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As filed with the Securities and Exchange Commission on January 15, 2020

Registration No. 333-            

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

 

Atotech Limited

(Exact name of registrant as specified in its charter)

Not Applicable

(Translation of registrant’s name into English)

 

Bailiwick of Jersey   2890   Not applicable
(State or other jurisdiction of incorporation or
organization)
  (Primary Standard Industrial Classification Code Number)   (I.R.S. Employer Identification No.)

William Street, West Bromwich

West Midlands, B70 0BG

United Kingdom

+49 30 349 85 703

(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)

 

 

Alpha US Bidco, Inc.

c/o The Corporation Trust Company

Corporation Trust Center

1209 Orange Street

Wilmington, Delaware 19801

+1 803 817 3500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Patrick H. Shannon

Jason M. Licht

Latham & Watkins LLP

555 Eleventh Street, NW

Washington, D.C. 20004

(202) 637-2200

 

Rod Miller

Benjamin J. Miles
Milbank LLP

55 Hudson Yards

New York, New York 10001

(212) 530-5000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act.  ☐

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of Securities to be registered   Proposed maximum aggregate
offering price(a)(b)
  Amount of registration fee(c)

  Common Shares, $0.10 par value per share

 

$100,000,000.00

 

$12,980.00

 

 

 

(a)   Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) promulgated under the Securities Act of 1933, as amended.
(b)   Includes additional common shares that may be purchased by the underwriters.
(c)   Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. We and the selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED                    , 2020

PROSPECTUS

                 Common Shares

 

 

LOGO

Atotech Limited

Common Shares

 

 

This is Atotech Limited’s initial public offering. Atotech Limited is offering                  common shares in this offering.

We expect the public offering price to be between $         and $             per share. Currently, no public market exists for our common shares. We have applied for listing of our common shares on the New York Stock Exchange under the symbol “ATC.”

 

 

Investing in the common shares involves risks that are described in the “Risk Factors” section beginning on page 29 of this prospectus.

Upon completion of this offering and the conversion of              preferred shares (representing all issued and outstanding preferred shares) to common stock, the common shares beneficially owned by The Carlyle Group Inc. and its affiliates will represent     % of the total voting power of our outstanding common shares. See “Prospectus Summary—Corporate Reorganization.” Accordingly, we expect to be a “controlled company” under the corporate governance rules of the New York Stock Exchange.

We are a “foreign private issuer” under the applicable Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements. See “Management—Foreign Private Issuer Exemption.”

 

 

 

     Per Share      Total  

Public offering price

   $                  $              

Underwriters’ discounts and commissions(1)

   $                  $              

Proceeds, before expenses, to Atotech Limited

   $                  $              

 

(1)   We refer you to “Underwriting” for additional information regarding underwriting compensation.

The selling shareholders named in this prospectus have granted the underwriters an option exercisable for 30 days after the date of this prospectus, to purchase, from time to time, in whole or in part, up to an aggregate of              common shares from the selling shareholders at the public offering price less underwriting discounts and commissions. We will not receive any proceeds from the sale of the shares by the selling shareholders. The selling shareholders named in this offering include affiliates of The Carlyle Group Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The common shares will be ready for delivery on or about                 , 2020 through the book-entry facilities of The Depository Trust Company.

 

 

 

Citigroup   Credit Suisse
BofA Securities   J.P. Morgan

 

 

The date of this prospectus is                     , 2020.

 


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A Global Leader in Surface Finishing Solutions HOUSING SMARTPHONES CHIP IC SUBSTRATE AUTOMOTIVE CHROME NICKEL COPPER PLASTIC


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TABLE OF CONTENTS

 

Prospectus Summary

     1  

Risk Factors

     29  

Forward-Looking Statements

     65  

Use of Proceeds

     67  

Dividend Policy

     68  

Capitalization

     69  

Dilution

     70  

Selected Historical Financial Information

     71  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     73  

Our Industry and End-Markets

     102  

Business

     107  

Management

     128  

Certain Relationships and Related Party Transactions

     144  

Principal and Selling Shareholders

     146  

Description of Capital Stock

     149  

Common Shares Eligible For Future Sale

     160  

Taxation

     162  

Enforceability of Civil Liabilities

     172  

Underwriting

     173  

Expenses Related to the Offering

     179  

Validity of Common Shares

     180  

Experts

     180  

Where You Can Find Additional Information

     181  

Index to Audited Financial Statements

     F-1  

 

 

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction other than the United States where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our common shares and the distribution of this prospectus outside the United States.

We are incorporated in the Bailiwick of Jersey, and many of our outstanding voting securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or SEC, we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We are responsible for the information contained in this prospectus and in any related free-writing prospectus we prepare or authorize and you should only rely on such information. We and the underwriters have not authorized anyone to give you any other information, and we and the underwriters take no responsibility for any other information that others may give you. The selling shareholders are offering to sell, and seeking offers to buy, our common shares only in jurisdictions where offers and sales are permitted. The information in this document may only be accurate on the date of this document, regardless of its time of delivery or of any sales of our common shares. Our business, financial condition, results of operations, or cash flows may have changed since such date.

Certain monetary amounts, percentages, and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic

 

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aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

BASIS OF PRESENTATION

On October 6, 2016, Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with its corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66940532 (“Opco”) entered into the share purchase agreement with Total Holdings Europe, a French société par actions simplifiée and Total Gestion USA, a French société à responsabilité limitée (collectively, “TOTAL”) pursuant to which Atotech UK Topco Limited indirectly acquired all the outstanding equity interests of Atotech B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands (“Predecessor”) on January 31, 2017 (the “Acquisition”). In connection with the Acquisition, we entered into (a) a senior secured first lien term loan facility (the “term loan facility”) in an aggregate principal amount of $1,400.0 million and (b) a senior secured first lien multi-currency revolving credit facility with commitments, when taken together, of $250.0 million (the “revolving credit facility” and, together with the term loan facility, the “senior secured credit facilities”). The Acquisition was funded in part by (i) proceeds from borrowings under the term loan facility and (ii) proceeds totaling $425.0 million from the issuance of the 6.250% Senior Notes due 2025 (the “Opco Notes”) issued by Opco and Alpha US Bidco, Inc., a Delaware corporation, on January 31, 2017. The consummation of the Acquisition, the borrowing of $1,400.0 million under our senior secured credit facilities and the issuance of the Opco Notes are referred to herein as the “Acquisition Transactions.”

Following the consummation of the Acquisition, $500.0 million of indebtedness outstanding under the term loan facility was redenominated from U.S. dollars to RMB (the “RMB Term Loan Facility”) with the balance remaining denominated in U.S. dollars (the “USD Term Loan Facility” and, together with the RMB Term Loan Facility, the “term loan facilities”). On May 30, 2018, Opco entered into an amendment to the senior secured credit facilities to borrow $200.0 million under the USD Term Loan Facility in incremental Term B-1 loans (the “Incremental Borrowings”), and Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with its corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442 (“Holdco”), and the direct owner of the outstanding equity interests of Opco, issued $300.0 million of 8.75%/9.50% Senior PIK Toggle Notes at an issue price of 99.010% (the “Holdco Notes” and, together with the Incremental Borrowings, the “2018 Recapitalization Borrowings”). Proceeds from the 2018 Recapitalization Borrowings were distributed to Atotech UK Topco Limited and used by it to pay accrued interest on, and redeem certain of, its preferred shares (such distribution, together with the 2018 Recapitalization Borrowings, the “2018 Recapitalization Transactions”).

Atotech Limited, the registrant, is a Bailiwick of Jersey company incorporated on December 12, 2018 for purposes of becoming the new holding company of Holdco and its subsidiaries. For the year ended December 31, 2018 and the nine months ended September 30, 2019, Atotech Limited had no operations, assets, or liabilities. In connection with the consummation of the offering and prior to effectiveness of the Registration Statement, we will undertake the following transactions (collectively, the “Reorganization Transactions,” together with the offering and the conversion of the preferred shares discussed below, the “Transactions”):

 

   

The Carlyle Group Inc. and its affiliates (“Carlyle”) and all other shareholders of Atotech UK Topco Limited will contribute all outstanding equity interests of Atotech UK Topco Limited to Atotech Limited in exchange for an equal number of common shares and preferred shares of Atotech Limited; and

 

   

Atotech Limited will consummate a                 -to-1 stock split.

 

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Following the consummation of the offering, Atotech UK Topco Limited will be dissolved and Atotech Limited will directly own all outstanding equity interests of Holdco and will indirectly own all outstanding equity interests of Holdco’s operating subsidiaries, including Opco. Substantially concurrently with the consummation of the offering, all outstanding preferred shares of Atotech Limited will be converted to common shares.

The number of common shares issued per preferred share will be based on the initial public offering price per common share as well as the date on which the public offering price per common share is determined. Changes in the initial public offering price from $             (the midpoint of the price range set forth on the cover page of this prospectus) or a change in the date on which the public offering price per common share is determined from the assumed date of             , 2020 will affect the number of common shares into which each preferred share will convert and will result in a corresponding change to the number of common shares outstanding after the completion of this offering. Each day by which the actual pricing date precedes or follows the assumed pricing date of             , 2020, will result in the issuance of              fewer or additional common shares, respectively. The effect of changes in the initial public offering price per common share is presented in the following table:

 

Public offering

price (with assumed pricing

date of             , 2020)

   Total common shares

outstanding after this
offering

 

$    

  

$    

  

$    *

  

$    

  

$    

  

*  The midpoint of the price range set forth on the cover page of this prospectus.

   

Prior to the Reorganization Transactions, Atotech Limited will have no operations and no material assets or liabilities. As a result of the Reorganization Transactions, Atotech Limited will succeed to the business and operations of Atotech UK Topco Limited and Atotech Limited’s historical financial statements will be substantially identical to those of Atotech UK Topco Limited. Accordingly, the financial statements of Atotech Limited are not meaningful to an understanding of our business and are not included in this prospectus. However, the financial statements of Predecessor have been included for periods prior to the Acquisition and the financial statements of Atotech UK Topco Limited (“Successor”) have been included for periods following the Acquisition.

We have omitted selected financial data as of and for the years ended December 31, 2014 and 2015, as such financial data was audited by KPMG Audit, a department of KPMG S.A. (France), on a basis that is not consistent with the financial statements audited by KPMG AG Wirtschaftsprüfungsgesellschaft (Germany) for the years ended December 31, 2016, 2017 and 2018, and cannot be provided on a consistent basis without unreasonable effort and expense.

 

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MARKET AND INDUSTRY DATA

This prospectus includes market, economic, and industry data (including compound annual growth rate forecasts for our markets based on expected total expenditures made by customers in such markets) as well as certain statistics and information relating to our business, markets, and other industry data, which we obtained or extrapolated from industry publications, generated through internal estimates, our review and analysis of market conditions, surveys, customer feedback, and reports provided by various statistics providers, market research organizations, and others, including the IMF, Forbes, and The Boston Consulting Group. Industry publications and other third-party surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. While we believe that such data is reliable, neither we nor the underwriters have independently verified such data and cannot guarantee the accuracy or completeness thereof. Additionally, we cannot assure you that any of the assumptions underlying these statements are accurate or correctly reflect our position in the industry, and not all of our internal estimates have been verified by any independent sources, including the underwriters. Furthermore, we cannot assure you that a third-party using different methods to assemble, analyze, or compute market data would obtain the same results. There is no precise definition for what constitutes the Electronics (“EL”) and General Metal Finishing (“GMF”) plating chemistry markets. We have defined the markets in this prospectus consistent with the presentation we use for our internal segment reporting purposes. However, third-party reports may define the EL and GMF chemistry markets differently and our competitors may do the same. The compound annual growth rates (“CAGR”) included in this prospectus related to our markets reflect the rate of increase or decrease required for a number to vary from its value at the beginning of each applicable period to its value at the end of each applicable period, assuming the increase or decrease occurred steadily and was compounded over the referenced time period. With respect to forecasts related to market growth in the EL and GMF plating chemistry markets and the EL and GMF equipment markets, these compound annual growth rates incorporate a number of assumptions and estimates with respect to the ultimate end-markets that utilize plating chemistry products as well as other macroeconomic factors. These assumptions and estimates may prove to be incorrect and, as a result, our CAGR forecasts included in this prospectus may not prove to be accurate. Most market position or market share, statistical, industry, or other market information presented in this prospectus is based on information or data for the year ended December 31, 2018 and for the nine months ended September 30, 2019. Management believes such information presented represents the most recent data available to us. We do not intend, and do not assume any obligations, to update industry or market data set forth in this prospectus. Finally, behavior, preferences, and trends in the marketplace tend to change. As a result, investors and prospective investors should be aware that data in this prospectus and estimates based on such data may not be reliable indicators of future results.

References to “market share,” “market position,” and “market leader” are based on global revenues in the referenced market, and unless otherwise specified herein, are based on certain of the materials referenced above. When we discuss our EL plating chemistry market, we refer to the $2.4 billion wet chemicals market that we currently target within the broader $23 billion global surface treatment market, which consists of electroplating and non-electroplating chemicals. When we discuss our GMF plating chemistry market, we refer to the $2.1 billion wet chemicals market that we currently target within the broader $23 billion global surface treatment market. When we refer to our EL equipment market, we refer to the market for PCB plating equipment. When we refer to our GMF equipment market, we refer to the market for GMF plating equipment.

The website URLs included in this prospectus are for inactive textual reference only. The information on the referenced websites is not incorporated herein and does not form a part of this prospectus.

TRADEMARKS

We own or have rights to trademarks, service marks, or trade names that we use in connection with the operation of our business. In addition, we have trademark and service mark rights to our names, logos, and website names and addresses. Other trademarks, service marks, and trade names appearing in this prospectus are

 

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the property of their respective owners. The trademarks and service marks we own or have the right to use include, among others, Atotech, Adhemax, BluCr, BondFilm, DynaChrome, DynaPlus, Inpulse, Multiplate, Neoganth, Printoganth, Stannatech, TriChrome, Uniplate, Zinni, and Zintek. Solely for convenience, in some cases, the trademarks, service marks, and trade names referred to in this prospectus are listed without the applicable ® and symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, service marks, and trade names. Other trademarks and service marks referenced in this prospectus are, to our knowledge, the property of their respective owners.

 

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all the information that may be important to you. You should read this entire prospectus and should consider, among other things, the matters set forth under “Risk Factors,” “Selected Historical Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our unaudited and audited financial statements and related notes thereto appearing elsewhere in this prospectus before making your investment decision. The information contained in this prospectus assumes (i) the Transactions have been consummated and (ii) the underwriters have not exercised their option to purchase additional shares. References to the financial measures “EBITDA” and “Adjusted EBITDA” refer to financial measures that do not comply with International Financial Reporting Standards (“IFRS”). For information about how we calculate EBITDA and Adjusted EBITDA, see Note 4 to the table under the heading “—Summary Historical and Pro Forma Financial Information.”

References in this prospectus to “Atotech,” “we,” “us,” “our,” “its,” and the “Company” refer to the registrant and its consolidated subsidiaries after giving effect to the Reorganization Transactions.

Our Company

We are the leading global provider of specialty electroplating solutions delivering chemistry, equipment, and service for high-growth technology applications. We are #1 in the global electronics (“EL”) plating chemistry market, #1 in the global general metal finishing (“GMF”) plating chemistry market, and the #1 global manufacturer of horizontal plating equipment for printed circuit board (“PCB”) production. Our solutions are used in a wide variety of attractive end-markets, including smartphones, communication infrastructure, cloud computing infrastructure, computing and consumer electronics, automotive electronics, and automotive surface finishing, as well as in numerous industrial and consumer applications such as heavy machinery and household appliances. We benefit from various secular growth trends such as digitalization, increasing data volumes and processing speed requirements, the growth of the consumer class in emerging markets, increasing environmental regulations, and rising product quality and durability standards. We expect these trends to not only increase demand for our customers’ end-products that use our plating chemistry, but also increase the amount and value of plating chemistry used in each end-product, allowing our growth to outpace underlying end-market volume growth.

We are the only major company in our industry that provides both chemistry and equipment, which we sell through both our EL and GMF segments. Our comprehensive systems and solutions approach leverages our unique offering of chemistry, equipment, and service. We believe this business model creates a sustainable competitive advantage that helps us achieve deep customer intimacy and allows us to continue to grow our market share and capitalize on positive market growth trends. This approach is supported by our 17 state-of-the-art global technology centers, which allow us to provide local service around the world and to respond in real-time to customer needs. The combination of our comprehensive systems and solutions approach, expansive global manufacturing and sales footprint, customer-driven investments in research and development (“R&D”), and superior technical expertise makes us an ideal electroplating and surface finishing solutions partner for our diverse customer base. This drives long-lasting relationships and an industry-leading financial profile, with fiscal 2018 EL and GMF Segment Adjusted EBITDA margins of 33.9% and 27.0%, respectively, and EL and GMF Segment Adjusted EBITDA margins for the nine months ended September 30, 2019 of 35.7% and 26.8%, respectively.

Our solutions are mission-critical for the PCB, semiconductor (“SC”), and surface finishing industries, but typically account for less than 1% of total end-product cost. Our customers rely on these solutions to increase processing speeds, further miniaturize devices, transform product appearance, and increase product durability. Our direct customers are among the most important suppliers to the world’s leading original equipment manufacturers (“OEMs”) in our key end-markets. In order to satisfy demanding OEM specifications, we often

 

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partner with OEMs and our direct customers to develop comprehensive solutions that embed, or “design-in” our offerings. The “designed-in” nature of our solutions and the associated testing and certification processes, which can last up to five years, lead to high switching costs for our direct customers and OEMs. Our solutions create significant value for our customers by consistently and reliably enabling superior product performance. Our ability to consistently deliver a compelling customer value proposition has led to long-standing customer relationships, with an average relationship length of 24 years among our top 25 customers, and underpins our sustainable competitive advantage.

Our business is defined by an unwavering commitment to R&D with a focus on high-growth applications, close customer collaboration, and market-led innovation. We believe that we consistently invest more in R&D than our competitors with our fiscal 2018 R&D expense representing 4.8% of revenue for the same period. This investment includes over 500 R&D employees worldwide. Approximately 90% of our annual R&D investments support our existing customers’ product improvement and short-term R&D needs. This close collaboration enables us to pioneer new high-value solutions with reduced commercial risk, while the remainder of our R&D investment is focused on developing next-generation technologies, often in partnership with leading OEMs, customers, and universities. Our historical and continued investment in R&D allows us to solve complex technical problems associated with cutting-edge product innovations, such as organic light-emitting diode (“OLED”) displays, flexible screens, and advanced driver-assistance systems (“ADAS”).

Our well-invested global footprint is comprised of our 17 state-of-the-art global technology centers, 15 chemistry production facilities, and two equipment production facilities. We believe we have the largest EL and GMF plating presence in Asia, with seven production facilities and nine technology centers, a distinct and crucial element of our business that enables us to capture growth throughout this key region. We serve customers locally in over 40 countries with approximately 4,000 employees, of whom 1,900 are directly engaged in customer support, leveraging their technical expertise in sales, marketing and service to enhance our customers’ operations, improve existing practices, and enable the rapid commercialization of new products. Of these approximately 1,900 technical experts, several hundred work directly with our customers at their facilities. Our scale and strong local presence are key competitive differentiators, allowing us to leverage our technology portfolio to address our customers’ current and future requirements, while simultaneously providing localized, high-touch customer service.

We sell our chemistry and equipment to a diverse mix of customers who are typically manufacturers serving global markets, ultimately mitigating our exposure to any individual geography. For fiscal 2018, our top ten customers accounted for approximately 25% of our total chemistry revenue.

 

Revenues By End-Market(1)     Revenues By Geography(1)       End User Demand by Geography(3) 

 

 

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    LOGO    LOGO   LOGO

 

(1)   Represents 2018 chemistry revenues.
(2)   Includes over 20 additional end-markets that utilize our offerings, including medical & industrial, energy, decorative hardware, and others.

 

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(3)   End user demand by geography represents the estimated geographic breakdown of our 2018 revenues by ultimate end users of products with our chemistry.

During fiscal 2018, we generated revenues, consolidated net loss, and Adjusted EBITDA of $1,212.8 million, $23.7 million, and $391.7 million, respectively, representing a 32.3% Adjusted EBITDA margin. During the nine months ended September 30, 2019, we generated revenues, consolidated net income, and Adjusted EBITDA of $877.4 million, $12.0 million, and $279.3 million, respectively, representing a 31.8% Adjusted EBITDA margin. As of December 31, 2018, we had cash of $386.2 million and outstanding indebtedness of $2,292.6 million, which may limit the availability of financial resources to pursue our growth initiatives. As of September 30, 2019, we had cash of $247.2 million and outstanding indebtedness of $2,157.2 million (excluding short-term and long-term deferred financing costs and $73.8 million of lease liabilities), which may limit the availability of financial resources to pursue our growth initiatives.

Our Business Segments

Our business operates in two business segments, Electronics and General Metal Finishing, with both offering chemistry, equipment, and service globally.

 

 

LOGO

 

(1)   See “Prospectus Summary—Summary Historical and Pro Forma Financial Information.”
(2)   Segment Adjusted EBITDA does not reflect the impact of the adjustment regarding IFRS 16 “Leases” as discussed in footnote 4(i) in “Summary Historical and Pro Forma Financial Information.”
(3)   Other end-markets include aerospace & military, medical & industrial, decorative hardware, and others.

Although these segments each have distinct end-markets and customers, they both benefit from our centralized functions and global scale. In addition, we leverage our significant R&D spend and resulting innovations, as well as our shared technology centers and production facilities, to benefit from technologies, innovations, best practices, and other key learnings across our product portfolio and segments. This R&D coordination, along with our centralized functions, results in better commercial focus and increased productivity and profitability.

 

   

Electronics Segment: Our comprehensive systems and solutions approach provides chemistry, equipment, and service, which are integral to manufacturing PCBs, SCs and connectors. We are #1 in the global EL plating chemistry market, with a market share of approximately 24% based on our fiscal 2018

 

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EL plating chemistry revenue. We are also the #1 global manufacturer of horizontal plating equipment for PCB production. Our expansive footprint allows us to serve the global electronics supply chain, as demonstrated by our longstanding relationships with 28 of the top 30 global PCB manufacturers. We believe the combination of our chemistry and equipment provides our customers with enhanced production yields, higher-quality results, and improved manufacturing efficiency. In addition, our services and solutions facilitate and enable end-product innovation, such as flexible screens, higher processing speeds, and further device miniaturization. As a result of this systems approach, we have increased the proportion of our PCB chemistry sold for use in our proprietary EL equipment from approximately 51% to 57% during the period from 2010 to 2018. We believe that this trend increases our value to our customers, grows our share of more profitable “cutting edge” and complex applications, and enhances our competitive advantage.

EL segment demand is expected to be driven by various secular trends, including the build-out of 5G infrastructure, digitalization and exponentially increasing data volumes and processing speed requirements associated with increasing electronics content in cars, the adoption of next-generation mobile devices, the adoption of big data-related analytics and cloud computing, and the “Internet of Things” (“IoT”). The worldwide annual creation of data associated with many of these trends is expected to increase from less than 33 trillion gigabytes in 2018 to more than 175 trillion gigabytes in 2025. We believe we will continue to gain market share as a result of our portfolio’s focus on attractive growth segments of the EL plating chemistry market that involve technologically advanced production processes. These high-value technology segments include complex applications such as High Density Interconnectors (“HDIs”), Integrated Circuit (“IC”) substrates, and flex or rigid-flex PCBs to facilitate ongoing technological innovations.

EL Applications in High-end Smartphone

 

 

LOGO

 

   

General Metal Finishing Segment: We supply chemistry, equipment, and service as a comprehensive process solution for functional and decorative surface finishing applications across a diverse set of end-markets, including automotive, heavy machinery, household appliances, fixtures, and construction. We are #1 in the global GMF plating chemistry market, with a market share of approximately 22% based

 

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on our fiscal 2018 GMF plating chemistry revenue, supplying specialty-plating chemistry to approximately 7,000 customer sites globally. We are also one of the market leaders in GMF plating equipment. Our comprehensive systems and solutions generally add the most value for our larger GMF customers who have complex technical requirements. For our other customers, who are often smaller, we provide value by being a one-stop shop for all their plating needs, supplying chemistry, auxiliary equipment, and high-touch local service. Our solutions not only transform the aesthetics of plastics and metals to create a higher value appearance, but also improve corrosion- and wear-resistance and environmental sustainability. We believe our comprehensive approach strengthens our ability to win business, providing our customers with enhanced production yields, higher quality results, and improved end-product performance, while reducing their manufacturing and warranty costs. For high-end applications where our combined chemistry and equipment solution provides the greatest value, we have increased the proportion of our chemistry sold for use in our GMF equipment. For example, for our DynaChrome offering, we have increased the proportion of chemistry sold for use in our equipment from approximately 8% to 23% during the period from 2010 to 2018. We believe that by growing our chemistry sales for use in our equipment, we are able to increase our customer intimacy and competitive differentiation.

GMF segment demand is expected to be driven by increased automotive production and further penetration of our products in automotive and construction applications, as well as demand for household appliances and fixtures. We expect the growth of the consumer class in emerging markets will drive demand growth for our products in such markets in-excess of developed markets. For example, consumer purchases in China and India are expected to grow from approximately $6.1 trillion in 2015 to approximately $25.0 trillion in 2030. Growth is also expected to be bolstered by increased chemistry penetration due to trends towards increasing quality requirements, premiumization, environmental regulations, and lightweighting. We believe we will continue to gain market share as a result of our positioning in environmentally sustainable solutions, product quality, R&D leadership, and customer proximity.

GMF Applications in Automotive

 

 

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Transformational Initiatives

Since the Acquisition, we have made significant investments designed to maximize the benefits of being a standalone company, positioning the business for current and future commercial success. Although additional opportunities remain, to date, we have implemented several initiatives, which are unlocking significant value, including:

 

   

Enhanced Senior Leadership Team: We have augmented our existing long-term business leaders, technical experts, and customer relationship managers with additional world-class managers to lead our organizational realignment and increase focus on commercial excellence and our customers. To accomplish this transition, we have hired a new Chief Executive Officer, Chief Financial Officer, Chief Operations Officer, Vice President of R&D, Vice President and Group General Counsel, and Vice President of Human Resources.

 

   

Globalized Management Structure: We have reorganized the business from a decentralized, locally-focused structure, to a centralized, global/regional structure organized around our two segments. This has allowed us to build strong centralized and regional functional teams, ensuring best practices are implemented across all regions. Within each segment, we have redesigned our management structure to expand the accountability of business unit leaders to include full P&L responsibility.

 

   

Customer-Focused Approach: We have realigned our sales, service, marketing, and R&D functions to be more coordinated, effectively anticipate and meet the demands of our customers, and increase sales force efficiency. As part of this initiative, we identified global key accounts for which we assign dedicated managers to provide a single point of contact to more effectively serve these customers.

 

   

Optimized R&D: We have focused on increasing R&D productivity by improving our stage-gate processes to ensure more efficient use of resources and enable faster introduction of new products. Additionally, we are further improving the cost-efficiency of our R&D process by relocating certain standardized R&D activities to lower cost geographies.

 

   

Operational Improvements: We have introduced a culture of continuous cost management, launching several efficiency initiatives, including lean manufacturing and optimization of our procurement spend. We anticipate new opportunities, along with our existing value-creation program, will generate cost savings, which are expected to more than offset inflation in our underlying costs.

 

   

Aligned Incentives: We have developed a performance-based compensation structure that closely aligns individual incentives with our overall strategic and financial objectives.

Collectively, these initiatives helped grow our revenues from $1,124.2 million to $1,212.8 million from fiscal 2016 to fiscal 2018. Adjusted EBITDA grew from $309.4 million to $391.7 million, while Adjusted EBITDA margin improved by 480 basis points during this same period. We expect to realize additional benefits from these initiatives going forward.

Our Competitive Strengths

Global market leader in well-structured markets with positive long-term secular growth trends

We are the global market leader in both of our primary markets—#1 in EL plating chemistry with a 24% market share and #1 in GMF plating chemistry with a 22% market share. Each market is well structured, with the three largest players in the EL and GMF plating chemistry markets representing a combined 64% and 48% market share, respectively. We are a recognized leader in plating processes for applications such as HDI for smartphones, IC substrates, decorative coatings (“DECO”), plating on plastics (“POP”), as well as functional chrome plating and have long-standing relationships with our customers.

 

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We expect our market leadership will allow us to leverage and capitalize on favorable secular trends in the EL and GMF plating chemistry markets, which are forecast to grow at compound annual growth rates of approximately 3.6% and 2.8%, respectively, from 2019 through 2023. Within the EL plating chemistry market, growth is expected to be driven by expanding communications infrastructure (ongoing 5G network build-out), increasing device complexity (HDI and flex or rigid-flex PCBs), digitalization (IoT), adoption of big data-related analytics and cloud computing, increasing automotive electronics content and vehicle electrification as well as autonomous driving. We also expect demand for our chemistry products to be driven by increased chemistry penetration per device. As technological innovation creates devices with greater computing power, speed, and capabilities, while simultaneously shrinking the product size, more advanced plating chemistry solutions are needed to address growing device complexity. This complexity, coupled with increasing OEM technical specifications, is driving greater PCB density and an increasing number of PCB layers per device. More complex plating chemistries and processes can enable increased speed and further device miniaturization by reducing the distance and line size connecting components, reducing latencies between components, and increasing PCB line density. See illustrative example below:

 

 

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Within the GMF plating chemistry market, growth is expected to be driven by evolving consumption patterns of a growing consumer class in emerging markets, increasing automotive production, vehicle lightweighting, increased warranty requirements, product premiumization, and stricter environmental regulations. However, we can make no assurances that our assumptions about market growth will be correct. Historically, we have been able to increase our market share and we believe we are well-positioned to continue to do so in the future as a result of our comprehensive systems and solutions approach, strong customer integration, innovative R&D, and global footprint.

Comprehensive systems and solutions approach drives sustainable competitive advantage and unmatched customer intimacy

We offer a differentiated systems- and solutions-based approach that combines chemistry, equipment, and service across both of our segments.

 

   

Chemistry: Our chemistry solutions are designed to address the specific process needs of our customers, reflecting iterative collaboration with OEMs and direct customers alike to solve for complex technological requirements such as further device miniaturization and increasing processing speeds through greater conductor line sophistication. We design these proprietary processes in close collaboration with our customers and OEMs, making our chemistry difficult to substitute and fostering deep and lasting customer relationships.

 

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Equipment: We believe that utilizing our equipment in connection with our tailored chemistry provides our customers with significant value. Our more than 1,000 installed systems help many of our customers engage in more complex plating processes that demand our higher value-added chemistry and provide another point of customer contact, further driving customer integration. Once installed, our equipment is a source of recurring revenue and an important growth driver for our chemistry, spare parts/wear parts, service, line upgrades, retrofits, and technical support. In addition, the installation of our equipment tends to drive increased customer intimacy and create higher switching costs for our customers. We believe this approach is a key driver of our growth and customer loyalty, delivering enhanced production yields, higher-quality results, and improved end-product performance to our customers, while improving manufacturing efficiency. From 2010 to 2018, we have increased the percentage of our chemistry sold for use in our EL equipment from approximately 51% to 57%. For chemistry sold for use in our GMF DynaChrome equipment, which is used in high-value GMF applications, the percentage has increased from approximately 8% to 23%.

 

   

Service: We also provide world-class service to our customers. This service includes on-site support and training, embedded employees engaged in manufacturing process oversight, and the benefits of a global network of 17 technology centers. Our facilities are strategically located in close proximity to key customers to facilitate application development, testing, analytical measurements, chemical and physical characterization, technical support, and training. Approximately 1,900 employees worldwide are dedicated to customer support, with several hundred working on-site at our customers’ manufacturing facilities. Our regional and global product teams support our front-line staff and our customers with their deep product expertise to help ensure that optimal results are achieved through utilization of our chemistry and equipment, furthering our customer intimacy. In addition, our several hundred on-site personnel provide crucial feedback regarding upcoming customer needs to our R&D team, further enabling us to be a first mover on new technologies and to increase our portion of sales to those customers.

Our comprehensive systems and solutions approach is supported by our dedicated sales force and local presence and reflects our holistic view of the electroplating process. This combination allows us to respond in real-time to technological challenges, helping to develop solutions alongside our customers as we support them in their need to address constantly changing market dynamics. Our close customer relationships, with sales to 28 of the top 30 PCB manufacturers and joint development projects with 13 of these manufacturers, have allowed us to develop solutions alongside our customers. This collaboration helps our customers innovate and reduce their time-to-market, while allowing us to be the market leader on the newest high-tech and value-added solutions, which underpins our industry-leading financial profile.

Market leading R&D investment and technological innovation

We are a global technology leader in the electroplating chemistry market due to our market-leading R&D and track record of innovation. We believe our $206.0 million in R&D investment during the three years ended December 31, 2018, with fiscal 2018 expense representing 4.8% of total revenue, significantly exceeds that of our competition. For fiscal 2018, we estimate our R&D spend represented approximately 34% of the combined R&D spend of all plating chemical companies and 51% of the combined R&D spend of the four largest plating chemical companies by market share. As a result, we believe we have developed one of the most advanced R&D organizations in our industry, evidenced by our over 500 R&D professionals worldwide, 1,500 patents, 3,500 registered trademarks, 500 pending patent applications, and more than 100 employees with Ph.D.s. This central R&D function is bolstered by our 17 state-of-the-art global technology centers staffed by approximately 200 professionals, providing local support to our customers through testing, analysis, and pilot production. While we can provide no assurance that our investment in R&D will continue to provide competitive advantages, we believe we are well-equipped to continue our technological leadership to meet the future product needs of our customers and OEMs.

 

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Our investments in R&D have allowed us to solve complex technical problems associated with cutting-edge end-product innovations such as OLED displays, flexible screens, ADAS, and the build-out of 5G infrastructure.

We believe we are particularly well-positioned to capitalize on future transformative technologies, including artificial intelligence, next-generation devices enabled by 5G, continuing developments in ADAS, and complex composite anti-corrosion coatings. We also have the capability to develop and produce unique chemistry in-house, which we use to produce custom additives differentiating our chemistry from that of our competitors. As part of our investment in future technologies, we have invested heavily in environmentally sustainable solutions. For example, we were the first company to introduce the trivalent chromium hard chrome plating process, allowing our customers to phase out hexavalent chromium (“Chrome VI”). Our investments in these areas and the products we develop allow our customers to drive higher value product sales, reduce waste, and maximize operating efficiency in the face of evolving consumer demands and more stringent regulatory regimes. We expect the benefits associated with our R&D platform will persist as we continue to enhance our R&D productivity and focus on customer-driven innovation. We believe this sustainable competitive advantage will allow us to increase our market share going forward.

Mission-critical nature of our solutions drives customer stickiness

Our solutions are vital to our direct customers’ product performance and enable end-product innovation, while typically accounting for less than 1% of total end-product cost. OEMs and our direct customers generally demand the highest quality and performance specifications in plated components, which they generally verify through extensive testing and certification processes that can last up to five years. The long OEM testing and certification process reduces the likelihood that our customers will switch suppliers once our chemistry has been approved. Consequently, we have a close relationship with many OEMs and partner with them during the product development process to ensure that our solutions are certified. Our customer stickiness is evidenced by an average relationship length of 24 years among our top 25 customers. Further, our deep collaboration with OEMs provides greater customer insight, driving development of new products and processes to capture incremental growth from new end-product innovations.

Diverse revenue base by end-market, customer, and geography

The diverse nature of our global operations limits our financial exposure to any single end-market, customer, or region. For fiscal 2018, we generated approximately 12% of our chemistry revenues in the Americas, 19% in Europe, 38% in China, 9% in Taiwan, and 22% in the rest of Asia. The majority of our chemistry revenues are generated by sales to manufacturers in Asia that serve global end-markets with the estimated geographic breakdown of our revenues by ultimate end users of products with our chemistry across the Americas, Europe, China, Taiwan, and the rest of Asia representing approximately 27%, 29%, 25%, 2%, and 16% of our fiscal 2018 chemistry revenues, respectively. Additionally, our customers are located in over 40 countries, with no single customer representing more than approximately 5% of our chemistry revenue for fiscal 2018 and with our top ten customers representing approximately 25% of chemistry revenue for fiscal 2018. This diversified base includes customers serving a broad variety of end-markets, including smartphones, communication infrastructure, cloud computing infrastructure, automotive electronics, and consumer electronics for our EL offerings and automotive surface finishing, heavy machinery, household appliances, fixtures, and construction for our GMF offerings.

Compelling financial profile with consistently strong margins and cash flow

We have an attractive financial profile highlighted by our strong and stable margins. Our EL and GMF segments generated Segment Adjusted EBITDA margins of 33.9% and 27.0%, respectively, for fiscal 2018 and Segment Adjusted EBITDA margins of 35.7% and 26.8%, respectively, for the nine months ended September 30,

 

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2019. We have implemented numerous initiatives that have reduced our fixed and variable costs and improved working capital productivity. We expect that these initiatives will generate additional cost savings and cash flows as many have only recently begun to contribute to our financial results, although we cannot make any assurances regarding the amount or timing of additional cost savings and cash flows these initiatives may generate.

 

 

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(1)   Segment Adjusted EBITDA does not reflect the impact of the adjustment regarding IFRS 16 “Leases” as discussed in footnote 4(i) in “Summary Historical and Pro Forma Financial Information.”
(2)   Successor Pro Forma results.

Our track record of operating profitability and low capital intensity, including maintenance capital expenditures of approximately 1% of revenues over the past three years, has allowed us to consistently generate strong cash flows. Our global footprint and operational flexibility allow us to be more nimble and shift production to meet our customers’ needs. Our efficient and well-invested asset base supports our ability to meet demand growth and innovation requirements with limited capital expenditures.

Experienced management team and strong equity sponsor

Our company is led by a highly experienced and talented management team with an average tenure in the specialty chemicals industry of more than 19 years. Our management team, led by Chief Executive Officer Geoff Wild, is strategically positioned around the globe and is focused on improving company performance by consistently driving commercial and operational excellence. Mr. Wild has over 39 years of industry experience and previously served as Chief Executive Officer of AZ Electronic Materials, a former Carlyle portfolio company, where he was instrumental in the IPO process, successfully driving a total shareholder return of 68% from IPO in October 2010 to Merck KGaA’s acquisition of the business in May 2014. Our Chief Financial Officer Peter Frauenknecht has over 34 years of experience in global industrial manufacturing businesses, serving as Chief Financial Officer and member of the Executive Board at Constantia Flexibles, a leading, global flexible packaging company, where he was instrumental in driving efficiency gains, integrating acquisitions, supporting revenue growth from €1.6 billion in 2013 to €1.9 billion in 2015, and improving profitability. Our sponsor, Carlyle, is a leading global alternative asset management firm with extensive experience in successfully completing corporate carve-out transactions in the industrial sector and a track record of successful IPOs and transitioning companies from private to public.

 

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Our Business Strategies

Increase penetration of our comprehensive systems and solutions approach

We believe our comprehensive systems and solutions approach, which includes selling chemistry, equipment, and service, is the best way to maximize our all-in value to customers. We have realigned our resources to better implement this market- and solutions-based approach, including by embedding our equipment business within our EL and GMF segments. As applications become more complex, we believe the efficiency and value proposition of our systems-based solution will become more evident, which we intend to capitalize on to drive market share gains. We intend to expand this systems-based approach to new customers, as well as existing customers, who currently only use our chemistry, through our marketing efforts and a continued focus on the customer value proposition. We are expanding our equipment manufacturing in China to lower production costs, growing our addressable market opportunities and penetration with local Chinese customers and other Asian customers. In addition, we continue to invest in technologies to further broaden our portfolio and enable us to increase the penetration of our comprehensive systems and solutions approach. Most recently, we invested in vertical conveyorized plating (“VCP”) technology, which substantially increases our addressable market for plating equipment, and in turn provides us the opportunity to pull through more of our chemistry. We intend to leverage our broad network of technology centers, production facilities, and regional support teams to locally serve our global customer base and facilitate further integration into our customers’ operations as we help optimize their production efficiency and quality. We believe the continued proliferation of our comprehensive systems and solutions will drive better informed R&D decisions, increasing the value of our approach to our customers.

Leverage market leadership in existing technologies to expand to new applications and geographies

Over our 150-year history, we have cultivated a strong platform of innovative and high-tech solutions, resulting in #1 global market shares in EL plating and GMF plating chemistry. We intend to continue to leverage our scale, relationships, and existing solutions to expand our penetration into new applications in high-growth market segments and geographies.

In the EL plating chemistry market, we are focused on leveraging our expertise and technology leadership in high-density electronics for smartphones to capture incremental demand for new applications such as PCBs for the 5G infrastructure build-out and increase in automotive electronic content per vehicle. For example, our market leading expertise in interconnects for high-density PCBs can be leveraged to address high-growth automotive electronic applications, such as light detection and ranging (“LIDAR”) and radio detection and ranging (“RADAR”) applications. In addition to our expertise, our strong relationships with automotive OEMs and PCB and SC manufacturers position us to capitalize on these growth opportunities. From a geographic perspective, we expect our clients in the global electronics supply chain to continue to move their production supply chains to lower-cost regions. We continue to adapt to this shift by replicating our successful China market entry strategy in these target countries by building up local sales force teams, technical support, and leveraging coordinated key account management.

In the GMF plating chemistry market, we are seeking to expand our market share in high-growth applications. We are applying our existing corrosion protection technologies to satisfy increasing durability requirements in applications such as fasteners and brake systems. The trend towards automotive lightweighting also provides incremental opportunities to deploy our technologies to capture a greater share of plating content per vehicle. In particular, as electric vehicles (“EVs”) require lighter-weight materials to improve battery range, we believe we can also use our DECO and POP solutions to capture incremental demand. From a geographic perspective, we are targeting select OEMs in North America to obtain certifications for products that we have already successfully introduced to Europe- and Asia-based OEMs.

 

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Capitalize on attractive secular growth trends through R&D and continued technology leadership

We believe our substantial prior and future investments in R&D, our strong product pipeline, and our long-standing relationships with most leading OEMs will allow us to continue to be the leader in technological innovation. For example, the number of patents and pending patent applications related to our offerings increased from 1,138 in fiscal 2005 to 2,152 in fiscal 2018. We believe expanding our already strong position at the cutting edge of new chemistry, equipment, and service will allow us to continue to benefit from secular growth trends that are driving new and complex applications. Our strong customer intimacy and customer-driven innovation through our systems and solutions approach helps provide early insight into customer trends, allowing us to invest intelligently in disruptive, next-generation innovations. We will continue to address the needs of our customers by complementing our existing technology portfolio, both through organic R&D and through strategic bolt-on acquisitions of new technologies where possible.

In the GMF plating chemistry market, we see the largest growth potential in innovative sustainable solutions for the automotive industry. We believe we are currently at the forefront of sustainable technological innovation. For example, our DynaChrome offering utilizes 70% less water and 42% less energy versus standard vertical plating lines, and we were the first company to offer the trivalent chromium hard chrome plating process, which is an environmentally safer alternative to Chrome VI plating. Furthermore, we believe that the increasing requirements on vehicle life will drive demand for higher performing, more efficient and more environmentally friendly surface finishing solutions. Increasing environmental awareness, in combination with our sustainable solutions for Paint Support Technologies, allows us to serve markets that were previously difficult to access. In addition, we are a leading supplier of auxiliary equipment which helps reduce wastewater and extend chemistry bath life, reducing costs, improving quality, and diminishing the overall environmental impact of our customers’ plating operations. We continue to bolster our sustainable solutions and are well-positioned to support our customers’ efforts to adapt to increasingly stringent environmental laws and regulations for their manufacturing processes.

In the EL plating chemistry market, we believe that we are particularly well-positioned to capture growth from the introduction of 5G networks and IoT, driving volumes and enabling a new wave of technological innovation, including the next generation of automotive electronics and high-frequency electronic devices. These new electronic devices are expected to include significantly more sophisticated and compact electronic components and circuitry, which we expect will drive demand for our new high-end plating chemical products, as evidenced by the evolution of PCBs in smartphones. The increase in speed, power, and corresponding battery size, reduce the available space for PCBs in mobile and other devices. Miniaturization requires greater line density and the layering of PCBs, both of which require more complex chemistry plating solutions.

Execute on operational improvement opportunities to drive earnings growth, expand margins, and increase cash flow

In addition to our growing topline, our financial performance has also benefited from capitalizing on operational improvement initiatives and we believe there are still significant value-creation opportunities available to us going forward. We anticipate these new opportunities, along with our existing value-creation program, will generate cost savings, which are expected to more than offset inflation in our underlying costs. Key initiatives that we expect to contribute to these cost savings include leveraging the strength of our centralized business unit structure to increase commercial focus in the local regions, optimizing our purchasing function, increasing coordination in our operations, and reducing general and administrative costs. In addition, we continue to implement a more effective R&D portfolio review process, and to relocate certain standardized R&D, back-office, and equipment manufacturing activities to lower cost geographies. We expect these initiatives to help improve margins going forward, reinforced by the implementation of management incentive programs tied to the initiatives’ performance.

 

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Our Industry and End-Markets

We are #1 in the global EL plating chemistry market and #1 in the global GMF plating chemistry market, with the top three players in each market collectively holding a significant portion of those markets. The remaining share of each market is generally held by small, local suppliers focused on specific technologies or geographies. Within our EL segment, we currently focus on a $2.4 billion portion of the broader $23 billion surface treatment market. Within our GMF segment, we currently focus on a $2.1 billion portion of the broader $23 billion surface treatment market.

We expect our markets to grow at a CAGR of approximately 3.2% from 2019 to 2023 driven by various secular growth trends such as digitalization, further device miniaturization, increased data volumes and processing speed requirements, the growth of the consumer class in emerging markets, increasing environmental regulations, and rising product quality and durability standards. We believe our unique business model, characterized by consistent and significant investment in R&D, a focus on high-tech growth applications, customer intimacy and integration, and chemistry-equipment solutions approach, positions us to continue to increase our market share. Over time, we expect our innovation, organic growth strategy, and potential bolt-on M&A will expand our market opportunity.

EL Industry and Trends

The EL plating chemistry market is a $2.4 billion industry and is expected to grow at a 3.6% CAGR from 2019 to 2023. We are #1 in the global EL plating chemistry market with a 24% market share. EL plating chemistry is used in electronic applications such as PCBs embedded in smartphones, automotive electronics, communication infrastructure, cloud computing infrastructure, and consumer electronics.

The EL market benefits from broad digitalization and proliferation of PCBs and SCs, driven by prominent secular trends, including:

 

   

5G Infrastructure: The rollout of 5G wireless infrastructure is expected to require approximately twice the number of high-frequency base stations compared to those needed for 4G in order to support the higher data traffic volumes, speeds, and frequency capabilities. This increased infrastructure need will drive incremental demand for advanced PCBs and SCs. 5G is also expected to enable new applications that consume larger amounts of data, at higher speeds, and on higher frequencies, which is expected to increase the requirements for plating technology in devices transmitting, receiving, and processing such data.

 

   

Next-Generation Smartphones: The smartphone market is a highly innovation-intensive market characterized by constant technological advancements such as OLED displays, flexible screens, additional sensing features, and increased processing speeds. In addition, the new generation of smartphones will be 5G compatible. These advancements, along with increased battery life, require constant PCB miniaturization and greater line density, which drive demand for advanced plating solutions, such as modified semi-additive processes (“mSAPs”), to meet technical requirements.

 

   

Increasing Electronics Content in Automotive: The automotive industry is undergoing a fundamental and transformational change with an evolution towards electrification of powertrains (EVs and hybrid electric vehicles (“HEVs”)) and ADAS/autonomous vehicles. These trends will drive increasing volumes and electronic content per vehicle, with the electronic content cost as a percentage of total automotive manufacturing costs projected to be over 40% in 2030, creating significant additional demand for higher value PCBs and SCs.

 

   

Cloud Computing Infrastructure Growth: Adoption of big data-related analytics is expected to drive increased need for cloud computing infrastructure for data storage and IoT devices for data creation. There

 

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is significant industry investment in this area, with approximately 60 million servers estimated to be shipped globally from 2018 to 2022, compared to 44 million shipped globally from 2014 to 2018. Additionally, utilizing this data will call for increases in processing speed. Together, these factors are expected to drive adoption of, and demand for, advanced PCBs and SCs.

 

   

Adoption of Consumer and Industrial “Internet of Things” Devices: The growth of IoT results in increasing proliferation of connected sensors and devices in various consumer electronics (“smart” homes) and industrial (machine learning) applications. By 2022, there are expected to be 15.8 billion connected IoT devices, compared to 5.3 billion in 2018. As the capability of IoT devices increases, so will demand, driving higher volumes, device miniaturization, and state-of-the-art PCBs, HDIs, and SCs.

We are well-positioned to take advantage of these trends and the resulting complexity given our advanced chemistry capabilities, equipment integration, and reputation for quality and high-touch customer service.

GMF Industry and Trends

The GMF plating chemistry market is a $2.1 billion industry and is expected to grow at a 2.8% CAGR from 2019 to 2023. We are #1 in the global GMF plating chemistry market, with a 22% market share. GMF plating chemistry is predominantly used in automotive surface finishing and other industrial applications such as heavy machinery, household appliances, fixtures, and construction.

The GMF market benefits from growing industrial- and consumer-driven demand, driven by prominent secular trends, including:

 

   

Increasing Quality Requirements: The trend towards improving product quality to meet longer warranty standards requires greater useful lives of parts and components, driving demand for high-performance GMF plating processes. These processes increase wear- and corrosion-resistance of our customers’ end-products.

 

   

Premiumization: The growth of the consumer class in emerging markets such as China and India has led to increased demand for light and premium vehicles, household appliances, and heavy machinery. This increased “premiumization” of products and demand for new products has led to more and higher-value chrome surfaces (e.g., satin finishes) and growing per-unit plating content. Consumer purchases in China and India are expected to grow from approximately $6.1 trillion in 2015 to approximately $25.0 trillion in 2030 and, as purchasing power in these markets continues to rise, these demand patterns should continue driving increased volumes of our products.

 

   

Increasing Environmental Regulation: New environmental requirements regulating specific substances used in certain chemical processes, water and waste disposal, and tightening emissions standards, such as Euro 6d-TEMP and China 6 among other measures, have led OEMs and our customers to emphasize sustainable products and systems. These new regulations are expected to increase demand for our market-leading environmentally sustainable solutions and technology.

 

   

Lightweighting: Increasingly stringent emissions standards, environmental regulations, and an emphasis on range for EVs and HEVs have increased demand for automotive weight-efficiency. This increase in lightweighting drives demand for GMF plating applications, particularly our POP and DECO products, which can enable substitution of metal for plastics with metallic finishes. Lightweighting also leads to new innovations because, as new lighter-weight materials are utilized, they will require tailored chemistry solutions to address new challenges, such as advanced corrosion protection requirements.

We are well-positioned to take advantage of these trends and the resulting complexity given our advanced chemistry capabilities, equipment integration, and reputation for quality and high-touch customer service.

 

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Equipment Industry and Trends

In addition to the chemistry markets, we also compete within the equipment markets for EL and GMF plating chemistry applications where we have the #1 global market share in EL horizontal plating equipment and are one of the market leaders in GMF plating equipment. We have also recently invested in VCP technology, which substantially increases our addressable market for plating equipment and will provide us with the opportunity to increase our market share and chemistry sales. We view our equipment offering as critical in supporting our chemistry sales, as well as in providing our comprehensive systems and solutions approach. We expect the equipment market to benefit from the same drivers as the underlying chemical markets. Consequently, we estimate the value of the EL equipment market to grow at a CAGR of approximately 3.6% from 2019 to 2023 and we expect the GMF equipment market to grow at a CAGR of approximately 2.8% from 2019 to 2023. As equipment represents a substantial upfront investment for our customers, procurement decisions for equipment products typically follow the characteristics of the capital and technological investment cycles. Once installed, our equipment is a source of recurring revenue and an important growth driver for our chemistry, spare parts/wear parts, service, line upgrades, retrofits, and technical support.

Recent Developments

Our financial results for the year ended December 31, 2019 are not yet finalized; however, the following information reflects our preliminary expectations with respect to such results based on information currently available to management:

     Year Ended      Year Ended
December 31,
2018
 

(dollars in millions)

   December 31,
2019 (Low)
     December 31,
2019 (Mid-Point)
     December 31,
2019 (High)
 

Statement of operations data:

           

Revenues (a)

   $                $                $                $ 1,212.8  

Consolidated net income (loss)

   $                $                $                $ (23.7

Balance sheet data:

           

Cash and cash equivalents (at end of period)

   $                $                $                $ 386.2  

Total indebtedness (at end of period)

   $                $                $                $ 2,292.6  

Other financial and operating data:

           

Adjusted EBITDA (b)

   $                $                $                $ 391.7  

 

(a)   Revenues by segment is estimated to fall within the following ranges:

 

     Year Ended      Year Ended
December 31,
2018
 

(dollars in millions)

   December 31,
2019 (Low)
     December 31,
2019 (Mid-Point)
     December 31,
2019 (High)
 

EL Segment revenues

   $                $                $                $ 669.4  

GMF Segment revenues

   $                $                $                $ 543.4  

 

(b)   For a discussion of our presentation of Adjusted EBITDA, see footnote (4) under “—Summary Historical and Pro Forma Financial Information.”

 

   

We expect to report revenues between $         million and $         million for the year ended December 31, 2019, compared to revenues of $1,212.8 million for the year ended December 31, 2018, representing a change between     % and     %. This change in our expected revenues was primarily driven by                     . We expect revenues attributable to our EL Segment to be between $         million and $         million for the year ended December 31, 2019, compared to revenues of $669.4 million for the year ended December 31, 2018, representing a change between     % and     %. This change in EL Segment revenues was driven by                     . We expect revenues attributable to our GMF Segment to be between

 

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$         million and $         million for the year ended December 31, 2019, compared to revenues of $543.4 million for the year ended December 31, 2018, representing a change between     % and     %. This change in GMF Segment revenues was driven by                     .

 

   

We expect to report consolidated net income (loss) between $         million and $         million for the year ended December 31, 2019, compared to net loss of $23.7 million for the year ended December 31, 2018, representing a change between     % and     %. This change in our expected net income (loss) was primarily driven by                     .

 

   

We expect to report Adjusted EBITDA between $         million and $         million for the year ended December 31, 2019, compared to Adjusted EBITDA of $391.7 million for the year ended December 31, 2018, representing a change between     % and     %. This expected change in our Adjusted EBITDA resulted primarily from                     . We expect Adjusted EBITDA in our EL Segment to be between $         million and $         million for the year ended December 31, 2019, compared to $227.2 million for the year ended December 31, 2018, representing a change between     % and     %. This change in Adjusted EBITDA in our EL Segment resulted primarily from                     . We expect Adjusted EBITDA in our GMF Segment to be between $         million and $         million for the year ended December 31, 2019, compared to $146.5 million for the year ended December 31, 2018, representing a change between     % and     %. This change in Adjusted EBITDA in our GMF Segment resulted primarily from                     .

EBITDA and Adjusted EBITDA are financial measures not calculated in accordance with IFRS. For a discussion of our presentation of Adjusted EBITDA, see footnote (4) under “—Summary Historical and Pro Forma Financial Information.” We encourage you to review our financial information in its entirety and not rely on any single financial measure. The following table presents a reconciliation of estimated EBITDA and Adjusted EBITDA to the IFRS financial measure of net income (loss) for the year ended December 31, 2019 (mid-point is shown for illustrative purposes only) and 2018.

 

     Year Ended      Year Ended
December 31,
2018
 
(dollars in millions)    December 31,
2019 (Low)
     December 31,
2019 (Mid-Point)
     December 31,
2019 (High)
 

Consolidated net income (loss)

   $                $                $                $ (23.7

Interest expense, net

              133.3  

Income taxes

             
52.4
 

Depreciation and amortization (excluding impairment charges)

             
161.7
 
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

              323.7  

Non-cash adjustments (a)

              16.9  

Gain on disposal of fixed asset (b)

              —    

Foreign exchange loss, net (c)

              (0.2

Restructuring (d)

              14.8  

Eliminated product categories (e)

              (0.1

Transaction related costs (f)

              16.4  

Management fee (g)

              2.2  

Adoption of IFRS 16 “Leases” (h)

     —          —          —          18.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $                $                $                $ 391.7  

 

(a)  

Eliminates the non-cash impact of (1) share-based compensation (between $         and $         for the year ended December 31, 2019 and $0.1 million for the year ended December 31, 2018), (2) gains or losses on the sale of fixed assets (between $         and $         for the year ended December 31, 2019 and $0.7 million for the year ended December 31, 2018), (3) impairment charges (between $         and $         for the year

 

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ended December 31, 2019 and $10.4 million for the year ended December 31, 2018), and (4) mark-to-market adjustments related to our foreign currency derivatives entered into in connection with certain redenomination transactions not linked to underlying individual transactions and bifurcated embedded derivatives related to certain redemption features of the Opco Notes and Holdco Notes (between $         and $         for the year ended December 31, 2019 and $5.7 million for the year ended December 31, 2018).

(b)   Eliminates the cash impact of gains on the sale of fixed assets.
(c)   Eliminates net foreign currency transaction gains and losses on balance sheet items.
(d)   Eliminates charges resulting from restructuring activities principally from the Company’s cost reduction efforts.
(e)   In 2016, we determined to discontinue the sale of products containing Chrome VI and to exit our product lines for soldermasks and resists for secondary imaging technology, which we refer to as our “EM” product line. Accordingly, this adjustment eliminates the EBITDA generated by sales of products containing Chrome VI and sales of products in our EM product line during the periods presented.
(f)   Reflects adjustments to eliminate (1) purchase accounting and transaction fees incurred as part of the Acquisition, (2) fees associated with the foreign currency exchange derivatives entered into in conjunction with the Acquisition, and (3) professional fees paid to third-party advisors in connection with the implementation of strategic initiatives.
(g)   Reflects an adjustment to eliminate fees paid to Carlyle. The consulting agreement pursuant to which management fees are paid to Carlyle will terminate on the earlier of (i) the second anniversary of the initial public offering and (ii) the date upon which Carlyle ceases to own more than ten percent of the outstanding voting securities of the Company. Management does not view these fees as indicative of the Company’s operational performance and the removal of these fees from Adjusted EBITDA is consistent with the calculation of similar measures under our senior secured credit facilities, the Holdco Notes Indenture, and the Opco Notes Indenture. See “Certain Relationships and Related Party Transactions.”
(h)   We adopted IFRS 16 “Leases” on January 1, 2019, which has resulted in (i) our operating leases being treated as right-of-use assets and lease liabilities on our balance sheets as of any date after January 1, 2019; (ii) the removal of expenses associated with our operating leases from our cost of sales and selling, general, and administrative expenses in our statements of income for any period ending after January 1, 2019; and (iii) an increase in our depreciation and interest expense in our statements of income for any period ending after January 1, 2019. As a result of these effects, the adoption of IFRS 16 “Leases” increases our EBITDA in an amount equal to the increase in our depreciation and interest expense for each period ending after January 1, 2019 relative to periods ending prior to that date. In order to enhance the comparability of our results presented herein, we have made adjustments to reflect the estimated impact on our EBITDA that the adoption of IFRS 16 “Leases” would have had in each of the periods presented prior to January 1, 2019 had the standard had been retroactively applied. This adjustment is also consistent with the calculation of measures similar to Adjusted EBITDA under our senior secured credit facilities, the Holdco Notes Indenture, and the Opco Notes Indenture. The adjustments presented above are based on an analysis of our historical operating lease expense and other currently available information, including a review of our material operating leases, and an estimate of effective interest rates by country, and are subject to significant estimates that do not constitute retroactive application of the new standard. We estimate that the adoption of IFRS 16 “Leases” would have affected our balance sheet by increasing our fixed assets and our capital lease obligations by approximately $84.5 million as of December 31, 2018. See “Management’s Discussion and Analysis of Financial Condition and Results of OperationsRecent Accounting Guidance.”

As of December 31, 2019, cash and cash equivalents and total indebtedness are expected to be approximately $         million and $         million, respectively, with total expected availability under our revolving credit facility of $         million (after giving effect to $22.5 million of guarantee obligations). In addition we expect our capital expenditures for the year ended December 31, 2019 to total between $         million and $         million.

 

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We have provided ranges for the preliminary estimated financial results described above because our financial closing procedures for the year ended December 31, 2019 are not complete, and our financial results for the year ended December 31, 2019 will not be publicly available until after the expected completion of this offering. The information presented above should not be considered a substitute for such full audited annual financial statements.

The preliminary information presented in this “Recent Developments” section has been prepared by and is the responsibility of management, reflects management’s estimates based solely upon information available to us as of the date of this prospectus and is not a comprehensive statement of our financial results for the year ended December 31, 2019. Management prepared this preliminary financial information in good faith on a materially consistent basis with prior periods and with our calculation of financial data presented in “—Summary Historical and Pro Forma Financial Information.” Our actual results may differ materially from these estimated ranges. For example, during the course of the preparation and audit of the respective financial statements and related notes, additional items that would require material adjustments to be made to the preliminary estimated financial information presented above may be identified. Our independent registered public accounting firm, KPMG AG Wirtschaftsprüfungsgesellschaft (Germany), has not audited, reviewed, compiled, or performed any procedures on this preliminary information. Accordingly, KPMG AG Wirtschaftsprüfungsgesellschaft (Germany) does not express an opinion or any other form of assurance with respect thereto. During the course of the preparation and audit of our consolidated financial statements and related notes for the year ended December 31, 2019, we and our auditors may identify items that would require us to make material adjustments to the preliminary information presented above. Accordingly, you should not place undue reliance upon these preliminary estimates and should not draw any inferences from this information regarding financial or operating data not presented. In addition, these preliminary estimates are not necessarily indicative of the results to be achieved in any future period. These preliminary results should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in particular “—Results of Operations,” “—Selected Segment Information,” “Risk Factors” and the consolidated financial statements and related notes contained in this prospectus.

Risks Related to our Business

Investing in our common shares involves substantial risk. You should carefully consider all the information in this prospectus prior to investing in our common shares. As described under “Risk Factors” elsewhere in this prospectus, there are several risks related to our business and our ability to leverage our strengths and execute our strategies described elsewhere in this prospectus. Among these important risks are risks associated with the following:

 

   

uncertainty, downturns, and changes in our target markets;

 

   

foreign currency exchange rate fluctuations;

 

   

reduced market acceptance and inability to keep pace with evolving technology and trends;

 

   

loss of customers;

 

   

the impact that our substantial indebtedness may have on our business, results of operations, financial condition, and growth prospects;

 

   

increases in costs or reductions in the supplies of raw materials that may materially adversely affect our business, financial condition, and results of operations;

 

   

our ability to provide products and services in light of changing environmental, health and safety, product liability, financial, and other legislation and regulation;

 

   

our failure to compete successfully in product development;

 

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our ability to successfully execute our growth initiatives, business strategies, and operating plans, and to leverage our strengths;

 

   

whether the secular trends we expect to drive growth in our business materialize to the degree we expect them to, or at all;

 

   

material costs relating to environmental and health and safety requirements or liabilities;

 

   

underfunded defined benefit pension plans;

 

   

risk that the insurance we maintain may not fully cover all potential exposures;

 

   

failure to comply with the anti-corruption laws of the United States and various international jurisdictions;

 

   

tariffs, border adjustment taxes, or other adverse trade restrictions and impacts on our customers’ value chains;

 

   

political, economic, and legal uncertainties in China, the Chinese government’s control of currency conversion and expatriation of funds, and the Chinese government’s policy on foreign investment in China;

 

   

regulations around the production and use of chemical substances that affect our products;

 

   

United Kingdom’s referendum on withdrawal from the European Union;

 

   

weak intellectual property rights in jurisdictions outside the United States;

 

   

intellectual property infringement and product liability claims;

 

   

our ability to obtain additional capital on commercially reasonable terms may be limited;

 

   

risks related to our derivative instruments;

 

   

ability to attract, motivate, and retain senior management and qualified employees;

 

   

increased risks to our global operations including, but not limited to, political instability, acts of terrorism, taxation, and unexpected regulatory and economic sanctions changes, among other things;

 

   

natural disasters that may materially adversely affect our business, financial condition, and results of operations;

 

   

the inherently hazardous nature of chemical manufacturing that could result in accidents that disrupt our operations and expose us to losses or liabilities;

 

   

damage to our brand reputation;

 

   

the amount of the costs, fees, expenses, and charges related to this offering and the related costs of being a public company;

 

   

Carlyle’s ability to control our common shares;

 

   

any statements of belief and any statements of assumptions underlying any of the foregoing;

 

   

other factors disclosed in this prospectus; and

 

   

other factors beyond our control.

 

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Organizational Structure

The following chart summarizes our corporate structure and principal indebtedness after giving effect to the Transactions. This chart is provided for illustrative purposes only and does not represent all legal entities affiliated with, or all obligations of, the Company:

 

LOGO

Our Sponsor

Our principal shareholders are certain investment funds affiliated with Carlyle.

Founded in 1987, Carlyle is a global investment firm with $222 billion of assets under management as of September 30, 2019. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Credit and Investment Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: technology and business services, media and telecommunications, aerospace, defense and government services, consumer and retail, energy and power, financial services, healthcare, industrial, real estate, and transportation. Carlyle employs more than 1,775 people in 33 offices across six continents. Carlyle has significant experience completing corporate carve-out transactions and transitioning them to successful public companies including Axalta Coatings Systems (formerly known as DuPont Performance Coatings) from E. I. du Pont de Nemours and Company, AZ Electronic Materials from Clariant, the Hertz Corporation from Ford, and Allison Transmission, Inc. from General Motors.

Company Information

Atotech Limited was incorporated on December 12, 2018 for purposes of becoming the new holding company of Holdco and its subsidiaries.

 

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The headquarters for the Atotech business is located at Erasmusstrasse 20, 10553 Berlin, Germany. The Atotech telephone number is +49 30 349 85 703 and website is www.atotech.com. Information on, or accessible through, such website is not part of this prospectus, nor is such content incorporated by reference herein. You should rely only on the information contained in this prospectus when making a decision as to whether to invest in the common shares.

Corporate Reorganization

Atotech Limited, the registrant, is a Bailiwick of Jersey company incorporated on December 12, 2018 for purposes of becoming the new holding company of Holdco and its subsidiaries. For the year ended December 31, 2019, Atotech Limited had no operations, assets, or liabilities. In connection with the consummation of the offering and prior to effectiveness of the Registration Statement, we will undertake the following Reorganization Transactions:

 

   

Carlyle and all other shareholders of Atotech UK Topco Limited will contribute all outstanding equity interests of Atotech UK Topco Limited to Atotech Limited in exchange for an equal number of common shares and preferred shares of Atotech Limited; and

 

   

Atotech Limited will consummate a         -to-1 stock split.

Following the consummation of the Reorganization Transactions, Atotech Limited will indirectly own all outstanding equity interests of Holdco and all the Company’s operating subsidiaries, including Opco. Substantially concurrently with the consummation of the offering, all outstanding preferred shares of Atotech Limited will be converted to common shares.

The number of common shares issued per preferred share will be based on the initial public offering price per common share as well as the date on which the public offering price per common share is determined. Changes in the initial public offering price from $             (the midpoint of the price range set forth on the cover page of this prospectus) or a change in the date on which the public offering price per common share is determined from the assumed date of             , 2020 will affect the number of common shares into which each preferred share will convert and will result in a corresponding change to the number of common shares outstanding after the completion of this offering. Each day by which the actual pricing date precedes or follows the assumed pricing date of             , 2020, will result in the issuance of              fewer or additional common shares, respectively. The effect of changes in the initial public offering price per common share is presented in the following table:

 

Public offering

price (with assumed

pricing date of             , 2020)

   Total common shares
outstanding after this
offering
 

$    

  

$    

  

$    *

  

$    

  

$    

  

*  The midpoint of the price range set forth on the cover page of this prospectus.

   

Following the consummation of the offering, Atotech UK Topco Limited will be dissolved and Atotech Limited will directly own all outstanding equity interests of Holdco.

 

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THE OFFERING

 

Common shares offered by us

                 common shares

Common shares outstanding after this offering

                 common shares, assuming the conversion of each preferred share of Atotech Limited into                 shares of common stock (based on an assumed initial public offering price of $         (the midpoint of the price range set forth on the cover page of this prospectus) and an initial public offering date of             , 2020). See “Basis of Presentation

 

Option to purchase additional common shares

The selling shareholders have granted the underwriters a 30-day option from the date of this prospectus to purchase up to an additional                  common shares at the initial public offering price, less underwriting discounts and commissions.

 

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $        million, assuming the common shares are offered at $        per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to use our net proceeds from this offering for the redemption of our outstanding Holdco Notes and to pay related fees and expenses. Any excess proceeds will be used for general corporate purposes and/or the repayment of indebtedness outstanding under our senior secured credit facilities. We will not receive any proceeds from the sale of common shares by the selling shareholders. See “Use of Proceeds.”

 

Proposed stock exchange symbol

“ATC”

 

Risk factors

See “Risk Factors” beginning on page 29 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common shares.

The number of common shares to be outstanding after completion of this offering is based on common shares outstanding as of                 , 2020, which assumes the conversion of each preferred share of Atotech Limited into                 shares of common stock (based on an assumed initial public offering price of $         (the midpoint of the price range set forth on the cover page of this prospectus) and an initial public offering date of             , 2020), and which excludes:

 

   

            common shares issuable upon the exercise of options outstanding at a weighted average exercise price of $        per share;

 

   

the number of common shares reserved for issuance under our 2020 Incentive Award Plan, which we plan to adopt in connection with this offering, which we expect will equal an aggregate of 9.2% of our common shares (as determined immediately following the closing of this offering); and

 

   

the number of common shares reserved for issuance under our Employee Share Purchase Plan, which we plan to adopt in connection with this offering, which we expect will equal an aggregate of 2.0% of our common shares (as determined immediately following the closing of this offering).

Unless we specifically state otherwise, all information in this prospectus assumes:

 

   

no exercise of the option to purchase additional common shares by the underwriters;

 

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an initial offering price of $        per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus;

 

   

the consummation of the Reorganization Transactions;

 

   

assuming the conversion of each preferred share of Atotech Limited into                 shares of common stock (based on an assumed initial public offering price of $         (the midpoint of the price range set forth on the cover page of this prospectus) and an initial public offering date of             , 2020). See “Basis of Presentation

 

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following table sets forth our summary historical and pro forma financial information for the following reporting periods:

 

   

The year ended December 31, 2016 and the period from January 1, 2017 through January 31, 2017, which reflect the results of operations of Atotech B.V. (“Predecessor”).

 

   

The years ended December 31, 2017 and December 31, 2018 and the nine months ended September 30, 2018 and September 30, 2019, which reflect the results of operations of Atotech UK Topco Limited (“Successor”) and includes the effects of acquisition accounting and the financing of the Acquisition in each case commencing on January 31, 2017. From December 20, 2016 (inception) through January 31, 2017, Atotech UK Topco Limited had no operations or activity.

 

   

The pro forma year ended December 31, 2017, which reflects the historical results of operations of Atotech B.V. for the period from January 1, 2017 through January 31, 2017 and Atotech UK Topco Limited for the year ended December 31, 2017, as adjusted for the effects of the Acquisition and the consummation of this offering and the use of proceeds therefrom. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Basis of Presentation—Pro Forma Financial Information.”

The historical financial data for the years ended December 31, 2017 and 2018 and the historical balance sheet data as of December 31, 2017 and December 31, 2018 presented below were derived from our audited financial statements and the related notes thereto included elsewhere in this prospectus. The historical financial data for the nine months ended September 30, 2018 and 2019 and the historical balance sheet data as of September 30, 2019 presented below were derived from the unaudited interim condensed consolidated financial statements and related notes thereto included elsewhere in this prospectus. The historical financial data for the year ended December 31, 2016 and the period from January 1, 2017 through January 31, 2017 presented below have been derived from the audited financial statements and the related notes thereto included elsewhere in this prospectus. The historical balance sheet data as of December 31, 2016 presented below has been derived from the financial statements of Predecessor not included in this prospectus. See “Basis of Presentation.”

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and, in the opinion of management, include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the information set forth herein.

Our historical financial data is not necessarily indicative of our future performance and does not reflect what our financial position and results of operations would have been had we operated as an independent publicly traded company during the periods shown. The results of operations included in the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus are not necessarily indicative of results for the full fiscal year or any future reporting period.

The unaudited pro forma financial data presented below was derived from the audited financial statements and the related notes thereto of the Predecessor and Successor included elsewhere in this prospectus. Our unaudited pro forma statements of operations data are presented for the year ended December 31, 2017 assuming that the Acquisition was completed on January 1, 2017.

The unaudited pro forma information set forth below is based upon available information and assumptions that we believe are reasonable. The unaudited pro forma information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the above transactions occurred on the dates indicated. The unaudited pro forma financial information should not be considered representative of our future financial condition or results of operations. You should read the information contained in this table in conjunction with “Selected Historical Financial Information,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the audited financial statements and the related notes thereto included elsewhere in this prospectus.

 

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    Predecessor     Successor     Successor
Pro Forma
    Successor  

($ in millions, except for share data)

  Year ended
December 31,
2016
    January 1
through
January 31,
2017
    Year ended
December 31,
2017(1)
    Year ended
December 31,
2017
    Year ended
December 31,
2018
    Nine months
ended
September 30,
2018
    Nine months
ended
September 30,
2019
 

Statement of Operations Data:

                 

EL Segment revenues

  $ 593.0     $ 45.8     $ 603.0     $ 648.8     $ 669.4     $ 504.0     $ 496.7  

GMF Segment revenues

    531.2       45.5       490.6       536.1       543.4       415.4       380.7  

Revenues

    1,124.2       91.3       1,093.6       1,184.9       1,212.8       919.4       877.4  

Cost of sales, excluding depreciation and amortization

    (470.4     (40.7     (513.7     (500.4     (504.2     (381.5     (360.2

Depreciation and amortization

    (51.9     (4.0     (141.1     (153.7     (171.6     (125.8     (121.9

Selling, general, and administrative expenses

    (266.4     (19.8     (250.7     (270.5     (295.6     (217.0     (205.2

Research and development expenses

    (79.1     (6.3     (62.6     (68.9     (58.0     (44.9     (39.9

Restructuring expenses

    (5.3     (0.4     (10.8     (11.2     (14.8     (12.2     (13.7

Operating profit

    251.1       20.1       114.7       180.2       168.6       138.0       136.5  

Interest expense

    (4.5     (0.1     (94.1     (102.7     (134.7     (97.3     (113.6

Other income (expense), net

    (9.3     (0.8     (23.7     (24.5     (5.2     (9.7     27.0  

Acquisition related expenses

    —         —         (67.0     —         —        
—  
 
   
—  
 

Income (loss) before income taxes

    237.3       19.2       (70.1     53.0       28.7       31.0       49.9  

Income tax expense

    (64.3     (6.0     (16.7     (45.5     (52.4     (30.7     (37.9

Consolidated net income (loss)

  $ 173.0     $ 13.2     $ (86.8   $ 7.5     $ (23.7   $ 0.3     $ 12.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Per share data(2)

                 

Earnings (loss) per common share:

                 

Basic

                 

Diluted

                 

Weighted average common shares outstanding:

                 

Basic

                 

Diluted

                 
   

Balance Sheet Data (at end of period):

                 

Non-current assets

  $ 446.3         $ 3,279.5       $ 3,024.1       $ 2,956.1  

Current assets:

                 

Inventories, net

    105.3           112.8         121.5         124.5  

Trade and other receivables, net

    259.8           297.2         278.8         285.0  

Current tax assets

    22.6           22.5         23.7         34.9  

Cash and cash equivalents

    332.5           325.8         386.2         247.2  

Other financial assets

    —             —           1.6         4.5  

Total current assets

    720.2           758.3         811.8         696.1  

Total assets

    1,166.5           4,037.8         3,835.9         3,652.2  

Total liabilities

    517.6           2,725.8         3,131.2         3,025.8  

Total shareholders’ equity

    648.9           1,312.0         704.7         626.4  
   

Cash Flow Data:

                 

Net cash provided by (used in):

                 

Operating activities

  $ 229.6     $ (8.7   $ 107.2       $ 166.7     $ 88.1     $ 66.1  

Investing activities

    (83.2     (3.3     (2,736.3       (53.9     (29.8     (45.7

Financing activities

    (199.0     (140.3     2,933.6         (37.7     (34.5     (139.6
   

Other Financial and Operating Data:

                 

Capital expenditures(3)

  $ 84.0     $ 3.6     $ 47.8       $ 56.6     $ 31.3     $ 48.2  

Adjusted EBITDA(4)

  $ 309.4     $ 26.6     $ 337.7     $ 364.3     $ 391.7     $
298.7
 
  $ 279.3  

Adjusted EBITDA margin(5)

    27.5     29.1     30.9     30.7     32.3     32.5     31.8

R&D expense as a percentage of revenues(6)

    7.0     6.9     5.7     5.8     4.8     4.9     4.5

 

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(1)   Reflects 11 months of operations of Atotech UK Topco Limited following the Acquisition.
(2)   All share and per share information has been adjusted to (i) reflect the                 -for-1 stock split, consummated prior to effectiveness of the Registration Statement and (ii) reflect the conversion of each preferred share of Atotech Limited into                 shares of common stock (based on an assumed initial public offering price of $        (the midpoint of the price range set forth on the cover page of this prospectus) and an initial public offering date of             , 2020). See “Basis of Presentation.
(3)   Represents cash used in the acquisition of “intangible assets and property, plant, and equipment” as reflected in the relevant statement of cash flows.
(4)   To supplement our financial information presented in accordance with IFRS, we use the following additional non-IFRS financial measures to clarify and enhance our understanding of past performance: EBITDA, Adjusted EBITDA and Adjusted EBITDA margin. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance and allows investors to better assess our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business and including certain items that reflect current and future operating performance. We use certain of these financial measures for business planning purposes and for measuring our performance relative to that of our competitors. We utilize Adjusted EBITDA as the primary measure of consolidated financial performance.

 

     EBITDA consists of consolidated net income (loss) before interest expense, net, income taxes, and depreciation and amortization. Adjusted EBITDA consists of EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, or other items that are included in net income and EBITDA that we do not consider indicative of our ongoing operating performance, and (iii) adjustments to reflect the adoption of IFRS 16 “Leases.”

 

     We believe these financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the terms EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin may vary from that of others in our industry. These financial measures should not be considered as alternatives to operating profit, operating profit margin, consolidated net income (loss), earnings per share, or any other performance measures derived in accordance with IFRS as measures of operating performance.

 

     EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under IFRS. Some of these limitations are that EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin:

 

   

do not reflect the significant interest expense on our debt, including the senior secured credit facilities, the Opco Notes, and Holdco Notes;

 

   

eliminate the impact of income taxes on our results of operations;

 

   

contain estimates of what the impact of adoption of IFRS 16 “Leases” in periods prior to our adoption of it on January 1, 2019 would have been;

 

   

exclude depreciation and amortization, which are non-cash charges, and assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin do not reflect any expenditures for such replacements; and

 

   

may be calculated differently by other companies, which limits their usefulness as comparative measures.

 

     We compensate for these limitations by using EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin along with other comparative tools, together with IFRS measurements, to assist in the evaluation of operating performance. Such IFRS measurements include operating profit, operating profit margin, net income (loss), earnings per share, and other performance measures.

 

     In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin should also not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

 

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The following table reconciles consolidated net income (loss) to EBITDA and Adjusted EBITDA for the periods presented:

 

    Predecessor     Successor     Successor
Pro Forma
    Successor  

($ in millions)

  Year ended
December 31,
2016
    January 1
through
January 31,
2017
    Year ended
December 31,
2017(a)
    Year ended
December 31,
2017
    Year ended
December 31,
2018
    Nine months
ended
September 30,

2018
    Nine months
ended
September 30,
2019
 

Consolidated net income (loss)

  $ 173.0     $ 13.2     $ (86.8   $ 7.5     $ (23.7   $ 0.3     $ 12.0  

Interest expense, net

    1.3       —         93.3       101.8       133.3       96.2       113.1  

Income taxes

    64.3       6.0       16.7       45.5       52.4       30.7       37.9  

Depreciation and amortization (excluding impairment charges)

    50.0       4.0       138.4       151.0       161.7       123.5       123.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    288.6       23.2       161.6       305.8       323.7       250.7       286.1  

Non-cash adjustments(b)

    3.9       —         14.6       14.6       16.9       12.2       (6.8

Gain on disposal of fixed asset(c)

    —         —         —         —         —         —         (6.1

Foreign exchange loss, net(d)

    3.0       1.7       7.0       8.7       (0.2     1.2       (14.4

Restructuring(e)

    5.3       0.4       10.8       11.2       14.8       12.2       13.7  

Eliminated product categories(f)

    (6.8     (0.2     (1.0     (1.2     (0.1     (0.1     —    

Transaction related costs(g)

    —         —         126.2       5.2       16.4       7.3       4.9  

Management fee(h)

    —         —         2.0       2.0       2.2       1.7       1.9  

Adoption of IFRS 16 “Leases”(i)

    15.4       1.5       16.5       18.0       18.0    

 

 

 

13.5

 

 

 

 

 

 

—  

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 309.4     $ 26.6     $ 337.7     $ 364.3     $ 391.7     $ 298.7     $ 279.3  

 

  (a)   Reflects 11 months of operations of Atotech UK Topco Limited following the Acquisition.
  (b)   Eliminates the non-cash impact of (1) share-based compensation, (2) gains or losses on the sale of fixed assets, (3) impairment charges, and (4) mark-to-market adjustments related to our foreign currency derivatives entered into in connection with certain redenomination transactions not linked to underlying individual transactions and bifurcated embedded derivatives related to certain redemption features of the Opco Notes and Holdco Notes. The dollar value of these non-cash adjustments for each period presented above is set forth below:

 

    Predecessor     Successor     Successor
Pro Forma
    Successor  

($ in millions)

  Year ended
December 31,
2016
    January 1
through
January 31,
2017
    Year ended
December 31,
2017(a)
    Year ended
December 31,
2017
    Year ended
December 31,
2018
    Nine months
ended
September 30,
2018
    Nine months
ended
September 30,
2019
 

Share-based compensation

  $ 1.9     $ —       $ 0.1     $ 0.1     $ 0.1     $ 0.1     $ 0.1  

Gains/Losses on the sale of fixed assets

    —         —         1.1       1.1       0.7       0.8       0.3  

Impairment charges

    1.9       —         2.7       2.7       10.4       2.7       (1.2

Mark-to-market adjustments

    —         —         10.7       10.7       5.7       8.6       (6.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-cash adjustments

  $ 3.9     $ —       $ 14.6     $ 14.6     $ 16.9     $ 12.2     $ (6.8

 

  (c)   Eliminates the cash impact of gains on the sale of fixed assets.
  (d)   Eliminates net foreign currency transactional gains and losses on balance sheet items.

 

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  (e)   Eliminates charges resulting from restructuring activities principally from the Company’s cost reduction efforts.
  (f)   In 2016, we determined to discontinue the sale of products containing Chrome VI and to exit our product lines for soldermasks and resists for secondary imaging technology, which we refer to as our “EM” product line. Accordingly, this adjustment eliminates the EBITDA generated by sales of products containing Chrome VI and sales of products in our EM product line during the periods presented.
  (g)   Reflects an adjustment to eliminate (1) purchase accounting and transaction fees incurred as part of the Acquisition, (2) fees associated with the foreign currency exchange derivatives entered into in conjunction with the Acquisition, and (3) professional fees paid to third-party advisors in connection with the implementation of strategic initiatives.
  (h)   Reflects an adjustment to eliminate fees paid to Carlyle. The consulting agreement pursuant to which management fees are paid to Carlyle will terminate on the earlier of (i) the second anniversary of the initial public offering and (ii) the date upon which Carlyle ceases to own more than ten percent of the outstanding voting securities of the Company. Management does not view these fees as indicative of the Company’s operational performance and the removal of these fees from Adjusted EBITDA is consistent with the calculation of similar measures under our senior secured credit facilities, the Holdco Notes Indenture, and the Opco Notes Indenture. See “Certain Relationships and Related Party Transactions.”
  (i)   We adopted IFRS 16 “Leases” on January 1, 2019, which has resulted in (i) our operating leases being treated as right-of-use assets and lease liabilities on our balance sheets as of any date after January 1, 2019; (ii) the removal of expenses associated with our operating leases from our cost of sales and selling, general, and administrative expenses in our statements of income for any period ending after January 1, 2019; and (iii) an increase in our depreciation and interest expense in our statements of income for any period ending after January 1, 2019. As a result of these effects, the adoption of IFRS 16 “Leases” increases our EBITDA in an amount equal to the increase in our depreciation and interest expense for each period ending after January 1, 2019 relative to periods ending prior to that date. In order to enhance the comparability of our results presented herein, we have made adjustments to reflect the estimated impact on our EBITDA that the adoption of IFRS 16 “Leases” would have had in each of the periods presented prior to January 1, 2019 had the standard had been retroactively applied. This adjustment is also consistent with the calculation of measures similar to Adjusted EBITDA under our senior secured credit facilities, the Holdco Notes Indenture, and the Opco Notes Indenture. The adjustments presented above are based on an analysis of our historical operating lease expense and other currently available information, including a review of our material operating leases, and an estimate of effective interest rates by country, and are subject to significant estimates that do not constitute retroactive application of the new standard. We estimate that the adoption of IFRS 16 “Leases” would have affected our balance sheet by increasing our fixed assets and our capital lease obligations by approximately $90.0 million as of December 31, 2016 and January 31, 2017, approximately $107.0 million as of December 31, 2017, approximately $84.5 million as of December 31, 2018. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Accounting Guidance.”
(5)   Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues for the applicable period.
(6)   R&D expense as a percentage of revenues is calculated by dividing R&D expenses by revenues for the applicable period.

 

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RISK FACTORS

An investment in our common shares involves a high degree of risk. You should consider carefully the following risks, together with the other information contained in this prospectus, before you decide whether to buy our common shares. If any of the events contemplated by the following discussion of risks should occur, our business, results of operations, financial condition, and cash flows could suffer significantly. As a result, the market price of our common shares could decline, and you may lose all or part of the money you paid to buy our common shares.

Risks Related to Our Business

We face intense competition and our failure to compete successfully in product development may have an adverse effect on our business, financial condition, and results of operations.

Our industry is highly competitive and most of our product lines compete against product lines from at least two competitors. We encounter competition from numerous and varied competitors in all areas of our business. Further, our products compete not only with similar products manufactured by our competitors, but also against a variety of other alternatives provided by our competitors. Industry consolidation may result in larger, more homogeneous, and potentially stronger competitors in the markets in which we compete.

We compete primarily on the basis of quality, technology, performance, reliability, brand, reputation, range of products, and service and support. We expect our competitors to continue to develop and introduce new products and to enhance their existing products, which could cause a decline in market acceptance of our products. Our competitors may also improve their manufacturing processes or expand their manufacturing capacity, which could make it more difficult or expensive for us to compete successfully. In addition, our competitors could enter into exclusive arrangements with our existing or potential customers or suppliers, which could limit our ability, or make it significantly more expensive, to acquire necessary raw materials or to generate sales.

Some of our competitors may have greater financial, technical, and marketing resources than we do and may be able to devote greater resources to promoting and selling certain products. Unlike many of our competitors who specialize in a single or limited number of product lines, we have a portfolio of businesses and must allocate resources across those businesses. As a result, we may invest less in certain areas of our business than our competitors invest in competing businesses, and our competitors may therefore have greater financial, technical, and marketing resources available to them with respect to those businesses.

Some of our competitors may also incur fewer expenses than we do in creating, marketing, and selling certain products and may face fewer risks in introducing new products to the market. This circumstance results from the nature of our business model, which is based on providing innovative and high-quality products and therefore may require that we spend a proportionately greater amount on R&D than some of our competitors. If our pricing and other factors are not sufficiently competitive, or if there is an adverse reaction to our product decisions, we may lose market share in certain areas, which could adversely affect our business, financial condition, and results of operations.

Additionally, competitors could benefit from favorable tax regimes or additional governmental grants and subsidies. Certain of our competitors in various countries in which we do business, including China, may be owned by or affiliated with members of local governments and political entities. These competitors may receive special treatment with respect to regulatory compliance and product registration, while certain of our products, including those based on new technologies, may be delayed or even prevented from entering into the local market. Further, because many of our competitors are small divisions of large, international businesses, these competitors may have access to greater resources than we do and may therefore be better able to withstand a change in conditions within our industry and throughout the economy as a whole.

 

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Our profitability could suffer if our cost management strategies are unsuccessful or our competitors develop an advantageous cost structure that we cannot match.

Our ability to improve or maintain our profitability is dependent on our ability to successfully manage our costs. Our cost management strategies include maintaining appropriate alignment between the demand for our offerings and our resource capacity and maintaining or improving our sales and marketing and general and administrative costs as a percentage of revenues. If our cost management efforts are not successful, our efficiency may suffer and we may not achieve desired levels of profitability. In addition, we may not be able to implement our cost management efforts in a manner that permits us to realize the cost savings we anticipate in the time, manner, or amount we currently expect, or at all due to a variety of risks, including, but not limited to, difficulties in integrating shared services within our business, higher than expected employee severance or retention costs, higher than expected overhead expenses, delays in the anticipated timing of activities related to our cost savings plans, and other unexpected costs associated with operating our business. If we are not effective in managing our operating costs in response to changes in demand or pricing, or if we are unable to absorb or pass on increases in the compensation of our employees or costs of raw materials, we may not be able to invest in our business in an amount necessary to achieve our planned rates of growth, and our business, financial condition, and results of operations could be materially adversely affected.

It may be possible for our current or future competitors to gain an advantage in product technology, manufacturing technology, or process technology, which may allow them to offer products or services that have a significant advantage over our offerings. Advantages could be in price, capacity, performance, reliability, serviceability, industry standards or formats, brand and marketing, or other attributes. If we do not compete successfully by developing and deploying new cost-effective products, processes, and technologies on a timely basis and by adapting to changes in our industry and the global economy, there could be a material adverse effect on our business, financial condition, and results of operations. Similarly, our chemicals are used by manufacturers of component parts for a variety of industries. To the extent these industries become more sensitive to input costs, we may face price pressure. Our ability to respond to such pressures depends on the strength and viability of our internal cost management and pricing programs. Any failure of these programs could have a material adverse effect on our business, financial condition, and results of operations.

Increases in costs or reductions in the supplies of our specialty and commodity chemicals or precious metals or our manufacturing, testing, and operations processes could materially and adversely affect our business, financial condition, and results of operations.

We use a variety of specialty and commodity chemicals and precious metals in our manufacturing processes, and our most significant raw material input by value is palladium. Our manufacturing operations depend upon obtaining adequate supplies of raw materials on a timely basis. We purchase our major raw materials on a contract or as-needed basis from outside sources. The availability and prices of raw materials may be subject to curtailment or change due to, among other things, the financial stability of our suppliers, suppliers’ allocations to other purchasers, interruptions in production by suppliers, new laws or regulations, changes in foreign currency exchange rates, and worldwide price levels. In addition, many of our raw materials and intermediate products are available in the quantities we require from a limited number of suppliers, which makes it more difficult to replace suppliers in the event of any supply disruption. Further, in some cases, we are limited in our ability to purchase certain raw materials from other suppliers by supply agreements that contain certain minimum purchase requirements. Additionally, we can provide no assurance that, as our supply contracts expire, we will be able to renew them or, if they are terminated, that we will be able to obtain replacement supply agreements on terms favorable to us. In particular, we rely on a local basis on single principal suppliers of palladium, with whom we have long-standing relationships. While we believe there are other suppliers of palladium in each of the regions in which we operate that may meet our needs, we may face difficulty or delays in finding a new supplier should that need arise. Our business, financial condition, and results of operations could be materially adversely affected if we are unable to obtain adequate supplies of raw materials in a timely manner or if the costs of raw materials increase significantly.

 

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From time to time, suppliers may extend lead times, limit supplies, or increase prices due to capacity constraints, environmental limitations, or other factors. In addition, some of the raw materials that we use are derived from petrochemical based feedstocks, and there have been historical periods of rapid and significant upward and downward movements in the prices of these feedstocks. We may not always be able to pass on these price increases, and price increases by our other suppliers, to our customers due to competitive pricing pressure, and, even when we are able to do so, there may be a time delay between increased raw material prices and our ability to increase the prices of our products. Any limitation on, or delay in, our ability to pass on any price increases could have a material adverse effect on our business, financial condition, and results of operations.

In addition to specialty and commodity chemicals and precious metals, our manufacturing, testing, and operations processes, in particular the control software for our own equipment, require specialized software which is available only from a limited number of suppliers. Should the access to software and services from these suppliers be restricted or contracts be terminated, we can provide no assurance that we would be able to immediately replace these services, which could adversely affect our business and operations.

The reputation of our brand is an important company asset and is key to our ability to remain a trusted supplier of specialty chemistry, equipment, and service.

The reputation of our brand is an important company asset and is key to our ability to remain a trusted supplier of specialty chemistry, equipment, and service and to attract and retain customers. Negative publicity regarding our company or actual, alleged, or perceived issues regarding one of our products or services, particularly given the high cost-of-failure nature of our products and services, could harm our relationship with customers. Failure to protect the reputation of our brand may adversely impact our credibility. In addition, in certain jurisdictions we may engage sales agents in connection with the sale of certain of our products and services. It is difficult to monitor whether such agents’ representations of our products and services are accurate. Poor representation of our products and services by agents, or entities acting without our permission, could have a material adverse effect on our reputation and our business, financial condition, and results of operations.

If our products and services do not maintain and/or achieve broad market acceptance, or if we are unable to keep pace with or adapt to rapidly changing technology or trends, our business, financial condition, and results of operations could be materially adversely affected.

Our business is dependent on the continued acceptance by our customers of our existing products and services and the value placed on them. If these products and services do not maintain market acceptance, our revenues may decrease. We are also continually investing in new product development to expand our offerings beyond our traditional products and services. Market acceptance of any new products or services may be affected by customer confusion surrounding our introduction of new products and services. Our expansion into new offerings may present increased risks and efforts to expand beyond our traditional products and services may not succeed.

In addition, our business is subject to constant and rapid technological change, product obsolescence, price erosion, evolving standards, short product lifecycles, raw material price fluctuations, and changes in product supply and demand. The specialty chemistry industry is currently affected by localization and a shift in customers’ businesses. The trends and characteristics in these industries may cause significant fluctuations in our results of operations and cash flows and have a material adverse effect on our financial condition. Our growth and success depend upon our ability to enhance our existing products and services and to develop and introduce new products and services to keep pace with such changes and developments and to meet changing customer needs and preferences. However, newer products or services may not achieve market acceptance if current or potential customers do not value the benefits of using our products, do not achieve favorable results using our products, use their budgets for different products, experience difficulties in using our products, or believe that our products are not cutting edge or do not add as much value as our competition’s products. If these newer products and services do not achieve market acceptance, there could be a material adverse effect on our business, financial

 

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condition, and results of operations and our profitability could decline. Additionally, changes, including technological changes, in our customers’ products or processes may make our specialty chemistry unnecessary or reduce the quantity of our specialty chemistry needed for a given product, which would reduce the demand for those chemicals. We have had, and may continue to have, customers who find alternative materials or processes and therefore no longer require our products, which would have a material adverse effect on our business, financial condition, and results of operations.

In addition, we may fail to anticipate the impact of new and emerging technology or changes in trends, fail to accurately determine market demand for new products and services, experience cost overruns, delays in delivery or performance problems, and create market confusion by making changes to our existing products and services. If we are not successful in obtaining any required regulatory approval or acceptance for new products or services, demand for our products and services may decline and/or we may not be able to grow our business or growth may occur more slowly than we anticipate. Some of our current or future products or services could also be rendered obsolete as a result of competitive offerings. Furthermore, if our customers deviate from the expected timeline for the introduction of new technology, the sales of our newer products could be adversely affected. Failure to anticipate changes in our customers’ product introduction timelines could have a material adverse effect on our business, financial condition, and results of operations.

Our direct customers and their direct and indirect customers face numerous competitive challenges, which may materially adversely affect their business and ours.

Factors adversely affecting our direct customers and their direct and indirect customers may also adversely affect us. These factors include:

 

   

recessionary periods in their markets;

 

   

their inability to adapt to rapidly changing technology and evolving industry standards, which may contribute to short product lifecycles or shifts in their strategies;

 

   

their inability to develop, market, or gain commercial acceptance of their products, some of which are new and untested;

 

   

their products becoming commoditized or obsolete;

 

   

loss of business or a reduction in pricing power experienced by our customers and their direct and indirect customers;

 

   

the emergence of new business models or more popular products and shifting patterns of demand;

 

   

a highly competitive consumer products industry, which is often subject to shorter product lifecycles, shifting end-user preferences, and higher revenue volatility; and

 

   

the loss of manufacturing capacity due to tightening environmental legislation and its enforcement.

If our customers or our customers’ direct and indirect customers in the ultimate end-markets we serve, including the markets for smartphones, communication infrastructure, cloud computing infrastructure, automotive surface finishing, and automotive electronics, are unsuccessful in addressing these competitive challenges, their businesses may be materially adversely affected, reducing the demand for our offerings, decreasing our revenues, or altering our production cycles and inventory management, each of which could have a material adverse effect on our business, financial condition, and results of operations.

Our revenue, earnings, and other operating results have fluctuated in the past and may fluctuate in the future.

Our revenue, earnings, and other operating results have fluctuated in the past and may fluctuate in the future. If demand for our products fluctuates as a result of economic conditions or for other reasons, our revenue

 

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and profitability could be impacted. Our future operating results will depend on many factors, including the following:

 

   

business, political, and macroeconomic changes, including trade disputes and downturns in the EL and GMF plating markets and the overall global economy;

 

   

seasonality in both our segments, which generally experience their strongest revenue in the second half of each fiscal year, mostly driven by consumption trends during the holiday season, and their lowest revenue in the first quarter of each fiscal year, mostly driven by the slowdown in production in China as a result of the Chinese New Year, which can result in a sequential decline in our revenues in the first quarter of a fiscal year relative to the fourth quarter of the prior fiscal year;

 

   

changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, expectations for inflation, unemployment levels, and energy or other commodity prices;

 

   

fluctuations in demand for our customers’ and their customers’ products;

 

   

our ability to forecast our customers’ demand for our products accurately;

 

   

our ability to anticipate secular trends that affect demand for our products and the degree to which those trends materialize;

 

   

our customers’ ability to manage the inventory that they hold and to forecast accurately their demand for our products;

 

   

our ability to achieve cost savings and improve yields and margins on our new and existing products; and

 

   

our ability to utilize our capacity efficiently or acquire additional capacity in response to customer demand.

It is likely that our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline.

We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans.

We are continually executing on several growth initiatives, strategies, and operating plans designed to enhance our business. In our EL segment, this strategy includes using existing technology to address the build-out of 5G infrastructure and leveraging R&D to address new technologies, including next-generation smartphones, automotive electronics, cloud computing infrastructure growth, and adoption of IoT devices. In our GMF segment, this strategy includes obtaining approvals for our chemistry to be used in more corrosion protection applications and leveraging R&D to address tightening environmental regulation.

In addition to these growth strategies, our business plan incorporates certain transformational initiatives, including our enhanced senior leadership team, globalized management structure, renewed focus on customers, optimized R&D, cost management initiatives, and a new incentive structure and may include potential acquisitions.

The anticipated benefits from these strategies and initiatives are based on several assumptions that may prove to be inaccurate, including assumptions as to the key trends that will drive growth in our business. Moreover, we may not be able to successfully complete these growth initiatives, strategies, and operating plans without making additional expenditures or at all. If we are unable to complete these initiatives, strategies, and operating plans, we may not realize all the benefits we currently anticipate, including the growth targets and cost savings, we expect to achieve. The anticipated cost savings disclosed elsewhere in this prospectus are presented on a gross basis and do not reflect any expenses that may be required to achieve such cost savings.

 

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A variety of risks could cause us not to realize some or all the expected benefits. These risks include, among others, delays in the anticipated timing of activities related to such growth initiatives, strategies, and operating plans; the secular trends on which many of our strategies and initiatives are based not materializing or not materializing to the degree expected; increased difficulty and cost in implementing our growth efforts; and the incurrence of other unexpected costs associated with operating the business. Moreover, our continued implementation of these programs may disrupt our operations and performance. Similarly, we may not realize the benefits we currently expect from our comprehensive systems and solutions approach.

If any of the assumptions underlying our growth initiatives prove to be inaccurate or any of the foregoing risks materialize, we may not realize the expected benefits of our initiatives and we may be adversely affected, including as the result of the costs associated with these initiatives. If, for any reason, the benefits we realize are less than our estimates or the implementation of these growth initiatives, strategies, and operating plans adversely affect our operations or cost more or take longer to effectuate than we expect, or if our assumptions, including our assumptions with respect to growth of our end-markets, prove inaccurate, our business, financial condition, and results of operations may be materially adversely affected.

We may be adversely affected by uncertainty, downturns, and changes in the markets that we serve.

Our performance depends on the financial health and strength of our customers, which in turn is dependent on the economic conditions of the markets in which we and our customers operate. Declines or uncertainties in the United States and global economies may lead customers to delay or reduce purchases of our products and services as they take measures to reduce their operating costs, including by delaying the development or launch of new products and brands and/or reducing R&D spending generally.

We are also sensitive to general trends and changes in the key markets we serve. Some of these markets, including the markets for smartphones, communication infrastructure, cloud computing infrastructure, automotive surface finishing, and automotive electronics, exhibit a high degree of cyclicality. Decisions to purchase our chemistry and equipment are largely the result of the performance of these and other end-markets. If demand for output in these end-markets decreases, demand for our offerings will decrease as well. Demand for the products produced by customers in our end-markets is impacted by numerous factors including macroeconomic conditions, prices of commodities, rates of infrastructure spending, consumer confidence and spending, labor conditions, and fuel costs, among others. Increases or decreases in these variables globally may significantly impact the demand for our offerings and could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to accurately predict demand in our end-markets or of the customers we serve, we may be unable to meet our customers’ needs, resulting in the loss of potential sales. Alternatively, we may manufacture excess products, resulting in increased inventories and overcapacity in our manufacturing facilities, increasing our incremental production costs and decreasing our operating margins.

In addition, mergers or consolidations among our customers or OEMs could reduce the number of our customers and potential customers. For example, in recent years there has been consolidation in certain industries that we serve, and this has led to decreased levels of growth in certain product lines. Continued consolidation could adversely affect our revenues even if these events do not reduce the activities of the consolidated entities. When entities consolidate, overlapping services previously purchased separately are usually purchased only once by the consolidated entity, leading to loss of revenues. In addition, consolidated entities can better negotiate pricing terms while reducing spending on other services that were previously purchased by one of the merged or consolidated entities which may be deemed unnecessary or cancelled. Any such developments among our customers could have a material adverse effect on our business, financial condition, and results of operations.

We may acquire other businesses which could require significant management attention, disrupt our business, dilute shareholder value, and adversely affect our results of operations.

As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies. The identification of suitable acquisition candidates is difficult, and we may not be

 

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able to complete such acquisitions on favorable terms, if at all. If we do complete future acquisitions, we may not ultimately strengthen our competitive position or achieve our goals and business strategy; we may be subject to claims or liabilities assumed from an acquired company, product, or technology; and any acquisitions we complete could be viewed negatively by our customers, investors, and securities analysts. In addition, if we are unsuccessful at integrating future acquisitions, or the technologies associated with such acquisitions, into our company, the revenue and results of operations of the combined company could be adversely affected. Any integration process may require significant time and resources, which may disrupt our ongoing business and divert management’s attention, and we may not be able to manage the integration process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, realize anticipated synergies from the acquisition, or accurately forecast the financial impact of an acquisition transaction and integration of such acquisition, including accounting charges. We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any future acquisitions, each of which could adversely affect our financial condition or the market price of our common shares. The sale of equity or issuance of equity-linked debt to finance any future acquisitions could result in dilution to our shareholders. The incurrence of indebtedness would result in increased liabilities and could also include covenants or other restrictions that would impede our ability to manage our operations. The occurrence of any of these risks could harm our business, results of operations, and financial condition.

If we do not continue to attract, motivate, and retain members of our senior management team and qualified employees, we may not be able to support our operations.

The completion and execution of our strategies depend on the continued service and performance of our senior management team. If we lose key members of our senior management team, we may not be able to effectively manage our transition to a public company or our current and future operations.

In addition, our business depends on our ability to continue to attract, motivate, and retain many skilled employees across all of our business lines. There is a limited pool of employees who have the requisite skills, training, and education. We compete with many businesses and organizations that are seeking skilled individuals, particularly those with experience in technology and the sciences and those with Ph.D.s in technical fields. Competition for professionals across our entire business can be intense, as other companies seek to enhance their positions in the markets we serve. In addition, competition for experienced talent in our faster growing geographic areas outside of Europe continues to intensify, requiring us to increase our focus on attracting and developing highly skilled employees in our most strategically important locations in those areas of the world. As competition for experienced talent grows, we may be forced to increase spending on employee salaries which could have a material adverse effect on our business, financial condition, and results of operations.

Future organizational changes and the implementation of our cost savings initiatives could also cause our employee attrition rate to increase and may result in significant costs to us in connection with implementing such initiatives. If we are unable to continue to identify or be successful in attracting, motivating, and retaining appropriately qualified personnel, there could be a material adverse effect on our business, financial condition, and results of operations.

We may be subject to work stoppages, union negotiations, labor disputes, and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs.

Many of our employees globally are in unions or otherwise covered by labor agreements, including works councils. As of December 31, 2018, approximately 26% of our workforce, excluding employees in China and Mexico, was unionized or otherwise covered by labor agreements. Consequently, we may be subject to potential union campaigns, work stoppages, union negotiations, and other potential labor disputes. Additionally, negotiations with unions or works councils in connection with existing labor agreements may result in significant increases in our cost of labor, divert management’s attention away from operating our business, or break down and result in the disruption of our operations. The occurrence of any of the preceding outcomes could impair our

 

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ability to manufacture our products and result in increased costs and/or decreased operating results. Further, we may be impacted by work stoppages at our suppliers or customers that are beyond our control.

Our global operations subject us to increased risks.

We have global operations and, accordingly, our business is subject to risks resulting from differing legal and regulatory requirements, political, social, and economic conditions, and unforeseeable developments in a variety of jurisdictions. We have a significant presence in several major regions, including certain emerging markets such as India and China, and we plan to continue such expansion. Our global operations are subject to the following risks, among others:

 

   

political instability;

 

   

acts of terrorism and military actions in response to such acts;

 

   

unexpected changes in regulatory environments and government interference in the economy;

 

   

changes to economic sanctions laws and regulations, including regulatory exemptions that currently authorize certain of our limited dealings involving sanctioned countries;

 

   

increasingly stringent laws related to privacy and consumer and data protection, including the E.U. General Data Protection Regulation and U.S. State privacy and security breach notification laws;

 

   

international trade disputes that could result in tariffs or other protectionist measures;

 

   

varying tax regimes, including with respect to the imposition of confiscatory taxes, other unexpected taxes, or withholding taxes on remittances and other payments by our partnerships or subsidiaries;

 

   

the impact of changes in the U.S. federal tax code as a result of recent U.S. federal tax legislation and uncertainty as to how some of those changes may be applied;

 

   

differing labor regulations, particularly in Germany and China where we have a significant number of employees;

 

   

rising wages;

 

   

foreign exchange controls and restrictions on repatriation of funds;

 

   

fluctuations in foreign currency exchange rates;

 

   

inability to collect payments or seek recourse under or comply with ambiguous or vague commercial or other laws;

 

   

difficulty in obtaining, or denial of, export licenses or delay or interruption of the transportation of our products;

 

   

differing protections for intellectual property rights;

 

   

increased risk of cybersecurity incidents and cyberattacks from third-party and state actors and privacy violations;

 

   

difficulties in attracting and retaining qualified management and employees, or rationalizing our workforce;

 

   

increased credit risk and different financial conditions of customers and distributors may necessitate longer payment cycles of accounts receivable or result in increased bad debt write-offs (including due to bankruptcy) or additions to reserves;

 

   

differing business practices, which may require us to enter into agreements that include non-standard terms; and

 

   

difficulties in penetrating new markets due to entrenched competitors, lack of recognition of our brand, and lack of local acceptance of our products and services.

 

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Our overall success as a global business depends, in part, on our ability to anticipate and effectively manage these risks but there can be no assurance that we will be able to do so without incurring unexpected costs. If we are not able to manage the risks related to our international operations, our business, financial condition, and results of operations may be materially adversely affected.

Our business in emerging markets requires us to respond to rapid changes in market conditions in these countries. Our overall success as a global business depends, in part, upon our ability to succeed in different legal, regulatory, economic, social, and political conditions. We may not succeed in developing and implementing policies and strategies which will be effective in each location where we do business. Furthermore, any of the foregoing factors or any combination thereof could have a material adverse effect on our business, financial condition, and results of operations.

We may also face difficulties managing and administering an internationally dispersed business. In particular, the management of our personnel across several countries can present logistical and managerial challenges. Additionally, international operations present challenges related to operating under different business cultures and languages. We may have to comply with unexpected changes in foreign laws and regulatory requirements, which could negatively impact our operations and ability to manage our global financial resources. Export controls or other regulatory restrictions could prevent us from shipping our products into and from some markets. Moreover, we may not be able to adequately protect our trademarks and other intellectual property overseas due to uncertainty of laws and enforcement in several countries relating to the protection and enforcement of intellectual property rights. See “—Our efforts to protect our intellectual property may be less effective in some countries where intellectual property rights are not as well protected as in the United States.” Changes in tax regulations in the United States and other jurisdictions, including under and with respect to bilateral and multilateral tax treaties, or the interpretation thereof, could significantly reduce the financial performance of our foreign operations or the magnitude of their contributions to our overall financial performance. In addition, the interpretation and application of consumer and data protection laws in the United States, Europe, and elsewhere are often uncertain, contradictory, and in flux. For example, the European Union enacted stricter data protection laws in 2018. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. If so, this could result in government-imposed fines or orders requiring that we change our data practices, which could have an adverse effect on our business. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

Our products and our customers are subject to numerous laws regulating the production and use of chemical substances, and some of our products may need to be reformulated or discontinued to comply with these laws and regulations.

As a specialty chemistry manufacturer, we are subject to chemicals approvals, registrations, and regulations around the world, including the European Union Registration, Evaluation, Authorisation, and Restriction of Chemicals (“EU REACH”) regulation and, in particular, its Substances of Very High Concern (“SVHC”) program, the Toxic Substances Control Act (“TSCA”) in the United States, and similar requirements in China, Korea, Taiwan, Australia, the Philippines, Canada, and other countries. Some of the laws and regulations applicable to us have changed in recent years to impose new obligations that could also force us to reformulate or discontinue certain of our products.

Governmental, regulatory and societal demands for increasing levels of product safety and environmental protection are resulting in increased pressure for more stringent regulatory control with respect to the chemical industry. The EU REACH has set forth comprehensive compliance obligations and restrictions on certain chemicals, and comparable regulatory requirements have now been adopted in several other countries. In the United States, the core provisions of TSCA were amended in June 2016 for the first time in nearly 40 years. Among the more significant changes are that these amendments mandate safety reviews of existing “high priority” chemicals and regulatory action to control any “unreasonable risks” identified as a result of such

 

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reviews. In addition, the EPA must make a no “unreasonable risk” finding before a new chemical can be fully commercialized. These new mandates create uncertainty about whether existing chemicals of importance to our business may be designated for restriction and whether the new chemical approval process may become more difficult and costly. These changes could adversely impact our ability to supply certain products to our customers and could also result in compliance obligations, fines, ongoing monitoring, and other future business activity restrictions, which could have a material adverse effect on our business, financial condition and results of operations.

Additionally, we have complied with the deadline to submit registrations for all chemicals manufactured or imported exceeding 1 t/a under EU REACH, which has since passed. We do not expect additional material compliance costs. The cost of a registration varied greatly (ranging from €30,000 to €300,000) and depended upon several factors, such as the amount and quality of existing data and the availability of other companies to share costs of generating new data. The EU REACH registration process may affect our ability to manufacture and sell certain products in the future. If a registration was, or in the future is, not submitted by any applicable deadline, our ability to sell those products may be negatively impacted until the registration process has been completed. However, we believe that we have minimized our registration obligations and the risk associated with supplier-related registrations by clarifying registration requirements and willingness of suppliers early. We have also submitted an Authorisation Application for one SVHC—chromium trioxide. The decision of the European Union Commission on the application is still pending. Because of our strong sales in Asia and our current efforts to develop alternative formulations, it is unlikely our business will be materially affected if the application is not granted. The SVHC and Candidate SVHC lists contain other chemicals being used by our business; we expect generally to phase out these chemicals rather than seek Authorisation, but we may decide to submit an Authorisation Application in the future where that makes sense for our business.

Finally, we have in the past used mist suppressants containing perfluorooctanesulfonic acid (“PFOS”) and perfluorooctanoic acid (“PFOA”), sold products containing these substances and may have previously processed other long-chain per- and polyfluoroalkyl substances (“PFAS”). While we have developed a suite of products that do not require any PFAS chemicals and, when adopted by the industry, will obviate the need for PFAS-containing mist suppressants, we continue to use limited amounts of short-chain PFAS-containing mist suppressants and sell limited amounts of short-chain PFAS-containing products to certain customers. PFOS, PFOA, and other long-chain PFAS have been targeted for risk assessment, restriction, and high-priority remediation and have been the subject of ongoing and substantial litigation in the both the United States and European Union. We have not received any claims or enforcement actions from governments or third parties relating to PFOS, PFOA or any other PFAS.

International chemicals regulation requirements, and enforcement of these requirements, may become more stringent in the future and could result in material costs relating to regulatory compliance, liabilities, or litigation proceedings or other impacts, such as restrictions or prohibitions on our products. Future regulatory or other developments could also restrict or eliminate the use of, or require us to make modifications to, our products, packaging, manufacturing processes, and technology, which could have a material adverse effect on our business, financial condition, and results of operations. Our production facilities require permits, such as environmental, operating, and product-related permits and import/export permits, which are subject to renewal and, in some circumstances, revocation. We may not obtain the necessary permits, existing permits may be discontinued, and any newly issued permits may contain significant and costly new requirements. If a permit for a production facility would not be renewed or would be revoked, the facility may need to be closed temporarily or permanently, which may have a material adverse effect on our business, financial condition, and results of operations. Failure to obtain or maintain permits for our facilities or other failure to comply with applicable environmental regulations could result in the shutdown of, or suspension of operations at, our plants.

Furthermore, changes or tightening of environmental protection laws and regulations in China may also have adverse effects on our business, including by adversely impacting operations efficiency, restricting the scope of our operations, increasing costs associated with the transportation of chemicals, and resulting in higher costs for environmental protection taxes and other expenditures.

 

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Many of our customers are subject to the same or similar environmental regulations. The impact of these regulations on our customers and our customers’ ability to comply with these regulations is outside of our control. However, noncompliance by our customers could have an indirect negative effect on our business. We are monitoring relevant chemical regulatory developments in order to limit the associated risks of new developments by being able to trigger countermeasures such as alternative products, and phase-outs, among others, at the right time.

Our financial results may be affected by tariffs or border adjustment taxes or other adverse trade restrictions.

We have global operations, including a significant presence in several major regions, including markets such as India and China. We cannot predict whether the countries in which we operate, or may operate in the future, could become subject to new or additional trade restrictions imposed by the United States or other governments, including the likelihood, type or effect of any such restrictions. The U.S. government imposed various actions regarding trade with China, including levying various tariffs on imports from China, and is contemplating imposing additional actions in the future. In addition, President Trump recently issued an executive order designed to secure the information and communications technology and services supply chain, which would restrict the acquisition or use in the United States of information and communications technology or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries. Further, the U.S. Commerce Department has implemented additional restrictions and may implement further restrictions that would affect conducting business with certain Chinese companies. The impact on us from these tariffs and trade restrictions is largely indirect, as our customers who import or export products to and from the United States are subject to the tariffs and trade restrictions and pass on the cost to us. However, we can provide no assurance that we will not be subject to direct tariffs and trade restrictions in the future. Similarly, the impact of these trade restrictions on the global value chains we serve may cause customers to seek other suppliers for our products in different countries, and we may be unable to recapture or replace such customers. Moreover, depending on the duration and implementation of the tariffs, the executive order and other regulatory actions, these trade restrictions may also adversely affect the development of new technologies and the rollout of next-generation networks, including 5G.

There is increased uncertainty with respect to trade relations, including as a result of potential retaliatory tariffs, between the United States and other countries, particularly China and Mexico. The focus on policy reforms that discourage U.S. corporations from outsourcing manufacturing and production activities to foreign jurisdictions, including increased customs restrictions and tariffs or quotas or the imposition of additional duties and other charges on imports and exports, could change the way we and our customers conduct business, increase our costs, or impede the timely delivery of our products and have a material adverse effect on our business, financial condition, and results of operations.

Our operations and assets in China are subject to significant political and economic uncertainties.

Changes in Chinese laws and regulations, or their interpretation, or the imposition of unexpected or confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency, or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, financial condition, and results of operations of our subsidiaries organized under the laws of China. Under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

Additionally, if we repatriate funds from our Chinese operations in order to fund our working capital requirements in jurisdictions outside of China, to pay dividends, or otherwise, we will be required to comply with the procedures and regulations of applicable Chinese law, which may significantly limit our ability to extract

 

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cash from our Chinese operations. Furthermore, under the Enterprise Income Tax Law and the regulation on the implementation of the Enterprise Income Tax Law, absent application of a relevant treaty, withholding tax at 10% will normally apply to dividends payable to non-Chinese investors which are derived from sources within China. Any changes to these procedures and regulations, or our failure or inability to comply with these or other aspects of these or other procedures and regulations, could prevent us from repatriating funds from our Chinese operations or subject us to other forms of taxation and/or penalties, which could have a material adverse effect on our business, financial condition, and results of operations. Failure to comply with applicable laws, regulations and/or rules in relation to foreign exchange control, including but not limited to the Administrative Regulations on Foreign Exchange of China, could subject us to administrative penalties (such as warnings and/or fines) as well as potential criminal liabilities in severe situations.

The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese economy may not continue to grow and if there is growth, such growth may not be steady and uniform. If there is a slowdown, such slowdown may have a negative effect on our Chinese business and our business in general. We can provide no assurance that the various macroeconomic measures and monetary policies adopted by the Chinese government to guide economic growth and the allocation of resources will be effective in sustaining the growth rate of the Chinese economy. If Chinese growth stagnates or there is an economic downturn in China, our business, financial condition, and results of operations may be materially adversely affected.

The Chinese government’s control of currency conversion and expatriation of funds may affect our liquidity.

The Chinese government imposes controls on the convertibility of the currency of China (the “RMB”) into foreign currencies and, in certain cases, the remittance of currency out of China. Substantially all revenues of our subsidiaries organized under the laws of China are denominated in RMB. Shortages in the availability of foreign currency in China may restrict the ability of our Chinese subsidiaries to remit sufficient foreign currency to pay dividends or to make other payments to us, or otherwise to satisfy their foreign currency-denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade-related payments, can be made in foreign currencies without prior approval from China’s State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements, including, among others, submission of relevant documentary evidence of such transactions to designated foreign exchange banks in China for processing of relevant payments. We are required to present relevant documentary evidence of such transactions and conduct such transactions at designated foreign exchange banks in China. However, for any Chinese company, dividends can be declared and paid only out of the retained earnings of that company under Chinese law and may be subject to taxation. In accordance with relevant Chinese laws and provisions in their articles of association, each of our Chinese subsidiaries is required to set aside 10% of its after tax profits based on Chinese accounting standards as statutory reserve until such reserve reaches 50% of its registered capital. As a result, our Chinese subsidiaries may be restricted in their ability to transfer cash outside of China whether in the form of dividends, loans, and advances. These restrictions and requirements could reduce the amount of distributions that we receive from our subsidiaries, which would restrict our ability to fund our operations, generate income, pay dividends, and service our indebtedness.

Furthermore, approval from SAFE or its local branch is required where RMB are to be converted into foreign currencies and remitted out of China for payments of capital account items, such as the repayment of loans denominated in foreign currencies. Without a prior approval from SAFE or its local branch, cash generated from the operations of our Chinese subsidiaries may not be used to repay debt in a currency other than the RMB owed by such subsidiaries to entities outside China, or make other payments of capital account items outside China in a currency other than the RMB. The Chinese government may also at its discretion, restrict access in the future to foreign currencies for current account transactions. In the current regime of stringent regulation of

 

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outflow of capital, RMB outflow may face the same level of scrutiny by the Chinese government as the outflow of foreign currencies.

Additionally, because repatriation of funds of our Chinese subsidiaries requires the prior approval of SAFE and/or its authorized bank and/or compliance with certain procedural requirements, such repatriation could be delayed, restricted, or limited. There can be no assurance that the rules and regulations pursuant to which SAFE grants or denies such approval or stipulates the procedural requirements will not change in a way that adversely affects the ability of our Chinese subsidiaries to expatriate funds out of China. Future measures, including any additional requirements to repatriate profits earned in China, may increase our regulatory compliance burden.

Uncertainties presented by the Chinese legal system could limit the legal protections available to us and subject us to legal risks, which could have a material adverse effect on our business, financial condition, and results of operations.

Our operations in China are subject to applicable Chinese laws, rules, and regulations. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but have little value as precedents, although the judicial interpretations issued by the Supreme Court of China have binding effect. Additionally, Chinese statutes are often principle-oriented and require detailed interpretations by the enforcement bodies to further apply and enforce such laws.

Since 1979, the Chinese government has been developing a comprehensive system of commercial laws, and progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation, and trade. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because some of these laws and regulations are relatively new, and because of the limited volume of published court of arbitration decisions and their nonbinding nature (except for the judicial interpretations issued by the Supreme Court of China), the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the Chinese legal system is based in part on government policies and internal rules, some of which may not be published on a timely basis or at all, and some of which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since Chinese administrative and court authorities have significant discretion in interpreting and implementing statutory, regulatory, and contractual terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection in China than in more developed legal systems. These uncertainties may also impede our ability to enforce the contracts we have entered into in China. As a result, these uncertainties could have a material adverse effect on our business, financial condition, and results of operations.

Material increases in labor costs in China could have an adverse impact on our business and operating results.

We operate several manufacturing facilities in China. In past years, we have experienced increases in labor costs in our Chinese facilities. We expect increases in the cost of labor in our manufacturing facilities in China will continue to occur in the future. To the extent we are unable to pass on increases in labor costs to our customers by increasing the prices for our products and services, minimum wage increases or increases in other labor costs could have a material adverse effect on our business, financial condition, and results of operations.

If our land use rights in China are revoked, we would have no operational capabilities in the country.

Under Chinese law, land is owned by the state or rural collective economic organizations. The state issues to the land users the land use right certificate. Land use rights can be revoked and the land users forced to vacate at

 

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any time when redevelopment of the land is in the public interest. The public interest rationale is interpreted quite broadly and the process of land appropriation may not be transparent. We have one technology center in Shanghai and another in Guangzhou. We also have one production facility in Guangzhou and are developing a second production facility in Yangzhou, which we believe will be operational in 2020. These facilities are operated independently from each other and the loss of land use rights at any one facility would not necessarily impact the operations at any other site. However, we rely on these land use rights, and the loss of such rights would have a material adverse effect on our business, financial condition, and results of operations.

Changes in the Chinese government’s policy on foreign investment in China may adversely affect our business and results of operations.

The Foreign Investment Access Special Management Measures (Negative List) (2019 Version) (“Negative List”), which became effective on July 30, 2019, has identified the industrial areas that are restricted or prohibited for foreign investors. The business of our Chinese subsidiaries does not fall within any of such restricted or prohibited areas and their business scope was duly approved by the Chinese foreign investment regulatory authority upon their establishment.

The Negative List may be updated from time to time, and there can be no assurance that the Chinese government will not change its policies in a manner that would render part or all of our business to fall within the restricted or prohibited categories. If we cannot obtain approval from the relevant approval authorities to engage in a business that becomes prohibited or restricted for foreign investors pursuant to any applicable updates under the Negative List, we may be forced to sell or restructure our business in China. If we are forced to adjust our corporate structure or business as a result of changes in government policy on foreign investment, it could adversely affect our reputation, business, financial condition, and results of operations.

The Foreign Investment Law of China (“Foreign Investment Law”) was formally adopted by the National People’s Congress of China on March 15, 2019 and came into effect on January 1, 2020 to replace the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-Invested Enterprise Law with a single unified law aimed at promoting foreign investment by better protecting the rights and interests of foreign investors and standardizing management of foreign investment. The Foreign Investment Law is formulated to establish regulatory principles governing foreign investment in China, with detailed implementing regulations and rules to be enacted by relevant regulatory authorities. As such, there exist uncertainties regarding the interpretation and implementation of the Foreign Investment Law and the evolution of the regulatory landscape of foreign investment. The proposed Foreign Investment Law imposes enhanced information reporting requirements on foreign investors and the applicable foreign invested entities and requires reorganization of foreign-invested enterprises’ corporate governance for conformity with the Company Law of China. Once enacted, the Foreign Investment Law may have a material impact on certain aspects of our current corporate governance practices and business operations and may result in an increase in our compliance costs. In addition, and depending on the seriousness of the circumstances, noncompliance with information reporting obligations, concealment of information, and providing misleading or false information could result in monetary fines or criminal charges.

Foreign currency exchange rate fluctuations and volatility in global currency markets could have a material adverse effect on our business, financial condition, and results of operations.

Our international sales and operations expose us to fluctuations in foreign currency exchange rates. Foreign currency exchange rate movements in our currency exposures may cause fluctuations in our financial results due to transactional and translational effects. While a significant majority of our costs are denominated in Euros, our revenues are generally denominated in RMB, U.S. dollars, and Euros, with the significant majority of our non-U.S. dollar denominated revenues denominated in RMB. Although $468.0 million of our indebtedness is denominated in RMB, as of September 30, 2019, 67% of our debt under the senior secured credit facilities, and 100% of our debt under the Opco Notes and the Holdco Notes is denominated in U.S. dollars. Because a majority

 

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of our revenues and costs are denominated in currencies other than the U.S. dollar, changes in foreign currency exchange rates, and in particular changes in the value of RMB and the Euro, could reduce our ability to service our debt.

Moreover, movements in exchange rates may cause our revenues and expenses to fluctuate, impacting our profitability and cash flows and our results generally. Consequently, our business, financial condition, and results of operations may be materially adversely affected. These risks related to exchange rate fluctuations and currency volatility may increase in future periods as our operations outside of the United States and Europe continue to expand.

We regularly evaluate whether to enter into foreign currency hedging transactions from time to time. For example, effective January 21, 2019, we entered into a foreign currency forward with an amount of $200.0 million with a maturity of two years. There can be no assurance that such currency hedging activities would be successful, and any such currency hedging activities themselves would be subject to risk, including risks related to counterparty performance.

The international scope of our operations and our corporate and financing structure may expose us to potentially adverse tax consequences.

We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to intercompany pricing laws, including those relating to the flow of funds between our companies pursuant to, for example, purchase agreements, licensing agreements, or other arrangements. Adverse developments in these laws or regulations, or any change in position regarding the application, administration, or interpretation of these laws or regulations in any applicable jurisdiction, could have a material adverse effect on our business, financial condition, and results of operations. In addition, the tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions, including the tax treatment or characterization of our indebtedness, or the Transactions. If any applicable tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could result in the disallowance of deductions, the imposition of withholding taxes on internal deemed transfers, capital gains taxes, including on transfers that have been made and/or deemed to have been made in connection with the Transactions or otherwise, the reallocation of income, penalties, or other consequences that could have a material adverse effect on our business, financial condition, and results of operations.

Recent U.S. tax legislation may adversely affect net income and cash flows.

Recently enacted U.S. tax legislation has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions, adopting elements of a territorial tax system, limiting net operating loss carry forwards and introducing new anti-base erosion provisions. Many of these changes are effective for tax years beginning after December 31, 2017, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and Internal Revenue Service, any of which could lessen or increase certain adverse impacts of the legislation. Further, it is reasonable to expect that non-U.S. taxing authorities will be reviewing current law for potential modifications in reaction to the implementation of the new U.S. tax legislation. While some of the changes made by the U.S. tax legislation, and any future U.S. or non-U.S. legislative changes, may adversely affect us in one or more reporting periods and prospectively, other changes may be beneficial on a going forward basis. We continue to work with our tax advisors and auditors to determine the full impact that the recent U.S. tax legislation as a whole will have on us.

 

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Our failure to comply with trade restrictions such as economic sanctions and export controls could negatively impact our reputation and results of operations.

We are subject to trade restrictions, including economic sanctions and export controls, imposed by governments around the world with jurisdiction over our operations, which prohibit or restrict transactions involving certain designated persons and certain designated countries or territories, including Cuba, Iran, Syria, North Korea, and the Crimea Region of Ukraine. Our failure to successfully comply with these laws and regulations may expose us to reputational harm as well as significant sanctions, including criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts, and other remedial measures. Investigations of alleged violations can be expensive and disruptive. We maintain policies and procedures designed to comply with these laws and regulations. As part of our business, we may, from time to time, engage in limited sales and transactions involving certain countries that are targets of economic sanctions, provided that such sales and transactions are authorized pursuant to applicable economic sanctions laws and regulations. However, we cannot predict the nature, scope, or effect of future regulatory requirements, including changes that may affect existing regulatory authorizations, and we cannot predict the manner in which existing laws and regulations might be administered or interpreted.

In addition, any perceived or actual breach of compliance by us with respect to applicable laws, rules, and regulations could have a significant impact on our reputation and could cause us to lose existing customers, prevent us from obtaining new customers, negatively impact investor sentiment about our company, require us to expend significant funds to remedy problems caused by violations and to avert further violations, and expose us to legal risk and potential liability, all of which may have a material adverse effect on our reputation, business, financial condition, and results of operations.

Our failure to comply with the anti-corruption laws of the United States and various international jurisdictions could negatively impact our reputation and results of operations.

Doing business on a worldwide basis requires us to comply with anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, which includes the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act 2010 (“UK Bribery Act”), as well as the laws of the countries where we do business. These laws and regulations may restrict our operations, trade practices, investment decisions, and partnering activities. The FCPA and the UK Bribery Act prohibit us and our officers, directors, employees, and business partners acting on our behalf, including agents (“representatives”), from corruptly offering, promising, authorizing, or providing anything of value to foreign government officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The UK Bribery Act also prohibits non-governmental commercial bribery, soliciting or accepting bribes, and “facilitation payments,” or small payments to low-level government officials to expedite routine approvals. We also are subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and representatives into contact with foreign government officials responsible for issuing or renewing permits, licenses, or approvals or for enforcing other governmental regulations. In addition, some of the international locations in which we operate lack a developed legal system, and others are perceived to have elevated levels of public corruption. Our global operations expose us to the risk of violating, or being accused of violating, anti-corruption laws and regulations.

Other companies, including some that may compete with us, may not be subject to the prohibitions listed above, and therefore may have a competitive advantage over us. We maintain policies and procedures reasonably designed to comply with applicable anti-corruption laws and regulations. However, there can be no guarantee that our policies and procedures will effectively prevent violations by our employees or representatives for which we may be held responsible, and any such violation could adversely affect our reputation, business, financial condition, and results of operations. Our failure to successfully comply with these laws and regulations may expose us to reputational harm as well as significant sanctions, including criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions, and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive.

 

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The results of the United Kingdom’s referendum on withdrawal from the European Union may have a negative effect on global economic conditions, financial markets, and our business.

We have material business operations in Europe. Following a national referendum in which a majority of voters in the United Kingdom elected to withdraw from the European Union, the government of the United Kingdom formally initiated the process for withdrawal pursuant to Article 50 of the Lisbon Treaty on March 29, 2017. The United Kingdom is due to leave the European Union on January 31, 2020, although the United Kingdom could leave the European Union sooner than this if agreement is reached on the terms of its withdrawal. Negotiations between the United Kingdom and the European Union remain ongoing and are complex, and there can be no assurance regarding the terms (if any) or timing of any resulting agreement. The withdrawal process has created significant uncertainty about the future relationship between the United Kingdom and the European Union, and this may have political consequences not only in the United Kingdom but also in the remaining European member states.

These developments and the potential consequences of them, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, foreign currency exchange rates, including the valuation of the Euro and British pound in particular, and credit ratings have been and may continue to be subject to increased market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which European Union laws to replace or replicate in the event of a withdrawal could depress economic activity and restrict our access to capital before, during and after the period of negotiation or have a significant impact on our customers. The impact of the withdrawal, if any, will depend, in part, on the outcome of tariff, tax, trade, regulatory, immigration, and other negotiations between the United Kingdom and the European Union. If the United Kingdom and the European Union are unable to negotiate acceptable withdrawal terms or if other European Union member states pursue withdrawal, barrier-free access between the United Kingdom and other European Union member states or among the European Economic Area overall could be diminished or eliminated. Any of these factors could have a material adverse effect on our business, financial condition, and results of operations.

We may be adversely affected by changes in legislation and regulation, which may impact how we provide products and services.

We are subject to extensive laws, regulations, and industry standards in the various jurisdictions where we operate, market, and distribute our products, including environmental, health and safety, product regulatory, financial, accounting, and tax laws and regulations, which vary from jurisdiction to jurisdiction. Legislative and regulatory changes that impact us and our customers’ industries may impact how we provide products and services to our customers. It is difficult to predict in what form laws and regulations will be adopted or how they will be construed by the relevant courts, or the extent to which any changes might adversely affect us. Delays in adapting our products and services to legislative and regulatory changes could harm our reputation. Also, we may not be as well-equipped to respond to changes in legislation or regulation as some of our competitors or we may become subject to new legislation or regulation with regard to the products and services we offer which could cause us to be prohibited from providing certain services or make provision of affected services more expensive.

Although we have implemented policies and procedures that are designed to ensure compliance with applicable laws, rules, and regulations, there is no guarantee that we will remain in compliance. Any noncompliance could result in civil, criminal and administrative fees, fines, penalties, taxes, interruptions in our operations, and reputational harm for the company, which may have a material adverse effect on our business, financial condition, and results of operations.

Our know-how and innovations may not be adequately protected.

We believe that our product development, brand recognition and reputation, and the technological and innovative skills of our personnel are essential to establishing and maintaining our leadership position. We rely

 

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on a combination of patent, copyright, trademark, trade secrets, confidentiality procedures, technical measures, and contractual agreements with our customers, suppliers, and employees to establish and protect our know-how and innovations according to our products and services. If we fail to protect our know-how and innovations, our competitive position could suffer, which could adversely affect our business, financial condition, and results of operations.

We may be forced to initiate litigation or other enforcement actions against third parties to protect our know-how and innovations as well as defend and enforce our intellectual property rights. Litigating claims related to the enforcement of intellectual property rights is very expensive and can be burdensome in terms of management time and resources, which could adversely affect our business, financial condition, and results of operations. Moreover, the scope of our intellectual property rights may not prevent competitors from designing around such rights.

In some cases, we rely upon unpatented proprietary manufacturing expertise, continuing technological innovation, and other trade secrets to develop and maintain our competitive position. While we generally will enter into confidentiality agreements with our employees and third parties to protect our intellectual property, our confidentiality agreements could be breached and may not provide meaningful protection for our trade secrets or proprietary manufacturing expertise. In addition, adequate remedies may not be available in the event of unauthorized use or disclosure of our trade secrets or manufacturing expertise. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm our competitive position and cause our sales and operating results to decline as a result of increased competition.

In addition, we rely on both registered and unregistered trademarks to protect our name and brands. We can provide no assurance that our pending trademark applications will be approved. Failure by us to adequately maintain the quality of our products and services associated with our trademarks or any loss to the distinctiveness of our trademarks may cause us to lose certain trademark protection, which could result in the loss of goodwill and brand recognition in relation to our name and products. In addition, successful third-party challenges to the use of any of our trademarks may require us to rebrand our business or certain products or services associated therewith.

The failure of our patents, applicable intellectual property law, or our confidentiality agreements to protect our intellectual property and other proprietary information, including our know-how and innovations relating to processes, apparatuses, technology, trade secrets, trade names and proprietary manufacturing expertise, methods, and compounds, or if we are unsuccessful in our judicial enforcement proceedings, could have a material adverse effect on our competitive advantages, business, financial condition, and results of operations, and could require us to devote resources advertising and marketing these new brands. Further, we can provide no assurance that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

From time to time, competitors challenge the validity of our patents and trademarks, and we challenge the validity of their patents and trademarks. Further, our competitors may circumvent our patents or our patents may not be of sufficient scope or strength to provide us with meaningful protection or commercial advantage. We cannot be certain either of successfully defending the validity of our patents and trademarks or of invalidating patents and trademarks of our competitors. Additionally, our patents will all eventually expire, after which we will not be able to prevent our competitors from using our previously patented technologies, which could materially adversely affect any competitive advantage we have stemming from those products and technologies. We also cannot assure that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents.

Our efforts to protect our intellectual property may be less effective in some countries where intellectual property rights are not as well protected as in the United States.

The laws of some countries regarding trademark, patent, copyright, and other intellectual property rights do not protect proprietary rights to the same degree as the laws of the United States and there is a risk that our ability

 

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to protect our proprietary rights may not be adequate in these countries. Many companies have encountered significant problems in protecting their proprietary rights against copying or infringement in such countries, some of which are countries in which we intend to operate or to sell our products. In particular, the application of laws governing intellectual property rights in China has historically been less effective than those in other jurisdictions, mainly due to the lack of procedural rules for discovery of evidence, low damage awards, and low rates of criminal penalties against intellectual rights infringements. Accordingly, protection of intellectual property rights in China may not be as effective as other countries. Furthermore, the policing of unauthorized use of proprietary technology is difficult and expensive, and we may need to commence and become involved in expensive and lengthy proceedings to enforce or defend patents issued to us or determine the enforceability, scope, and validity of our proprietary rights or those of others. The experience and capabilities of different courts in handling intellectual property related matters vary, and outcomes are unpredictable. Therefore, it could involve substantial risks to us. If we are unable to adequately protect our intellectual property rights in China or elsewhere, our business, financial condition, and results of operations could be materially adversely affected. In addition, our competitors in China and these other countries may independently develop similar technology or duplicate our products, even if unauthorized, which could potentially reduce our sales in these countries and have a material adverse effect on our business, financial condition, and results of operations.

We have applied for patent protection relating to certain existing and proposed products, processes, and services in certain jurisdictions. While we generally consider applying for patents in those countries where we intend to make, have made, use or sell patented products, we may not accurately assess all the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. Furthermore, we cannot assure you that our pending patent applications will not be challenged by third parties or that such applications will eventually be issued by the applicable patent offices as patents. We also cannot assure you that the patents issued as a result of our foreign patent applications will have the same scope of coverage as our U.S. patents. It is possible that only a limited number of the pending patent applications will result in issued patents, which may have a material adverse effect on our business, financial condition, and results of operations.

We may face intellectual property infringement claims that could be costly to defend and result in our loss of significant rights.

From time to time, we may receive notices from third parties claiming infringement by our products and services of third-party patent and other intellectual property rights. As the number of products and services in our markets increases and the functionality of these products and services further overlaps, we may become increasingly subject to claims by a third party that our products and services infringe such party’s intellectual property rights. In addition, there is a growing occurrence of patent suits being brought by organizations that use patents to generate revenues without manufacturing, promoting or marketing products, or investing in R&D in bringing products to markets. These organizations continue to be active and target whole industries as defendants. We may not prevail in any such litigation given the complex technical issues and inherent uncertainties in intellectual property litigation.

If an infringement suit against us is successful, we may be required to compensate the third-party bringing the suit either by paying a lump sum or ongoing license fees to be able to continue selling a particular product or service. This type of compensation could be significant. We might also be prevented or enjoined by a court from continuing to provide the affected product or service and may be forced to significantly increase our development efforts and resources to redesign such product or service. We may also be required to defend or indemnify any customers who have been sued for allegedly infringing a third-party’s patent in connection with using one of our products or services. Responding to intellectual property claims, regardless of the validity, can be time-consuming for our personnel and management, result in costly litigation, cause product shipment delays, and harm our reputation, any of which could have a material adverse effect on our business, financial condition, and results of operations.

 

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We operate in a litigious environment, which may adversely affect our business, financial condition, and results of operations.

We may become involved in legal actions and claims arising in the ordinary course of business, including litigation regarding employment matters, breach of contract, and other commercial matters. Due to the inherent uncertainty in the litigation process, the resolution of any particular legal proceeding could result in changes to our products and business practices and could have a material adverse effect on our business, financial condition, and results of operations.

We may be liable for damages based on product liability claims brought against our customers in our end-markets or from our customers and their employees, and any successful claim for damages could have a material adverse effect on our business, financial condition, and results of operations.

We produce and use hazardous chemicals, the handling and use of which require appropriate procedures and care. As a result of the hazardous nature of some of the products we produce and use, we may face claims relating to incidents that involve our customers’ improper handling, storage, and use of our products.

In addition, many of our products provide critical performance attributes to our customers’ products that are sold to consumers who could potentially bring product liability suits related to such products. Our sale of these products therefore involves the risk of product liability claims, including class action lawsuits that claim liability for death, injury, or property damage caused by products that we manufacture or that contain our components. If a person were to bring a product liability suit against one of our customers, this customer may attempt to seek contribution from us. A person may also bring a product liability claim directly against us. A successful product liability claim or series of claims against us in excess of our insurance coverage for payments, for which we are not otherwise indemnified, could have a material adverse effect on our business, financial condition, and results of operations. While we endeavor to protect ourselves from such claims and exposures in our contractual negotiations, we can provide no assurance that our efforts in this regard will ultimately protect us from any such claims.

We depend upon our information technology systems, which are subject to interruption and failure.

Our business operations could be disrupted if our information technology systems fail to perform adequately. The efficient operation of our business depends on our information technology systems, some of which are managed by third-party service providers. We rely on our information technology systems to effectively manage our business data, communications, supply chain, order entry and fulfillment, and other business processes. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, power outages, systems failures, security breaches, cyber-attacks, and viruses. Any such damage or interruption could have a material adverse effect on our business, financial condition, and results of operations.

Further, our information technology systems, including those managed by third-party service providers, may be subject to computer viruses, malicious software, attacks by hackers, and other forms of cyber intrusions or unauthorized access, any of which can create system disruptions, shutdowns, or unauthorized disclosure of sensitive data. In addition, a security breach that leads to disclosure of information protected by privacy laws could compel us to comply with breach notification requirements under state, national, and federal laws and regulations, potentially resulting in litigation or regulatory action, or otherwise subjecting us to liability under laws that protect personal data.

We attempt to mitigate the above risks by employing several measures, including monitoring and testing of our security controls, employee training, maintenance of protective systems and contingency plans, and

 

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contracting with service providers to address third-party cybersecurity risks. Nonetheless, it is impossible to eliminate all cybersecurity risk and thus we remain potentially vulnerable to known or unknown threats. Information security risks have generally increased in recent years because of the increased proliferation, sophistication, and availability of complex malware and hacking tools to carry out cyber-attacks. As cyber threats continue to evolve, we may be required to expend additional resources to mitigate new and emerging threats while continuing to enhance our information security capabilities or to investigate and remediate security vulnerabilities.

Natural disasters, catastrophes, fire, or other unexpected events could have a material adverse effect on our business, financial condition, and results of operations.

Many of our business activities involve substantial investments in manufacturing facilities. These facilities could be materially damaged by natural disasters, such as floods, tornadoes, hurricanes, and earthquakes, or by fire or other unexpected events such as adverse weather conditions or other disruptions to our facilities, supply chain, or our customer’s facilities. We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and/or suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition, and results of operations.

Any natural disaster, catastrophe, fire, or other unexpected event could result in personal injury and loss of life, damage to property, and contamination of the environment, which may result in a shutdown of our facilities, suspension of operations, and the imposition of civil or criminal fines, penalties and other sanctions, cleanup costs, and claims by governmental entities or third parties. We are dependent on the continued operation of our production facilities, and the loss or shutdown of operations over an extended period at any of our other major operating facilities could have a material adverse effect on our business, financial condition, and results of operations.

Our revenues and profitability have varied depending on our product, customer, and geographic mix for any given period, which makes it difficult to forecast future operating results.

Our revenues vary among our products and customer groups and markets, and therefore may be different in future periods from historic or current periods. Overall profitability in any given period is dependent in large part on the product, customer, and geographic mix reflected in that period’s revenue. Market trends, competitive pressures, commoditization of products, increased component or shipping costs, foreign currency exchange rates, regulatory conditions, and other factors may result in reductions in our revenues and/or pressure on our profitability in a given period. Given the nature of our business, the impact of these factors on our business and results of operations will likely vary from period to period and from product to product. For example, a change in market trends that results in a decline in demand for high-margin products will have a disproportionately greater adverse effect on our profits for that period. Additionally, our equipment sales are subject to greater fluctuation than sales of our chemistry. Because of the varying nature of our product, customer, and geographic mix from period to period, and the corresponding variations in our revenue and profitability, we may experience difficulties in measuring the potential impact of market, regulatory, and other factors on our business. As a result, we may be challenged in our ability to forecast our future operating results. Further, potential future business acquisitions can compound the difficulty in making comparisons between prior, current, and future periods because acquisitions and divestitures, which are not ordinary course events, also affect our profitability and our overall operating results.

The loss of certain customers could adversely affect our overall sales and profitability.

The loss of any one of our most significant customers could have a material adverse effect on our business, financial condition, and results of operations for the affected earnings periods. The principal products purchased by such customers are EL chemistry products used in connection with the manufacturing of electronics components, including PCBs and SCs, and GMF chemistry products used in the manufacturing of products for

 

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the automotive surface finishing, construction equipment, household appliances, fixtures, and heavy machinery industries.

For fiscal 2018, our top ten customers represented approximately 25% of our chemistry revenues although no single customer represented more than 5% of our chemistry revenue. Loss of any such customer or any disruption in our relationship with such customers, could result in a reduction of revenue generated by such customers. If we are unable to replace revenue generated by one or more of our major customers, our revenue may significantly decrease which would have a material adverse effect on our business, financial condition, and results of operations.

We may be required to record an impairment charge on our accounts receivable if we are unable to collect the outstanding balances from our customers.

We frequently sell products and services to customers on credit. We estimate the collectability of our accounts receivable based on our analysis of the accounts receivable, historical bad debts, customer creditworthiness, and current economic trends. We continuously monitor collections from our customers and maintain adequate impairment allowance for doubtful accounts. However, if the bad debts significantly exceed our impairment allowance, we may be required to record an impairment charge and our business, financial condition, and results of operations could be materially adversely affected.

Our business, financial condition, and results of operations could be adversely affected by decreases in the average selling prices of products in the specialty chemistry industry.

Decreases in the average selling prices of our products may have a material adverse effect on our business, financial condition, and results of operations. Our ability to maintain or increase our profitability will continue to be dependent, in large part, upon our ability to offset decreases in average selling prices by improving production efficiency or by shifting to higher margin chemical products. In the past, we have elected to discontinue selling certain products as a result of sustained material decreases in the selling price of such products and our inability to effectively offset such decrease through shifts in operations. If we are unable to respond effectively to decreases in the average selling prices of our products in the future, our business, financial condition, and results of operations could be materially adversely affected. Further, while we may elect to discontinue products that are significantly affected by such price decreases, we can provide no assurance that any such discontinuation will mitigate the related declines in our financial condition.

Underfunded defined benefit pension plans could have a material adverse effect on our business, financial condition, and results of operations.

We maintain defined benefit pension plans, including in Germany. Various factors, such as changes in actuarial estimates and assumptions (including in relation to life expectancy and rate of return on assets) as well as actual return on assets, can increase the expenses and liabilities of the defined benefit pension plans. The assets and liabilities of the plans must be valued from time to time under applicable funding rules, and as a result we may be required to increase the cash payments in relation to these defined benefit pension plans. To the extent any of these plans are or become in the future underfunded or unfunded, the liabilities in relation to these plans will need to be satisfied from our operating reserves as they mature.

We may incur material costs relating to environmental and health and safety requirements or liabilities, which could have a negative impact on our business, financial condition, and results of operations.

As an international manufacturer and distributor of specialty chemistry and solutions, we are subject to extensive federal, state, local, and foreign environmental, health and safety laws and regulations concerning, among other things, emissions to the air, discharges to land, surface, subsurface strata, wastewater, and storm water discharges, and the generation, use, handling, storage, transportation, treatment, and disposal of hazardous

 

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waste and other materials. We are also required to hold numerous environmental permits related to our operations in various jurisdictions. Our operations bear the risk of violations of those laws and permits, and sanctions for violations such as capital expenditure obligations, clean up and removal costs, long-term monitoring and maintenance costs, costs of waste disposal, natural resource damages, and payments for property damage and personal injury. Although it is our policy to comply with such laws, permits, and regulations, it is possible that we have not been or may not be at all times in compliance with all these requirements. Many of our products are inherently hazardous. Moreover, our R&D, manufacturing, formulation, and packaging activities involve the use of hazardous materials and the generation of hazardous waste. Furthermore, we cannot eliminate the risk of accidental contamination, discharge, or injury resulting from these materials. As a result, we could in the future incur significant liabilities, including cleanup costs, fines and sanctions, and third-party claims for property or natural resource damages or personal injuries, any of which could be material.

Liability under some environmental laws relating to contaminated sites can be joint and several and imposed retroactively, regardless of fault or the legality of the activities that gave rise to the contamination. Some of our current manufacturing facilities and former facilities have an extended history of chemical manufacturing operations or other industrial activities, and contaminants have been detected at some of our sites. We or our predecessors have in the past been, and are currently, required to remediate contamination at several of our current and former sites. In particular, we have conducted soil remediation at the Erandio site in a former Chrome VI production area. Excavation work has been completed with final measurements and report pending. Further investigations and measurements are requested by authorities and depend also on measurement-results after the current remediation is finished, and there remains some risk that further remediation might be necessary. We also have received notices regarding potential responsibility for certain costs relating to offsite disposal locations, none of which we believe are material.

Chemical manufacturing is inherently hazardous and could result in accidents that disrupt our operations or expose us to significant losses or liabilities.

The hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products, and wastes are inherent in our operations. These hazards could lead to an interruption or suspension of operations and have a material adverse effect on the productivity and profitability of a particular manufacturing facility or on our business as a whole. Potential risks include:

 

   

storage tank leaks and ruptures;

 

   

explosions and fires;

 

   

inclement weather and natural disasters;

 

   

terrorist attacks;

 

   

cybersecurity breaches;

 

   

mechanical failure;

 

   

unscheduled downtime;

 

   

labor difficulties;

 

   

transportation interruptions; and

 

   

chemical spills and other discharges or releases of toxic or hazardous substances or gases.

These hazards may result in personal injury and loss of life, damage to property, and contamination of the environment, which may result in a suspension of operations and the imposition of civil or criminal fines, penalties and other sanctions, cleanup costs, and claims by governmental entities or third parties. We are dependent on the continued operation of our production facilities, and the loss or shutdown of operations over an extended period at any of our major operating facilities could have a material adverse effect on our business, financial condition, and results of operations.

 

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Global climate change legislation could negatively impact our results of operations or limit our ability to operate our business.

We operate production facilities in several countries. In many of the countries in which we operate, legislation has been passed or proposed, or legislation is being considered, to limit greenhouse gases through various means, including the capping and trading of emissions credits. Greenhouse gas regulation in the jurisdictions in which we operate could negatively impact our future results from operations through increased costs of production. We may be unable to pass such increased costs on to our customers, which may decrease our revenues and net income and have a material adverse effect on our business, financial condition, and results of operations. In addition, the potential impact of climate change regulation on our customers is highly uncertain and may also materially adversely affect our business, financial condition, and results of operations.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, internal codes of conduct, and insider trading prohibition.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with applicable regulations, to provide accurate information to the United States or other regulators, to comply with manufacturing standards we have established, to comply with federal and state fraud and abuse laws and regulations in the United States and other countries or jurisdictions, to report financial information or data accurately, or to disclose unauthorized activities to us.

It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations, including applicable environmental laws and regulations. For example, in 2017, we conducted an investigation regarding certain of our employees in India and concluded that improper payments or expense reimbursements had been made, which were inconsistent with our anti-corruption compliance policies. Based on our investigation, we believe that such improper payments or reimbursements did not involve personnel outside of India and amounted to less than $10,000 total. While we implemented remedial measures including, but not limited to, disciplinary actions, terminations, and enhanced oversight of our operations in India and throughout the business that may limit the risk, we can provide no assurance that such remedial measures will prevent similar inappropriate business practices in the future. If any such misconduct occurs or any related actions are instituted against us (and we are not successful in defending ourselves or asserting our rights) such misconduct or actions could have a material adverse effect on our business, financial condition, and results of operations.

We are not insured against all potential risks.

To the extent available, we maintain insurance coverage that we believe is customary in our industry. Such insurance does not, however, provide coverage for all liabilities, including certain hazards incidental to our business, and we can provide no assurance that our insurance coverage will be adequate to cover claims that may arise or that we will be able to maintain adequate insurance at rates we consider reasonable. For example, the occurrence of a significant business interruption in the operation of one or more of our key facilities, countries, partners, or systems could result in liability to us that is not insured and therefore could have a material adverse effect on our business, financial condition, and results of operations. In addition, our products are used in or integrated with many high-risk end-products and therefore if such products were involved in a disaster or catastrophic accident, we could be involved in litigation arising out of such incidents and susceptible to significant expenses or losses.

Our ability to use and operate certain portions of our facilities may be limited by the validity of, or a default or termination under, our real property leases.

Certain portions of our facilities are leased from third-party landlords, and we expect to lease facilities in the future. The invalidity of, or default or termination under, any of our leases may interfere with our ability to use

 

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and operate all or a portion of certain of our facilities, which may have material adverse effect on our business, financial condition, and results of operations.

Our real property is subject to casualty risks, which may have a material adverse effect on our business, financial condition, and results of operations.

We maintain insurance covering our respective properties, operations, personnel, and businesses as is customary in our industry and as required under our senior secured debt facilities. However, there are certain losses, including losses resulting from terrorist acts, that may be either uninsurable or not economically insurable, in whole or in part. As a result, we cannot assure you that the insurance proceeds will compensate us fully for our losses.

In the event of a total or partial loss affecting any of the real property, certain items of equipment and inventory may not be easily replaced. Accordingly, even though there may be insurance coverage, the extended period needed to obtain replacement units or inventory may cause significant delays, which may have a material adverse effect on our business, financial condition, and results of operations. In addition, certain zoning laws and regulations may prevent rebuilding substantially the same facilities in the event of a casualty, which may have a material adverse effect on our business, financial condition, and results of operations.

Our real property is subject to condemnation risks, which may have a material adverse effect on our business, financial condition, and results of operations.

It is possible that all or a portion of the real property may become subject to a condemnation proceeding. In such event, we may be compensated for any total or partial loss of property but it is possible that such compensation will be insufficient to fully compensate us for our losses. In addition, a total or partial condemnation may interfere with our ability to use and operate all or a portion of the affected facility, which may have a material adverse effect on our business, financial condition, and results of operations.

We face risks related to our derivative instruments.

From time to time, we may utilize derivative instruments to manage fluctuations in interest rates and foreign currency exchange rates. These derivative instruments manage our risk in the form of interest rate swaps and caps, forward hedges, and cross-currency and foreign exchange contracts. Periodically, we are required to determine the change in fair value, called the “mark-to-market,” of some of these derivative instruments, which could expose us to substantial mark-to-market losses or gains if such rates or prices fluctuate materially from the time the derivatives were entered into. Accordingly, volatility in rates or prices may adversely impact our business, financial condition, and results of operations and could impact the cost and effectiveness of our derivative instruments in managing our risks.

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy and our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations with respect to our indebtedness.

As of September 30, 2019, we had $2,157.2 million of indebtedness (excluding short-term and long-term deferred financing costs and $73.8 million of lease liabilities), including $425.0 million of our Opco Notes, $299.1 million of our Holdco Notes, $963.7 million of the USD Term Loan Facility, and $468.0 million of the RMB Term Loan Facility. In addition, we had no outstanding borrowings under our revolving credit facility (as defined herein) and $227.5 million in borrowing capacity available under our revolving credit facility, after giving effect to $22.5 million of guarantee obligations. As of September 30, 2019, we were in compliance with all the covenants under our outstanding debt instruments.

 

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Our substantial indebtedness could have important consequences for you. For example, it could:

 

   

limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, general corporate purposes, or other purposes;

 

   

require us to devote a substantial portion of our annual cash flow to the payment of interest on our indebtedness;

 

   

expose us to the risk of increased interest rates as, over the term of our debt, the interest cost on a significant portion of our indebtedness is subject to changes in interest rates;

 

   

hinder our ability to adjust rapidly to changing market conditions;

 

   

limit our ability to secure adequate bank financing in the future with reasonable terms and conditions or at all; and

 

   

increase our vulnerability to and limit our flexibility in planning for, or reacting to, a potential downturn in general economic conditions or in one or more of our businesses.

We are more leveraged than some of our competitors, which could adversely affect our business plans. A relatively greater portion of our cash flow is used to service debt and other financial obligations. This reduces the funds we have available for working capital, capital expenditures, acquisitions, and other purposes and, given current credit constriction, may make it more difficult for us to make borrowings in the future. Similarly, our relatively greater leverage increases our vulnerability to, and limits our flexibility in planning for, adverse economic and industry conditions and creates other competitive disadvantages compared with other companies with relatively less leverage.

In addition, the indentures governing the Opco Notes and the Holdco Notes and the agreements governing our senior secured credit facilities contain affirmative and negative covenants that limit our and certain of our subsidiaries’ ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our indebtedness.

To service all of our indebtedness, we will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control.

Our operations are conducted through our subsidiaries and our ability to make cash payments on our indebtedness will depend on the earnings and the distribution of funds from our subsidiaries. None of our subsidiaries, however, is obligated to make funds available to us for payment on our indebtedness. Further, the terms of the instruments governing our indebtedness significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us. Our ability to make cash payments on and refinance our debt obligations, to fund planned capital expenditures, and to meet other cash requirements will depend on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory, and other factors beyond our control. We might not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

Our business may not generate sufficient cash flow from operations and future borrowings may not be available under our senior secured credit facilities in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs, including planned capital expenditures. In such circumstances, we may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances. Such actions, if necessary, may not be effected on commercially reasonable terms or at all. The instruments governing our indebtedness restrict our ability to sell

 

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assets and our use of the proceeds from such sales, and we may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our revolving credit facility could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under the credit agreement governing our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities or we are in default thereunder and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under the credit agreement governing our senior secured credit facilities, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation, which would also result in an event of default under our Opco Notes Indenture and Holdco Notes Indenture.

Despite our current level of indebtedness and restrictive covenants, we and our subsidiaries may incur additional indebtedness or we may pay dividends in the future. This could further exacerbate the risks associated with our substantial financial leverage.

We and our subsidiaries may incur significant additional indebtedness under the agreements governing our indebtedness. Although the indentures governing the Opco Notes and the Holdco Notes and the credit agreement governing our senior secured credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to several thresholds, qualifications, and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. Additionally, these restrictions also will not prevent us from incurring obligations that, although preferential to our common shares in terms of payment, do not constitute indebtedness.

In addition, if new debt is added to our and/or our subsidiaries’ debt levels, the related risks that we now face as a result of our leverage would intensify. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Agreements.”

We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs. If our lenders are unable or unwilling to fund borrowings under their credit commitments or we are unable to borrow, it could have a material adverse effect on our business, financial condition, and results of operations.

We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs. If our lenders are unable to fund borrowings under their credit commitments or we are unable to borrow from them for any reason, there could be a material adverse effect on our business, financial condition, and results of operations. During periods of volatile credit markets, there is risk that any lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including, but not limited to, extending credit up to the maximum permitted by a credit facility, allowing access to additional credit features and otherwise accessing capital and/or honoring loan commitments. If our lenders are unable or unwilling to fund borrowings under their revolving credit commitments or we are unable to borrow from them, it could be difficult in such environments to obtain sufficient liquidity to meet our operational needs.

 

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Our ability to obtain additional capital on commercially reasonable terms may be limited.

Although we believe our cash and cash equivalents, together with cash we expect to generate from operations and unused capacity available under our revolving credit facility, provide adequate resources to fund ongoing operating requirements, we may need to seek additional financing to compete effectively.

If we are unable to obtain capital on commercially reasonable terms, it could:

 

   

reduce funds available to us for purposes such as working capital, capital expenditures, research and development, strategic acquisitions, and other general corporate purposes;

 

   

restrict our ability to introduce new products or exploit business opportunities;

 

   

increase our vulnerability to economic downturns and competitive pressures in the markets in which we operate; and

 

   

place us at a competitive disadvantage.

In addition, in July 2017, the United Kingdom’s Financial Conduct Authority which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. If LIBOR ceases to exist, we may need to renegotiate any borrowing under the USD Term Loan Facility extending beyond 2021 using LIBOR as a factor to determine the interest rate. The replacement for LIBOR is uncertain at this time and as a result it is not possible to predict the effect of a LIBOR phase out on our cost of capital.

Difficult and volatile conditions in the capital, credit and commodities markets and in the overall economy could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Difficult global economic conditions, including concerns about sovereign debt and significant volatility in the capital, credit, and commodities markets, could have a material adverse effect on our business, financial condition, results of operations, and cash flows. These global economic factors, combined with low levels of business and consumer confidence and high levels of unemployment, precipitated a slow recovery from the global recession and from time to time create a concern about a return to recessionary conditions. These difficult conditions and the overall economy can affect our business in several ways. For example:

 

   

as a result of the volatility in commodity prices, we may encounter difficulty in achieving sustained market acceptance of past or future price increases, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows;

 

   

under difficult market conditions, there can be no assurance that borrowings under our revolving credit facility would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all;

 

   

in order to respond to market conditions, we may need to seek waivers from various provisions in the credit agreement governing our senior secured credit facilities, and in such case, there can be no assurance that we can obtain such waivers at a reasonable cost, if at all;

 

   

market conditions could cause the counterparties to the derivative financial instruments we may use to hedge our exposure to interest rate, commodity, or currency fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly; and

 

   

market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending, which in turn could result in decreased sales and earnings for us.

In general, downturns in economic conditions can cause fluctuations in demand for our and our customers’ products, product prices, volumes, and margins. Future economic conditions may not be favorable to our industry

 

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and future growth in demand for our products, if any, may not be sufficient to alleviate any existing or future conditions of excess industry capacity. A decline in the demand for our products or a shift to lower margin products due to deteriorating economic conditions could have a material adverse effect on our business, financial condition, and results of operations and could also result in impairments of certain of our assets. We do not know if market conditions or the state of the overall economy will maintain its current course, improve, or decline in the near future. We cannot provide assurance that any decline in economic conditions or economic downturn in one or more of the geographic regions in which we sell our products would not have a material adverse effect on our business, financial condition, and results of operations.

Our debt obligations may limit our flexibility in managing our business.

The indentures governing our Holdco Notes and Opco Notes and the credit agreement governing our senior secured credit facilities require us to comply with several customary financial and other restrictive covenants, such as maintaining leverage ratios in certain situations, maintaining insurance coverage, and restricting our ability to make certain investments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Agreements.” These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness even if we had satisfied our payment obligations. If we were to default on the indentures governing our Holdco Notes or Opco Notes, the credit agreement governing our senior secured credit facilities, or other debt instruments, our business, financial condition, and results of operations would be materially adversely affected.

Risks Related to this Offering and Ownership of our Common Shares

Because a significant portion of our operations is conducted through our subsidiaries, we are largely dependent on our receipt of distributions or other payments from our subsidiaries for cash to fund all of our operations and expenses, including to make future dividend payments, if any.

A significant portion of our operations is conducted through our subsidiaries. As a result, our ability to service our debt or to make future dividend payments, if any, is largely dependent on the earnings of our subsidiaries and the payment of those earnings to us in the form of dividends, loans, or advances and through repayment of loans or advances from us. Payments to us by our subsidiaries will be contingent upon our subsidiaries’ earnings and other business considerations and may be subject to statutory or contractual restrictions. We do not currently expect to declare or pay dividends on our common shares for the foreseeable future; however, to the extent that we determine in the future to pay dividends on our common shares, the credit agreement governing our senior secured credit facilities and the indentures governing the Holdco Notes and the Opco Notes significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. Further, there may be significant tax and other legal restrictions on the ability of foreign subsidiaries to remit money to us.

There is no existing market for our common shares, and we do not know if one will develop to provide you with adequate liquidity to sell our common shares at prices equal to or greater than the price you paid in this offering.

Prior to this offering, there has not been a public market for our common shares. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market on the stock exchange on which we intend to list our common shares or otherwise or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling any of our common shares that you buy. The initial public offering price for the common shares will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common shares at prices equal to or greater than the price you paid in this offering, or at all.

 

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We will incur increased costs as a result of operating as a publicly traded company, and our management will be required to devote substantial time to new compliance initiatives.

As a publicly traded company, we will incur additional legal, accounting, and other expenses that we did not previously incur. Although we are currently unable to estimate these costs with any degree of certainty, they may be material in amount. In addition, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules of the SEC and the stock exchange on which our common shares are listed, have imposed various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives as well as investor relations. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur additional costs to maintain the same or similar coverage.

Furthermore, if we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, the market price of our common shares could decline and we could be subject to potential delisting by the stock exchange on which our common shares are listed and review by such exchange, the SEC or other regulatory authorities, which would require the expenditure by us of additional financial and management resources. As a result, our shareholders could lose confidence in our financial reporting, which would harm our business and the market price of our common shares.

The price of our common shares may fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of our common shares may prevent you from being able to sell your common shares at or above the price you paid for your common shares. The market price of our common shares could fluctuate significantly for various reasons, including:

 

   

our operating and financial performance and prospects;

 

   

our quarterly or annual earnings or those of other companies in our industries;

 

   

the public’s reaction to our press releases, our other public announcements, and our filings with the SEC;

 

   

changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common shares or the stock of other companies in our industries;

 

   

the failure of research analysts to cover our common shares;

 

   

strategic actions by us, our customers, or our competitors, such as acquisitions or restructurings;

 

   

increased competition;

 

   

new laws or regulations or new interpretations of existing laws or regulations applicable to us;

 

   

changes in accounting standards, policies, guidance, interpretations, or principles;

 

   

material litigation or government investigations;

 

   

default on our indebtedness;

 

   

changes in general conditions in the U.S. and global economies or financial markets, including those resulting from war, incidents of terrorism, natural disasters, severe weather, or responses to such events;

 

   

reactions to changes in the markets for the raw materials or key inputs that impact our production or our industries generally;

 

   

changes in key personnel;

 

   

sales of common shares by us, Carlyle, or members of our management team;

 

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termination or expiration of lock-up agreements with our management team and principal shareholders;

 

   

the granting or exercise of employee stock options;

 

   

volume of trading in our common shares; and

 

   

the realization of any risks described under this “Risk Factors” section.

In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in the end-markets we serve. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our common shares could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price and cause you to lose all or part of your investment. Further, in the past, market fluctuations and price declines in a company’s stock have led to securities class action litigations. If such a suit were to arise, it could have a substantial cost and divert our resources regardless of the outcome.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our common shares and trading volume could decline.

The trading market for our common shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who cover us downgrade our common shares or publish inaccurate or unfavorable research about our business, the market price for our common shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our common shares to decline.

The pro forma and non-IFRS financial measures included in this prospectus are presented for informational purposes only and may not be an indication of our financial condition or results of operations in the future.

The unaudited pro forma financial information included in this prospectus was derived from the audited financial statements and the related notes thereto of the Predecessor and Successor and is presented for information purposes only and is not necessarily indicative of what our actual financial condition or results of operations would have been had the Acquisition been completed on the date indicated. The assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect our financial condition or results of operations. Accordingly, our financial condition and results of operations in the future may not be consistent with, or evident from, such pro forma financial information. The non-IFRS financial measures included in this prospectus, including Adjusted EBITDA, include information that we use to evaluate our past performance, but you should not consider such information in isolation or as an alternative to measures of our performance determined under IFRS. For further information regarding such limitations, see “Prospectus Summary—Summary Historical and Pro Forma Financial Information.

If we fail to maintain proper and effective internal controls over financial reporting, our ability to produce accurate and timely financial statements could be impaired and investors’ views of us could be harmed.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, with auditor attestation of the effectiveness of our internal controls, beginning with our annual report on Form 20-F for the fiscal year ending December 31, 2020. If we are

 

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not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common shares could decline and we could be subject to sanctions or investigations by the stock exchange on which we intend to list our common shares, the SEC, or other regulatory authorities, which would require additional financial and management resources.

Our ability to successfully implement our business plan and comply with Section 404 of the Sarbanes-Oxley Act requires us to be able to prepare timely and accurate financial statements. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures, or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors. Moreover, we cannot be certain that these measures would ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we were to conclude, and our auditors were to concur, that our internal control over financial reporting provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. This, in turn, could have an adverse impact on trading prices for our common shares, and could adversely affect our ability to access the capital markets.

We are controlled by Carlyle, whose interests in our business may be different than yours.

As of the date hereof, Carlyle owned     % of Atotech UK Topco Limited’s common shares on a fully diluted basis and all the outstanding common shares of Atotech Limited, and is able to control our affairs in all cases. Following this offering, Carlyle will continue to own approximately     % of Atotech Limited’s common shares (or     % if the underwriters exercise their option to purchase additional common shares in full). Pursuant to a shareholders agreement, a majority of our board of directors (the “Board”) will be designated by Carlyle, and Carlyle will continue to have the ability to designate a majority of our directors until it owns less than     % of the outstanding common shares. See “Certain Relationships and Related Party Transactions.” As a result, Carlyle or its respective designees to our Board will have the ability to control the appointment of our management, the entering into of mergers, sales of substantially all or all of our assets, and other extraordinary transactions and influence amendments to our memorandum of association and articles of association. So long as Carlyle continues to own a majority of our common shares, they will have the ability to control the vote in any election of directors and will have the ability to prevent any transaction that requires shareholder approval regardless of whether other shareholders believe the transaction is in our best interests.

In any of these matters, the interests of Carlyle may differ from or conflict with your interests. Moreover, this concentration of share ownership may also adversely affect the trading price for our common shares to the extent investors perceive disadvantages in owning shares of a company with a controlling shareholder. In addition, since Carlyle will continue to own approximately     % of our common shares (or     % if the underwriters exercise their option to purchase additional common shares in full), the price of our common shares may be volatile due to a smaller public float. Carlyle is in the business of making investments in companies and may, from time to time, acquire interests in businesses that directly or indirectly compete with our business, as well as businesses that are our existing or potential suppliers or customers. Carlyle may acquire or seek to acquire assets that we seek to acquire and, as a result, those acquisition opportunities may not be available to us or may be more expensive for us to pursue.

We have no plans to pay regular dividends on our common shares, so you may not receive funds without selling your common shares.

We have no plans to pay regular dividends on our common shares. We generally intend to utilize our future earnings, if any, to fund our growth and reduce our indebtedness. Any payment of future dividends will be at the

 

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discretion of our Board (subject to, and in accordance with, our articles of association) and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations that our Board deems relevant. The senior secured credit facilities and the indentures governing the Holdco Notes and the Opco Notes also effectively limit our ability to pay dividends. Accordingly, you may have to sell some or all of your common shares after price appreciation in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell your common shares and you may lose the entire amount of the investment.

You may suffer immediate and substantial dilution.

The initial public offering price per share of our common shares is substantially higher than our net tangible book value per common share immediately after the offering. As a result, you may pay a price per share that substantially exceeds the tangible book value of our assets after subtracting our liabilities. At an offering price of $                    per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, you may incur immediate and substantial dilution in the amount of $                per share. We also had                common shares issuable upon the exercise of options outstanding as of                 at a weighted average exercise price of $                per share. To the extent these options are exercised, there may be further dilution. See “Dilution.”

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.

We are incorporated under Jersey law. The rights of holders of common shares are governed by Jersey law, including the provisions of the Companies (Jersey) Law 1991, as amended (the “Jersey Companies Law”), and by our articles of association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See “Description of Capital Stock—Differences in Corporate Law” in this prospectus for a description of the principal differences between the provisions of the Jersey Companies Law applicable to us and the Delaware General Corporation Law relating to shareholders’ rights and protections.

Future sales of our common shares in the public market could lower our share price, and any additional capital raised by us through the sale of equity or convertible debt securities may dilute your ownership in us and may adversely affect the market price of our common shares.

We and substantially all of our current shareholders may sell additional common shares in subsequent public offerings. We may also issue additional common shares or convertible debt securities, for a variety of reasons, including to finance future acquisitions. After the consummation of this offering, we will be authorized to issue an unlimited number of common shares and have                common shares outstanding. This number includes                common shares sold by us and         common shares that the selling shareholders are selling in this offering, which may be resold immediately in the public market. Of the remaining common shares,         , or         % of our total outstanding common shares, are restricted from immediate resale under the lock-up agreements between our current shareholders and the underwriters described in “Underwriting,” but may be sold into the market in the near future. These common shares and any common shares which may be issued upon exercise of outstanding options will become available for sale following the expiration of the lock-up agreements, which, without the prior consent of two of the four representatives of the underwriters, is 180 days after the date of this prospectus, subject to compliance with the applicable requirements under Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”).

We cannot predict the size of future issuances of our common shares or the effect, if any, that future issuances and sales of our common shares will have on the market price of our common shares. Sales of substantial amounts of our common shares (including sales pursuant to Carlyle’s registration rights and common shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices for our common shares. See “Certain Relationships and Related Party Transactions” and “Common Shares Eligible For Future Sale.”

 

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If a U.S. person is treated as owning at least 10% of our common shares, such holder may be subject to adverse U.S. federal income tax consequences.

As a result of the comprehensive U.S. tax reform bill signed into law on December 22, 2017, many of our non-U.S. subsidiaries will be classified as “controlled foreign corporations” for U.S. federal income tax purposes due to the expanded application of certain ownership attribution rules within a multinational corporate group. If a U.S. person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our common shares, such person may be treated as a “United States shareholder” with respect to one or more of our controlled foreign corporation subsidiaries. In addition, if our common shares are treated as owned more than 50% by United States shareholders, we would be treated as a controlled foreign corporation. Certain United States shareholders of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income, as ordinary income, its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not we make any distributions to such United States shareholder. An individual United States shareholder generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a corporate United States shareholder with respect to a controlled foreign corporation. A failure by a United States shareholder to comply with its reporting obligations may subject the United States shareholder to significant monetary penalties, loss of foreign tax credits, and may extend the statute of limitations with respect to the United States shareholder’s U.S. federal income tax return for the year for which such reporting was due. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are controlled foreign corporations or whether any investor is a United States shareholder with respect to any such controlled foreign corporations. We also cannot guarantee that we will furnish to United States shareholders information that may be necessary for them to comply with the aforementioned obligations. United States investors should consult their own advisors regarding the potential application of these rules to their investments in us. The risk of being subject to increased taxation may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our common shares.

We are a “foreign private issuer” and a “controlled company” within the meaning of the rules of the stock exchange on which we intend to list our common shares and, as a result, expect to qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

The corporate governance rules of the stock exchange on which we intend to list our common shares require listed companies to have, among other things, a majority of independent board members and independent director oversight of executive compensation, nomination of directors and corporate governance matters. However, as a foreign private issuer, we are permitted to, and we may, follow home country practice in lieu of the above requirements, subject to certain exceptions. As long as we rely on the foreign private issuer exemption for certain of these corporate governance standards, a majority of our Board are not required to be independent directors and our Compensation Committee and Nominating and Corporate Governance Committee are not required to be composed entirely of independent directors. Therefore, our Board’s approach to governance may be different from that of a board of directors consisting of a majority of independent directors, and, as a result, management oversight may be more limited than if we were subject to all the corporate governance standards of the stock exchange on which we intend to list our common shares.

Following the consummation of this offering, Carlyle will continue to control a majority of the voting power of our outstanding common shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the stock exchange on which we intend to list our common shares. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

 

   

the requirement that a majority of the Board consist of independent directors;

 

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the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

 

   

the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

 

   

the requirement for an annual performance evaluation of the nominating and corporate governance committee and compensation committee.

In the event we no longer qualify as a foreign private issuer, we may utilize these exemptions if we continue to qualify as a “controlled company.” If we do utilize the controlled company exemption, we will not have a majority of independent directors and our Nominating and Corporate Governance and Compensation Committees will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all the corporate governance requirements of the stock exchange on which we list our common shares.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of the common shares.

As a “foreign private issuer,” we are not subject to all the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act, that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we expect to submit quarterly interim consolidated financial data to the SEC under cover of the SEC’s Form 6-K, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act. Furthermore, our common shares are not listed and we do not currently intend to list our common shares on any market in the Bailiwick of Jersey, our home country. As a result, we are not subject to the reporting and other requirements of companies listed in the Bailiwick of Jersey. For instance, we are not required to publish quarterly or semi-annual financial statements. Accordingly, there may be less publicly available information concerning our Company than there would be if we were a U.S. public company.

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.

We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act, however, under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2020.

In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy,

 

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objectives, annual total compensation (base salary, bonus, and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors, and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

We may not meet the continued listing standards of the New York Stock Exchange.

The New York Stock Exchange requires companies to fulfill specific requirements in order for their shares to continue to be listed. If our common shares are delisted from the New York Stock Exchange at some later date, our shareholders could find it difficult to sell our common shares. In addition, if our common shares are delisted from the New York Stock Exchange at some later date, we may have our common shares quoted on the Bulletin Board or in the “pink sheets” maintained by the National Quotation Bureau, Inc. The Bulletin Board and the “pink sheets” are generally considered to be less efficient markets than the New York Stock Exchange. In addition, if our common shares are not so listed or are delisted at some later date, our common shares may be subject to the “penny stock” regulations. These rules impose additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As a result, the ability or willingness of broker-dealers to sell or make a market in our common shares might decline. If our common shares are delisted from the New York Stock Exchange at some later date or become subject to the penny stock regulations, it is likely that the price of our common shares would decline and that our shareholders would find it difficult to sell their shares.

It may be difficult to enforce a U.S. judgment against us or our directors and officers outside the United States, or to assert U.S. securities law claims outside of the United States.

Several of our directors and executive officers are not residents of the United States, and the majority of our assets and the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. See “Enforceability of Civil Liabilities.” Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.

In particular, investors should be aware that there is uncertainty as to whether the courts of the Bailiwick of Jersey would recognize and enforce judgments of U.S. courts obtained against us or our directors or management as well as against the selling shareholder predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or entertain original actions brought in courts of the Bailiwick of Jersey against us or our directors or officers as well as against the selling shareholder predicated upon the securities laws of the United States or any state in the United States. As a result of the difficulty associated with enforcing a judgment against us, you may not be able to collect any damages awarded by either a U.S. or foreign court.

 

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FORWARD-LOOKING STATEMENTS

Many statements made in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies and trends we expect to affect our business. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast,” and other similar expressions. These forward-looking statements are contained throughout this prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” We base these forward-looking statements or projections on our current expectations, plans, and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments, and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this prospectus, you should understand that these statements are not guarantees of future performance or results. The forward-looking statements and projections are subject to and involve risks, uncertainties, and assumptions and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections. Factors that may materially affect such forward-looking statements and projections include:

 

   

uncertainty, downturns, and changes in our target markets;

 

   

foreign currency exchange rate fluctuations;

 

   

reduced market acceptance and inability to keep pace with evolving technology and trends;

 

   

loss of customers;

 

   

increases in costs or reductions in the supplies of raw materials that may materially adversely affect our business, financial condition, and results of operations;

 

   

our ability to provide products and services in light of changing environmental, health and safety, product liability, financial, and other legislation and regulation;

 

   

our failure to compete successfully in product development;

 

   

our ability to successfully execute our growth initiatives, business strategies, and operating plans;

 

   

whether the secular trends we expect to drive growth in our business materialize to the degree we expect them to, or at all;

 

   

material costs relating to environmental and health and safety requirements or liabilities;

 

   

underfunded defined benefit pension plans;

 

   

risk that the insurance we maintain may not fully cover all potential exposures;

 

   

failure to comply with the anti-corruption laws of the United States and various international jurisdictions;

 

   

tariffs, border adjustment taxes, or other adverse trade restrictions and impacts on our customers’ value chains;

 

   

political, economic, and legal uncertainties in China, the Chinese government’s control of currency conversion and expatriation of funds, and the Chinese government’s policy on foreign investment in China;

 

   

regulations around the production and use of chemical substances that affect our products;

 

   

United Kingdom’s referendum on withdrawal from the European Union;

 

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weak intellectual property rights in jurisdictions outside the United States;

 

   

intellectual property infringement and product liability claims;

 

   

our substantial indebtedness;

 

   

our ability to obtain additional capital on commercially reasonable terms may be limited;

 

   

risks related to our derivative instruments;

 

   

ability to attract, motivate, and retain senior management and qualified employees;

 

   

increased risks to our global operations including, but not limited to, political instability, acts of terrorism, taxation, and unexpected regulatory and economic sanctions changes, among other things;

 

   

natural disasters that may materially adversely affect our business, financial condition, and results of operations;

 

   

the inherently hazardous nature of chemical manufacturing that could result in accidents that disrupt our operations and expose us to losses or liabilities;

 

   

damage to our brand reputation;

 

   

the amount of the costs, fees, expenses, and charges related to this offering and the related costs of being a public company;

 

   

Carlyle’s ability to control our common shares;

 

   

any statements of belief and any statements of assumptions underlying any of the foregoing;

 

   

other factors disclosed in this prospectus; and

 

   

other factors beyond our control.

 

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USE OF PROCEEDS

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $                    million, assuming the common shares are offered at $                per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to use our net proceeds from this offering for the redemption of our $299.1 million aggregate principal amount of outstanding Holdco Notes and to pay related fees and expenses. Any excess proceeds will be used for general corporate purposes and/or the repayment of indebtedness outstanding under our senior secured credit facilities. The Holdco Notes mature on June 1, 2023 and bear cash interest at a rate of 8.750% per annum and PIK interest at a rate of 9.500%. For the nine months ended September 30, 2019, borrowings under the USD Term Loan Facility bore interest at a rate of 5.578% and borrowings under the RMB Term Loan Facility bore interest at a rate of 4.900%. The USD Term Loan Facility and RMB Term Loan Facility mature on January 31, 2024. We will not receive any proceeds from any sale of common shares by the selling shareholders as a result of the exercise of the underwriters’ option to purchase additional common shares. Any increase or decrease in the number of common shares sold (or increase or decrease in the price from the midpoint of the price range set forth on the cover page of the prospectus) will correspondingly increase or decrease the amount of indebtedness that we will repay.

 

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DIVIDEND POLICY

We do not intend to pay any cash dividends for the foreseeable future. We intend to retain earnings, if any, for the future operation and expansion of our business and the repayment of debt. Any determination to pay dividends in the future will be at the discretion of our Board (in accordance with our articles of association and subject to the Jersey Companies Law) and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by the senior secured credit facilities and the indenture governing the Opco Notes or applicable laws and other factors that our Board may deem relevant. Our existing indebtedness effectively limits our ability to pay dividends and make distributions to our shareholders. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

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CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2019:

 

   

on an actual basis; and

 

   

on an as adjusted to give effect to (i) our issuance and sale of                common shares in this offering at an assumed initial public offering price of $                per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, (ii) the application of the proceeds from this offering, and (iii) the consummation of the Transactions.

The information in this table should be read in conjunction with “Selected Historical Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto included elsewhere in this prospectus.

 

     As of September 30, 2019  

($ in millions)

   Actual            As adjusted  

Cash and cash equivalents

   $ 247.2          $            
  

 

 

        

 

 

 

Debt:

         

Senior secured credit facilities(1):

         

Revolving credit facility

     —                

Term loan facilities

     1,431.7         

Opco Notes

     425.0         

Holdco Notes

     299.1         

Current bank debt(2)

     1.4         

Total debt(3)

     2,157.2         

Total shareholders’ equity

     626.4         
  

 

 

        

 

 

 

Total capitalization

   $ 2,783.6          $    

 

(1)   Our senior secured credit facilities consist of (a) our USD Term Loan Facility, (b) our RMB Term Loan Facility, and (c) our multicurrency revolving credit facility with commitments of $250.0 million (as of September 30, 2019, we had $227.5 million of availability under our revolving credit facility after giving effect to $22.5 million of guarantee obligations).
(2)   Represents amounts outstanding under various local currency revolving lines of credit.
(3)   Excludes short-term and long-term deferred financing costs of $52.2 million and lease liabilities of $73.8 million.

 

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DILUTION

If you invest in our common shares, your interest will be diluted to the extent of the difference between the initial public offering price per share and the net tangible book value per share after this offering and the use of proceeds therefrom.

As of September 30, 2019, we had net tangible book value of approximately $                    million, or $                per share. Net tangible book value per share represents total tangible assets less total liabilities divided by the number of common shares outstanding. After deducting estimated offering expenses payable by us in connection with this offering, our net tangible book value as of September 30, 2019 would have been approximately $                million, or $                per share. This represents an immediate decrease in net tangible book value of $                per share to existing shareholders and an immediate dilution of $                per share to new investors purchasing common shares in this offering. The following table illustrates this dilution on a per share basis:

 

     Per Share  

Assumed initial public offering price per share

      $                

Net tangible book value per share as of September 30, 2019

   $                   

Increase/decrease in net tangible book value per share attributable to the exercise of stock options and estimated offering costs

     

As adjusted net tangible book value per share after this offering

     

Dilution per share to new investors

      $                
  

 

 

    

 

 

 

The following table sets forth, as of September 30, 2019, the total number of common shares owned by existing shareholders and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing shareholders and to be paid by new investors purchasing common shares in this offering. The calculation below is based on an assumed initial public offering price of $                    per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting the assumed underwriting discounts and commissions and other estimated offering expenses payable by us.

 

     Common Shares
Purchased
    Total Consideration     Average
Price Per
Share
 

(in thousands, other than common shares and  percentages)

   Number      Percent     Amount      Percent  

Existing shareholders

                                $                             $                

New investors

            

Total

        100   $                      100   $                

A $1.00 increase (decrease) in the assumed initial offering price would increase (decrease) total consideration paid by new investors, total consideration paid by all shareholders and average price per share paid by all shareholders by $                    million, $                million and $                per share, respectively. An increase (decrease) of 1.0 million in the number of common shares offered by the selling shareholders would increase (decrease) total consideration paid by new investors, total consideration paid by all shareholders and average price per share paid by all shareholders by $                million, $                million and $                per share, respectively.

 

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SELECTED HISTORICAL FINANCIAL INFORMATION

The following table sets forth our selected historical financial information for the following reporting periods:

 

   

The “Predecessor” periods, which reflect the results of operations of Atotech B.V.

 

   

The “Successor” period, which reflects the results of operations of the Successor.

From December 20, 2016 (inception) through January 31, 2017, Atotech UK Topco Limited had no operations or activity. See “Basis of Presentation.”

The historical results of operations data and cash flow data for the years ended December 31, 2017 and 2018 and the historical balance sheet data as of December 31, 2017 and December 31, 2018 presented below were derived from our audited financial statements and the related notes thereto included elsewhere in this prospectus. The historical financial data for the nine months ended September 30, 2018 and 2019 and the historical balance sheet data as of September 30, 2019 presented below were derived from the unaudited interim condensed consolidated financial statements and related notes thereto included elsewhere in this prospectus. The historical financial data for the year ended December 31, 2016 and the period from January 1, 2017 through January 31, 2017 presented below have been derived from the financial statements and the related notes thereto included elsewhere in this prospectus. The historical balance sheet data as of December 31, 2016 presented below has been derived from the financial statements of Predecessor not included in this prospectus.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and, in the opinion of management, include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the information set forth herein.

Our historical financial data is not necessarily indicative of our future performance and does not reflect what our financial position and results of operations would have been had we operated as an independent publicly traded company during the periods shown. The results of operations included in the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus are not necessarily indicative of results for the full fiscal year or any future reporting period.

We have omitted the selected financial data as of and for the years ended December 31, 2014 and 2015, as such financial information was audited by KPMG Audit, a department of KPMG S.A. (France), on a basis that is not consistent with the financial statements audited by KPMG AG Wirtschaftsprüfungsgesellschaft (Germany) for the years ended December 31, 2016, 2017 and 2018, and cannot be provided on a consistent basis without unreasonable effort and expense.

 

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    Predecessor                 Successor  

($ in millions, except for share data)

  Year ended
December 31,
2016
    January 1
through
January 31,
2017
                Year ended
December 31,
2017(1)
    Year ended
December 31,
2018
    Nine months
ended
September 30,
2018
    Nine months
ended
September 30,
2019
 

Statement of Operations Data:

                 

EL Segment revenues

  $ 593.0     $ 45.8           $ 603.0     $ 669.4     $ 504.0     $ 496.7  

GMF Segment revenues

    531.2       45.5             490.6       543.4       415.4       380.7  
 

 

 

   

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Revenues

    1,124.2       91.3             1,093.6       1,212.8       919.4       877.4  

Cost of sales, excluding depreciation and amortization

    (470.4     (40.7           (513.7     (504.2     (381.5     (360.2

Depreciation and amortization

    (51.9     (4.0           (141.1     (171.6     (125.8     (121.9

Selling, general, and administrative expenses

    (266.4     (19.8           (250.7     (295.6     (217.0     (205.2

Research and development expenses

    (79.1     (6.3           (62.6     (58.0     (44.9     (39.9

Restructuring expenses

    (5.3     (0.4           (10.8     (14.8     (12.2     (13.7
 

 

 

   

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

    251.1       20.1             114.7       168.6       138.0       136.5  

Interest expense

    (4.5     (0.1           (94.1     (134.7     (97.3     (113.6

Other expense, net

    (9.3     (0.8           (23.7     (5.2     (9.7     27.0  

Acquisition related expenses

    —         —               (67.0     —         —         —    
 

 

 

   

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

    237.3       19.2                         (70.1     28.7       31.0       49.9  

Income tax expense

    (64.3     (6.0           (16.7     (52.4     (30.7     (37.9
 

 

 

   

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income (loss)

  $ 173.0     $ 13.2           $ (86.8   $ (23.7   $ 0.3     $ 12.0  
 

 

 

   

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Per share data(2)

                 

Earnings (loss) per common share:

                 

Basic

                 

Diluted

                 

Weighted average common shares outstanding:

                 

Basic

                 

Diluted

                 
 

Balance Sheet Data (at end of period):

                 

Non-current assets

  $ 446.3             $ 3,279.5     $ 3,024.1       $ 2,956.1  

Current assets:

                 

Inventories, net

    105.3               112.8       121.5         124.5  

Trade and other receivables, net

    259.8               297.2       278.8         285.0  

Current tax assets

    22.6               22.5       23.7         34.9  

Cash and cash equivalents

    332.5               325.8       386.2         247.2  

Other financial assets

    —                 —         1.6         4.5  

Total current assets

    720.2               758.3       811.8         696.1  

Total assets

    1,166.5               4,037.8       3,835.9         3,652.2  

Total liabilities

    517.6               2,725.8       3,131.2         3,025.8  

Total shareholders’ equity

  $ 648.9             $ 1,312.0     $ 704.7         626.4  
 

 

 

           

 

 

   

 

 

     

 

 

 
 

Cash Flow Data:

                 

Net cash provided by (used in):

                 

Operating activities

  $ 229.6     $ (8.7         $ 107.2     $ 166.7     $ 88.1     $ 66.1  

Investing activities

    (83.2     (3.3           (2,736.3     (53.9     (29.8     (45.7

Financing activities

    (199.0     (140.3           2,933.6       (37.7     (34.5     (139.6

 

(1)   Reflects 11 months of operations of Atotech UK Topco Limited following the Acquisition.
(2)   All share and per share information has been adjusted to (i) reflect the        -for-1 stock split, consummated prior to effectiveness of the Registration Statement and (ii) reflect the conversion of each preferred share of Atotech Limited into                  shares of common stock (based on an assumed initial public offering price of $         (the midpoint of the price range set forth on the cover page of this prospectus) and an initial public offering date of                     , 2020). See “Basis of Presentation.”

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion summarizes the significant factors affecting our operating results, financial condition, liquidity, and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with “Prospectus Summary—Summary Historical and Pro Forma Financial Information,” “Selected Historical Financial Information” and the audited financial statements and related notes thereto of Atotech UK Topco Limited included elsewhere in this prospectus. Except where noted, statements in the following discussion and analysis of financial condition and results of operations related to periods prior to the consummation of the Acquisition reflect the operations of Atotech B.V., the predecessor entity of Atotech UK Topco Limited, and statements in the following discussion and analysis of financial condition and results of operations related to periods following the consummation of the Acquisition reflect the operations of Atotech UK Topco Limited.

Certain financial measures for the year ended December 31, 2017 are presented on a pro forma basis to give effect to the Acquisition as though the Acquisition had occurred on January 1, 2017.

Our estimated results contained in this prospectus are forward-looking statements based solely on information available to us as of the date of this prospectus and may materially differ from actual results. Please see “Forward-Looking Statements,” and “Prospectus Summary—Summary Historical and Pro Forma Financial Information.”

Overview

We are the leading global provider of specialty electroplating solutions delivering chemistry, equipment, and service for high-growth technology applications. We are #1 in the global EL plating chemistry market, #1 in the global GMF plating chemistry market, and the #1 global manufacturer of horizontal plating equipment for PCB production. Our solutions are used in a wide variety of attractive end-markets, including smartphones, communication infrastructure, cloud computing infrastructure, computing and consumer electronics, automotive electronics, and automotive surface finishing, as well as in numerous industrial and consumer applications such as heavy machinery and household appliances. We benefit from various secular growth trends such as digitalization, increasing data volumes and processing speed requirements, the growth of the consumer class in emerging markets, increasing environmental regulations, and rising product quality and durability standards. We expect these trends to not only increase demand for our customers’ end-products that use our plating chemistry, but also increase the amount and value of plating chemistry used in each end-product, allowing our growth to outpace underlying end-market volume growth.

We are the only major company in our industry that provides both chemistry and equipment, which we sell through both our EL and GMF segments. Our comprehensive systems and solutions approach leverages our unique offering of chemistry, equipment, and service. We believe this business model creates a sustainable competitive advantage that helps us achieve deep customer intimacy and allows us to continue to grow our market share and capitalize on positive market growth trends. This approach is supported by our 17 state-of-the-art global technology centers, which allow us to provide local service around the world and to respond in real-time to customer needs. The combination of our comprehensive systems and solutions approach, expansive global manufacturing and sales footprint, customer-driven investments in R&D, and superior technical expertise makes us an ideal electroplating and surface finishing solutions partner for our diverse customer base. This drives long-lasting relationships and an industry-leading financial profile, with fiscal 2018 EL and GMF Segment Adjusted EBITDA margins of 33.9% and 27.0%, respectively, and EL and GMF Segment Adjusted EBITDA margins of 35.7% and 26.8%, respectively, for the nine months ended September 30, 2019.

Basis of Presentation

Atotech UK Topco Limited is the holding company of Holdco, Opco, and Alpha US Bidco, Inc. and their subsidiaries, and was incorporated on December 20, 2016 for the purpose of consummating the Acquisition.

 

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In this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (i) the “Successor” refers to Atotech UK Topco Limited and its subsidiaries for the period beginning on February 1, 2017 and thereafter following the Acquisition and (ii) “Predecessor” refers to Atotech B.V., on a carve-out basis for periods prior to February 1, 2017.

Atotech Limited, the registrant, is a Jersey company incorporated on December 12, 2018 for purposes of becoming the new holding company of Holdco and its subsidiaries. Substantially concurrently with the closing of this offering, all equity interests of the Successor will be contributed to Atotech Limited and the Successor will be dissolved thereafter with Atotech Limited directly or indirectly, respectively, owning all outstanding equity interests of Holdco and Opco. Prior to the Reorganization Transactions, Atotech Limited will have no operations and no material assets or liabilities. After the Reorganization Transactions, Atotech Limited will succeed to the business and operations of Successor and Atotech Limited’s historical financial statements will be substantially identical to those of the Successor. As a result, the financial statements of Atotech Limited are not meaningful to an understanding of our business and are not included in this prospectus.

On October 6, 2016, Opco entered into a share purchase agreement with TOTAL pursuant to which Atotech UK Topco Limited indirectly acquired all the outstanding equity interests of Atotech B.V. on January 31, 2017. The Acquisition purchase price was funded in part by (i) proceeds from borrowings under our senior secured credit facilities totaling $1,400.0 million and (ii) proceeds from the issuance of the Opco Notes totaling $425.0 million. The senior secured credit facilities, the Opco Notes, and the Acquisition are more fully described in Notes 5 and 12 to the financial statements for the year ended December 31, 2018 included elsewhere in this prospectus and under the caption “—Liquidity and Capital Resources—Debt Agreements.”

Acquisition Accounting

As a result of the Acquisition, and after the application of acquisition accounting to our balance sheet on January 31, 2017, our assets and liabilities were adjusted to their estimated fair market values as of the Acquisition closing date. These adjusted valuations have resulted in an increase in our operating expenses due to the depreciation and amortization expense related to the increased carrying value of our fixed assets and identifiable definite-lived intangible assets. The excess value of the total purchase price over the estimated fair value of our assets and liabilities on the Acquisition closing date has been allocated to goodwill. Any identifiable indefinite-lived assets, including goodwill, are subject to annual impairment testing. As of December 31, 2017, we had completed the accounting for the Acquisition. There were no measurement period adjustments recorded after December 31, 2017. See “—Critical Accounting Policies and Estimates—Impairment of Goodwill.”

2018 Recapitalization Transactions

On May 30, 2018, Opco entered into an amendment to the senior secured credit facilities to borrow $200.0 million in incremental Term B-1 loans, and Holdco issued $300.0 million of 8.75%/9.50% Senior PIK Toggle Notes at an issue price of 99.010%. Proceeds from such borrowings were distributed to Atotech UK Topco Limited and used by it to pay accrued interest on, and redeem certain of, its preferred shares.

Eliminated Product Categories

We continually review our product portfolio in an effort to optimize our offerings to our customers and determine to discontinue certain products from time to time. For example, in 2016, we began the phase out of products containing Chrome VI due to increasingly strict environmental requirements imposed by recently implemented REACH regulations. This phase out is largely complete other than de minimis sales to a limited number of customers. In addition, in 2016, we began to phase out our EM product line for strategic reasons and completed this exit during 2018. As a result of these decisions, the product portfolio of the businesses reflected in our audited financial statements has changed, particularly impacting our revenue growth rates in 2017, the year in which revenues generated from these eliminated product categories were most significantly impacted.

 

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Pro Forma Financial Information

In addition to the historical analysis of results of operations, we have prepared unaudited supplemental pro forma results of operations of Successor for the year ended December 31, 2017. We believe this supplemental presentation provides additional information that enables a more meaningful comparison of our results in the periods presented herein.

The pro forma results for the year ended December 31, 2017 represent the addition of the period from January 1, 2017 through January 31, 2017 and Successor fiscal 2017, as well as pro forma adjustments to reflect the Acquisition and the consummation of this offering and the use of proceeds therefrom as if it had occurred on January 1, 2017. The pro forma results do not reflect the actual results we would have achieved had the Acquisition been completed as of January 1, 2017 and are not indicative of our future results of operations.

 

    Predecessor                 Successor     Combined
Predecessor
and
Successor for
the year
ended
December 31,
2017
                Successor Pro
Forma year
ended
December 31,
2017
 

($ in millions)

  January 1
through
January 31,
2017
   

 

   

 

    Year ended
December 31,
2017(a)
    Acquisition
Adjustments
   

 

 

EL Segment revenues

  $ 45.8           $ 603.0     $ 648.8     $ —         $ 648.8  

GMF Segment revenues

    45.5             490.6       536.1       —           536.1  
 

 

 

         

 

 

   

 

 

   

 

 

     

 

 

 

Revenues

    91.3             1,093.6       1,184.9       —           1,184.9  

Cost of sales, excluding depreciation and amortization

    (40.7           (513.7     (554.4     54.0       (b     (500.4

Depreciation and amortization

    (4.0           (141.1     (145.1     (8.6     (c     (153.7

Selling, general, and administrative expenses

    (19.8           (250.7     (270.5     —           (270.5

Research and development expenses

    (6.3           (62.6     (68.9     —           (68.9

Restructuring expenses

    (0.4           (10.8     (11.2     —           (11.2
 

 

 

         

 

 

   

 

 

   

 

 

     

 

 

 

Operating profit

    20.1             114.7       134.8       45.4         180.2  

Interest expense

    (0.1           (94.1     (94.2     (8.5     (d     (102.7

Other expense, net

    (0.8           (23.7     (24.5     —           (24.5

Acquisition related expenses

    —               (67.0     (67.0     67.0       (e     —    
 

 

 

         

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) before income taxes

    19.2             (70.1     (50.9     103.9         53.0  

Income tax expense

    (6.0           (16.7     (22.7     (22.8     (f     (45.5
 

 

 

         

 

 

   

 

 

   

 

 

     

 

 

 

Consolidated net income (loss)

  $ 13.2           $ (86.8   $ (73.6   $ 81.1       $ 7.5  
 

 

 

         

 

 

   

 

 

   

 

 

     

 

 

 

 

(a)   Reflects 11 months of operations of Atotech UK Topco Limited following the Acquisition.
(b)   As a result of the Acquisition, Atotech UK Topco Limited adjusted the book value of inventory to its fair value in accordance with IFRS 3 “Business Combinations.” Accordingly, Atotech UK Topco Limited recorded a charge of $54.0 million for the year ended December 31, 2017. This adjustment reflects the removal of this charge as this adjustment is one-time in nature with no recurring impact. The tax benefit related to this adjustment was $16.2 million and has been also removed.
(c)   Reflects the impact to depreciation and amortization for the period from January 1, 2017 through January 31, 2017 not included in Atotech UK Topco Limited’s historical results of operations for the year ended December 31, 2017 as a result of the Acquisition. See Note 5 in the financial statements of Atotech UK Topco Limited for the year ended December 31, 2017. There was no tax benefit related to this adjustment.
(d)  

Reflects the estimated impact to interest expense for the period from January 1, 2017 through January 31, 2017 not included in Atotech UK Topco Limited’s historical results of operations for the year ended December 31, 2017, estimated to be $8.5 million, as a result of the Acquisition, based on $1,400.0 million of borrowings under the senior secured credit facility at an assumed interest rate of approximately 5.4%, the

 

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average interest rate in effect during the eleven months ended December 31, 2017, and $425.0 million of borrowings under the Opco Notes at a rate of 6.250%, the actual interest rate on the Opco Notes. Each one-eighth point change in interest rates on our USD Term Loan Facility (and to the extent that LIBOR is in excess of the 1.00% floor) and our RMB Term Loan Facility would result in a change in annual interest expense of $1.1 million and $0.6 million, respectively. There was no tax benefit related to this adjustment.

(e)   As a result of the Acquisition, Atotech UK Topco Limited recorded acquisition-related costs of $67.0 million for the year ended December 31, 2017. This adjustment reflects the removal of this charge as these transaction costs are one-time in nature with no recurring impact. The tax benefit related to this adjustment was $6.6 million and has been also removed.
(f)   This adjustment reflects the estimated tax effect of the pro forma adjustments described in footnotes (b) and (e) above. Because the tax rate used for the pro forma financial information is an estimate, it will likely vary from the actual effective rate in periods subsequent to the consummation of this offering.

Key Factors Affecting the Components of Our Results of Operations

The following discussion sets forth certain components of our statement of operations and certain factors that impact those items:

Revenues

We generate revenues from the sale of chemistry and equipment across all major geographic areas. Revenues exclude sales taxes and are presented net of discounts, rebates, and reductions. Our revenues are impacted by the following key factors and trends:

 

   

broad macroeconomic trends and factors, including general economic conditions, economic conditions in the markets in which we operate, consumer preferences, and rising costs of labor;

 

   

technological advancements in our EL end-markets, including the rollout of 5G infrastructure, the adoption of next-generation mobile devices and EVs, the proliferation of big data and cloud computing, and the increasing use of IoT connected devices;

 

   

secular trends in our GMF end-markets, including increased plating content per unit as a result of vehicle lightweighting, increasing quality requirements, and premiumization;

 

   

increasingly stringent environmental regulations;

 

   

our ability to pass through changes in the price of raw materials, in particular, palladium, to our customers;

 

   

our ability to successfully develop and launch new solutions;

 

   

the discontinuance of any of our products in the future in an effort to optimize our offering to our customers;

 

   

seasonality in both our segments, which generally experience their strongest revenue in the second half of each fiscal year, mostly driven by consumption trends during the holiday season, and their lowest revenue in the first quarter of each fiscal year, mostly driven by the slowdown in production in China as a result of the Chinese New Year, which can result in a sequential decline in our revenues in the first quarter of a fiscal year relative to the fourth quarter of the prior fiscal year; and

 

   

fluctuations in foreign currency exchange rates.

Cost of sales, exclusive of depreciation and amortization (“Cost of sales”)

Cost of sales principally consists of the price paid for raw materials, unfinished and finished products, compensation and benefit costs for employees involved in our manufacturing operations, and other cost of sales. Raw materials are valued at their respective purchase prices, net of discounts and rebates, including transportation costs and ancillary expenses.

 

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The key factors that impact our cost of sales as a percentage of our revenues include:

 

   

changes in the price of raw materials, in particular, palladium;

 

   

the impact of wage inflation;

 

   

the mix of products sold during any period; in particular the mix of our revenues between chemistry and equipment; and

 

   

the impact of our operational improvement initiatives.

Depreciation and amortization

Depreciation and amortization consists of capitalized costs incurred in connection with the ownership and operation of all tangible assets, including the depreciation and amortization expense related to the increased carrying value of our fixed assets and identifiable definite-lived intangible assets related to the Acquisition. The main tangible items that are depreciated over their useful lives are our recently completed technology centers, our R&D equipment, and our new and existing fully depreciated production facilities. The principal intangible items that are amortized over their useful lives include our developed technology, customer relationships, and trade name portfolio.

Selling, general, and administrative expenses (“SG&A”)

SG&A expense consists principally of expenditures incurred in connection with the sales and marketing of our products, third-party logistics, as well as administrative costs for support functions such as finance, information technology, human resources, and legal. Following the Acquisition, we have built up additional corporate functions in order to operate as a standalone company. We expect we will incur additional expenses as a result of being a public company.

Research and development expenses (“R&D”)

R&D expenses principally consist of costs incurred to develop new products and equipment, processes, and technologies, or to generate improvements to existing products, equipment, or processes.

Restructuring expenses

Restructuring expenses mainly consist of expenditures in relation to organizational changes and severance payments.

Interest expense

Interest expense consists of interest on our financial obligations as well as the amortization of debt issuance costs and debt discounts associated with our senior secured credit facilities, Opco Notes, and Holdco Notes. The majority of the Company’s interest expense is not deductible for income tax purposes because the company has incurred its indebtedness in jurisdictions where it has no taxable income.

Other expense, net

Other expense, net principally consists of gains or losses from foreign currency fluctuations; gains or losses on disposal of property, plant, and equipment; and mark-to-market adjustments of our derivatives.

Income taxes

Income taxes include (a) deferred tax, consisting of amounts of income taxes payable or recoverable during future fiscal years for taxable or deductible timing differences and carry-forward of unused tax losses, and tax credits and (b) the payable amount of corporate tax, estimated on the basis of the tax rules in force in applicable

 

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jurisdictions, and distribution tax on dividends received, or withholding tax, as applicable, including provisions for tax litigations and disputes. We and our subsidiaries are subject to income tax in the various jurisdictions in which we operate. Changes to the debt and equity capitalization of our subsidiaries, and the realignment of the functions performed and risks assumed by the various subsidiaries are among the factors that will determine the future book and taxable income of the respective subsidiary and the Company as a whole.

 

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Results of Operations

The following discussion should be read in conjunction with the information contained in the accompanying audited financial statements and related footnotes included elsewhere in this prospectus. Our results of operations set forth below may not necessarily reflect what would have occurred if we had been a standalone entity prior to the Acquisition or what will occur in the future.

The following table was derived from the Successor’s consolidated statements of operations for fiscal 2017 and fiscal 2018 and the nine months ended September 30, 2018 and 2019 and from the Predecessor’s combined statements of operations for fiscal 2016 and the period from January 1, 2017 through January 31, 2017 included elsewhere in this prospectus. It should be noted that the results of operations for Successor fiscal 2017 only include the results of Atotech B.V. from the date of the Acquisition. Prior to the Acquisition, Atotech UK Topco Limited generated no revenue or expenses. We have also presented pro forma financial results for Successor fiscal 2017 as if the Acquisition Transactions had occurred on January 1, 2017. See “—Basis of Presentation.” This information and the related comparison to the operating results for Predecessor fiscal 2016 is provided for a more meaningful comparison between years.

 

    Predecessor                 Successor                 Successor
Pro Forma
    Successor  

($ in millions)

  Year ended
December 31,
2016
    January 1
through
January 31,
2017
                Year ended
December 31,
2017(1)
                Year ended
December 31,
2017(2)
    Year ended
December 31,
2018
    Nine months
ended
September 30,
2018
    Nine months
ended
September 30,
2019
 

EL Chemistry revenues

  $ 481.0     $ 39.0           $ 488.9           $ 527.9     $ 568.5     $ 429.1     $ 436.9  

EL Equipment revenues

    112.0       6.8             114.1             120.9       100.9       74.9       59.8  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Total EL Segment revenues

    593.0       45.8             603.0             648.8       669.4     $ 504.0     $ 496.7  

GMF Chemistry revenues

    471.6       37.9             449.6             487.5       498.0       379.4       349.7  

GMF Equipment revenues

    59.6       7.6             41.0             48.6       45.4       36.0       31.0  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Total GMF Segment revenues

    531.2       45.5             490.6             536.1       543.4       415.4       380.7  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Revenues

    1,124.2       91.3             1,093.6             1,184.9       1,212.8       919.4       877.4  

Cost of sales, excluding depreciation and amortization

    (470.4     (40.7           (513.7           (500.4     (504.2     (381.5     (360.2

Depreciation and amortization

    (51.9     (4.0           (141.1           (153.7     (171.6     (125.8     (121.9

Selling, general, and administrative expenses

    (266.4     (19.8           (250.7           (270.5     (295.6     (217.0     (205.2

Research and development expenses

    (79.1     (6.3           (62.6           (68.9     (58.0     (44.9     (39.9

Restructuring expenses

    (5.3     (0.4           (10.8           (11.2     (14.8     (12.2     (13.7
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

    251.1       20.1             114.7             180.2       168.6       138.0       136.5  
                         

Interest expense

    (4.5     (0.1           (94.1           (102.7     (134.7     (97.3     (113.6

Other expense, net

    (9.3     (0.8           (23.7           (24.5     (5.2     (9.7     27.0  

Acquisition related expenses

    —         —               (67.0           —         —         —         —    
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

    237.3       19.2             (70.1           53.0       28.7       31.0       49.9  

Income tax expense

    (64.3     (6.0           (16.7           (45.5     (52.4     (30.7     (37.9
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income (loss)

  $ 173.0     $ 13.2           $ (86.8         $ 7.5     $ (23.7   $ 0.3     $ 12.0  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   Reflects 11 months of operations of Atotech UK Topco Limited following the Acquisition.
(2)   See “—Pro Forma Financial Information” for a complete description of the adjustments and assumptions underlying the pro forma financial information included in this prospectus.

 

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Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Revenues

Revenues decreased $42.0 million, or 4.6%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This decrease was a result of a decline in both segments. EL segment revenues declined by $7.3 million, or 1.4%, while GMF segment revenues declined by $34.7 million, or 8.4%, over the same period. Geographically, the decline was most significant in our markets in Europe and the Americas, while China and the rest of Asia reported lower declines or single digit percentage gains in revenue. Chemistry revenues declined by $21.9 million, or 2.7%, over such period, while equipment revenues declined by $20.1 million, or 18.1%, although our market share in all regions remained stable. The change in chemistry revenues was largely impacted by declining volumes due to softer market conditions in our key end markets. In addition, chemistry revenues for the nine months ended September 30, 2019 were negatively impacted by an unfavorable exchange rate translation compared to the prior nine-month period, reducing revenues by $33.8 million, partially offset by fluctuations in palladium prices which increased sales by $35.8 million. Excluding the impact of these items, our chemistry revenues decreased by $23.9 million, or 2.9%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. For additional information on the key factors driving the changes in our chemistry revenues within our segments, see “—Selected Segment Information.”

Cost of sales, excluding depreciation and amortization (“Cost of sales”)

Cost of sales decreased $21.3 million, or 5.6%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This decrease was primarily caused by lower sales volumes in equipment and GMF chemistry resulting in lower chemistry purchases. Cost of sales as a percentage of revenue decreased from 41.5% for the nine months ended September 30, 2018 to 41.1% for the nine months ended September 30, 2019 due to a favorable product mix shift.

Depreciation and amortization

Depreciation and amortization decreased $3.9 million, or 3.1%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This decrease was primarily caused by the reversal of an impairment loss from 2018 in 2019 amounting to $1.5 million and reduced amortization of intangible assets, reduced amortization of intangible assets and favorable exchange rate translations.

Selling, general, and administrative expenses

Selling, general, and administrative expenses decreased $11.8 million, or 5.4%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This decrease is primarily attributable to lower selling expenses, which decreased by $10.7 million, reflecting headcount adjustments as well as additional cost savings leading to higher efficiency in support and sales functions and favorable exchange rate translations.

Research and development expenses

R&D expenses decreased $5.0 million, or 11.1%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This decrease is attributable to headcount reductions, other cost efficiency measures and favorable exchange rate translations.

Restructuring benefit (expenses)

Restructuring expenses increased $1.5 million, or 12.3%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This increase is mainly related to an increase in provisions for a restructuring program in Germany.

 

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Interest expense

Interest expenses increased $16.3 million, or 16.8%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This increase was primarily attributable to the first nine months of 2019 being fully impacted by the additional borrowings under the incremental term loan B-1 and the Holdco Notes totaling $500 million, which led to an increase of financial interest on debt of $16.8 million, partially reduced by lower interest expenses on term loan B-3 borrowings due to favorable foreign exchange effects and extraordinary repayments of our term loan B-1.

Other income (expense), net

Other income, net was $27.0 million for the nine months ended September 30, 2019, compared to an other expense, net of $9.7 million for the nine months ended September 30, 2018. The change of $36.7 million is mainly a result of foreign exchange gains, mostly related to the revaluation of intercompany loans and receivables, amounting to $15.6 million, a change in market value in derivatives embedded into our debt instruments amounting to $14.6 million, and a $6.1 million gain on disposal of assets resulting from the sale of assets in Singapore.

Income tax expense

Income tax expense increased $7.2 million or 23.5%, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018, which is primarily due to an earnings mix shift between low and high tax jurisdictions as well as a non-recurring benefit of $4.0 million from deferred tax realized exclusively in the nine months ended September 30, 2018.

Successor fiscal 2018 compared to Successor fiscal 2017 and Pro Forma Successor fiscal 2017

Revenues

Historical: Revenues were $1,212.8 million for Successor fiscal 2018 compared to $1,093.6 million and $91.3 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: Revenues increased $27.9 million, or 2.4%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018 primarily as a result of increased chemistry revenues, which grew $51.1 million, or 5.0%, over such period, and were partially offset by decreases in equipment revenues of $23.2 million. This change in chemistry revenues was largely attributed to strong demand for our chemistry products in both of our EL and GMF segments and successfully implemented projects at our customers. EL chemistry growth was driven by increased demand in high-end smartphone and automotive applications. GMF benefitted from higher customer demand in the global automotive markets, particularly outside of Asia, as well as the fixtures and heavy machinery markets. In addition, chemistry revenues were impacted by a decrease in revenues due to the discontinuance of our Chrome VI and EM product lines ($4.6 million), an increase in revenues due to fluctuations in palladium prices ($20.3 million), and an increase in revenues as a result of a positive impact of currency fluctuations ($16.2 million). Excluding the impact of these items, our chemistry revenues grew by $19.2 million, or 1.9%, for Successor fiscal 2018 compared to Pro Forma Successor fiscal 2017. For additional information on the key factors driving the growth in our chemistry revenues within our segments, see “—Selected Segment Information.”

Cost of sales

Historical: Cost of sales were $504.2 million for Successor fiscal 2018 compared to $513.7 million and $40.7 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively. This decrease was mainly driven by adjustments of $54.0 million to the book value of inventory in 2017 in accordance with IFRS 3 “Business Combinations” due to the Acquisition. The $54.0 million

 

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step-up in fair value of inventory was expensed as the acquired inventory was sold over the subsequent twelve months, leading to increased cost of sales in fiscal 2017 as compared to fiscal 2018. As a percentage of sales, cost of sales remained stable.

Pro Forma: Cost of sales increased $3.8 million, or 0.8%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This slight increase was primarily attributable to higher palladium prices, which we pass through to our customers, and the impact of currency fluctuations offset by a product mix effect. Cost of sales as a percentage of revenue decreased from 42.2% for Pro Forma Successor fiscal 2017 to 41.6% for Successor fiscal 2018.

Depreciation and amortization

Historical: Depreciation and amortization was $171.6 million for Successor fiscal 2018 compared to $141.1 million and $4.0 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: Depreciation and amortization increased $17.9 million, or 11.6%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This increase was primarily due to higher investments in tangible and intangible assets in 2018.

Selling, general, and administrative expenses

Historical: Selling, general, and administrative expenses were $295.6 million for Successor fiscal 2018 compared to $250.7 million and $19.8 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: Selling, general, and administrative expenses increased $25.1 million, or 9.3%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This increase is primarily due to expenses of $15.8 million for certain strategic initiatives and the enhancement of capabilities for being a standalone company. In addition, costs for internal functions in our headquarters rose due to unfavorable exchange rate translations and more extensive reporting, tax and compliance requirements demanding an increase in headcount which only fully impacted our costs in fiscal 2018.

Research and development expenses

Historical: R&D expenses were $58.0 million for Successor fiscal 2018 compared to $62.6 million and $6.3 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: R&D expenses decreased $10.9 million, or 15.8%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This decrease is attributable to cost efficiency measures in R&D which became fully effective in fiscal 2018 as well as a higher R&D efficiency overall.

Restructuring expenses

Historical: Restructuring expenses were $14.8 million for Successor fiscal 2018 compared to $10.8 million and $0.4 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: Restructuring expenses increased $3.6 million, or 32.1%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This increase is primarily attributable to the relocation of production facilities in Europe and South-East Asia.

 

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Interest expense

Historical: Interest expense was $134.7 million for Successor fiscal 2018 compared to $94.1 million and $0.1 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: Interest expense increased $32.0 million or 31.2% from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This increase was attributable to the new borrowings under the Incremental Term B-1 loans and the Holdco Notes totaling $500.0 million.

Other expense, net

Historical: Other expense, net was $5.2 million for Successor fiscal 2018 compared to $23.7 million and $0.8 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: Other expense, net decreased $19.3 million, or 78.8%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. This decrease is primarily related to fair value adjustments to derivatives of $9.4 million, most of them embedded into our notes as part of certain redemption features as well as hedging premiums. Furthermore, foreign currency losses declined by $8.9 million from Pro Forma Successor fiscal 2017 to Successor fiscal 2018.

Acquisition related expenses

Historical: Acquisition related expenses were $67.0 million in Successor fiscal 2017. These expenses consisted primarily of investment banking, legal, and other professional advisory services costs related to the Acquisition. There were no Acquisition related expenses during fiscal 2018.

Pro Forma: There were no Acquisition related expenses on a pro forma basis, as these expenses were eliminated in Pro Forma Successor fiscal 2017.

Income tax expense

Historical: Income tax expense was $52.4 million for Successor fiscal 2018 compared to $16.7 million and $6.0 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

In Predecessor period from January 1, 2017 through January 31, 2017, the effective tax rate was 31% while the statutory tax rate in the Netherlands was 25% for the same period; the difference in these two tax rates primarily resulted from valuation allowances on deferred tax assets and tax rate differences at the subsidiary level.

In Successor fiscal 2018, the effective tax rate was 183%, compared to negative 24% in Successor fiscal 2017, while the statutory tax rate was 19% for each period. For each period, the difference to the statutory tax rate is primarily due to financing expenses incurred in our holding companies which were not offset against taxable profits, leading to a difference for unrecognized deferred taxes of $24.7 million in Successor fiscal 2018 and $24.5 million in Successor fiscal 2017. Additionally, statutory tax rates in our key regions are different than the statutory rate in the United Kingdom for each period, leading to differences between the statutory tax rate and the overall effective tax rate and a resulting increase in tax expenses of $8.8 million in Successor fiscal 2018 and a resulting decrease of $12.5 million in Successor fiscal 2017. Furthermore, on December 22, 2017, the United States government enacted comprehensive tax legislation (“2017 U.S. Tax Legislation”), which changed the Federal tax rate to 21% from January 1, 2018 and led to a non-cash income tax benefit of approximately $11 million in Successor fiscal 2017. Lastly, the relative tax rates as between Successor fiscal 2018 and Successor

 

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fiscal 2017 were impacted by other permanent differences, in particular from transaction costs incurred, which are non-deductible for tax purposes, and from repatriation of profits and international transfer pricing regulations, which led to an increase in tax expenses of $14.7 million in Successor fiscal 2018 and $33.8 million in Successor fiscal 2017.

Pro Forma: Income tax expense increased $6.9 million, or 15.2%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. The effective tax rate grew from 86% in Pro Forma Successor fiscal 2017 to 183% in Successor fiscal 2018. This increase in tax expense is due to the following factors: an increase of $12.3 million mainly due to 2017 U.S. Tax Legislation; a positive non-cash income tax benefit in Pro Forma Successor fiscal 2017; an increase of $2.2 million due to an increase in financing expenses which cannot be offset against taxable profits; and an increase of $18.3 million driven by differences between statutory rates in key regions as compared to the statutory rate in the United Kingdom. These movements are partially offset by a year over year reduction in tax expenses of $19.1 million of permanent differences from transaction costs incurred which are non-deductible for tax purposes, the repatriation of profits, international transfer pricing regulations and a decrease of $5.9 million due to a decrease of taxable income.

Successor fiscal 2017 and Predecessor period January 1, 2017 through January 31, 2017 compared to Predecessor fiscal 2016 and Pro Forma Successor fiscal 2017 compared to Predecessor fiscal 2016

Revenues

Historical: Revenues were $1,093.6 million and $91.3 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $1,124.2 million for Predecessor fiscal 2016.

Pro Forma: Revenues increased $60.7 million, or 5.4%, from Predecessor 2016 to Pro Forma Successor fiscal 2017 primarily as a result of increased chemistry revenues, which grew $62.8 million, or 6.6%, over such period. This change in chemistry revenues was largely attributed to strong demand for our chemistry products in both of our EL and GMF segments and wallet share gains at certain of our key customers. In addition, chemistry revenues were impacted by a decrease in revenues due to the discontinuance of our Chrome VI and EM product lines ($30.0 million), an increase in revenues due to fluctuations in palladium prices ($25.8 million), and an increase in revenues as a result of a positive impact of currency fluctuations ($2.8 million). Excluding the impact of these items, our chemistry revenues grew by $64.2 million, or 6.7%, for Pro Forma Successor fiscal 2017 compared to Predecessor fiscal 2016. For additional information on the key factors driving the growth in our chemistry revenues within our segments, see “—Selected Segment Information.”

Cost of sales

Historical: Cost of sales were $513.7 million and $40.7 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $470.4 million for Predecessor fiscal 2016. This increase was mainly driven by adjustments of $54.0 million to the book value of inventory in 2017 in accordance with IFRS 3 “Business Combinations” due to the Acquisition (and a less favorable product mix in Successor fiscal 2017). The $54.0 million step-up in fair value of inventory was expensed as the acquired inventory was sold over the subsequent twelve months, leading to increased cost of sales in Successor fiscal 2017 as compared to Predecessor fiscal 2016.

Pro Forma: Cost of sales increased $30.0 million, or 6.4%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This increase is primarily attributable to increased sales volume and higher raw material costs for palladium, which is ultimately passed through to our customers. Cost of sales as a percentage of revenue increased from 41.8% for Predecessor fiscal 2016 to 42.2% for Pro Forma Successor fiscal 2017.

 

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Depreciation and amortization

Historical: Depreciation and amortization was $141.1 million and $4.0 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $51.9 million for Predecessor fiscal 2016.

Pro Forma: Depreciation and amortization increased $101.8 million, or 196.1%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This increase is primarily attributable to higher amortization expense resulting from acquired intangibles as a result of the application of acquisition accounting in connection with the Acquisition.

Selling, general, and administrative expenses

Historical: Selling, general, and administrative expenses were $250.7 million and $19.8 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $266.4 million for Predecessor fiscal 2016.

Pro Forma: Selling, general, and administrative expenses increased $4.1 million, or 1.5%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. The increase is primarily attributable to additional administrative expenses associated with becoming a standalone company, partially offset by certain cost-saving measures since the Acquisition.

Research and development expenses

Historical: R&D expenses were $62.6 million and $6.3 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $79.1 million for Predecessor fiscal 2016.

Pro Forma: R&D expenses decreased $10.2 million, or 12.9%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This decrease is primarily attributable to the restructuring of our R&D function to improve efficiency and return on investment.

Restructuring expenses

Historical: Restructuring expenses were $10.8 million and $0.4 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $5.3 million for Predecessor fiscal 2016.

Pro Forma: Restructuring expenses increased $5.9 million, or 111.3%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This increase is mainly attributable to severance packages resulting from the restructuring of certain R&D and SG&A functions primarily in Germany.

Interest expense

Historical: Interest expense was $94.1 million and $0.1 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $4.5 million for Predecessor fiscal 2016.

Pro Forma: Interest expense increased $98.2 million from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This increase is attributable to the borrowings under our senior secured credit facilities and the Opco Notes used to finance the Acquisition.

 

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Other expense, net

Historical: Other expense, net was $23.7 million and $0.8 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $9.3 million for Predecessor fiscal 2016.

Pro Forma: Other expense, net increased $15.2 million, or 163.4%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This increase is primarily attributable to a $15.2 million of mark-to-market adjustment of our foreign currency derivatives and bifurcated embedded derivatives related to certain redemption features of the Opco Notes as well as hedging premiums that were not in existence in the prior year and a $5.7 million increase in foreign currency exchange losses, partially offset by a decrease of $5.2 million resulting from a payment for long-term service made in fiscal 2016 in connection with the retirement of an executive.

Acquisition related expenses

Historical: Acquisition related expenses were $67.0 million in Successor fiscal 2017. These expenses consisted primarily of investment banking, legal, and other professional advisory services costs related to the Acquisition.

Pro Forma: There were no Acquisition related expenses on a pro forma basis, as these expenses were eliminated in Pro Forma Successor fiscal 2017.

Income tax expense

Historical: Income tax expense was $16.7 million and $6.0 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $64.3 million for Predecessor fiscal 2016.

In Predecessor fiscal 2016, the effective tax rate was negative 27% while the statutory tax in the Netherlands was 25% for the same period; the difference in these two tax rates resulted primarily from valuation allowances on deferred tax assets and tax rate differences at the subsidiary level.

For each period, the difference to the statutory tax rate is mainly due to financing expenses incurred in our holding companies which were not offset against taxable profit, leading to a difference for unrecognized deferred taxes and benefits on previously unrecognized deferred taxes of $24.5 million in Successor fiscal 2017, as well as due to changes in valuation allowance of deferred tax assets of negative $1.4 million in Predecessor fiscal 2017 and negative $4.0 million in Predecessor fiscal 2016. Additionally, statutory tax rates in our key regions differ from those statutory rates applicable for the controlling entities in the respective years, leading to differences between the statutory tax rate and the overall effective tax rate and a resulting decrease in tax expenses of $12.5 million in Successor fiscal 2017, a decrease of $0.2 million in Predecessor 2017 and an increase of $0.7 million in Predecessor fiscal 2016.

Furthermore, on December 22, 2017, the United States government enacted the 2017 U.S. Tax Legislation, which lead to a non-cash income tax benefit of approximately $11 million in Successor fiscal 2017. Lastly, the relative tax rates as between Successor fiscal 2017 and Predecessor fiscal 2016 were impacted by other permanent differences, in particular from transaction cost incurred which are non-deductible for tax purposes, but also from repatriation of profits and international transfer pricing regulations, which led to an increase in tax expenses of $33.8 million in Successor fiscal 2017 and negative $0.2 million in Predecessor fiscal 2016.

Pro Forma: Income tax expense decreased $18.8 million, or 29.2%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. This decrease is primarily attributable to the tax impact of the Acquisition related adjustments and a shift in the profit mix between high and low tax jurisdictions, partially offset by the changes in the U.S. statutory tax rate going forward enacted as of December 22, 2017.

 

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Selected Segment Information

The following table presents revenue by segment and Segment Adjusted EBITDA for the following periods:

 

    Predecessor                 Successor                 Successor
Pro Forma
    Successor  

($ in millions)

  Year ended
December 31,
2016
    January 1
through
January 31,
2017
                Year ended
December 31,
2017(1)
                Year ended
December 31,
2017
    Year ended
December 31,
2018
    Nine months
ended

September 30,
2018
    Nine months
ended

September 30,
2019
 

EL

                         

EL Chemistry revenues

  $ 481.0     $ 39.0           $ 488.9           $ 527.9     $ 568.5     $ 429.1     $ 436.9  

EL Equipment revenues

    112.0       6.8             114.1             120.9       100.9       74.9       59.8  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

EL Segment revenues

    593.0       45.8             603.0             648.8       669.4       504.0       496.7  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

EL Segment Adjusted EBITDA(2)

    175.3       14.4             193.7             208.1       227.2       168.4       177.2  

EL Segment Adjusted EBITDA margin

    29.6     31.4           32.1           32.1     33.9     33.4     35.7

GMF

                         

GMF Chemistry revenues

  $ 471.6     $ 37.9           $ 449.6           $ 487.5     $ 498.0     $ 379.4     $ 349.7  

GMF Equipment revenues

    59.6       7.6             41.0             48.6       45.4       36.0       31.0  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

GMF Segment revenues

    531.2       45.5             490.6             536.1       543.4       415.4       380.7  
 

 

 

   

 

 

         

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

GMF Segment Adjusted EBITDA(2)

    118.7       10.7             127.5             138.2       146.5       116.8       102.1  

GMF Segment Adjusted EBITDA margin

    22.3     23.5           26.0           25.8     27.0     28.1     26.8

 

(1)   Reflects 11 months of operations of Atotech UK Topco Limited following the Acquisition.
(2)   For additional information regarding Segment Adjusted EBITDA, see Note 24 to our financial statements appearing elsewhere in this prospectus.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Electronics Segment Revenues

EL revenues decreased by $7.3 million, or 1.4%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily as a result of lower EL equipment revenues, which decreased $15.1 million, or 20.2% while chemistry revenues increased $7.8 million, or 1.8%. Chemistry revenues benefited from a recovery of the smartphone market in the third quarter 2019. Our EL equipment revenues decreased due to delayed customer orders and a strong 2018 comparable period.

EL chemistry revenues were favorably impacted by an increase in palladium prices ($27.4 million), which we pass through to our customers, offset by unfavorable currency translation effects ($18.3 million). Excluding

 

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the impact of these items, our EL chemistry revenues decreased by $1.3 million, or 0.3%, for the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018.

Electronics Segment Adjusted EBITDA

EL Segment Adjusted EBITDA increased $8.8 million, or 5.2%, for the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018, driven by lower fixed costs. EL Segment Adjusted EBITDA margin increased from 33.4% in the nine months ended September 30, 2018 to 35.7% in the nine months ended September 30, 2019. This increase was due to lower fixed costs due to our cost savings measures and a more favorable mix between chemistry and equipment.

General Metal Finishing Segment Revenues

GMF revenues decreased $34.7 million, or 8.4%, for the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018, primarily as a result of decreased GMF chemistry revenues, which declined $29.7 million, or 7.8%, and a decrease of equipment revenues of $5.0 million, or 13.9%. The decrease in GMF chemistry revenues is primarily attributable to lower demand in the global automotive markets. Geographically, revenues were negatively impacted in China and North America. The decline in revenues from our GMF equipment business of 13.9% was primarily driven by lower orders from our customers due to the less favorable environment for capital investments.

GMF chemistry revenues were positively impacted by fluctuations in palladium prices ($8.4 million), offset by unfavorable currency translation effects ($15.5 million), and the discontinuance of our Chrome VI product line ($0.3 million). Excluding the impact of these items, our GMF chemistry revenues decreased by $22.3 million, or 5.8%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

General Metal Finishing Segment Adjusted EBITDA

GMF Segment Adjusted EBITDA decreased $14.7 million, or 12.6%, from the nine months ended September 30, 2018 to the nine months ended September 30, 2019, driven by lower chemistry and equipment volumes. GMF Segment Adjusted EBITDA margin decreased from 28.1% in the nine months ended September 30, 2018 to 26.8% in the nine months ended September 30, 2019, due to lower sales volumes and subsequent lower margins, partially offset by lower fixed costs from cost savings initiatives.

Successor fiscal 2018 compared to Successor fiscal 2017 and Pro Forma Successor fiscal 2017

Electronics Segment Revenues

Historical: EL revenues were $669.4 million for Successor fiscal 2018 compared to $603.0 million and $45.8 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: EL revenues increased $20.6 million, or 3.2%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018 primarily as a result of increased EL chemistry revenues, which grew $40.6 million, or 7.7%, over such period and were partially offset by decreased equipment revenues of $20.0 million. The increase in chemistry revenues primarily reflects solid growth in chemistry due to price and volume increases driven by high-end smartphone and automotive applications. In addition, EL chemistry revenues were impacted by an increase in revenues due to fluctuations in palladium prices ($14.9 million) and an increase in revenues as a result of a positive impact of currency fluctuations ($11.1 million). Excluding the impact of these items, our EL chemistry revenues grew by $14.6 million, or 2.8%, for Successor fiscal 2018 compared to Pro Forma Successor fiscal 2017. While EL chemistry revenues increased, equipment revenues decreased due to lower order intakes arising from delayed customer investment decisions.

 

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Electronics Segment Adjusted EBITDA

Historical: Segment Adjusted EBITDA was $227.2 million for Successor fiscal 2018 compared to $193.7 million and $14.4 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively. Segment Adjusted EBITDA margin increased from 32.1% and 31.4% for Successor fiscal 2017 and the Predecessor period January 1, 2017 through January 31, 2017, respectively to 33.9% for Successor fiscal 2018.

Pro Forma: Segment Adjusted EBITDA increased $19.1 million, or 9.2%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. Segment Adjusted EBITDA margin increased from 32.1% in Pro Forma Successor fiscal 2017 to 33.9% in Successor fiscal 2018. This increase was attributable to increases in chemistry revenue and a more favorable product mix due to the factors discussed above, as well as the successful implementation of cost improvement programs.

General Metal Finishing Segment Revenues

Historical: GMF revenues were $543.4 million for Successor fiscal 2018 compared to $490.6 million and $45.5 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively.

Pro Forma: GMF revenues increased $7.3 million, or 1.4%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018 primarily as a result of increased GMF chemistry revenues, which grew $10.5 million, or 2.2%, over such period. This increase is primarily attributable to higher customer demand in the global automotive markets, particularly outside of Asia, as well as the sanitary and heavy machinery markets mainly during the first half of fiscal 2018. In addition, GMF chemistry revenues were impacted by a decrease in revenues due to the discontinuance of our Chrome VI product line ($4.6 million), an increase in revenues due to fluctuations in palladium prices ($5.5 million), and an increase in revenues as a result of a positive impact of currency fluctuations ($5.2 million). Excluding the impact of these items, our GMF chemistry revenues grew by $4.4 million, or 0.9%, for Successor fiscal 2018 compared to Pro Forma Successor fiscal 2017. The remaining change in GMF revenues is attributable to a decrease in equipment revenue reflecting cautious customer investment levels.

General Metal Finishing Segment Adjusted EBITDA

Historical: Segment Adjusted EBITDA was $146.5 million for Successor fiscal 2018 compared to $127.5 million and $10.7 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively. Segment Adjusted EBITDA margin increased from 26.0% and 23.5% for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively to 27.0% for Successor fiscal 2018.

Pro Forma: Segment Adjusted EBITDA increased $8.3 million, or 6.0%, from Pro Forma Successor fiscal 2017 to Successor fiscal 2018. Segment Adjusted EBITDA margin increased from 25.8% in Pro Forma Successor fiscal 2017 to 27.0% in Successor fiscal 2018. This increase was attributable to increases in chemistry revenue and a more favorable product mix due to the factors discussed above, as well as the successful implementation of cost improvement programs.

Successor fiscal 2017 and Predecessor period January 1, 2017 through January 31, 2017 compared to Predecessor fiscal 2016 and Pro Forma Successor fiscal 2017 compared to Predecessor fiscal 2016

Electronics Segment Revenues

Historical: EL revenues were $603.0 million and $45.8 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $593.0 million for Predecessor fiscal 2016.

 

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Pro Forma: EL revenues increased $55.8 million, or 9.4%, from Predecessor 2016 to Pro Forma Successor fiscal 2017 primarily as a result of increased EL chemistry revenues, which grew $46.9 million, or 9.8%, over such period. This change was largely attributable to strong demand for advanced HDIs and rigid-flex PCBs from the high-end smartphone supply chain and wallet share gains at key PCB manufacturers. In addition, EL chemistry revenues were impacted by a decrease in revenues due to the discontinuance of our EM product line ($2.9 million), an increase in revenues due to fluctuations in palladium prices ($17.5 million), and an increase in revenues as a result of a positive impact of currency fluctuations ($1.2 million). Excluding the impact of these items, our EL chemistry revenues grew by $31.1 million, or 6.5%, for Pro Forma Successor fiscal 2017 compared to Predecessor fiscal 2016. The remaining change in EL revenues is attributable to an increase in equipment revenue driven by strong order intakes after the introduction of new technologies.

Electronics Segment Adjusted EBITDA

Historical: Segment Adjusted EBITDA was $193.7 million and $14.4 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $175.3 million for Predecessor fiscal 2016. Segment Adjusted EBITDA margin increased from 29.6% in Predecessor fiscal 2016 to 32.1% and 31.4%, respectively, for Successor fiscal 2017 and the Predecessor period January 1, 2017 through January 31, 2017.

Pro Forma: Segment Adjusted EBITDA increased $32.8 million, or 18.7%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. Segment Adjusted EBITDA margin increased from 29.6% in Predecessor fiscal 2016 to 32.1% in Pro Forma Successor fiscal 2017. This increase was attributable to increases in revenue due to the factors discussed above, as well as the successful implementation of cost improvement programs.

General Metal Finishing Segment Revenues

Historical: GMF revenues were $490.6 million and $45.5 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $531.2 million for Predecessor fiscal 2016.

Pro Forma: GMF revenues increased $4.9 million, or 0.9%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017 primarily as a result of increased GMF chemistry revenues, which grew $15.9 million, or 3.4%, over such period. This change was driven by strong demand from automotive customers in Asia, as well as wallet share gains and a major new customer in the Americas region. In addition, GMF chemistry revenues were impacted by a decrease in revenues due to the discontinuance of our Chrome VI product line ($27.1 million), an increase in revenues due to fluctuations in palladium prices ($8.3 million), and an increase in revenues as a result of a positive impact of currency fluctuations ($1.6 million). Excluding the impact of these items, our GMF chemistry revenues grew by $33.1 million, or 7.0%, for Pro Forma Successor fiscal 2017 compared to Predecessor fiscal 2016. The remaining change in GMF revenues is attributable to a decrease in equipment revenue driven by strong order intakes in 2016 as compared to 2017.

General Metal Finishing Segment Adjusted EBITDA

Historical: Segment Adjusted EBITDA was $127.5 million and $10.7 million for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017, respectively, compared to $118.7 million for Predecessor fiscal 2016. Segment Adjusted EBITDA margin increased from 22.3% in Predecessor fiscal 2016 to 26.0% and 23.5%, respectively, for Successor fiscal 2017 and the Predecessor period from January 1, 2017 through January 31, 2017.

Pro Forma: Segment Adjusted EBITDA increased $19.5 million, or 16.5%, from Predecessor fiscal 2016 to Pro Forma Successor fiscal 2017. Segment Adjusted EBITDA margin increased from 22.3% in Predecessor fiscal 2016 to 25.8% in Pro Forma Successor fiscal 2017. This increase was attributable to increases in revenue due to the factors discussed above, as well as the successful implementation of cost improvement programs.

 

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Liquidity and Capital Resources

Our liquidity requirements are principally related to funding our operating expenses, making interest payments under our indebtedness, meeting working capital requirements, and making capital expenditures. Our capital expenditures during Predecessor fiscal 2016, Successor fiscal 2017 and Successor fiscal 2018 were $84.0 million, $47.8 million and $56.6 million, respectively. Our capital expenditures during the nine months ended September 30, 2019 and September 30, 2018 were $48.2 million and $31.3 million, respectively.

We anticipate that the cash flows from operations, cash on hand, and availability under the revolving credit facility and our local lines of credit will be sufficient to fund our liquidity requirements. From time to time, we may establish new local lines of credit or utilize existing local lines of credit. We will manage our global cash balances by utilizing available cash management strategies, which may include intercompany agreements, permitted dividends, and hedging. However, our ability to fund our liquidity requirements will depend on our ability to generate and access cash in the future. This is subject to general economic, financial, contractual, competitive, legislative, regulatory, and other factors, some of which are beyond our control, as well as the factors described in “Risk Factors” including our ability to access cash generated in China as described in “Risk Factors—Risks Related to our Business—The Chinese government’s control of currency conversion and expatriation of funds may affect our liquidity.”

Historical Cash Flows

The following table summarizes our primary sources and uses of cash for the periods indicated:

 

     Predecessor                 Successor  

($ in millions)

   Year ended
December 31,
2016
    January 1
through
January 31,
2017
                  Year ended
December 31,
2017
    Year ended
December 31,
2018
    Nine months
ended
September 30,
2018
    Nine months
ended
September 30,
2019
 

Net cash provided by (used in):

                  

Operating activities

   $ 229.6     $ (8.7         $ 107.2     $ 166.7     $ 88.1     $ 66.1  

Investing activities

   $ (83.2   $ (3.3         $ (2,736.3   $ (53.9   $ (29.8   $ (45.7

Financing activities

   $ (199.0   $ (140.3         $ 2,933.6     $ (37.7   $ (34.5   $ (139.6

Nine months ended September 30, 2019 compared to nine months ended September 30, 2018

Operating activities

Net cash generated by operating activities was $66.1 million for nine months ended September 30, 2019 compared to $88.1 million of net cash generated for the nine months ended September 30, 2018, a decrease of $22.0 million. This decrease in net cash generated by operating activities for the nine months ended September 30, 2019 was primarily due to a higher net loss on financial instruments of $21.5 million and higher taxes paid of $10.9 million, partially offset by a higher net income, which increased $11.7 million during the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018, and the benefit from a lower working capital of $3.8 million.

Investing activities

Net cash used in investing activities was $45.7 million for the nine months ended September 30, 2019 compared to $29.8 million for the nine months ended September 30, 2018, an increase of $15.9 million. The increase was mainly driven by investments in our infrastructure including the development center in India and equipment investments at customers which remained on our balance sheet.

 

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Financing activities

Net cash used by financing activities was $139.6 million for the nine months ended September 30, 2019 compared to net cash used by financing activities of $34.5 million for nine months ended September 30, 2018. The increase in net cash used by financing activities was primarily due to the early partial repayment of our Term Loan B-1 in fiscal 2019 of $99.0 million and the first-time application of IFRS 16 in 2019 leading to an $11.5 million payment of lease liabilities.

Successor fiscal 2018 compared to Successor fiscal 2017

Changes in historical cash flows for the Successor fiscal 2018 compared to Successor fiscal 2017 reflect, among other things, the additional month of operations during the Successor fiscal 2018, as compared to the Successor fiscal 2017, which excludes the Predecessor period January 1, 2017 through January 31, 2017.

Operating activities

Net cash generated by operating activities was $166.7 million for Successor fiscal 2018 compared to $107.2 million for Successor fiscal 2017, an increase of $59.5 million. The increase in net cash generated by operating activities for fiscal 2018 was primarily due to the decrease in consolidated net loss, compared to fiscal 2017 as a result of higher sales due to the additional month of operations in fiscal 2018 as well as cost reductions.

Investing activities

Net cash used in investing activities was $53.9 million for Successor fiscal 2018 compared to $2,736.3 million for Successor fiscal 2017, a decrease of $2,682.4 million. The decrease was primarily due to the inclusion of the purchase price for the Acquisition of Atotech B.V. in cash flows for 2017.

Financing activities

Net cash used by financing activities was $37.7 million for Successor fiscal 2018, compared to net cash generated from financing activities of $2,933.6 million for Successor fiscal 2017. The decrease in net cash generated was primarily due to the inclusion of financing activities related to the Acquisition in cash flows for Successor fiscal 2017, primarily comprised of the equity contribution of $1,245.0 million from Carlyle as well as net proceeds from borrowings under our senior secured credit facilities and the issuance of the Opco Notes totaling $1,838.2 million and partially offset by a dividend paid to our shareholders of $490.5 million in 2018 related to the Acquisition.

January 1, 2017 through January 31, 2017 (Predecessor)

Operating activities

Net cash used in operating activities for the Predecessor period from January 1, 2017 through January 31, 2017 was $8.7 million, which was primarily attributable to a net increase in working capital of $20.7 million, partially offset by consolidated net income of $13.2 million.

Investing activities

Net cash used in investing activities for the Predecessor period from January 1, 2017 through January 31, 2017 was $3.3 million, which was substantially attributable to purchases of intangible assets and property, plant, and equipment.

Financing activities

Net cash used in financing activities for the Predecessor period from January 1, 2017 through January 31, 2017 was $140.3 million, substantially attributable to dividend payments to TOTAL of $110.6 million in connection with the Acquisition and a decrease in current borrowings of $23.0 million.

 

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Successor fiscal 2017 compared to Predecessor fiscal 2016

Changes in historical cash flows for the Successor fiscal 2017 compared to Predecessor fiscal 2016 reflect, among other things, the additional month of operations during the Predecessor fiscal 2016, as compared to the Successor fiscal 2017, which excludes the Predecessor period January 1, 2017 through January 31, 2017.

Operating activities

Net cash generated by operating activities was $107.2 million for Successor fiscal 2017 compared to $229.6 million for Predecessor fiscal 2016, a decrease of $122.4 million. The decrease in net cash generated by operating activities for fiscal 2017 was primarily due to the decrease in consolidated net income as a result of acquisition costs paid in connection with the Acquisition, partially offset by an increase in depreciation, amortization, and finance costs, as well as a decrease in working capital.

Investing activities

Net cash used in investing activities was $2,736.3 million for Successor fiscal 2017 compared to $83.2 million for Predecessor fiscal 2016, an increase of $2,653.1 million. The increase was primarily due to the Acquisition of Atotech B.V., partially offset by less capital expenditures.

Financing activities

Net cash generated from financing activities was $2,933.6 million for Successor fiscal 2017, compared to net cash used by financing activities of $199.0 million for Predecessor fiscal 2016. The increase in net cash generated was primarily due to the new equity contribution of $1,245.0 million from Carlyle as well as net proceeds from borrowings under our senior secured credit facilities and the issuance of the Opco Notes totaling $1,838.2 million, partially offset by a dividend paid to TOTAL of $110.6 million in January 2017 related to the Acquisition.

Debt Agreements

Our liquidity requirements are significantly impacted by the cash expense associated with servicing our indebtedness. As of September 30, 2019, our principal outstanding indebtedness totals $2,155.8 million (excluding $1.4 million of local lines of credit representing our current bank debt and $73.8 million of lease liabilities). The following table details our borrowings outstanding as of September 30, 2019 and the associated interest expense, including amortization of debt issuance costs and debt discounts, and average effective interest rates for such borrowings for the nine months ended September 30, 2019:

 

($ in millions)

   Principal balance
as of September 30,
2019
     Average annual
interest rate, for
the nine
months ended
September 30, 2019
    Interest expense for
the nine

months ended
September 30, 2019
 

USD Term Loan Facility

   $ 963.7        5.578   $ 47.3  

RMB Term Loan Facility(2)

   $ 468.0        4.900   $ 24.8  

Revolving Credit Facility

     —          0.375   $ 1.6  

Opco Notes

   $ 425.0        6.250   $ 19.9  

Holdco Notes

   $ 299.1        8.750 %(1)    $ 20.0  

 

(1)   The Holdco Notes bear cash interest at a rate of 8.750% per annum and PIK interest at a rate of 9.500% per annum. To date, we have elected to pay all interest in cash.
(2)   Reflects currency exchange rate in effect at period end.

Senior Secured Credit Facilities

Our senior secured credit facilities consist of our USD Term Loan Facility, our RMB Term Loan Facility, and our multicurrency revolving credit facility. Our revolving credit facility provides for revolving loans and

 

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letters of credit pursuant to commitments in an aggregate principal amount of $250.0 million with borrowing capacity of $227.5 million after giving effect to $22.5 million of guarantee obligations. Letters of credit issued under our revolving credit facility are subject to a $75.0 million sublimit. We may use future borrowings under our revolving credit facility to fund working capital and for other general corporate purposes, including permitted acquisitions and other investments. Our ability to draw under our revolving credit facility or issue letters of credit thereunder will be conditioned upon, among other things (including the covenants governing our other indebtedness), delivery of required notices, accuracy of the representations and warranties contained in the credit agreement governing our senior secured credit facilities and the absence of any default or event of default under our senior secured credit facilities, subject to certain exceptions.

At the Acquisition closing date, our RMB Term Loan Facility was initially incurred entirely in U.S. dollars in an aggregate principal amount of $500.0 million with the option to redenominate into an equivalent amount of RMB. Since the Acquisition closing date, Opco redenominated the entire amount of the RMB Term Loan Facility from U.S. dollars into RMB. Opco incurred $32.0 million of fees in fiscal 2018 associated with such redenomination.

Borrowings under our USD Term Loan Facility bear interest at a floating rate that may, at our option, be set at either LIBOR plus 3.00% (subject to a LIBOR floor of 1.00%), or the alternate base rate (which is based on the public and federal trends rate, the prime rate, or one-month LIBOR plus 1.00%) plus 2.00% (subject to a base rate floor of 2.00%). Borrowings under our revolving credit facility currently bear interest at a floating rate that may, at our option, be set at either LIBOR plus 3.75% (subject to a LIBOR floor of 0.00%), or an alternate base rate plus 2.75% (subject to a base rate floor of 0.00%). The applicable margin for our revolving credit facility is subject to two step downs of 25 basis points each based on Opco’s latest reported consolidated first lien net leverage ratio. Our RMB Term Loan Facility bears interest at a one-time fixed rate based on a prevailing official lending rate (the “PBOC Benchmark Rate”) that was communicated to Opco by the Bank of China Limited, Shanghai Branch at the time the loans were redenominated into RMB. This rate reflects the official lending rate per annum promulgated and announced by the People’s Bank of China. The margin applicable for such term loans denominated in RMB is 100% of the PBOC Benchmark Rate as of the date of redenomination into RMB for five years following the Acquisition Closing Date and 130% of the PBOC Benchmark Rate thereafter until final maturity. Our revolving credit facility will mature on January 31, 2022 and our USD Term Loan Facility and RMB Term Loan Facility will mature on January 31, 2024.

Opco Notes

On January 31, 2017, Alpha 3 B.V. and Alpha US Bidco, Inc. (the “Opco Issuers”), our indirect wholly owned subsidiaries, issued the Opco Notes and related guarantees thereof. The Opco Notes are unconditionally guaranteed on a senior basis by certain of the Opco Issuers’ subsidiaries. The Opco Notes were sold at par and are due on February 1, 2025. The Opco Notes bear interest at 6.250% payable semi-annually on February 1 and August 1.

On and after February 1, 2020, we have the option to redeem all or part of the Opco Notes at the following redemption prices:

 

Period

   Redemption
price
 

2020

     103.125

2021

     101.563

2022 and thereafter

     100.000

Notwithstanding the foregoing, at any time and from time to time prior to February 1, 2020, we may redeem in the aggregate up to 40% of the original aggregate principal amount of the Opco Notes with the net cash proceeds of one or more Equity Offerings (as defined in the indenture governing the Opco Notes), at a redemption price equal to 106.250% plus accrued and unpaid interest, if any, to (but not including) the

 

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redemption date. Upon the occurrence of certain events constituting a change of control, holders of the Opco Notes have the right to require us to purchase all or part of the Opco Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date.

Holdco Notes

On May 30, 2018, Holdco, our indirect wholly owned subsidiary, issued $300.0 million aggregate principal amount of 8.750/9.500% senior PIK Toggle Notes due 2023. The Holdco Notes were sold at an issue price of 99.010% and are due on June 1, 2023. Cash interest will accrue on the Holdco Notes at the rate of 8.750% per annum and PIK interest will accrue on the Holdco Notes at the rate of 9.500% per annum.

On and after June 1, 2019, we have the option to redeem all or part of the Holdco Notes at the following redemption prices:

 

Period

   Redemption
price
 

2019

     102.000

2020

     101.000

2021 and thereafter

     100.000

Notwithstanding the foregoing, at any time and from time to time prior to June 1, 2019, we may redeem the Holdco Notes, in whole or in part with an amount equal to the cash proceeds of one or more Equity Offerings (as such term is defined in the indenture governing the Holdco Notes), at a redemption price equal to 102.000%, plus accrued and unpaid interest, if any, to (but not including) the redemption date. Upon the occurrence of certain events constituting a change of control, holders of the Holdco Notes have the right to require us to purchase all or part of the Holdco Notes at a purchase price equal to 101.000% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date.

Covenants

The Holdco Notes Indenture, the Opco Notes Indenture, and the credit agreement governing our senior secured credit facilities contain several covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. The restrictions these covenants place on us include limitations on our ability to:

 

   

merge and consolidate with other companies;

 

   

incur indebtedness;

 

   

grant liens or security interests on assets;

 

   

make acquisitions, loans, advances, or investments;

 

   

pay dividends;

 

   

sell or otherwise transfer assets;

 

   

optionally prepay or modify terms of junior lien (in the case of the senior secured credit facilities only) or pay subordinated indebtedness (in the case of the Holdco Notes, Opco Notes and the senior secured credit facilities);

 

   

enter into certain restrictive agreements; or

 

   

in the case of the senior secured credit facilities, change our fiscal year.

With respect to our revolving credit facility, we are also required to maintain a maximum first lien net leverage ratio not in excess of 7.30 to 1.00, tested at the end of any quarter when more than 35% of our revolving

 

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credit facility (excluding letters of credit, any amounts drawn to fund certain original issue discount or upfront fees, and certain ordinary course ancillary facilities incurred under the revolving credit facility, and further reduced by up to $100.0 million of cash on our balance sheet that is the result of certain equity overfunding on the Acquisition Closing Date, the proceeds of which have not otherwise been utilized to make distributions or dividends) is utilized at such date.

The Holdco Notes Indenture, the Opco Notes Indenture, and the credit agreement governing our senior secured credit facilities also contain several customary affirmative covenants. We, or our affiliates, may from time to time seek to repurchase or retire the Holdco Notes, the Opco Notes, or term loans through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, their liquidity, contractual restrictions, and other factors. The amounts involved may be material.

Local Lines of Credit

We have a local line of credit in Malaysia and from time to time may have lines of credit in other jurisdictions. As of September 30, 2019, we had MYR 6,000,000 ($1.4 million) outstanding under the local line of credit in Malaysia, which represents our current bank debt.

Contractual Obligations and Commitments

The following table presents a summary of our significant contractual obligations as of December 31, 2018.

 

     Payments due by period as of December 31, 2018  

(in millions)

   Total      Less
than 1
year
     1-3
years
     3-5
years
     Over
5 years
 

Contractual Obligations:

              

Long-term indebtedness, including current portion and interest(1)

   $ 3,010.5      $ 155.8      $ 309.2      $ 591.9      $ 1,953.6  

Operating lease obligations(2)

     51.5        13.3        17.3        7.7        13.2  

Management fee(3)

     5.4        1.8        3.6        —          —    

Other(4)

     29.7        25.9        3.1        0.6        0.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commitments given

   $ 3,097.1      $ 196.8      $ 333.2      $ 600.2      $ 1,966.9  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)   Figures assume that our senior secured credit facilities, the Holdco Notes, and the Opco Notes are repaid upon maturity, and the revolving portion of our senior secured credit facilities remains undrawn, which may or may not reflect future events. Future interest payments include the fee on the unused availability under our revolving credit facility, and are based on an assumed average interest rate. Actual interest payments and repayment amounts may change and such changes may be material. Figures do not reflect the expected use of proceeds from this offering. See “Use of Proceeds.”
(2)   Does not give effect to the applications of IFRS 16 “Leases.” We adopted IFRS 16 “Leases” on January 1, 2019. We estimate that the adoption of IFRS 16 “Leases” would have increased our fixed assets and our capital lease obligations by approximately $84.5 million as of December 31, 2018.
(3)   Following the consummation of this offering we will continue to pay Carlyle an annual fee pursuant to our existing consulting services agreement. The consulting agreement pursuant to which management fees are paid to Carlyle will terminate on the earlier of (i) the second anniversary of the initial public offering and (ii) the date upon which Carlyle ceases to own more than ten percent of the outstanding voting securities of the Company. See “Certain Relationships and Related Person Transactions—Consulting Agreement.
(4)   Represents other commitments consisting primarily of purchasing obligations.

 

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Contingent Liabilities

Our contingent liabilities primarily comprise guarantees of third-party obligations, including indemnification obligations under purchase and sale agreements, letters of credit, payment guarantees, down payment guarantees and performance bonds, and other similar obligations in the ordinary course of business.

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements and we have not accrued any liabilities related to such indemnification obligations in our audited financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements other than operating leases entered into in the ordinary course of business.

Critical Accounting Policies and Estimates

We describe our significant accounting policies in Note 3, “Summary of Significant Accounting Policies,” to our audited financial statements as of and for the year ended December 31, 2018 included elsewhere in this prospectus. The preparation of the audited financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in many instances, the reported amounts of revenue and expenses during the applicable reporting period. A change in estimates and assumptions could have a material impact on our results. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the audited financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the audited financial statements.

Revenue Recognition

The Company early adopted IFRS 15 “Revenue from Contracts with Customers” on January 31, 2017 (Predecessor) and at December 31, 2017 (Successor) using the full retrospective application to all periods presented in the historical consolidated financial statements. Under the new standard, revenue is recognized when the entity can identify a contract, identify performance obligations, determine the transaction price, and allocate the transaction price between the purchase obligations. Revenue is then recognized as performance obligations are satisfied. Revenue is measured net of returns, trade discounts, and volume rebates. For sales of chemistry, revenues are recorded at the time of the transfer of ownership, according to the terms in the contract. These revenues are recorded at the time of the transfer of ownership, according to the terms in the contract.

Revenue also includes sales of equipment. Equipment revenue is recognized and allocated to the individual performance obligations when or as the customer obtains control over the goods or services to be performed under the contract. The contract assessment for sale of equipment, retrofits, and modifications revealed that only one performance obligation is given that includes the installation process which takes several months until the final qualification protocol is prepared and acceptance by the customer takes place. Thus, control is transferred

 

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over a certain period of time, in general, ending with the finalization of the protocol of qualification and acceptance of the installed equipment by the customer. For these sales, the Company uses the cost-to-cost input method and recognizes revenue on the basis of direct measurements of the value to the customer of the goods and services transferred to date relative to the remaining goods and services under the contract.

Business Combination

We account for business combinations under the acquisition method of accounting pursuant to IFRS 3 “Business Combination”. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, royalty rates, asset lives, and market multiples, among other items.

The fair values of intangible assets were estimated using an income approach, either the excess earnings method (customer relationships) or the relief from royalty method (technology and trademarks). Under the excess earnings method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows attributable solely to the intangible asset over its remaining useful life. Under the relief from royalty method, fair value is measured by estimating future revenue associated with the intangible asset over its useful life and applying a royalty rate to the revenue estimate. These intangible assets enable us to secure markets for our products, develop new products to meet the evolving business needs and competitively produce our existing products.

The fair value of real properties acquired was based on the consideration of their highest and best use in the market. The fair values of property, plant, and equipment, other than real properties, were based on the consideration that unless otherwise identified, they will continue to be used “as is” and as part of the ongoing business. In contemplation of the in-use premise and the nature of the assets, the fair value was developed primarily using a cost approach. The determination of the fair value of assets acquired and liabilities assumed involves assessing factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.

The results of operations for businesses acquired are reflected in the financial statements from the date of the Acquisition. See Note 5 to the Successor financial statements for further detail on the Acquisition and related accounting.

Income Tax

Income taxes include the current and deferred tax expenses or benefit not recognized in other comprehensive income, or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax basis, and on carry-forwards of unused tax losses and tax credits.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective periods of realization, provided they are enacted or substantively enacted by the end of the

 

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reporting period. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income, based on the Company’s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full.

Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

Impairment of Goodwill

The recoverable amount of goodwill is tested for impairment annually, or more frequently if any indication of impairment exists.

Assets are grouped into cash-generating units (“CGUs”) and tested. A CGU is a group of assets that generates cash inflows that are largely independent of the cash inflows from other groups of assets. We determined that we operate as two CGUs, GMF, and EL. For this purpose, assets (and capital expenditure cash flows included in the discounted cash flows) are allocated between the two CGUs.

An impairment loss is recognized when the recoverable amount is lower than the carrying amount of the assets. The recoverable amount is the higher of the fair value (less costs of disposal) and value in use. The value in use of a CGU is determined by reference to the discounted expected future cash flows, based upon the management’s expectation of future economic and operating conditions.

See Note 5, “Business Combinations,” to the Successor financial statements for further detail on the Acquisition and related accounting.

Derivative and Hedging Instruments

We occasionally use derivative instruments to manage our exposure to risks of changes in foreign exchange rates. Derivative instruments are measured at fair value. Under IAS 39 “Financial Instruments: Recognition and Measurement,” which was applicable to the Predecessor year ended December 31, 2016 and the month ended January 31, 2017 and the Successor year ended December 31, 2017, and IFRS 9 “Financial Instruments” which was applicable to the year ended December 31, 2018, changes in fair value of derivative instruments were recognized in the statement of income or, if cash flow or net investment hedge accounting was applied, in other comprehensive income for the effective portion of changes in fair value, and were recognized in the balance sheet in the accounts corresponding to their nature. The derivative instruments used by us are foreign currency forwards and options exclusively. Forward and option exchange contracts are valued on the basis of a comparison of the negotiated forward rates with the rates in effect on the financial markets at year-end for similar maturities.

We do not use any other derivatives. Our Opco Notes and Holdco Notes contain certain redemption features that are required to be accounted for separately at fair value as embedded derivatives. Embedded derivatives are measured at fair value and recognized in the balance sheet accounts corresponding to their nature. The embedded derivatives present in each of the Opco Notes and the Holdco Notes are valued as a single compound derivative based on a set of discounted cash flow scenarios in which binomial interest rate trees are created utilizing market based volatility assumptions and constant interest rate spreads to determine scenarios in which each option would be rationally exercised. Changes in fair value of such derivatives are recognized in “Other expense, net” in the statement of income.

 

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Recent Accounting Guidance

IFRS 16 “Leases” is effective for annual periods beginning on or after January 1, 2019. We adopted this standard on January 1, 2019, by using the simplified retrospective approach. Therefore, the Company will not restate the comparative amounts for the year prior to adoption, as allowed by IFRS 16.C7, and will continue to report them under IAS 17 and IFRIC 4.

IFRS 16 “Leases” changes the definition of a lease and provides a single on-balance lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. We will recognize new assets and liabilities for operating leases with some exceptions. In addition, expenses related to leases will now change from straight-line operating lease expenses to depreciation charge for right-of-use assets and interest expense on lease liabilities. Lessor accounting remains similar to the current standard and no significant impact is expected for finance leases.

We anticipate the adoption of IFRS 16 “Leases” will have less than a 5% impact to our total assets at December 31, 2018. Additionally, we do not expect the adoption of IFRS 16 “Leases” to impact our ability to comply with our senior secured credit facilities, Holdco Notes Indenture, and Opco Notes Indenture.

Quantitative and Qualitative Disclosures about Market Risk

Our business and financial results are affected by fluctuations in world financial markets, including interest rates and foreign currency exchange rates. We may in the future utilize derivative financial instruments (including LIBOR swap arrangements), among other methods, to hedge some of these exposures. We do not use derivative financial instruments for speculative or trading purposes.

Interest Rate Risk

We are subject to the risk that the fair value of future cash flows will fluctuate as a result of changes in prevailing market conditions. In order to manage that risk, our indebtedness includes both fixed and floating rate interest rates. The principal outstanding amount of indebtedness was $2,157.2 million (excluding short-term and long-term deferred financing costs and $73.8 million of lease liabilities) of which $1,192.1 million bore interest at a fixed rate as of September 30, 2019.

As of September 30, 2019, an increase of interest rates of 100 basis points would have resulted in additional annual interest expense in the amount of $9.6 million.

Foreign Currency Exchange Rate Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates relative to the U.S. dollar, the currency in which we prepare our financial statements. This is because when we generate revenues and cash flows in a currency other than the U.S. dollar, these amounts must be translated into U.S. dollars for purposes of preparing our financial statements. Accordingly, our reported financial results will generally benefit when the U.S. dollar is weak relative to other currencies and will generally be adversely affected when the U.S. dollar is strong relative to other currencies. Because the majority of our non-U.S. dollar revenues are denominated in Euros and RMB, we are particularly impacted by changes in the price of these currencies relative to the U.S. dollar. For Pro Forma Successor fiscal 2017, 18%, 33% and 40% of our revenues were denominated in Euros, RMB and other non-U.S. dollar currencies, respectively. For Successor fiscal 2018, 17%, 34% and 41% of our revenues were denominated in Euros, RMB and other non-U.S. dollar currencies, respectively. For the nine months ended September 30, 2019, 18%, 35% and 40% of our revenues were denominated in Euros, RMB and other non-U.S. dollar currencies, respectively.

 

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In addition to this translational risk, we are subject to foreign currency transaction risk when we or any of our subsidiaries enter into transactions denominated in currencies other than the functional currency of the applicable entity. Specifically, we and our subsidiaries face the risk of adverse movements in the price of the applicable foreign currency relative to the applicable functional currency between the time a transaction is originally entered into and the time that it is settled.

To mitigate our foreign currency translational risk, we may from time to time engage in translation exposure hedging. To mitigate our foreign transaction risk, we generally try to have our subsidiaries transact in their respective functional currencies and may from time to time enter into hedging arrangements. However, we do not manage our foreign currency exposure in a manner that eliminates all the effects of changes in foreign currency exchange rates on our revenues, cash flows, or the fair values of our assets and liabilities and as a result, changes in foreign currency exchanges rates may adversely affect us.

Commodity Price Risk

We currently have effective contractual arrangements with nearly all of our customers for passing through changes in the cost of palladium to them. Should these arrangements no longer be in place or effective in the future, we may need to hedge these costs and our results could be adversely affected.

 

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OUR INDUSTRY AND END-MARKETS

We are #1 in the global EL plating chemistry market and #1 in the global GMF plating chemistry market, with the top three players in each market collectively holding a significant portion of those markets. The remaining share of each market is generally held by small, local suppliers focused on specific technologies or geographies. Within our EL segment, we currently focus on a $2.4 billion portion of the broader $23 billion global surface treatment market. Within our GMF segment, we currently focus on a $2.1 billion portion of the broader $23 billion global surface treatment market.

We expect our markets to grow at a CAGR of approximately 3.2% from 2019 to 2023 driven by various secular growth trends such as digitalization, further device miniaturization, increased data volumes and processing speed requirements, the growth of the consumer class in emerging markets, increasing environmental regulations, and rising product quality and durability standards. We believe our unique business model, characterized by consistent and significant investment in R&D, a focus on high-tech growth applications, customer intimacy and integration, and chemistry-equipment solutions approach, positions us to continue to increase our market share. Over time, we expect our innovation, organic growth strategy, and potential bolt-on M&A will expand our market opportunity.

EL Industry and Trends

The EL plating chemistry market is a $2.4 billion industry and is expected to grow at a 3.6% CAGR from 2019 to 2023. We are #1 in the global EL plating chemistry market with a 24% market share. EL plating chemistry is used in electronic applications such as PCBs embedded in smartphones, automotive electronics, communication infrastructure, cloud computing infrastructure, and consumer electronics.

 

EL Chemistry Addressable Market     EL Competitive Landscape (2018)

 

LOGO

 

   

 

LOGO

 

 

Source: Industry report by a major third-party consulting firm and/or management estimates.

(1)   Includes end-markets such as industrial, medical, and others.
(2)   Expected market growth is subject to a number of significant uncertainties and assumptions, see “Market and Industry Data.”

The EL market benefits from broad digitalization and proliferation of PCBs and SCs, driven by prominent secular trends, including:

 

   

5G Infrastructure: The rollout of 5G wireless infrastructure is expected to require approximately twice the number of high-frequency base stations compared to those needed for 4G in order to support the

 

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higher data traffic volumes, speeds, and frequency capabilities. This increased infrastructure need will drive incremental demand for advanced PCBs and SCs. 5G is also expected to enable new applications that consume larger amounts of data, at higher speeds, and on higher frequencies, which is expected to increase the requirements for plating technology in devices transmitting, receiving, and processing such data.

 

   

Next-Generation Smartphones: The smartphone market is a highly innovation-intensive market characterized by constant technological advancements such as OLED displays, flexible screens, additional sensing features, and increased processing speeds. In addition, the new generation of smartphones will be 5G compatible. These advancements, along with increased battery life, require constant PCB miniaturization and greater line density, which drive demand for advanced plating solutions, such as mSAPs, to meet technical requirements.

 

   

Increasing Electronics Content in Automotive: The automotive industry is undergoing a fundamental and transformational change with an evolution towards electrification of powertrains (EVs and HEVs) and ADAS/autonomous vehicles. These trends will drive increasing electronic content per vehicle, with the value of electronic systems within a car expected to grow to 40% of total automotive manufacturing costs by 2030, creating significant additional demand for higher value PCBs and SCs.

 

   

Cloud Computing Infrastructure Growth: Adoption of big data-related analytics is expected to drive increased need for cloud computing infrastructure for data storage and IoT devices for data creation. There is significant industry investment in this area, with approximately 60 million servers estimated to be shipped globally from 2018 to 2022, compared to 44 million shipped globally from 2014 to 2018. Additionally, utilizing this data will call for increases in processing speed. Together, these factors are expected to drive adoption of, and demand for, advanced PCBs and SCs.

 

   

Adoption of Consumer and Industrial “Internet of Things” Devices: The growth of IoT results in increasing proliferation of connected sensors and devices in various consumer electronics (“smart” homes) and industrial (machine learning) applications. By 2022, there are expected to be 15.8 billion connected IoT devices, compared to 5.3 billion in 2018. As the capability of IoT devices increases, so will demand, driving higher volumes, device miniaturization, and state-of-the-art PCBs, HDIs, and SCs.

We are well-positioned to take advantage of these trends and the resulting complexity given our advanced chemistry capabilities, equipment integration, and reputation for quality and high-touch customer service.

 

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The following illustration outlines components of a high-end smartphone dependent upon EL chemistry:

 

 

LOGO

GMF Industry and Trends

The GMF plating chemistry market is a $2.1 billion industry and is expected to grow at a 2.8% CAGR from 2019 to 2023. We are #1 in the global GMF plating chemistry market, with a 22% market share. GMF plating chemistry is predominantly used in automotive surface finishing and other industrial applications such as heavy machinery, household appliances, fixtures, and construction.

 

GMF Chemistry Addressable Market      GMF Competitive Landscape (2018)

 

LOGO

    

 

LOGO

 

Source: Industry report by a major third-party consulting firm and/or management estimates.

(1)   Includes end-markets such as household fixtures and decorative hardware, cosmetic, fashion, jewelry, energy, and others.
(2)   Expected market growth is subject to a number of significant uncertainties and assumptions, see “Market and Industry Data.”

 

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The GMF market benefits from growing industrial- and consumer-driven demand, driven by prominent secular trends, including:

 

   

Increasing Quality Requirements: The trend towards improving product quality to meet longer warranty standards requires greater useful lives of parts and components, driving demand for high-performance GMF plating processes. These processes increase wear- and corrosion-resistance of our customers’ end-products.

 

   

Premiumization: The growth of the consumer class in emerging markets such as China and India has led to increased demand for light and premium vehicles, household appliances, and heavy machinery. This increased “premiumization” of products and demand for new products has led to more and higher-value chrome surfaces (e.g., satin finishes) and growing per-unit plating content. Consumer purchases in China and India are expected to grow from approximately $6.1 trillion in 2015 to approximately $25.0 trillion in 2030 and, as purchasing power in these markets continues to rise, these demand patterns should continue driving increased volumes of our products.

 

   

Increasing Environmental Regulation: New environmental requirements regulating specific substances used in certain chemical processes, water and waste disposal, and tightening emissions standards, such as Euro 6d-TEMP and China 6 among other measures, have led OEMs and our customers to emphasize sustainable products and systems. These new regulations are expected to increase demand for our market-leading environmentally sustainable solutions and technology.

 

   

Lightweighting: Increasingly stringent emissions standards, environmental regulations, and an emphasis on range for EVs and HEVs have increased demand for automotive weight-efficiency. This increase in lightweighting drives demand for GMF plating applications, particularly our POP and DECO products, which can enable substitution of metal for plastics with metallic finishes. Lightweighting also leads to new innovations because, as new lighter-weight materials are utilized, they will require tailored chemistry solutions to address new challenges, such as advanced corrosion protection requirements.

We are well-positioned to take advantage of these trends and the resulting complexity given our advanced chemistry capabilities, equipment integration, and reputation for quality and high-touch customer service.

 

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The following illustration outlines components of a medium-sized automotive dependent upon GMF chemistry:

 

 

LOGO

Equipment Industry and Trends

In addition to the chemistry markets, we also compete within the equipment markets for EL and GMF plating chemistry applications where we have the #1 global market share in EL horizontal plating equipment and are one of the market leaders in GMF plating equipment. We have also recently invested in VCP technology, which substantially increases our addressable market for plating equipment and will provide us with the opportunity to increase our market share and chemistry sales. We view our equipment offering as critical in supporting our chemistry sales, as well as in providing our comprehensive systems and solutions approach. We expect the equipment market to benefit from the same drivers as the underlying chemical markets. Consequently, we estimate the value of the EL equipment market to grow at a CAGR of approximately 3.6% from 2019 to 2023 and we expect the GMF equipment market to grow at a CAGR of approximately 2.8% from 2019 to 2023. As equipment represents a substantial upfront investment for our customers, procurement decisions for equipment products typically follow the characteristics of the capital and technological investment cycles. Once installed, our equipment is a source of recurring revenue and an important growth driver for our chemistry, spare parts/wear parts, service, line upgrades, retrofits, and technical support.

 

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BUSINESS

We are the leading global provider of specialty electroplating solutions delivering chemistry, equipment, and service for high-growth technology applications. We are #1 in the global EL plating chemistry market, #1 in the global GMF plating chemistry market, and the #1 global manufacturer of horizontal plating equipment for PCB production. Our solutions are used in a wide variety of attractive end-markets, including smartphones, communication infrastructure, cloud computing infrastructure, computing and consumer electronics, automotive electronics, and automotive surface finishing, as well as in numerous industrial and consumer applications such as heavy machinery and household appliances. We benefit from various secular growth trends such as digitalization, increasing data volumes and processing speed requirements, the growth of the consumer class in emerging markets, increasing environmental regulations, and rising product quality and durability standards. We expect these trends to not only increase demand for our customers’ end-products that use our plating chemistry, but also increase the amount and value of plating chemistry used in each end-product, allowing our growth to outpace underlying end-market volume growth.

We are the only major company in our industry that provides both chemistry and equipment, which we sell through both our EL and GMF segments. Our comprehensive systems and solutions approach leverages our unique offering of chemistry, equipment, and service. We believe this business model creates a sustainable competitive advantage that helps us achieve deep customer intimacy and allows us to continue to grow our market share and capitalize on positive market growth trends. This approach is supported by our 17 state-of-the-art global technology centers, which allow us to provide local service around the world and to respond in real-time to customer needs. The combination of our comprehensive systems and solutions approach, expansive global manufacturing and sales footprint, customer-driven investments in R&D, and superior technical expertise makes us an ideal electroplating and surface finishing solutions partner for our diverse customer base. This drives long-lasting relationships and an industry-leading financial profile, with fiscal 2018 EL and GMF Segment Adjusted EBITDA margins of 33.9% and 27.0%, respectively, and EL and GMF Segment Adjusted EBITDA margins for the nine months ended September 30, 2019 of 35.7% and 26.8%, respectively.

Electroplating refers to an advanced manufacturing process that involves the electrolytic deposition of a thin metal coating on a substrate. This technique is widely used in the manufacturing of products for a variety of end-markets, including smartphones, automotive, heavy machinery, and household appliances. Electroplating provides mission-critical functionality to the final end-products, such as interconnection in electronic devices, corrosion protection and wear-resistance of mechanical components, and high-value aesthetic appearance in metal finishing of decorative parts and surfaces. Our solutions are mission-critical for the PCB, SC, and surface finishing industries, but typically account for less than 1% of total end-product cost. Our customers rely on these solutions to increase processing speeds, further miniaturize devices, transform product appearance, and increase product durability. Our direct customers are among the most important suppliers to the world’s leading OEMs in our key end-markets. In order to satisfy demanding OEM specifications, we often partner with OEMs and our direct customers to develop comprehensive solutions that embed, or “design-in” our offerings. The “designed-in” nature of our solutions and the associated testing and certification processes, which can last up to five years, lead to high switching costs for our direct customers and OEMs. Our solutions create significant value for our customers by consistently and reliably enabling superior product performance. Our ability to consistently deliver a compelling customer value proposition has led to long-standing customer relationships, with an average relationship length of 24 years among our top 25 customers and, underpins our sustainable competitive advantage.

 

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Our chemistry is found in a variety of everyday products across a wide range of attractive end-markets:

 

 

LOGO

Our business is defined by an unwavering commitment to R&D with a focus on high-growth applications, close customer collaboration, and market-led innovation. We believe that we consistently invest more in R&D than our competitors with our fiscal 2018 R&D expense representing 4.8% of revenue for the same period. This investment includes over 500 R&D employees worldwide. Approximately 90% of our annual R&D investments support our existing customers’ product improvement and short-term R&D needs. This close collaboration enables us to pioneer new high-value solutions with reduced commercial risk, while the remainder of our R&D investment is focused on developing next-generation technologies, often in partnership with leading OEMs, customers, and universities. Our historical and continued investment in R&D allows us to solve complex technical problems associated with cutting-edge product innovations, such as OLED displays, flexible screens, and ADAS.

Our well-invested global footprint is comprised of our 17 state-of-the-art global technology centers, 15 chemistry production facilities, and two equipment production facilities. We believe we have the largest EL and GMF plating presence in Asia, with seven production facilities and nine technology centers, a distinct and crucial element of our business that enables us to capture growth throughout this key region. We serve customers locally in over 40 countries with approximately 4,000 employees, of whom 1,900 are directly engaged in customer support, leveraging their technical expertise in sales, marketing and service to enhance our customers’ operations, improve existing practices, and enable the rapid commercialization of new products. Of these approximately 1,900 technical experts, several hundred work directly with our customers at their facilities. Our scale and strong local presence are key competitive differentiators, allowing us to leverage our technology portfolio to address our customers’ current and future requirements, while simultaneously providing localized, high-touch customer service.

We sell our chemistry and equipment to a diverse mix of customers who are typically manufacturers serving global markets, ultimately mitigating our exposure to any individual geography. For fiscal 2018, our top ten customers accounted for approximately 25% of our total chemistry revenue.

 

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Our Business Segments

Our business operates in two business segments, Electronics and General Metal Finishing, with both offering chemistry, equipment, and service globally.

 

 

LOGO

 

 

(1)   See “Prospectus Summary—Summary Historical and Pro Forma Financial Information.”
(2)   Segment Adjusted EBITDA does not reflect the impact of the adjustment regarding IFRS 16 “Leases” as discussed in footnote 4(i) in “Summary Historical and Pro Forma Financial Information.”
(3)   Other end-markets include aerospace & military, medical & industrial, decorative hardware, and others.

Although these segments each have distinct end-markets and customers, they both benefit from our centralized functions and global scale. In addition, we leverage our significant R&D spend and resulting innovations, as well as our shared technology centers and production facilities, to benefit from technologies, innovations, best practices, and other key learnings across our product portfolio and segments. This R&D coordination, along with our centralized functions, results in better commercial focus and increased productivity and profitability.

 

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Electronics

Overview

We are #1 in the global EL plating chemistry market, with a market share of approximately 24% based on our fiscal 2018 EL plating chemistry revenue. We provide plating chemistry, equipment, and service used in the manufacturing of electronics components, including PCBs and SCs, with demand driven by a variety of end-markets, including smartphones, communication infrastructure, cloud computing infrastructure, automotive electronics, and consumer electronics in which we have strong positions. In addition, we have invested and developed solutions that have enabled a new wave of technological innovation, including the next generation of automotive electronics and electronic devices created by our customers and OEMs. In connection with these investments, the number of patents and patent applications related to our EL offerings increased from 693 in fiscal 2005 to 1,326 in fiscal 2018, or 91.3%. Our expansive footprint allows us to serve the global electronics supply chain, as demonstrated by our longstanding relationships with 28 of the top 30 global PCB manufacturers. Our top ten EL customers accounted for approximately 52% of our total EL revenue for fiscal 2018.

 

 

Revenues by End-Market(1)

 

   

 

Revenues by Geography(1)

 

   

 

End-user Demand by Geography(3)

 

 

LOGO

 

   

LOGO

 

  LOGO  

LOGO

 

 

(1)   Represents 2018 chemistry revenues.
(2)   Includes end markets such as medical & industrial, energy, and others.
(3)   End user demand by geography represents the estimated geographic breakdown of our 2018 revenues by ultimate end users of products with our chemistry.

 

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Chemistry

Our EL plating chemistry offering is used in the manufacturing of PCBs and SCs to provide electrical conductivity used in devices and components serving mission critical functions in a wide variety of end-markets including consumer electronics and automotive applications. Our product portfolio is focused on attractive growth segments of the EL plating chemistry market that involve technologically advanced production processes. These high-value technology segments include complex applications such as HDIs, IC substrates, and flex or rigid-flex PCBs used in smartphones, 5G infrastructure, servers, and automotive electronics. The use of our specialty chemistry in these applications typically requires long approval lead times and faces high switching costs and costs of failure, resulting in our higher margins relative to those of other plating applications. Descriptions of our various products and applications are set forth in the table below:

 

            Product   Description   Atotech Differentiation   Applications

PCB Applications

  Plating

Through

Hole (“PTH”)

  LOGO   Creating conductivity on non-conductive surfaces   Our horizontal Uniplate equipment together with our chemistry is the leading solution for HDI PCBs and the preferred process for many leading smartphone OEMS   Enables the next generation of PCBs such as multi-layer boards, flex and rigid-flex PCBs, HDI, and package substrate boards. Also used in touchscreens and displays
  Pattern / Panel

Plating

  LOGO   Electroplating of copper, nickel, gold, and tin on the surface of a PCB to create interconnects among components
  Selective

Finishing

  LOGO   Final finishes for soldering, wire bonding, and other assembly technologies   Leading immersion tin surface finish (Stannatech) for automotive electronics
  Surface

Treatment

Technologies

  LOGO   Surface preparation to create adhesion during the electroplating process   Most successful oxide replacement process for innerlayer bonding product series, namely Bondfilm and leading advanced surface preparation processes
       

SC and Interconnect Applications

    Semiconductor
Plating: Dual
Damascene &
Advanced
Packaging
  LOGO   High speed copper RDL (redistribution layer) and pillar plating for advanced packaging. Electroless processes for under bump metalization   High purity chemistries and optimized process solutions for metal deposition on SCs, complemented by our cutting edge, single and double side Multiplate plating equipment   Flip chip memory transceivers, embedded processors, microelectromechanical systems, complementary metal- oxide-semiconductors, image sensors, insulated gate bipolar transistors, and power chips
    Leadframes &

Connectors

  LOGO   Provides connector & leadframe industries with tin & tin alloys, silver plating and adhesion promoters   Highly reliable processes qualified at major automotive and aerospace OEMs   Connectors, integrated circuit/lead frames, and LED

Equipment

We manufacture and supply a broad range of horizontal plating equipment to our customers. Our broad range of plating and auxiliary equipment, spare parts, and ancillary services for our EL offering provides us with an advantage over our competitors who provide only chemicals. When our equipment is used in conjunction with our EL plating chemistry offerings, we believe our customers can optimize plating results with better production yields and higher product quality, thus reducing their manufacturing costs and improving end-product performance. Our customers have recognized this benefit, with 57% of our EL PCB plating chemistry sales in fiscal 2018 sold for use in our equipment.

 

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We are the #1 global manufacturer of horizontal plating equipment for PCB applications, and we have recently invested in vertical plating technology for PCB applications. While both horizontal and vertical plating equipment enable the deposition of metal layers in solutions, they utilize different methods to transport PCB panels through a plating line. In horizontal plating, PCB panels are transported through a line via rollers, whereas in vertical plating, PCB panels are transferred via baskets. Each process offers advantages depending on the specific PCB manufacturing processes and applications. Historically, we have focused on horizontal plating equipment and gained a decisive competitive advantage in this area. Our horizontal plating equipment reduces consumption of fresh and wastewater, energy, and process chemistry, while also providing superior fluid delivery to the PCB panels, which leads to enhanced process uniformity and quality. Compared to a standard vertical plating line, our Uniplate system is environmentally friendly, reducing wastewater generation by 41%. Due to these benefits, horizontal plating equipment is typically used for higher value PCBs versus standard vertical plating equipment. However, since some of our customers use vertical conveyorized plating equipment for specific applications, our recent investment in VCP technology enables us to broaden our portfolio and provide them with a comprehensive systems approach, which we expect will drive additional chemistry sales. The following table details our equipment:

 

    Product   Description   Atotech
Differentiation
  Related Product/
Technology
     

Uniplate Cu

  LOGO   Horizontal electrolytic copper plating   High throughput and reliability for high-end PCBs (i.e., for smartphones and chip packaging applications such as Flip Chip Scale Package). Eliminates chemical fumes, requires less floor space and less chemistry volume compared to vertical plating equipment   Pattern/Panel Plating

Uniplate P/LB

  LOGO   Desmear system including market leading regeneration and resource saving features; horizontal copper plating line   The market leader for horizontal desmear and electroless copper processing. Offers the highest yield on fine line products due to patented flooding devices and capability for ultra thin core transport, as required for advanced IC substrates   Plating Through Hole

Uniplate

CP/NP

  LOGO   Horizontal direct metallization lines for conductive polymer and palladium colloid processes   Optimized for our palladium and polymer direct plating processes to allow maximum range of product to be produced at high yields   Plating Through Hole

Polygon

Product Lines

  LOGO   Cost-effective horizontal equipment for advanced surface preparation, desmear and electroless copper process   Offers similar plating performance as Uniplate P/LB at lower cost, targeted for automotive and HDI PCB production. Surface treatment line ensures best surface treatment process performance and appearance   Surface Treatment Technologies and Plating Through Hole

Horizon

Bondfilm

  LOGO   Horizontal inner layer bonding   The leading oxide replacement system for ultra thin core processing   Surface Treatment Technologies

Horizon

Stannatech

  LOGO   Horizontal immersion tin for multiple lead-free soldering and press-fit technologies   Leading system solution for immersion tin. Equipment and chemistry have been optimized in close cooperation with the automotive electronics industry to maximize reliability   Selective Finishing

Multiplate for

Wafer and

Panel

  LOGO   Double-sided electrochemical deposition (“ECD”) on wafer, double-sided electrolytic plating   Several unique features ensure better surface distribution, high plating speed, and differentiated double-sided plating   Semiconductor Plating and Pattern/Panel Plating

Vertical
Conveyorized    
Plating   

  LOGO   Vertical conveyorized double-sided electrolytic copper plating equipment   Recent addition to Atotech’s equipment offering. Broadens the addressable EL equipment market to semi-additive electroplating solutions required in the high-end smartphone and IC packaging end-markets   Pattern/Panel Plating

 

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Service

We offer services to our customers, including on-site support at our customers’ PCB and SC production facilities. We engage in joint development projects leveraging our technology centers to collaborate with OEMs and direct customers. This customer intimacy allows us to better understand our customers’ production processes and enables us to optimize our solutions, leading to an increase in productivity and process reliability. These projects also allow us to anticipate the industry’s future requirements, which, in turn helps our customers remain at the forefront of technological advancement. In many instances, we help to set up and run new plating lines, as well as provide manufacturing oversight to ensure that optimal plating results are consistently achieved. With the support of our 11 EL technology centers worldwide, we can rapidly introduce new and relevant technologies to the market and provide application development, testing, support, and training services. Our analytical and materials science laboratories support customers with the use of cutting-edge scientific tools and highly skilled professionals.

Customers

We work directly with, and are certified by, many of the leading global electronics OEMs and are able to satisfy their strictest quality requirements. We partner with OEMs during their product development process to have our process solutions qualified and designed into the product specifications they provide to PCB manufacturers. The PCB manufacturers, our direct customers, supply a diverse group of blue chip OEMs, including Oppo, Samsung, Sony, and Microsoft and SC packaging manufacturers. Quality and technical competence, as well as innovation, R&D, and sustainability are the primary purchasing criteria for our customers. Through a combination of superior solutions and customized on-site support we have demonstrated a successful track record of consistently meeting the needs of our customers which has resulted in long-standing and deep relationships. We serve 28 of the top 30 of the largest PCB manufacturers in the world and have historical or ongoing joint development projects for future technologies and products with 13 of the top 30. The fragmented nature of the PCB customer base provides diversity, which differs from the more concentrated customer base in the SC industry.

Electronics Manufacturing Value Chain

 

 

LOGO

General Metal Finishing

Overview

We are #1 in the global GMF plating chemistry market, with a market share of approximately 22% based on our fiscal 2018 GMF plating chemistry revenue, supplying specialty-plating chemistry to approximately 7,000

 

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customer sites globally. We are also one of the market leaders in GMF plating equipment. Our comprehensive systems and solutions generally add the most value for our larger GMF customers who have complex technical requirements. For our other customers, who are often smaller, we provide value by being a one-stop shop for all their plating needs, supplying chemistry, auxiliary equipment, and high-touch local service. Our solutions not only transform the aesthetics of plastics and metals to create a higher value appearance, but also improve corrosion- and wear-resistance and environmental sustainability. We believe our comprehensive approach strengthens our ability to win business, providing our customers with enhanced production yields, higher quality results, and improved end-product performance, while reducing their manufacturing and warranty costs. Our diverse technology portfolio enables customers to respond quickly to evolving trends in their respective end-markets. In connection with our investments in our GMF offering, the number of patents and patent applications related to our GMF offerings increased from 445 in fiscal 2005 to 788 in fiscal 2018, or 77.1%, and the number of approvals from leading OEMs increased to approximately 400. In addition, we have grown our market share in Asian markets where we anticipate strong demand for our GMF plating chemistry offering going forward. Our top ten GMF customers accounted for approximately 14% of our total chemistry GMF revenue for fiscal 2018.

 

Revenues by End-Market(1)     Revenues By Geography(1)      Revenue by Customer(3)
LOGO     LOGO     

LOGO

 

 

(1)   Represents 2018 GMF chemistry revenues.
(2)   Includes end-markets such as cosmetic, fashion, jewelry, energy, household fixtures, decorative hardware, and others.
(3)   Represents 2018 specialty chemistry revenues, excluding commodities.

 

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Chemistry

Our GMF plating chemistry offering comprises specialty plating chemicals used in surface finishing processes for a wide variety of end-markets including automotive surface finishing, heavy machinery, household appliances, fixtures, and construction. These metal finishing processes enhance the physical properties of products by providing functional coatings for wear resistance and corrosion protection and transform the aesthetic appearance of products by providing decorative coatings. We focus on applications in which we add significant value, including complex applications for components and safety parts for automotive, heavy machinery and construction, as well as on other applications where our high-touch service can significantly improve production outcomes. The use of our specialty chemistry in these applications typically requires long approval lead times and faces high switching costs and costs of failure, resulting in higher margins for us relative to other plating applications. In addition, we have pioneered sustainable technology in our GMF segment, which has been particularly important to our customers in order to ensure compliance with tightening environmental regulations. For example, we were the first company to introduce the trivalent chromium hard chrome plating process, allowing our customers to phase out Chrome VI. Examples of our products and applications are set forth in the table below:

 

     Product   Description   Atotech Differentiation   Applications    
     

Decorative

Coatings (“DECO”)

/ Plating on Plastics (“POP”)

   LOGO   Gives metals and plastics high-quality and decorative appearance through the use of copper, nickel, and chrome electroplating   Market leader in plating on plastics and decorative coatings worldwide. Superior equipment offering   Interior and exterior vehicle fittings, shower heads, faucets, general fittings, jewelry, cosmetics
     

Corrosion

Protection

   LOGO   Coatings such as zinc and zinc alloys, zinc flake coatings, passivates, and sealers used to provide protection against corrosion and enhance decorative properties   Only supplier in the market with a comprehensive electrolytic zinc/zinc alloy and zinc flake coating portfolio   Fasteners, brake components, stamped parts, window frames
     

Wear Resistant
Coatings    
(Functional    
Chrome /  
Electroless    

Nickel)

   LOGO   Provides high surface & abrasion resistance using materials including hard chrome, iron, phosphorous, electrolytic nickel, and silicon carbide   Benchmark for conventional hard chrome plating. BluCr first functional trivalent chrome process in the market. Unique shipment approach/DynaChrome   Piston rods, piston rings, hydraulic systems, fuel delivery systems, valves
     

Paint Support

Technologies

   LOGO   Covers paint pretreatment, paint stripping, and paint overspray treatment solutions   Focus on sustainability by reducing sludge, CO2, and hazardous materials for our customers   Consumer goods, household appliances, motorbike components, automotive tools, aluminum wheels

Equipment

We are one of the market leaders in GMF plating equipment. We manufacture and supply equipment that comprises plating lines and related spare parts and a broad range of auxiliary equipment to our customers. When our equipment is used in conjunction with our specialty chemistry, we believe our customers can optimize plating results with better production yields and higher product quality, thus reducing their manufacturing costs, improving product performance, and ensuring their compliance with environmental regulations. Because of these customer benefits, our equipment sales are usually correlated with significant follow-on chemistry sales. Our plating lines contribute to minimized energy consumption, for example, through optimized exhaust air systems and wastewater reduction, efficient pumps, and motors, in combination with advanced control system intelligence. GMF plating equipment is particularly beneficial to our customers facing complex technological

 

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requirements such as the plating of shock absorbers at high speed and large quantities. Our auxiliary equipment ranges from ion exchange technologies, metal recovery systems, and membrane anode technology to regeneration and electrodialysis systems. This auxiliary equipment helps our customers reduce consumption of raw materials and generation of waste while increasing their production efficiency. Although we primarily do business with metal plating service providers and suppliers, we have partnered with most major OEMs to deliver comprehensive solutions to meet their evolving technical and design specifications. In addition, we emphasize environmentally friendly products, including our DynaChrome systems, which utilize 70% less water and 42% less energy versus standard vertical plating lines. The following table details our equipment and services:

 

    Product   Description   Atotech Differentiation   Related Product /
Technology
   

DynaChrome

  LOGO   Piston rods (shock absorbers) plating   Has no equivalent in the market. The unique vertical plating technology can be fully integrated into the production process and is used for shock absorbers plating where we are the market leader   Wear Resistant Coatings / Functional Chrome
   

DynaPlus

  LOGO   Decorative plating of front grills, emblems, interior parts Functional plating for rack and barrel parts.   For our key customers, we offer vertical production lines for decorative and functional plating   DECO, POP, CRC
   
Auxiliary Equipment   LOGO   Ion exchange systems, regeneration systems, and electrodialysis systems which increase production efficiency (e.g., by reducing wastewater and chemistry consumption during the plating process) and quality   We are a technology leader with our fully automated auxiliary equipment and have the broadest offering with a wide range of technologies and applicable plating product groups   DECO, POP, Corrosion Protection, Electroless Nickel

Service

We offer on-site support at our customers’ production facilities and other services to our customers. We engage in joint development projects leveraging our technology centers to collaborate with OEMs and direct customers. This customer intimacy allows us to better understand our customers’ production processes and enables us to optimize our solutions, leading to an increase in productivity and process reliability. These projects also allow us to anticipate the industry’s future requirements, which, in turn helps our customers to remain at the forefront of technological advancement. In some instances, we help to set up and run new process lines, as well as provide manufacturing oversight to ensure that optimal plating results are consistently achieved. With the support of our 15 GMF technology centers worldwide, we can rapidly introduce new and relevant technologies to the market and provide application development, testing, support, and training services. Our analytical and materials science laboratories support customers with the use of cutting-edge scientific tools and highly skilled professionals.

Customers

Within the GMF plating chemistry market, we have a highly diversified customer base of approximately 7,000 customer sites and supply plating chemicals for decorative and functional surface finishing applications across a wide variety of end-markets. Our largest end-market is automotive surface finishing, where our chemistry supplies the value chain serving all major automotive OEMs. Our products and technologies must be pre-qualified by the OEMs, which is a time-intensive process that can last up to five years and yields strong and often long-lasting client relationships and results in high switching costs for customers. Our customers place a

 

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strong emphasis on quality, technical competence, and customer service, including technical support and training. The competitive advantages derived from our technology leadership and intimate customer approach further strengthens our existing relationships and foster new ones. In addition, our dedicated support teams stay in close contact with OEMs and suppliers to address their present and future needs and align our R&D program accordingly.

General Metal Finishing Value Chain

 

 

LOGO

Our Competitive Strengths

Global market leader in well-structured markets with positive long-term secular growth trends

We are the global market leader in both of our primary markets—#1 in EL plating chemistry with a 24% market share and #1 in GMF plating chemistry with a 22% market share. Each market is well structured, with the three largest players in the EL and GMF plating chemistry markets representing a combined 64% and 48% market share, respectively. We are a recognized leader in plating processes for applications such as HDI for smartphones, IC substrates, DECO, POP, as well as functional chrome plating and have long-standing relationships with our customers.

 

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We expect our market leadership will allow us to leverage and capitalize on favorable secular trends in the EL and GMF plating chemistry markets, which are forecast to grow at CAGRs of approximately 3.6% and 2.8%, respectively, from 2019 through 2023. Within the EL plating chemistry market, growth is expected to be driven by expanding communications infrastructure (ongoing 5G network build-out), increasing device complexity (HDI and flex or rigid-flex PCBs), digitalization (IoT), adoption of big data-related analytics and cloud computing, increasing automotive electronics content and vehicle electrification as well as autonomous driving. We also expect demand for our chemistry products to be driven by increased chemistry penetration per device. As technological innovation creates devices with greater computing power, speed, and capabilities, while simultaneously shrinking the product size, more advanced plating chemistry solutions are needed to address growing device complexity. This complexity, coupled with increasing OEM technical specifications, is driving greater PCB density and an increasing number of PCB layers per device. More complex plating chemistries and processes can enable increased speed and further device miniaturization by reducing the distance and line size connecting components, reducing latencies between components, and increasing PCB line density. See illustrative example below:

 

 

LOGO

Within the GMF plating chemistry market, growth is expected to be driven by evolving consumption patterns of a growing consumer class in emerging markets, increasing automotive production, vehicle lightweighting, increased warranty requirements, product premiumization, and stricter environmental regulations. However, we can make no assurances that our assumptions about market growth will be correct. Historically, we have been able to increase our market share and we believe we are well-positioned to continue to do so in the future as a result of our comprehensive systems and solutions approach, strong customer integration, innovative R&D, and global footprint.

Comprehensive systems and solutions approach drives sustainable competitive advantage and unmatched customer intimacy

We offer a differentiated systems- and solutions-based approach that combines chemistry, equipment, and service across both of our segments.

 

   

Chemistry: Our chemistry solutions are designed to address the specific process needs of our customers, reflecting iterative collaboration with OEMs and direct customers alike to solve for complex technological requirements such as further device miniaturization and increasing processing speeds through greater conductor line sophistication. We design these proprietary processes in close collaboration with our customers and OEMs, making our chemistry difficult to substitute and fostering deep and lasting customer relationships.

 

   

Equipment: We believe that utilizing our equipment in connection with our tailored chemistry provides our customers with significant value. Our more than 1,000 installed systems help many of our customers

 

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engage in more complex plating processes that demand our higher value-added chemistry and provide another point of customer contact, further driving customer integration. Once installed, our equipment is a source of recurring revenue and an important growth driver for our chemistry, spare parts/wear parts, service, line upgrades, retrofits, and technical support. In addition, the installation of our equipment tends to drive increased customer intimacy and create higher switching costs for our customers. We believe this approach is a key driver of our growth and customer loyalty, delivering enhanced production yields, higher-quality results, and improved end-product performance to our customers, while improving manufacturing efficiency. From 2010 to 2018, we have increased the percentage of our chemistry sold for use in our EL equipment from approximately 51% to 57%. For chemistry sold for use in our GMF DynaChrome equipment, which is used in high-value GMF applications, the percentage has increased from approximately 8% to 23%.

 

   

Service: We also provide world-class service to our customers. This service includes on-site support and training, embedded employees engaged in manufacturing process oversight, and the benefits of a global network of 17 technology centers. Our facilities are strategically located in close proximity to key customers to facilitate application development, testing, analytical measurements, chemical and physical characterization, technical support, and training. Approximately 1,900 employees worldwide are dedicated to customer support, with several hundred working on-site at our customers’ manufacturing facilities. Our regional and global product teams support our front-line staff and our customers with their deep product expertise to help ensure that optimal results are achieved through utilization of our chemistry and equipment, furthering our customer intimacy. In addition, our several hundred on-site personnel provide crucial feedback regarding upcoming customer needs to our R&D team, further enabling us to be a first mover on new technologies and to increase our portion of sales to those customers.

Our comprehensive systems and solutions approach is supported by our dedicated sales force and local presence and reflects our holistic view of the electroplating process. This combination allows us to respond in real-time to technological challenges, helping to develop solutions alongside our customers as we support them in their need to address constantly changing market dynamics. Our close customer relationships, with sales to 28 of the top 30 PCB manufacturers and joint development projects with 13 of these manufacturers, have allowed us to develop solutions alongside our customers. This collaboration helps our customers innovate and reduce their time-to-market, while allowing us to be the market leader on the newest high-tech and value-added solutions, which underpins our industry-leading financial profile.

Market leading R&D investment and technological innovation

We are a global technology leader in the electroplating chemistry market due to our market-leading R&D and track record of innovation. We believe our $206.0 million in R&D investment during the three years ended December 31, 2018, with fiscal 2018 expense representing 4.8% of total revenue, significantly exceeds that of our competition. This investment includes over 500 R&D employees worldwide. For fiscal 2018, we estimate our R&D spend represented approximately 34% of the combined R&D spend of all plating chemical companies and 51% of the combined R&D spend of the four largest plating chemical companies by market share. As a result, we believe we have developed one of the most advanced R&D organizations in our industry, evidenced by our over 1,500 patents, 500 pending patent applications, and more than 100 employees with Ph.D.s. This central R&D function is bolstered by our 17 state-of-the-art global technology centers staffed by approximately 200 professionals, providing local support to our customers through testing, analysis, and pilot production. While we can provide no assurance that our investment in R&D will continue to provide competitive advantages, we believe we are well-equipped to continue our technological leadership to meet the future product needs of our customers and OEMs.

Our investments in R&D have allowed us to solve complex technical problems associated with cutting-edge end-product innovations such as OLED displays, flexible screens, ADAS, and the build-out of 5G infrastructure. We believe we are particularly well-positioned to capitalize on future transformative technologies, including

 

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artificial intelligence, next-generation devices enabled by 5G, continuing developments in ADAS, and complex composite anti-corrosion coatings. We also have the capability to develop and produce unique chemistry in-house, which we use to produce custom additives differentiating our chemistry from that of our competitors. As part of our investment in future technologies, we have invested heavily in environmentally sustainable solutions. For example, we were the first company to introduce the trivalent chromium hard chrome plating process, allowing our customers to phase out hexavalent chromium (“Chrome VI”). Our investments in these areas and the products we develop allow our customers to drive higher value product sales, reduce waste, and maximize operating efficiency in the face of evolving consumer demands and more stringent regulatory regimes. We expect the benefits associated with our R&D platform will persist as we continue to enhance our R&D productivity and focus on customer-driven innovation. We believe this sustainable competitive advantage will allow us to increase our market share going forward.

Mission-critical nature of our solutions drives customer stickiness

Our solutions are vital to our direct customers’ product performance and enable end-product innovation, while typically accounting for less than 1% of total end-product cost. OEMs and our direct customers generally demand the highest quality and performance specifications in plated components, which they generally verify through extensive testing and certification processes that can last up to five years. The long OEM testing and certification process reduces the likelihood that our customers will switch suppliers once our chemistry has been approved. Consequently, we have a close relationship with many OEMs and partner with them during the product development process to ensure that our solutions are certified. Our customer stickiness is evidenced by an average relationship length of 24 years among our top 25 customers. Further, our deep collaboration with OEMs provides greater customer insight, driving development of new products and processes to capture incremental growth from new end-product innovations.

Diverse revenue base by end-market, customer, and geography

The diverse nature of our global operations limits our financial exposure to any single end-market, customer, or region. For fiscal 2018, we generated approximately 12% of our chemistry revenues in the Americas, 19% in Europe, 38% in China, 9% in Taiwan, and 22% in the rest of Asia. The majority of our chemistry revenues are generated by sales to manufacturers in Asia that serve global end-markets with the estimated geographic breakdown of our revenues by ultimate end users of products with our chemistry across the Americas, Europe, China, Taiwan, and the rest of Asia representing approximately 27%, 29%, 25%, 2%, and 16% of our fiscal 2018 chemistry revenues, respectively. Additionally, our customers are located in over 40 countries, with no single customer representing more than approximately 5% of our chemistry revenue for fiscal 2018 and with our top ten customers representing approximately 25% of chemistry revenue for fiscal 2018. This diversified base includes customers serving a broad variety of end-markets, including smartphones, communication infrastructure, cloud computing infrastructure, automotive electronics, and consumer electronics for our EL offerings and automotive surface finishing, heavy machinery, household appliances, fixtures, and construction for our GMF offerings.

 

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Compelling financial profile with consistently strong margins and cash flow

We have an attractive financial profile highlighted by our strong and stable margins. Our EL and GMF segments generated Segment Adjusted EBITDA margins of 33.9% and 27.0%, respectively, for fiscal 2018 and EL and GMF Segment Adjusted EBITDA margins of 35.7% and 26.8%, respectively, for the nine months ended September 30, 2019. We have implemented numerous initiatives that have reduced our fixed and variable costs and improved working capital productivity. We expect that these initiatives will generate additional cost savings and cash flows as many have only recently begun to contribute to our financial results, although we cannot make any assurances regarding the amount or timing of additional cost savings and cash flows these initiatives may generate.

 

LOGO

 

(1)   Segment Adjusted EBITDA does not reflect the impact of the adjustment regarding IFRS 16 “Leases” as discussed in footnote 4(i) in “Summary Historical and Pro Forma Financial Information.”
(2)   Successor Pro Forma results.

Our track record of operating profitability and low capital intensity, including maintenance capital expenditures of approximately 1% of revenues over the past three years, has allowed us to consistently generate strong cash flows. Our global footprint and operational flexibility allow us to be more nimble and shift production to meet our customers’ needs. Our efficient and well-invested asset base supports our ability to meet demand growth and innovation requirements with limited capital expenditures.

Experienced management team and strong equity sponsor

Our company is led by a highly experienced and talented management team with an average tenure in the specialty chemicals industry of more than 19 years. Our management team, led by Chief Executive Officer Geoff Wild, is strategically positioned around the globe and is focused on improving company performance by consistently driving commercial and operational excellence. Mr. Wild has over 39 years of industry experience and previously served as Chief Executive Officer of AZ Electronic Materials, a former Carlyle portfolio company, where he was instrumental in the IPO process, successfully driving a total shareholder return of 68% from IPO in October 2010 to Merck KGaA’s acquisition of the business in May 2014. Our Chief Financial Officer Peter Frauenknecht has over 34 years of experience in global industrial manufacturing businesses, serving as Chief Financial Officer and member of the Executive Board at Constantia Flexibles, a leading global flexible packaging company, where he was instrumental in driving efficiency gains, integrating acquisitions, supporting revenue growth from €1.6 billion in 2013 to €1.9 billion in 2015, and improving profitability. Our sponsor, Carlyle, is a leading global alternative asset management firm with extensive experience in successfully completing corporate carve-out transactions in the industrial sector and a track record of successful IPOs and transitioning companies from private to public.

 

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Our Business Strategies

Increase penetration of our comprehensive systems and solutions approach

We believe our comprehensive systems and solutions approach, which includes selling chemistry, equipment, and service, is the best way to maximize our all-in value to customers. We have realigned our resources to better implement this market- and solutions-based approach, including by embedding our equipment business within our EL and GMF segments. As applications become more complex, we believe the efficiency and value proposition of our systems-based solution will become more evident, which we intend to capitalize on to drive market share gains. We intend to expand this systems-based approach to new customers, as well as existing customers, who currently only use our chemistry, through our marketing efforts and a continued focus on the customer value proposition. We are expanding our equipment manufacturing in China to lower production costs, growing our addressable market opportunities and penetration with local Chinese customers and other Asian customers. In addition, we continue to invest in technologies to further broaden our portfolio and enable us to increase the penetration of our comprehensive systems and solutions approach. Most recently, we invested in VCP technology, which substantially increases our addressable market for plating equipment, and in turn provides us the opportunity to pull through more of our chemistry. We intend to leverage our broad network of technology centers, production facilities, and regional support teams to locally serve our global customer base and facilitate further integration into our customers’ operations as we help optimize their production efficiency and quality. We believe the continued proliferation of our comprehensive systems and solutions will drive better informed R&D decisions, increasing the value of our approach to our customers.

Leverage market leadership in existing technologies to expand to new applications and geographies

Over our 150-year history, we have cultivated a strong platform of innovative and high-tech solutions, resulting in #1 global market shares in EL plating and GMF plating chemistry. We intend to continue to leverage our scale, relationships, and existing solutions to expand our penetration into new applications in high-growth market segments and geographies.

In the EL plating chemistry market, we are focused on leveraging our expertise and technology leadership in high-density electronics for smartphones to capture incremental demand for new applications such as PCBs for the 5G infrastructure build-out and increase in automotive electronic content per vehicle. For example, our market leading expertise in interconnects for high-density PCBs can be leveraged to address high-growth automotive electronic applications, such as LIDAR and RADAR applications. In addition to our expertise, our strong relationships with automotive OEMs and PCB and SC manufacturers position us to capitalize on these growth opportunities. From a geographic perspective, we expect our clients in the global electronics supply chain to continue to move their production supply chains to lower-cost regions. We continue to adapt to this shift by replicating our successful China market entry strategy in these target countries by building up local sales force teams, technical support, and leveraging coordinated key account management.

In the GMF plating chemistry market, we are seeking to expand our market share in high-growth applications. We are applying our existing corrosion protection technologies to satisfy increasing durability requirements in applications such as fasteners and brake systems. The trend towards automotive lightweighting also provides incremental opportunities to deploy our technologies to capture a greater share of plating content per vehicle. In particular, as EVs require lighter-weight materials to improve battery range, we believe we can also use our DECO and POP solutions to capture incremental demand. From a geographic perspective, we are targeting select OEMs in North America to obtain certifications for products that we have already successfully introduced to Europe- and Asia-based OEMs.

Capitalize on attractive secular growth trends through R&D and continued technology leadership

We believe our substantial prior and future investments in R&D, our strong product pipeline, and our long-standing relationships with most leading OEMs will allow us to continue to be the leader in technological

 

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innovation. For example, the number of patents and pending patent applications related to our offerings increased from 1,138 in fiscal 2005 to 2,152 in fiscal 2018. We believe expanding our already strong position at the cutting edge of new chemistry, equipment, and service will allow us to continue to benefit from secular growth trends that are driving new and complex applications. Our strong customer intimacy and customer-driven innovation through our systems and solutions approach helps provide early insight into customer trends, allowing us to invest intelligently in disruptive, next-generation innovations. We will continue to address the needs of our customers by complementing our existing technology portfolio, both through organic R&D and through strategic bolt-on acquisitions of new technologies where possible.

In the GMF plating chemistry market, we see the largest growth potential in innovative sustainable solutions for the automotive industry. We believe we are currently at the forefront of sustainable technological innovation. For example, our DynaChrome offering utilizes 70% less water and 42% less energy versus standard vertical plating lines, and we were the first company to offer the trivalent chromium hard chrome plating process, which is an environmentally safer alternative to Chrome VI plating. Furthermore, we believe that the increasing requirements on vehicle life will drive demand for higher performing, more efficient and more environmentally friendly surface finishing solutions. Increasing environmental awareness, in combination with our sustainable solutions for Paint Support Technologies, allows us to serve markets that were previously difficult to access. In addition, we are a leading supplier of auxiliary equipment which helps reduce wastewater and extend chemistry bath life, reducing costs, improving quality, and diminishing the overall environmental impact of our customers’ plating operations. We continue to bolster our sustainable solutions and are well-positioned to support our customers’ efforts to adapt to increasingly stringent environmental laws and regulations for their manufacturing processes.

In the EL plating chemistry market, we believe that we are particularly well-positioned to capture growth from the introduction of 5G networks and IoT, driving volumes and enabling a new wave of technological innovation, including the next generation of automotive electronics and high-frequency electronic devices. These new electronic devices are expected to include significantly more sophisticated and compact electronic components and circuitry, which we expect will drive demand for our new high-end plating chemical products, as evidenced by the evolution of PCBs in smartphones. The increase in speed, power, and corresponding battery size, reduce the available space for PCBs in mobile and other devices. Miniaturization requires greater line density and the layering of PCBs, both of which require more complex chemistry plating solutions.

Execute on operational improvement opportunities to drive earnings growth, expand margins, and increase cash flow

In addition to our growing topline, our financial performance has also benefited from capitalizing on operational improvement initiatives and we believe there are still significant value-creation opportunities available to us going forward. We anticipate these new opportunities, along with our existing value-creation program, will generate cost savings, which are expected to more than offset inflation in our underlying costs. Key initiatives that we expect to contribute to these cost savings include leveraging the strength of our centralized business unit structure to increase commercial focus in the local regions, optimizing our purchasing function, increasing coordination in our operations, and reducing general and administrative costs. In addition, we continue to implement a more effective R&D portfolio review process, and to relocate certain standardized R&D, back-office, and equipment manufacturing activities to lower cost geographies. We expect these initiatives to help improve margins going forward, reinforced by the implementation of management incentive programs tied to the initiatives’ performance.

 

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Sales and Marketing

Through our sales and marketing teams, we combine the deep product expertise of our marketing experts with our front-line sales staff’s intimate customer knowledge. Our sales and marketing teams are generally structured on a country-by-country basis. In addition, for our global key accounts, we employ dedicated managers to provide a single point of contact and more effectively serve these customers. Close customer relationships are key success factors in our EL and GMF segments. As many of our chemistry solutions are designed to meet customer-specific needs, sales and marketing activities need to be closely aligned with our service and R&D activities and conducted in close proximity to our customers. In total, we employed approximately 1,900 sales and sales support staff worldwide.

Procurement

We purchase our raw materials, including chemicals, precious and other metals, equipment, and packaging from a variety of suppliers. One important raw material input is palladium, a largely available precious metal that is traded publicly in a highly liquid market. We manage or mitigate precious metal exposure by passing through price fluctuations to our customers by various commercial arrangements. We care deeply about the quality of our raw materials and thus have long-standing relationships with our most trusted suppliers and employ rigorous processes for qualifying new suppliers. The approval process often lasts anywhere from three months to three years, ensuring that we maintain consistent quality and control standards in order to continue to develop products of highest quality that have fostered our industry-leading reputation. Together with our R&D teams, we continuously strive to secure and diversify our supply sources. Additionally, we have begun to develop and produce some chemistry in-house in order to improve sourcing costs and secure a competitive advantage. Certain items are sourced globally, with local procurement conducted as needed to fulfill individual and unique customer demands. We have strengthened our global procurement function to better leverage our scale and have been re-negotiating contracts for chemistry, equipment, and indirect purchases.

Research and Development

We employ a global R&D strategy to drive organic and customer-led innovation. We have more than 100 employees with Ph.D.s, many of whom work closely with our customers to pursue highly complex projects, translating R&D into customer solutions by creating new technologies and further integrating our existing technology. Integral to our R&D strategy is our investment in and development at our 17 technology centers, which are located strategically around the world. As the hubs for innovation and product development, our technology centers allow us to conduct qualification runs for customers and OEMs in-house, enable pilot production programs for our customers, serve as venues for development tests, and function as comprehensive training centers for employees, customers, and OEMs. In 2018, our technology centers conducted more than 750,000 material science and 600,000 analytical services measurements.

Central to our R&D process is having multiple points of interaction and joint development with our customers. Our early stage R&D is typically conducted on a centralized basis, with individual and customized product development needs addressed on a local basis through our technology centers in close proximity to our customers’ sites around the world. We have invested heavily in our R&D capabilities over the last several years, which we believe has positioned us to take advantage of various trends in an innovation intensive market. This investment includes over 500 R&D employees worldwide. We believe our $206.0 million in R&D investment during the three years ended December 31, 2018, with fiscal 2018 expense representing 4.8% of total revenue significantly exceeds that of our competition. Approximately 90% of our annual R&D investments support our existing customers’ product improvement needs and their short-term R&D goals. This close collaboration enables us to pioneer new high-value solutions while limiting commercial risk, while the remainder of our R&D investment focuses on developing next-generation technology. For fiscal 2018, we estimate our R&D expense represented approximately 34% of the combined R&D spend of all plating chemical companies and 51% of the combined R&D spend of the four largest plating chemical companies by market share. While we continue to

 

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advance our program of high research intensity, we have improved our processes to become even more efficient and commercially focused. We believe that we now have a fully invested R&D platform that will enable us to capture the anticipated growth from the next wave of electronics and surface finishing innovation. Our ability to pursue multiple projects and technologies simultaneously while maintaining our record of service and attentiveness to our customers is a key factor in our continued success.

We benefit from our integrated R&D platform which allows us to capture synergies between our EL and GMF segments. The availability of shared R&D functions and infrastructure allows for the direct transfer of best practices and relevant know-how, resulting in improved product quality, higher innovation rates and faster time-to-market. In addition, R&D developments in our equipment offering are closely related to the chemicals these equipment offerings are designed to process.

We hold more than 1,500 global patents with varying remaining durations and 500 pending patent applications. No specific group or groups of intellectual property rights are material to our business. Further, we hold several global trade names and trademark registrations and applications for registration, which we consider to be of value in identifying our products. We seek to protect our proprietary rights through a combination of confidentiality agreements and procedures and through copyright, patent, trademark, and trade secret laws of the United States and international jurisdictions.

Competition

We compete in the global specialty and performance chemicals market. Our market is fairly consolidated with the top three players holding 54% of market share. Our primary multinational competitors include Element Solutions and DuPont. We also compete with regional players, including Uyemura, Coventya, Dipsol, JCU, and Okuno. Our primary equipment competitors are Schmid, PAL, and Manz. We compete primarily based on our product quality, the depth of our product portfolio, our unique systems approach of offering chemicals, equipment, and services, and our global geographic reach.

Properties

As of December 31, 2018, we lease or own facilities in approximately 40 countries. We maintain an asset-light approach to manufacturing our products, leading to greater flexibility to adjust our production footprint, higher returns on operating assets, and lower operating leverage.

 

   

Chemistry Production Facilities—We operate 15 chemistry production facilities (including the Yangzhou chemistry production plant currently under construction and expected to be commissioned in 2020).

 

   

Equipment Production Facilities—We operate two equipment production facilities in two countries.

 

   

Technology Centers—We operate 17 technology centers in 12 countries.

 

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The table below presents summary information regarding our material facilities as of December 31, 2018.

 

Country

 

Location

 

Type of Facility

Brazil

  Sao Paulo   Technology Center, Production Facility

Canada

  Burlington   Technology Center, Production Facility

China

  Guangzhou(1)   Technology Center, Production Facility

China

  Shanghai   Technology Center

China

  Yangzhou(2)   Production Facility

Czech Republic

  Jablonec   Technology Center, Production Facility

Germany

  Berlin*   Technology Center

Germany

  Feucht   Technology Center, Production Facility

Germany

  Neuruppin   Production Facility

Germany

  Trebur   Technology Center, Production Facility

India

  Bangalore   Technology Center

India

  New Delhi   Technology Center, Production Facility

Italy

  Milan   Technology Center

Japan

  Koda   Production Facility

Japan

  Yokohama*   Technology Center

Korea

  Jangan   Technology Center, Production Facility

Malaysia

  Penang   Production Facility

Mexico

  Mexico City   Production Facility

Republic of Singapore

  Singapore   Technology Center

Slovenia

  Podnart   Production Facility

Taiwan

  Guanyin   Technology Center, Production Facility

Taiwan

  Kaohsiung   Technology Center

United States of America

  Albany(3)   Technology Center

United States of America

  Rock Hill*   Technology Center, Production Facility
 

Location by

Region

    Number of

Facilities

 
  Americas     5  
  Europe     7  
  Asia     12  

 

(1)   The Guangzhou, China facility contains a chemistry production facility and an equipment production facility.
(2)   Yangzhou, China is expected to start production by the beginning of 2020.
(3)   Operations at the Albany, New York facility are winding down and will be closed by the end of 2019.
*   Denotes a regional headquarter location.

Employees

As of December 31, 2018, we employed 3,787 employees (including limited contract employees) across over 40 countries. Employees in some of our non-U.S. locations are subject to collective bargaining agreements or are represented by works councils. We believe that we maintain positive relations with our employees.

Health, Safety, and Environmental

We are subject to numerous laws and regulations that govern the protection of the environment and health and safety of our employees. We are committed to achieving and maintaining compliance with all applicable legal requirements including the management and disposal of hazardous substances. We have a strong record of

 

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safety and have developed policies and management systems to monitor compliance and ensure the possession of appropriate permits, registrations, or other authorizations. This strong record is reflected in an 80% decrease in accidents per working hour from 2006 through 2017.

We believe all of our manufacturing facilities are operated in compliance with existing environmental requirements, in all material respects, including the operating permits required at our facilities. We are also committed to anticipating our customers’ evolving environmental needs. For example, we have developed a suite of products that do not require any PFAS chemicals.

We expect to incur ongoing costs to comply with existing and future requirements. This will continue to be implemented through proper training, communication of policies, procedures and practices, management of internal systems, and ongoing monitoring of legislative and regulatory developments that may affect our operations.

 

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MANAGEMENT

The following table provides information regarding the current members of our Board of Directors as of January 15, 2020, and the executive officers and director nominees that are expected to be in place upon consummation of the offering.

 

Name

  

Age

  

Position

Geoff Wild

   63    President, Chief Executive Officer, and Director

Peter Frauenknecht

   53    Chief Financial Officer

Harald Ahnert

  

48

   President—Electronics

Gertjan van der Wal

  

56

   President—General Metal Finishing

Brian A. Bernasek

   46    Director Nominee

Gregor P. Boehm

   55    Director

Herman H. Chang

   60    Director Nominee

Friedel Drees

   38    Director

Shaun Mercer

   39    Director

Gregory M. Nikodem

   40    Director

Charles W. Shaver

   60    Director Nominee

Martin W. Sumner

   44    Director

Geoff Wild

Geoff Wild will serve as our President and Chief Executive Officer. He joined Atotech as Chief Executive Officer in March 2017, and he is an experienced global chemicals industry executive, having previously served as the CEO of AZ Electronic Materials, a Carlyle Europe Partners portfolio company until 2012. Mr. Wild currently is a member of the board of directors of Cabot Microelectronics Corporation. He received his B.Sc. in chemistry from Bath University, UK.

Peter Frauenknecht

Peter Frauenknecht will serve as our Chief Financial Officer. He oversees global finance and treasury operations, external and internal reporting, worldwide controlling (financial planning & analysis), enterprise risk management, internal audit, communications and investor relations, the project management office, as well as global IT. Prior to joining Atotech in April 2017, Mr. Frauenknecht served as Chief Financial Officer and executive board member of Constantia Flexibles GmbH. Prior to this, he held various management positions at OSRAM AG/GmbH over a 25-year period as CFO for various business units and regions, and as Senior Vice President Global Finance, Accounting & Controlling. He received an M.Sc. in business administration from the Ludwig Maximilians University in Munich, Germany. In his previous positions, he worked in the United States, Mexico, and various countries in Europe, and spent considerable time in Asia.

Harald Ahnert

Harald Ahnert will serve as our President of Electronics. Mr. Ahnert joined Atotech as a full time employee in 1997 and has 22 years of industry experience. From 2010 until his appointment as Vice President in 2016, later President, Mr. Ahnert oversaw Atotech’s sales activities in Germany, the Netherlands, and Austria as Managing Director. Mr. Ahnert has served Atotech in various positions, including Global Key Account Manager in Electronics and GMF OEM Manager. Mr. Ahnert holds an M.B.A. from the Freie Universität (Free University) in Berlin, Germany.

Gertjan van der Wal

Gertjan van der Wal will serve as our President of General Metal Finishing. Mr. van der Wal joined Atotech in 1989 and has 34 years of industry experience. Mr. van der Wal has served Atotech in various positions,

 

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including Vice President for Europe and Americas, Managing Director for the Netherlands, Managing Director for the Czech Republic, and Worldwide Business Manager for Decorative Plating / Plating on Plastics. Prior to joining Atotech, Mr. van der Wal was a Manager at the Silver Factory. Mr. van der Wal holds an engineering degree from the Christiaan Huygens School, Rotterdam with a focus on metallurgy and plating.

Brian A. Bernasek

Brian A. Bernasek is a Managing Director and head of the Global Industrial and Transportation team at Carlyle. He is based in Washington, D.C. Since 2000, Carlyle’s Industrial and Transportation team has invested more than $21 billion of equity globally. Notable transactions include Allison Transmission, Atotech B.V., Axalta Coating Systems, HD Supply, Nouryon, the Hertz Corporation, Novolex Holdings, Signode Industrial Group, Rexnord Corporation, Kinder Morgan, and Genesee & Wyoming. Prior to joining Carlyle in 2000, Mr. Bernasek held positions in New York with Investcorp International, a private equity firm, and Morgan Stanley & Co., in its Investment Banking Division. He is currently a board member of Sundyne, Nouryon, and Novolex Holdings, and Vice Chairman of the Board of Directors of the Washington Jesuit Academy. Mr. Bernasek is a graduate of the University of Notre Dame and received his M.B.A. from Harvard Business School.

Gregor P. Boehm

Gregor P. Boehm is a Managing Director of Carlyle and Co-head of the Europe Buyout advisory group. He is based in London. Prior to joining Carlyle, Mr. Boehm was a Manager at I.M.M., one of Germany’s leading buyout groups. Prior to that, he was an analyst with Morgan Stanley’s Mergers and Acquisitions department in London. He is currently a member of the Supervisory Board of H.C. Starck GmbH. Mr. Boehm is a graduate of Cologne University and earned his M.B.A. from Harvard Business School.

Herman H. Chang

Herman Chang is a Managing Director of Carlyle Asia Partners, a group that makes large control and strategic minority investments in Asia. Mr. Chang focuses on the industrial sector. During the past 12 years with Carlyle, Mr. Chang has made investments in companies supplying fiberglass, specialty chemicals, lubricants, semi-conductors, electroplating for high density interconnect boards, large seamless steel tubes, ultra-low temperature refrigeration, and O2O automotive aftermarket service. He also led the operation enhancement for engineering equipment leasing, satellite service, TV broadcasting, commercial bank, and infant formula companies. Prior to joining Carlyle, Mr. Chang ran a global business unit and the Asia Pacific region for Delphi Automotive. He held positions in products, operations, and general management during his 20 years with General Motors and Delphi Automotive, 11 of which were spent in China/Asia. Mr. Chang formerly served on the board of directors of Yashili International Holdings Ltd, Natural Beauty Bio-Technology Limited, and Ta Chong Bank Ltd. He is currently on the board of directors of Tongyi Lubricant, Asia Satellite Telecommunications Holdings Limited, Bowenvale Limited, Shanghai Lantu Information Technology Co., Ltd., and VXI Global Solutions. Mr. Chang received an engineering Ph.D. degree from Northwestern University.

Friedel Drees

Friedel Drees is a Managing Director of Carlyle, where he advises on European buyout opportunities. He is based in the Munich office. Prior to joining Carlyle in 2009, Mr. Drees was a consultant at Bain & Company from 2005 to 2008. He earned a master’s degree and a Ph.D. in finance from the European Business School in Oestrich-Winkel, Germany. As a participant of the university’s double degree program with the University of Pittsburgh, he received his M.B.A. from the Katz Graduate School of Business.

Shaun Mercer

Shaun Mercer is a Managing Director of Carlyle advising on European buyout opportunities. Mr. Mercer is based in London. Since joining Carlyle in 2005, Mr. Mercer has been actively involved in a number of Carlyle’s

 

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investments. He is on the Board of Directors of Nouryon, Atotech and Addison Lee, and was previously engaged with the Boards of Axalta, AZ Electronic Materials and Ensus. Prior to joining Carlyle, Mr. Mercer was at Morgan Stanley, where he spent four years working in corporate finance and M&A as part of the Global Industrials Group. During this period, he also spent time working in Mumbai, India, managing the investment banking operations of Morgan Stanley Advantage Services. Mr. Mercer received a B.A. with honours from Cambridge University, where he was a Taylor Scholar.

Gregory M. Nikodem

Gregory Nikodem is a Managing Director of Carlyle focused on U.S. buyout opportunities in the industrial, transportation, and energy sectors. He is currently a member of the board of directors of Sundyne and Nouryon, where he serves as the chair of the audit committee. Additionally, he has been involved with Carlyle’s investments in ADT CAPS, Centennial Resources Development, JMC Steel, Veyance Technologies, and WildHorse Resource Development, among others. Prior to joining Carlyle, Mr. Nikodem held a position with Thomas Weisel Partners. Mr. Nikodem received his M.B.A. from the Stanford Graduate School of Business, where he was an Arjay Miller Scholar, and a B.S. in industrial engineering and engineering management from Stanford University.

Charles W. Shaver

Charles W. Shaver has been the Chief Executive Officer of Nouryon since September 2018. Prior to that, he served as Chairman of the Board and Chief Executive Officer of Axalta Coating Systems from 2013 until September 2018. With over 34 years of leadership roles in the global petrochemical, oil and gas industry, Mr. Shaver was the Chief Executive Officer and President of the TPC Group from June 2004 to June 2012. He also served as Vice President and General Manager for General Chemical, a division of Gentek, from 2001 through 2004, and as a Vice President and General Manager for Arch Chemicals from 1999 through 2001.

Mr. Shaver began his career with The Dow Chemical Company serving in a series of operational, engineering, and business positions from 1980 through 1996. He has an extensive background of leadership roles in a variety of industry organizations, including serving on the American Chemistry Council Board of Directors, the American Chemistry Council Finance Committee, and the National Petrochemical and Refiners Association Board and Executive Committee. Mr. Shaver currently serves as a member of the board of directors for U.S. Silica and the Texas A&M Advisory Board. Mr. Shaver earned his B.S. in Chemical Engineering from Texas A&M University.

Martin W. Sumner

Martin W. Sumner is a Managing Director of Carlyle where he focuses on investment opportunities in the industrial and transportation sectors. Since joining Carlyle in 2003, Mr. Sumner has led or been a key contributor to several of the firm’s investments, including Nouryon, Atotech, WildHorse Resource Development, Axalta Coating Systems, Centennial Resources Development, Allison Transmission, Veyance Technologies, AxleTech International, and United Components, among others. Prior to joining Carlyle, he held positions with Thayer Capital Partners, a private equity firm, and the strategy consulting group of Mercer Management Consulting. He is currently a member of the board of directors of Nouryon. Mr. Sumner received his M.B.A. from Stanford University, where he was an Arjay Miller Scholar, and a B.S. in Economics, magna cum laude, from the Wharton School of the University of Pennsylvania.

Foreign Private Issuer Exemption

As a “foreign private issuer,” as defined by the SEC, we are permitted to follow home country corporate governance practices instead of certain corporate governance practices required by the New York Stock

 

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Exchange for U.S. domestic issuers. While we intend to follow most of the New York Stock Exchange corporate governance listing standards, we intend to follow Jersey corporate governance practices in lieu of the New York Stock Exchange corporate governance listing standards as follows:

 

   

Exemption from the requirement to have a compensation committee and a nominating and corporate governance committee composed solely of independent members of the board of directors;

 

   

Exemption from quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under Jersey law. In accordance with generally accepted business practice, our amended and restated articles of association to be in effect immediately prior to the consummation of this offering will provide alternative quorum requirements that are generally applicable to meetings of shareholders;

 

   

Exemption from the New York Stock Exchange corporate governance listing standards applicable to domestic issuers requiring disclosure within four business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the New York Stock Exchange corporate governance listing standards, as permitted by the foreign private issuer exemption; and

 

   

Exemption from the requirement to obtain shareholder approval for certain issuances of securities, including shareholder approval of share option plans.

We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the rules adopted by the SEC and the New York Stock Exchange corporate governance rules and listing standards.

Because we are a foreign private issuer, our directors and senior management are not subject to short-swing profit and insider trading reporting obligations under Section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under Section 13 of the Exchange Act and related SEC rules.

Controlled Company

For purposes of the rules of the New York Stock Exchange, we will be a “controlled company.” Under the New York Stock Exchange rules, controlled companies are companies of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. We expect that Carlyle will continue to own more than 50% of the combined voting power of our common shares upon completion of this offering and will continue to have the right to designate a majority of the members of our Board for nomination for election and the voting power to elect such directors following this offering. Accordingly, we expect to be eligible to, and we intend to, take advantage of certain exemptions from corporate governance requirements provided in the rules of the New York Stock Exchange. Specifically, as a controlled company we would not be required to have (i) a majority of independent directors, (ii) a nominating and corporate governance committee composed entirely of independent directors, or (iii) a compensation committee composed entirely of independent directors. Therefore, following this offering we will not have a majority of independent directors, and our Nominating and Corporate Governance and Compensation Committees will not consist entirely of independent directors. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the New York Stock Exchange rules. The controlled company exemption does not modify the independence requirements for the Audit Committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and the New York Stock Exchange rules, which require that our Audit Committee be composed of at least three members, one of whom will be independent upon the listing of our common shares on the New York Stock Exchange, a majority of whom will be independent within 90 days of the date of this prospectus, and each of whom will be independent within one year of the date of this prospectus.

 

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Board Composition

Our Board will consist of ten members upon consummation of this offering.                 is the Chairman of the Board.

The exact number of members on our Board may be modified from time to time exclusively by resolution of our Board, subject to the terms of our shareholders agreement. Our Board is divided into three classes whose members serve three-year terms expiring in successive years. Directors hold office until their successors have been duly elected and qualified or until the earlier of their respective death, resignation, or removal.

At each annual meeting of shareholders, the successors to the directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting of shareholders following such election. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

In connection with the Acquisition, on January 31, 2017, the shareholders of Atotech UK Topco Limited entered into a shareholders agreement to which Carlyle and members of management who hold common shares are party, which agreement will terminate upon the consummation of this offering. Upon the effectiveness of the registration statement of which this prospectus forms a part, we will enter into a new shareholders agreement between the Company and Carlyle. See “Certain Relationships and Related Party Transactions—Shareholders Agreement.”

When considering whether directors and nominees have the experience, qualifications, attributes, or skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth immediately above. We believe that our directors provide an appropriate diversity of experience and skills relevant to the size and nature of our business.

Board Committees

Our Board directs the management of our business and affairs as provided by Jersey law and conducts its business through meetings of the Board and four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Executive Committee. In addition, from time to time, other committees may be established under the direction of the Board when necessary or advisable to address specific issues.

Each of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee will operate under a charter that will be approved by our Board. A copy of each of these charters will be available on our website upon completion of this offering.

Audit Committee

The Audit Committee, which following this offering will consist of                  (Chairman), Mr. Sumner and Mr. Drees, is responsible for, among its other duties and responsibilities, assisting the Board in overseeing: our accounting and financial reporting processes and other internal control processes, the audits and integrity of our financial statements, our compliance with legal and regulatory requirements, the qualifications and independence of our independent registered public accounting firm, the design and implementation of our internal audit function, and the performance of our internal audit function and independent registered public accounting firm. Our Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm. Our Audit Committee also has the authority to review and

 

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approve our decision to enter into derivatives and swaps and to establish policies and procedures with respect thereto, including utilizing the commercial end-user exception to enter into non-cleared swaps which are not executed through a board of trade or swap execution facility.

The Board has determined that                  is an “audit committee financial expert” as such term is defined under the applicable regulations of the SEC and has the requisite accounting or related financial management expertise and financial sophistication under the applicable rules and regulations of the New York Stock Exchange. The Board has also determined that                  is independent under Rule 10A-3 under the Exchange Act and the New York Stock Exchange standard, for purposes of the Audit Committee. Rule 10A-3 under the Exchange Act requires us to have a majority of independent audit committee members within 90 days and all independent audit committee members (within the meaning of Rule 10A-3 under the Exchange Act and the New York Stock Exchange standard) within one year of the effectiveness of the registration statement of which the prospectus forms a part. We intend to comply with these independence requirements within the appropriate time periods. All members of the Audit Committee are able to read and understand fundamental financial statements, are familiar with finance and accounting practices and principles, and are financially literate.

Compensation Committee

The Compensation Committee, which following this offering will consist of Mr. Sumner (Chairman), Mr. Nikodem, Mr. Chang and Mr. Mercer, is responsible for, among its other duties and responsibilities, reviewing and approving the compensation philosophy for our Chief Executive Officer, reviewing and approving all forms of compensation and benefits to be provided to our executive officers, and reviewing and overseeing the administration of our equity incentive plans.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee, which following this offering will consist of Mr. Boehm (Chairman), Mr. Bernasek, Mr. Shaver and Mr. Wild, is responsible for, among its other duties and responsibilities, identifying and recommending candidates to the Board for election to our Board, reviewing the composition of the Board and its committees, developing and recommending to the Board corporate governance guidelines that are applicable to us, and overseeing Board and Board committee evaluations.

Executive Committee

The Executive Committee, which following this offering will consist of Mr. Wild, Mr. Drees and Mr. Sumner, is responsible for exercising the powers of the Board between regularly scheduled meetings. The Executive Committee is authorized with all the powers of the Board except for certain specifically enumerated powers that may be exercised solely by the full Board, including:

 

   

the adoption, amendment or repeal of the Memorandum of Association or Articles of Association of the Company;

 

   

the approval or adoption, or recommendation to the Company’s equityholders, any action or matter (other than the election or removal of directors) expressly required by law to be submitted to equityholders for approval;

 

   

approval of a plan of merger, share exchange, or conversion of the Company;

 

   

the recommendation to equityholders of any sale, lease, or exchange of all or substantially all of the property or assets of the Company otherwise than in the usual and regular course of its business;

 

   

the recommendation to equityholders of a voluntary dissolution of the Company or a revocation thereof;

 

   

the amendment, alteration, repeal or taking of any action inconsistent with any resolution or action of the Board when the resolution or action of the Board provides by its terms that it shall not be amended, altered, or repealed by action of the Executive Committee;

 

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exercising any authority that the Board has expressly delegated to another committee of the Board or expressly reserved solely to the Board; and

 

   

undertaking any other action that must be performed by another committee of the Board or which is prohibited from being delegated by applicable law, regulation or listing standard.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee is currently one of our officers or employees. During the year ended December 31, 2019, none of our executive officers served as a member of the board or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our Board or our Compensation Committee.

Code of Business Conduct and Ethics

In connection with this offering, the Board will adopt a Code of Business Conduct and Ethics that applies to all of our directors and employees, including our executive officers. A copy of the Code of Business Conduct and Ethics will be available on our website. We intend to disclose future amendments to our Code of Business Conduct and Ethics on our website or in public filings.

Compensation

Executive Officer Remuneration

The following table sets forth the approximate remuneration paid during the year ended December 31, 2019 to our current executive officers.

 

Name and Principal Position

   Year      Total  

Geoff Wild, Chief Executive Officer

     2019      $ 1,653,932  

Peter Frauenknecht, Chief Financial Officer

     2019      $ 1,127,520  

Harald Ahnert, President—Electronics

     2019      $ 767,672  

Gertjan van der Wal, President—General Metal Finishing

     2019      $ 880,853  

Executive Officer Employment Arrangements

We have entered into employment agreements with each of our executive officers. The material terms and conditions of these agreements are described below.

Geoff Wild

We entered into an employment agreement with Geoff Wild on March 31, 2017 pursuant to which he serves as our Chief Executive Officer. The employment agreement had an initial term of two years, and automatically renews for successive one-year terms unless either party provides forty-five days’ prior written notice to the other party that the agreement shall not be so extended. The employment agreement entitles Mr. Wild to receive an annual base salary and an opportunity to earn an annual discretionary performance-based bonus, subject to the achievement of performance goals determined in accordance with our annual bonus plan. Mr. Wild is also entitled to tax preparation assistance and the use of a company car. The employment agreement also provides that if the terms and conditions of any employment contract of any of our employees are, taken as a whole, more favorable than those in the employment agreement, we must offer to amend the terms of the employment agreement so that they are, taken as a whole, at least as favorable as those of such employee. Mr. Wild is also entitled to an additional bonus on the basis of the return achieved by our main shareholders in connection with a public listing or change in control.

 

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Mr. Wild has also entered into an employment agreement with Atotech (Thailand) Co Ltd., one of our subsidiaries, pursuant to which he serves as its general manager.

In the event that we terminate Mr. Wild’s employment without “cause” (as such term is defined in his employment agreement), his employment terminates as a result of his death or disability, or he resigns for “good reason” (as such term is defined in his employment agreement), subject to his execution of a general release of claims in our favor, Mr. Wild is entitled to a cash termination payment.

In the event that we terminate Mr. Wild’s employment without cause or he resigns for good reason, in either case within six months following a change in control (other than following an initial public offering), then, in lieu of the foregoing and subject to his execution of a general release of claims in our favor, Mr. Wild is entitled to a cash termination payment.

Mr. Wild has also agreed to refrain from disclosing our confidential information during or at any time following his employment with us and from competing with us or soliciting our employees or customers during his employment and for one year following termination of his employment.

Peter Frauenknecht

We entered into a Managing Director Service Agreement with Peter Frauenknecht effective as of April 10, 2017 pursuant to which he serves as our Chief Financial Officer. The service agreement had an initial term that expired on March 31, 2019, and automatically renews for successive one-year terms unless either party provides six months’ prior written notice to the other party that the agreement shall not be so extended. The service agreement entitles Mr. Frauenknecht to receive an annual base salary and an opportunity to earn an annual discretionary performance-based bonus, subject to the achievement of performance goals determined in accordance with our annual bonus plan. Mr. Frauenknecht is also entitled to a monthly company car allowance and a company fuel card. The service agreement also provides for an annual payment which he may use to set up his own private pension program.

We entered into an amendment to the service agreement pursuant to which Mr. Frauenknecht is entitled to a cash termination payment in the event we terminate Mr. Frauenknecht’s employment within 12 months of a change of control, as defined in the service agreement amendment.

Mr. Frauenknecht has agreed to refrain from disclosing our confidential information during or at any time following his employment with us and from competing with us or soliciting our employees or customers during his employment and for 18 months following the termination of his employment. During his compliance with the post-termination non-competition restrictions, he will receive 50% of his total compensation to which he is entitled under the service agreement.

Harald Ahnert

We entered into an employment agreement with Mr. Ahnert, dated October 1, 1997, which was subsequently amended. Pursuant to the employment agreement, we employ Mr. Ahnert as President, Electronics. The employment agreement provides for an annual gross salary. In addition, the employment agreement entitles Mr. Ahnert to participate in our annual bonus program and he is also entitled to a company car.

Gertjan van der Wal

We entered into an employment agreement with Mr. van der Wal, effective July 1, 2008, pursuant to which we employ Mr. van der Wal as our President of General Metal Finishing. The employment agreement provides for an annual gross salary and entitles Mr. van der Wal to participate in our annual bonus program. He is also entitled to a company car. The employment agreement also provides that Mr. van der Wal is entitled to continue to participate in the pension plan of Atotech Nederland B.V. and we participate in the costs associated with such plan.

 

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Annual Incentive Plan

We sponsor an Annual Incentive Plan that offers our senior management, including our executive officers, the opportunity to earn cash performance bonuses based on a percentage of base salary. Performance goals are set annually and generally relate to corporate performance goals and individual goals.

Equity Compensation Arrangements

We have granted or may grant share options and awards under the following equity award programs (the “Share Plans”): (i) the Atotech UK Topco Limited Option Plan (the “LTIP”), and (ii) an equity participation program to enable certain management members to acquire interests in two pooling vehicles (the “Participants Equity Investment Program”).

LTIP

Pursuant to the LTIP, we have granted to certain of our service providers options to purchase ordinary shares in the capital of Atotech UK Topco Limited. The board of directors of Atotech UK Topco Limited (the “UK Topco Board”) administers the LTIP, provided that it may delegate such power to any person or entity that it decides. Subject to the express terms and conditions of the LTIP, the plan administrator has the authority to make all determinations in connection with the options, at its sole discretion, after consultation with our chief executive officer.

Options granted under the LTIP provide for the purchase of ordinary shares in the capital of Atotech UK Topco Limited in the future at an exercise price set on the grant date. The plan administrator will determine the number of shares covered by each option, the exercise price of each option, and the conditions and limitations applicable to the exercise of each option. The exercise price of an option will not be less than 100% of the fair market value of the underlying share on the grant date. The term of an option may not be longer than ten years. Options granted under the LTIP typically become exercisable as to a specified portion in connection with certain sales of the ordinary shares in the capital of Atotech UK Topco Limited by its principal investors, other than sales of securities in the context of an initial public offering or a transfer of securities to an entity controlled by some or all of such principal investors. Options granted under the LTIP typically are only exercisable until the participant’s termination of employment, except that a portion of the option may remain exercisable thereafter in certain circumstances, such as the participant’s death, disability, retirement, sale of the business division in which the participant works, or other reasons as determined by the UK Topco Board.

In the event of an extraordinary cash distribution or recapitalization of the Company, the UK Topco Board shall decide an adjustment of the exercise price of the outstanding options to reflect the resulting decrease of the value of the Company. Upon certain internal reorganizations in contemplation of an initial public offering that result in a new holding company, unless the Board otherwise determines, all options will be exchanged for equivalent options covering shares in the new holding company, with substantially similar terms. Consequently, in connection with the Reorganization Transactions, it is expected that outstanding options under the LTIP will be exchanged for equivalent options covering our common shares.

Participants Equity Investment Program

Certain members of our management have been afforded an opportunity to acquire an indirect ownership interest in Atotech UK Topco Limited and, in the future from time to time hereafter, may be afforded the opportunity to acquire an indirect ownership interest in Atotech Limited, by allowing them to purchase a partnership interest in Ato Beteiligung GmbH & Co. Verwaltungs KG or ATO Cayman, L.P., each of which we refer to as a Management Investment Partnership, in accordance with the Participants Equity Investment Program. The Management Investment Partnerships were each established to be a management ownership vehicle that holds common shares of Atotech UK Topco Limited. Members of management who have acquired

 

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interests in the Management Investment Partnerships have subscribed for such interests at their then fair value. In certain circumstances, such as the voluntary resignation of employment by a management member, the Management Investment Partnerships or one of their affiliates have the right, but not the obligation, to acquire the member’s interests in the Management Investment Partnerships. In certain circumstances, such as the management member’s death or disability, the management member may also require the Management Investment Partnerships or one of their affiliates to repurchase such interests in the Management Investment Partnerships. As of December 31, 2019, executive officers who have invested in the Management Investment Partnerships held an indirect voting interest in Atotech UK Topco Limited of approximately 4.40% and had invested capital of approximately $115,000.

The following table summarizes the number of common shares or partnership interests directly or indirectly held by the executive officers named in this prospectus as of December 31, 2019 (after giving effect to the Reorganization Transactions (other than the             -to-1 stock split)):

 

Name

   Common Shares
or Partnership
Interests
 

Geoff Wild

     550,000  

Peter Frauenknecht

     250,000  

Harald Ahnert

     175,000  

Gertjan van der Wal

     175,000  

As of December 31, 2019, such executive officers did not own any options pursuant to the Share Plans.

2020 Incentive Award Plan

Effective the day prior to the first public trading date of our common shares, we will adopt and our shareholders will approve the 2020 Incentive Award Plan (the “2020 Plan”), under which we may grant cash and equity-based incentive awards to eligible employees, directors and consultants in order to attract, retain, and motivate the persons who make important contributions to our company. The material terms of the 2020 Plan are summarized below.

As described above, in connection with the Reorganization Transactions, each option to purchase ordinary shares in the capital of Atotech UK Topco Limited, to the extent then outstanding and unexercised, shall automatically, without any action on the part of the holder thereof, be converted into an option to purchase our common shares (a “Rollover Option”), on the same terms, conditions, and vesting schedules as previously applied. Upon the effectiveness of the 2020 Plan, the Rollover Options will also be subject to the terms and conditions of the 2020 Plan.

Eligibility and Administration

Our employees, consultants, and directors, along with employees and consultants of our subsidiaries, will be eligible to receive awards under the 2020 Plan. The 2020 Plan will be administered by our Board, which may delegate its duties and responsibilities to one or more committees of our directors and/or officers (referred to collectively as the “plan administrator” below), subject to the limitations imposed under the 2020 Plan, Section 16 of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, stock exchange rules, and other applicable laws. The plan administrator will have the authority to take all actions and make all determinations under the 2020 Plan, to interpret the 2020 Plan and award agreements, and to adopt, amend, and repeal rules for the administration of the 2020 Plan as it deems advisable. The plan administrator will also have the authority to grant awards, determine which eligible employees, directors and consultants receive awards, and set the terms and conditions of all awards under the 2020 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2020 Plan.

 

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Shares Available for Awards

It is expected that an aggregate of 9.2% of our common shares (as determined immediately following the closing of this offering) will initially be available for issuance under the 2020 Plan. Shares issued upon exercise of the Rollover Options and shares issued in respect of all future awards will come out of this pool. No more than                      of our common shares may be issued under the 2020 Plan upon the exercise of incentive options. Common shares issued under the 2020 Plan may be authorized but unissued shares, shares purchased on the open market, or treasury shares.

If an award under the 2020 Plan (including the Rollover Options) expires, lapses, or is terminated, exchanged for cash, surrendered, repurchased, redeemed, canceled without having been fully exercised, or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new grants under the 2020 Plan. Awards granted under the 2020 Plan in substitution for any options or other share or share-based awards granted by an entity before the entity’s merger or consolidation with us or our acquisition of the entity’s property or shares will not reduce the shares available for grant under the 2020 Plan but may count against the maximum number of common shares that may be issued upon the exercise of incentive options.

Awards

The 2020 Plan provides for the grant of options, including incentive options and non-qualified options, share appreciation rights (“SARs”), restricted shares, dividend equivalents, restricted share units (“RSUs”), and other share or cash based awards. Certain awards under the 2020 Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code. All awards under the 2020 Plan will be set forth in award agreements, which will detail the terms and conditions of awards, including any applicable vesting and payment terms and post-termination exercise limitations. A brief description of each award type follows.

 

   

Options and SARs. Options provide for the purchase of common shares in the future at an exercise price set on the grant date. Incentive options, by contrast to non-qualified options, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the common shares subject to the award between the grant date and the exercise date. The plan administrator will determine the number of shares covered by each option and SAR, the exercise price of each option and SAR and the conditions and limitations applicable to the exercise of each option and SAR. The exercise price of an option or SAR will not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of incentive options granted to certain significant shareholders), except with respect to certain substitute awards granted in connection with a corporate transaction. The term of an option or SAR may not be longer than ten years (or five years in the case of incentive options granted to certain significant shareholders).

 

   

Restricted Shares and RSUs. Restricted shares are awards of nontransferable common shares that remain forfeitable unless and until specified conditions are met and which may be subject to a purchase price. RSUs are contractual promises to deliver common shares in the future, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on common shares prior to the delivery of the underlying common shares. The plan administrator may provide that the delivery of the common shares underlying RSUs will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to restricted shares and RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the 2020 Plan.

 

   

Other Share or Cash Based Awards. Other share or cash based awards are awards of cash, fully vested common shares, and other awards valued wholly or partially by referring to, or otherwise based on, common shares or other property. Other share or cash based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments, and as

 

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payment in lieu of compensation to which a participant is otherwise entitled. The plan administrator will determine the terms and conditions of other share or cash based awards, which may include any purchase price, performance goal, transfer restrictions, and vesting conditions.

Performance Criteria

The plan administrator may select performance criteria for an award to establish performance goals for a performance period. Performance criteria under the 2020 Plan may include, but are not limited to, the following: net earnings or losses (either before or after one or more of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit, or economic profit), profit return ratios or operating margin; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on shareholders’ equity; total shareholder return; return on sales; costs, reductions in costs, and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any incremental increase or decrease. Such performance goals also may be based solely by reference to the company’s performance or the performance of a subsidiary, division, business segment, or business unit of the company or a subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. When determining performance goals, the plan administrator may provide for exclusion of the impact of an event or occurrence which the plan administrator determines should appropriately be excluded, including, without limitation, non-recurring charges or events, acquisitions, or divestitures, changes in the corporate or capital structure, events unrelated to the business or outside of the control of management, foreign exchange considerations, and legal, regulatory, tax, or accounting changes.

Certain Transactions

In connection with certain corporate transactions and events affecting our common shares, including a change in control, or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the 2020 Plan to prevent the dilution or enlargement of intended benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes canceling awards for cash or property, accelerating the vesting of awards, providing for the assumption or substitution of awards by a successor entity, adjusting the number and type of shares subject to outstanding awards and/or with respect to which awards may be granted under the 2020 Plan and replacing or terminating awards under the 2020 Plan. In addition, in the event of certain non-reciprocal transactions with our shareholders, the plan administrator will make equitable adjustments to awards outstanding under the 2020 Plan as it deems appropriate to reflect the transaction.

Provisions of the 2020 Plan Relating to Director Compensation

The 2020 Plan provides that the plan administrator may establish compensation for non-employee directors from time to time subject to the 2020 Plan’s limitations.

 

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Plan Amendment and Termination

Our Board may amend or terminate the 2020 Plan at any time; however, no amendment, other than an amendment that increases the number of shares available under the 2020 Plan, may materially and adversely affect an award outstanding under the 2020 Plan without the consent of the affected participant, and shareholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. However, the plan administrator may not, without the approval of our shareholders, amend any outstanding option or SAR to reduce its price per share, other than in the context of corporate transactions or equity restructurings, as described above. The 2020 Plan will remain in effect until the tenth anniversary of its effective date, unless earlier terminated by our Board. No awards may be granted under the 2020 Plan after its termination.

Foreign Participants, Claw-Back Provisions, Transferability, and Participant Payments

The plan administrator may modify awards granted to participants who are foreign nationals or employed outside the United States or establish subplans or procedures to address differences in laws, rules, regulations, or customs of such foreign jurisdictions. All awards will be subject to any company claw-back policy as set forth in such claw-back policy or the applicable award agreement. Except as the plan administrator may determine or provide in an award agreement, awards under the 2020 Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding obligations arising in connection with awards under the 2020 Plan and exercise price obligations arising in connection with the exercise of options under the 2020 Plan, the plan administrator may, in its discretion, accept cash, wire transfer or check, common shares that meet specified conditions, a promissory note, a “market sell order,” such other consideration as the plan administrator deems suitable, or any combination of the foregoing.

2020 Employee Share Purchase Plan

Effective the day prior to the first public trading date of our common shares, we will adopt and our shareholders will approve the 2020 Employee Share Purchase Plan (the “ESPP”) the material terms of which are summarized below.

The ESPP is comprised of two distinct components in order to provide increased flexibility to grant options to purchase shares under the ESPP to U.S. and to non-U.S. employees. Specifically, the ESPP authorizes (1) the grant of options to U.S. employees that are intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Code, (the “Section 423 Component”), and (2) the grant of options that are not intended to be tax-qualified under Section 423 of the Code to facilitate participation for employees located outside of the U.S. who do not benefit from favorable U.S. federal tax treatment and to provide flexibility to comply with non-U.S. law and other considerations (the “Non-Section 423 Component”). Where permitted under local law and custom, we expect that the Non-Section 423 Component will generally be operated and administered on terms and conditions similar to the Section 423 Component.

Shares Available for Awards; Administration

It is expected that an aggregate of 2.0% of our common shares will initially be reserved for issuance under the ESPP. Our Board or a committee of our Board will administer and will have authority to interpret the terms of the ESPP and determine eligibility of participants. We expect that the compensation committee will be the initial administrator of the ESPP.

 

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Eligibility

The ESPP administrator may designate certain of our subsidiaries as participating “designated subsidiaries” in the ESPP and may change these designations from time to time. Our employees and employees of the designated subsidiaries are eligible to participate in the ESPP if they meet the eligibility requirements under the ESPP established from time to time by the ESPP administrator. However, an employee may not be granted rights to purchase shares under the ESPP if such employee, immediately after the grant, would own (directly or through attribution) shares possessing 5% or more of the total combined voting power or value of all classes of common shares or other classes of shares.

Grant of Rights

Shares will be offered under the ESPP during specific offering periods. The length of the offering periods under the ESPP will be determined by the plan administrator and may be up to twenty-seven months long. Employee payroll deductions will be used to purchase shares on each purchase date during an offering period. The purchase dates for each offering period will be the final trading day in the offering period. Offering periods under the ESPP will commence when determined by the plan administrator. The plan administrator may, in its discretion, modify the terms of future offering periods.

The ESPP permits participants to purchase common shares through payroll deductions of up to a specified percentage of their eligible compensation. The plan administrator will establish a maximum number of shares that may be purchased by a participant during any offering period. In addition, no employee will be permitted to accrue the right to purchase shares under the Section 423 Component at a rate in excess of $25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per Share as of the first day of the offering period). In non-U.S. jurisdictions where participation in the ESPP through payroll deductions is prohibited, the ESPP administrator may provide that an eligible employee may elect to participate through contributions to the participant’s account under the ESPP in a form acceptable to the ESPP administrator in lieu of or in addition to payroll deductions.

On the first trading day of each offering period, each participant will automatically be granted an option to purchase common shares. The option will expire at the end of the applicable offering period and will be exercised at that time to the extent of the payroll deductions accumulated during the offering period. The purchase price of the shares, in the absence of a contrary designation, will be 85%, for purposes of the Section 423 Component, or 80%, for purposes of the Non-Section 423 Component, of the fair market value of our common shares on the purchase date. Participants may voluntarily end their participation in the ESPP at any time during a specified period prior to the end of the applicable offering period and will be paid their accrued payroll deductions that have not yet been used to purchase common shares. Participation in the ESPP ends automatically upon a participant’s termination of employment.

A participant may not transfer rights granted under the ESPP other than by will or the laws of descent and distribution, and such rights are generally exercisable only by the participant.

Certain Transactions

In the event of certain non-reciprocal transactions or events affecting our common shares, the plan administrator will make equitable adjustments to the ESPP and outstanding rights. In the event of certain unusual or non-recurring events or transactions, including a change in control, the plan administrator may provide for (1) either the replacement of outstanding rights with other rights or property or termination of outstanding rights in exchange for cash, (2) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, if any, (3) the adjustment in the number and type of shares subject to outstanding rights, (4) the use of participants’ accumulated payroll deductions to purchase shares on a new purchase date prior to the next scheduled purchase date and termination of any rights under ongoing offering periods, or (5) the termination of all outstanding rights.

 

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Plan Amendment and Termination

The plan administrator may amend, suspend, or terminate the ESPP at any time. However, shareholder approval will be obtained for any amendment that increases the aggregate number or changes the type of shares that may be sold pursuant to rights under the ESPP or changes the corporations or classes of corporations whose employees are eligible to participate in the ESPP.

Non-Employee Director Compensation

In 2019, we agreed to pay a remuneration to Charles W. Shaver in the amount of $75,000.

Pension, Retirement or Similar Benefits

We operate various defined contribution and defined benefit pension plans in which our employees participate. The total amount set aside or accrued by us to provide pension, retirement or similar benefits to our named executive officers with respect to 2019 was $167,717.

Employees

We had 3,884, 3,787, and 3,783 employees as of December 31, 2017, December 31, 2018, and December 31, 2019, respectively, which includes 80, 69, and 74 temporary employees employed directly by us as of December 31, 2017, December 31, 2018, and December 31, 2019, respectively, as well as 319, 293, and 177 temporary employees who provided services to us through a third-party temporary staffing agency as of December 31, 2017, December 31, 2018, and December 31, 2019, respectively.

The following table sets forth the numbers of our employees categorized by function as of December 31, 2017, December 31, 2018, and December 31, 2019:

 

Function

   December 31,
2017
     December 31,
2018
     December 31,
2019
 

Manufacturing

     734        750        781  

Administration

     613        607        631  

Sales, Marketing & Technicians

     1,973        1,904        1,855  

Research & Development

     564        526        516  

The following table describes the number of employees by geographic location as of December 31, 2017, December 31, 2018, and December 31, 2019:

 

Country

   December 31,
2017
     December 31,
2018
     December 31,
2019
 

Germany

     936        962       
943
 

China

     1,131        1,107        1,101  

Taiwan

     233        228        222  

India

     341        306        312  

United States

     158        161        155  

Japan

     135        125        120  

Korea

     113        115        117  

Additionally, as of December 31, 2017, December 31, 2018, and December 31, 2019, we had approximately 837, 848, and 813 employees, respectively, in the aggregate, in Austria, France, Italy, Spain, the Netherlands, the

 

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United Kingdom, Scandinavia, Slovenia, Poland, Turkey, Lithuania, Russia, Czech Republic, Thailand, Malaysia, Vietnam, Hong Kong, Singapore, Australia, Canada, Mexico, Brazil, and Argentina.

Certain of our employees are represented by labor unions. We believe that we maintain a good working relationship with these unions and our employees, and we have not experienced any material labor disputes in the past.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In connection with this offering, our Board will adopt a written statement of policy for the evaluation of and the approval, disapproval and monitoring of transactions involving us and “related persons.” For the purposes of the policy, “related persons” will include our executive officers, directors, director nominees, and shareholders owning five percent or more of our outstanding common shares, and each of their respective immediate family members.

The policy will cover any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, the amount involved exceeds $100,000 and a related person had or will have a direct or indirect material interest.

Pursuant to this policy, our management will present to our Audit Committee each proposed related person transaction, including all relevant facts and circumstances relating thereto. Our Audit Committee will then:

 

   

review the relevant facts and circumstances of each related person transaction, including the financial terms of such transaction, the benefits to us, the availability of other sources for comparable products or services, if the transaction is on terms no less favorable to us than those that could be obtained in arm’s-length dealings with an unrelated third party or employees generally and the extent of the related person’s interest in the transaction; and

 

   

take into account the impact on the independence of any independent director and the actual or apparent conflicts of interest.

All related person transactions may only be consummated if our Audit Committee has approved or ratified such transaction in accordance with the guidelines set forth in the policy. Certain types of transactions have been pre-approved by our Audit Committee under the policy. These pre-approved transactions include:

 

   

the purchase of our products and resolution of warranty claims relating to our products on an arm’s-length basis in the ordinary course of business on terms and conditions generally available to other similarly situated customers;

 

   

transactions where the rates or charges involved in the transactions are determined by competitive bids;

 

   

transactions in the ordinary course of business where the interest of the related person arises solely from the ownership of a class of equity securities in our company where all holders of such class of equity securities will receive the same benefit on a pro rata basis;

 

   

certain employment and compensation arrangements; and

 

   

transactions in the ordinary course of business where the related person’s interest arises only from: (i) his or her position as a director of another entity that is party to the transaction; (ii) an equity interest of less than 10% in another entity that is party to the transaction; or (iii) a limited partnership interest of less than 10%, subject to certain limitations.

No director may participate in the approval of a related person transaction for which he or she, or his or her immediate family members, is a related person. In the event that an insufficient number of members of the Audit Committee are disinterested with regard to a specific transaction to achieve a quorum, such transaction will be considered by the members of the Board that are disinterested with regard to such transaction.

Consulting Agreement

On January 31, 2017, in connection with the Acquisition, we entered into a consulting agreement with Carlyle, pursuant to which we pay Carlyle a fee for consulting and oversight services provided to us and our subsidiaries. Pursuant to this agreement, subject to certain conditions, we pay the Sponsor an annual fee of $1.8 million for consulting services to the Company. Further, under this agreement Carlyle was entitled to additional

 

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reasonable fees and compensation agreed upon by the parties for advisory and other services provided by Carlyle to us from time to time, including additional advisory and other services associated with acquisitions and divestitures or sales of equity or debt instruments. Carlyle also received a one-time transaction fee of $25.0 million upon consummation of the Acquisition for transactional advisory and other services. Except for this one-time transaction fee, Carlyle did not provide any additional services beyond consulting and oversight services for the year ended December 31, 2017. On January 17, 2020, the consulting agreement was amended to allow for the accession of Company as a party thereto and to amend the termination provisions thereof. Following the consummation of this offering we will continue to pay Carlyle the annual fee payable pursuant to the consulting agreement until the earlier of (i) the second anniversary of the initial public offering and (ii) the date upon which Carlyle ceases to own more than ten percent of the outstanding voting securities of the Company.

Shareholders Agreement

In connection with the Reorganization Transactions, we expect to enter into a shareholders’ agreement with Carlyle. The management shareholders party to that agreement will be restricted thereunder from transferring any of their common shares for 180 days after the initial public offering. Pursuant to the shareholders agreement, we expect our Board will initially consist of eleven seats, with Carlyle having the right to designate ten of the board members and, in addition, our principal executive officer shall have the right to serve as a board member, who, for so long as he serves as our Chief Executive Officer, will be Mr. Wild. The number of board members that Carlyle (or such permitted transferee or affiliate) is entitled to designate is subject to maintaining certain ownership thresholds. If Carlyle (or such permitted transferee or affiliate) loses its right to designate any directors pursuant to the terms of the shareholders agreement, these positions will be filled by our shareholders in accordance with our articles of association. See “Description of Capital Stock” for more information regarding our articles of association. In addition, the shareholders agreement will provide that each committee of the Board will include a proportional number of directors designated by Carlyle (or such permitted transferee or affiliate) that is no less than the proportion designated by Carlyle as is then serving on the Board, subject to our obligation to comply with any applicable independence requirements.

The shareholders agreement will also include provisions pursuant to which we will grant Carlyle (or such permitted transferee or affiliate) the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common shares held by Carlyle (or such permitted transferee or affiliate) or to piggyback on other registration statements in certain circumstances. These shares will represent approximately     % of our common shares after this offering, or     % if the underwriters exercise their option to purchase additional common shares in full. These common shares also may be sold under Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of common shares held by persons deemed to be our affiliates. The shareholders agreement will also require us to indemnify Carlyle (or such permitted transferee or affiliate) and its affiliates in connection with any registrations of our securities.

Indemnification Agreements

In connection with the completion of this offering, we expect to enter into indemnification agreements with each of our directors and certain of our officers. We expect that these indemnification agreements will provide the directors and officers with contractual rights to indemnification and expense advancement. However, these indemnification provisions will be restricted by Jersey Law.

Employment Agreements

See “Management—Compensation—Executive Officer Employment Arrangements” for information regarding the employment agreements that we have entered into with certain of our executive officers.

 

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PRINCIPAL AND SELLING SHAREHOLDERS

We had                 common shares outstanding as of September 30, 2019 after giving effect to the          -for-1 stock split described elsewhere in this prospectus, which were owned by eight shareholders (after giving effect to the Reorganization Transactions and the conversion of preferred shares for common shares). See “Basis of Presentation.” As of September 30, 2019, certain investment funds affiliated with Carlyle owned approximately     % of our common shares, while the remainder is owned by certain current and former employees of the Company (after giving effect to the Reorganization Transactions and the conversion of preferred shares for common shares).

The following table sets forth information with respect to the beneficial ownership of our common shares as of September 30, 2019, and as adjusted to reflect the common shares offered hereby and after giving effect to the Reorganization Transaction and the conversion of preferred shares for common shares, by:

 

   

each person known to own beneficially more than 5% of the capital stock, including each of our selling shareholders;

 

   

each of our directors;

 

   

each of our named executive officers; and

 

   

all of our directors and executive officers as a group.

The amounts and percentages of common shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial” owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

 

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The following table gives effect to the Reorganization Transactions, the conversion of preferred shares into common shares and the                 -for-1 stock split described elsewhere in this prospectus and assumes an initial public offering price of $             (the midpoint of the price range set forth on the cover page of this prospectus) and an initial public offering date of             , 2020. See “Basis of Presentation.” Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the common shares of capital stock and the business address of each such beneficial owner is c/o Atotech Limited, William Street, West Bromwich, West Midlands, B70 0B6, United Kingdom.

 

     Common Shares of
Atotech Limited
Beneficially
Owned Prior to the
Offering
     Common Shares of Atotech Limited
Owned After the
Offering
 
  

 

 

    

 

 

 
                   Excluding
Exercise of Option
to Purchase
Additional
Common Shares
     Including
Exercise of Option
to Purchase
Additional
Common Shares
 

Name of Beneficial Owner

   Number      Percent      Number      Percent      Number      Percent  

Principal Shareholders

                 

Carlyle(1)

                 

Executive Officers and Directors

                 

Geoff Wild

                 

Peter Frauenknecht

                 

Harald Ahnert

                 

Gertjan van der Wal

                 

Brian A. Bernasek

                 

Gregor P. Boehm

                 

Herman H. Chang

                 

Friedel Drees

                 

Shaun Mercer

                 

Gregory M. Nikodem

                 

Charles W. Shaver

                 

Martin W. Sumner

                 

All executive officers and directors as a group (12 persons)

                 

 

*   Denotes less than 1.0% of beneficial ownership.
(1)   Includes                  shares held by Carlyle Partners VI Cayman Holdings, L.P.,                  shares held by Atotech Beteiligungs GmbH & Co. Verwaltungs KG,                  shares held by Ato Cayman LP,                  shares held by CEP IV Participations, S.à r.l. SICAR,                  shares held by Gamma Holding Company Limited, and                  shares held by Zweite Ato Beteiligung GmbH & Co. Verwaltungs KG.

Carlyle Group Management L.L.C. holds an irrevocable proxy to vote a majority of the shares of The Carlyle Group Inc., which is a publicly traded entity listed on NASDAQ. The Carlyle Group Inc. is the sole member of Carlyle Holdings II GP L.L.C., which is the managing member of Carlyle Holdings II L.L.C., which, with respect to the securities reported herein, is the managing member of CG Subsidiary Holdings L.L.C., which is the general partner of TC Group Cayman Investment Holdings, L.P., which is the general partner of TC Group Cayman Investment Holdings Sub L.P., which is the sole shareholder TC Group VI Cayman, L.L.C., which is the general partner of TC Group VI Cayman, L.P., which is the general partner of Carlyle Partners VI Cayman Holdings, L.P. Carlyle Partners VI Cayman Holdings, L.P. is sole shareholder of CP Alpha Holdings Limited, which is the majority shareholder of Ato Beteiligungsverwaltungs GmbH, which is the general partner of each of Atotech Beteiligungs GmbH & Co. Verwaltungs KG and Zweite Ato Beteiligung GmbH & Co. Verwaltungs KG. Carlyle Partners VI Cayman Holdings, L.P. is also the majority shareholder of Cayman Ltd., which is the general partner of Ato Cayman LP.

 

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TC Group Cayman Investment Holdings Sub L.P. is also the sole shareholder of CEP IV Managing GP Holdings, Ltd. and the sole member of CAP IV, L.L.C. CEP IV Managing GP Holdings, Ltd. is the general partner of CEP IV Managing GP, L.P., which is the managing general partner of Carlyle Europe Partners IV, L.P., which is the majority shareholder of CEP IV Participations, S.à r.l. SICAR. CAP IV, L.L.C. is the general partner of CAP IV General Partner, L.P., which is the general partner of Carlyle Asia Partners IV, L.P., which is the majority shareholder of Gamma Holding Company Limited.

Voting and investment determinations with respect to the shares held by Carlyle Partners VI Cayman Holdings, L.P., Atotech Beteiligungs GmbH & Co. Verwaltungs KG and Ato Cayman LP are made by an investment committee of TC Group VI Cayman, L.P., which is comprised of Allan Holt, William Conway, Jr., Daniel D’Aniello, David Rubenstein, Peter Clare, Kewsong Lee, Norma Kuntz, and Sandra Horbach. Each member of the investment committees disclaims beneficial ownership of such shares.

Voting and investment determinations with respect to the shares held by CEP IV Participations, S.à r.l. SICAR are made by the board of CEP IV Participations, S.à r.l. SICAR following recommendations by the investment committee of CEP IV Managing GP, L.P. Voting and investment determinations with respect to the shares held by Gamma Holding Company Limited are made by an investment committee of CAP IV General Partner, L.P. The Board of the SICAR is comprised of Barbara Imbs, William Cagney, Guy Harles, David Garcelan, Andrew Howlett-Bolton, Rick Wallace and CEP IV Managing GP Holdings Ltd. Each of the investment committees of CEP IV Managing GP, L.P. and CAP IV General Partner, L.P. are comprised of Daniel D’Aniello, William Conway, Jr., David Rubenstein, Peter Clare, Kewsong Lee, and Norma Kuntz. Each of the members of the investment committees and the Board of the SICAR disclaims beneficial ownership of such shares.

The address of each person or entity named in this footnote is c/o The Carlyle Group, 1001 Pennsylvania Ave. NW, Suite 220 South, Washington, D.C. 20004-2505.

 

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DESCRIPTION OF CAPITAL STOCK

The following descriptions are summaries of the material terms of our amended and restated articles of association and memorandum of association that will become effective as of the closing of this offering. Reference is made to the more detailed provisions of the amended and restated articles of association and memorandum of association. Please note that this summary is not intended to be exhaustive. For further information please refer to the full version of our amended and restated articles of association and memorandum of association which is included as an exhibit to the registration statement of which this prospectus is part.

General

Our Company was incorporated under the laws of Jersey, Channel Islands, on December 12, 2018 with registered number 127906. Our register of members is kept by our assistant company secretary, Ogier Global Company Secretary (Jersey) Limited at 3rd Floor 44 Esplanade, St. Helier, Jersey, JE4 9WG and our U.S. Branch register is held with American Stock Transfer & Trust Company, LLC (“AST”) at 6201 15th Avenue, Brooklyn, NY 11219. Our registered office is at 3rd Floor 44 Esplanade, St. Helier, Jersey, JE4 9WG. Our secretary is Josh McMorrow and our assistant secretary is Ogier Global Company Secretary (Jersey) Limited. Under our memorandum and articles of association, our authorized capital stock consists of                common shares, nominal value $0.10 per share.

Issued Capital Stock

Our issued capital stock as of September 30, 2019 (after giving effect to the Reorganization Transactions and the conversion of preferred shares into common shares) was                 common shares with a nominal value of $0.10 per share. See “Basis of Presentation.” Each issued common share is fully paid. We currently have no deferred shares in our issued capital stock.

Common Shares

The holders of common shares are entitled to receive dividends, if any, in proportion to the number of common shares held by them. Holders of common shares are entitled, in proportion to the number of common shares held by them, to share in any surplus in the event of our winding up. The holders of common shares are entitled to receive notice of, attend either in person or by proxy or, being a corporation, by a duly authorized representative, and vote at general meetings of shareholders.

Options

As of September 30, 2019 (after giving effect to the Reorganization Transactions and the conversion of preferred shares into common shares), there were options to purchase                 common shares outstanding. See “Basis of Presentation.

Anti-Takeover Effects of Certain Provisions of Our Articles of Association

General

Our articles of association contain provisions that could have the effect of delaying, deterring, or preventing another party from acquiring or seeking to acquire control of us. These provisions, as well as our ability to issue preferred shares, are designed to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also intended to encourage anyone seeking to acquire control of us to negotiate first with our Board. However, these provisions may also delay, deter, or prevent a change in control or other takeovers of our Company that our shareholders might consider to be in their best interests, including transactions that might result in a premium being paid over the market price of our common shares and also may limit the price that investors are willing to pay in the future for our common shares. These provisions may also

 

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have the effect of preventing changes in our management. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because negotiation of those proposals could result in an improvement of their terms. A description of these provisions is set forth below.

Staggered Board of Directors

Our articles of association provide for a staggered Board consisting of three classes of directors. Directors of each class are chosen for three-year terms upon the expiration of their current terms and each year one class of our directors will be elected by our shareholders. The terms of the Class I directors will expire in 2021. Beginning in 2021, our shareholders will elect directors for three-year terms upon the expiration of their current terms. Our shareholders will elect only one class of directors each year. We believe that classification of our Board will help to ensure the continuity and stability of our business strategies and policies as determined by our Board. There is no cumulative voting in the election of directors.

As such, this classified board provision could have the effect of making the replacement of incumbent directors more time-consuming and difficult. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of our Board. Thus, the classified board provision could increase the likelihood that incumbent directors will retain their positions. The staggered terms of directors also may delay, defer, or prevent a tender offer or an attempt to change control of us, even though a tender offer or change in control might be believed by our shareholders to be in their best interest.

No Shareholder Action by Written Consent

Our articles of association provide that, at any time Carlyle owns less than 50% of our outstanding common shares, all shareholder actions are required to be taken by a vote of the shareholders at an annual or special meeting, and shareholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take shareholder actions and would prevent the amendment of our articles of association or memorandum of association or removal of directors by our shareholders without holding a meeting of shareholders.

Advance Notice Procedure

Our articles of association provide an advance notice procedure for shareholders to nominate director candidates for election, including proposed nominations of persons for election to the Board. Subject to the rights of the holders of any series of preferred shares, only persons nominated by, or at the direction of, our Board or by a shareholder who has given proper and timely notice to our secretary prior to the meeting, will be eligible for election as a director.

Limitation of Liability of Directors and Officers

Our articles of association include provisions that indemnify, to the fullest extent allowable under Jersey law, the personal liability of directors or officers for monetary damages for actions taken as our director or officer, or for serving at our request as a director or officer or another position at another corporation or enterprise, as the case may be. However, exculpation under the articles of association does not apply if the directors acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions, or derived an improper benefit from their actions as directors. We will also be expressly authorized to advance certain reasonable expenses (including attorneys’ fees and disbursements and court costs) to our directors and officers and to carry directors’ and officers’ insurance to protect us, our directors, officers, and certain employees for some liabilities. In addition, in connection with the consummation of this offering, we expect to enter into indemnification agreements with each of our directors and certain of our officers. See “Certain Relationships and Related Party Transactions—Indemnification Agreements.”

 

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We believe that the limitation of liability and indemnification provisions in our articles of association and the indemnification agreements and pursuant to the terms of our directors’ and officers’ insurance policy will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling the registrant pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Other Jersey, Channel Islands Law Considerations

Purchase of Own Common Shares

As with declaring a dividend, we may not buy back or redeem our shares unless our directors who are to authorize the buyback or redemption have made a statutory solvency statement that, immediately following the date on which the buyback or redemption is proposed, the Company will be able to discharge its liabilities as they fall due and, having regard to prescribed factors, the Company will be able to continue to carry on business and discharge its liabilities as they fall due for the 12 months immediately following the date on which the buyback or redemption is proposed (or until the Company is dissolved on a solvent basis, if earlier).

If the above conditions are met, we may purchase common shares in the manner described below.

We may purchase on a stock exchange our own fully paid common shares pursuant to a special resolution of our shareholders specifying (a) the maximum number of common shares to be purchased, (b) the maximum and minimum prices that may be paid and (c) a date, not being later than 5 years after the passing of the resolution, on which the authority to purchase is to expire.

We may purchase our own fully paid common shares otherwise than on a stock exchange pursuant to a special resolution of our shareholders, but only if the purchase is made on the terms of a written purchase contract which has been approved in advance by an ordinary resolution of our shareholders. The shareholder from whom we propose to purchase or redeem common shares is not entitled to vote in respect of the common shares to be purchased.

We may fund a redemption or purchase of our own common shares from any source. We cannot purchase our common shares if, as a result of such purchase, only redeemable common shares would remain in issue.

If authorized by a resolution of our shareholders, any shares that we redeem or purchase may be held by us as treasury shares. Any shares held by us as treasury shares may be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them. Shares redeemed or purchased by us are cancelled where we have not been authorized to hold these as treasury shares.

Mandatory Purchases and Acquisitions

The Jersey Companies Law provides that where a person has made an offer to acquire a class or all of our outstanding common shares not already held by the person and has as a result of such offer acquired or contractually agreed to acquire 90% or more in nominal value of such outstanding common shares, that person is then entitled (and may be required) to acquire the remaining common shares. In such circumstances, a holder of any such remaining common shares may apply to the Jersey court for an order that the person making such offer not be entitled to purchase the holder’s common shares or that the person purchase the holder’s common shares on terms different to those under which the person made such offer.

 

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Other than as described above and below under “—U.K. City Code on Takeovers and Mergers,” we are not subject to any regulations under which a shareholder that acquires a certain level of share ownership is then required to offer to purchase all of our remaining common shares on the same terms as such shareholder’s prior purchase.

Compromises and Arrangements

Where we and our creditors or shareholders or a class of either of them propose a compromise or arrangement between us and our creditors or our shareholders or a class of either of them (as applicable), the Jersey court may order a meeting of the creditors or class of creditors or of our shareholders or class of shareholders (as applicable) to be called in such a manner as the court directs. Any compromise or arrangement approved by a majority in number present and voting at the meeting representing 75% or more in value of the creditors or 75% or more of the voting rights of shareholders or class of either of them (as applicable) if sanctioned by the court, is binding upon us and all the creditors, shareholders or members of the specific class of either of them (as applicable).

Whether the capital of the Company is to be treated as being divided into a single or multiple class(es) of shares is a matter to be determined by the court. The court may in its discretion treat a single class of shares as multiple classes, or multiple classes of shares as a single class, for the purposes of the shareholder approval referred to above taking into account all relevant circumstances, which may include circumstances other than the rights attaching to the shares themselves.

U.K. City Code on Takeovers and Mergers

The U.K. City Code on Takeovers and Mergers (the “Takeover Code”) applies, among other things, (i) to an offer for a public company whose registered office is in the Channel Islands and whose securities are admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or any stock exchange in the Channel Islands or the Isle of Man, or (ii) if the company is a public company and is considered by the Panel on Takeovers and Mergers (the “Takeover Panel”), to have its place of central management and control in the United Kingdom or the Channel Islands or the Isle of Man (in each case, a “Code Company”). This is known as the “residency test.” Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man by looking at various factors, including the structure of our Board, the functions of the directors, and where they are resident.

If at the time of a takeover offer, the Takeover Panel determines that the residency test is satisfied and we have our place of central management and control in the United Kingdom, we would be subject to several rules and restrictions, including but not limited to the following: (i) our ability to enter into deal protection arrangements with a bidder would be extremely limited; (ii) we might not, without the approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (iii) we would be obliged to provide equality of information to all bona fide competing bidders. The Takeover Code also contains certain rules in respect of mandatory offers for Code Companies. Under Rule 9 of the Takeover Code, if a person:

 

   

acquires an interest in shares of a Code Company that, when taken together with shares in which persons acting in concert with such person are interested, carry 30% or more of the voting rights of the Code Company; or

 

   

who, together with persons acting in concert with such person, is interested in shares that in the aggregate carry not less than 30% and not more than 50% of the voting rights in the Code Company, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested, the acquirer, and, depending on the circumstances, its concert parties, would be required (except with the consent of the Takeover Panel) to make a cash offer (or provide a cash alternative) for the Code Company’s outstanding shares at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the previous 12 months.

 

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Upon completion of this offering, we expect a majority of our Board to reside outside of the United Kingdom, the Channel Islands and the Isle of Man. Based upon our current and intended plans for our directors and management, for the purposes of the Takeover Code, we anticipate that the residency test will not be met and that we will be considered to have our place of central management and control outside the United Kingdom, the Channel Islands or the Isle of Man. Therefore, the Takeover Code should not apply to us. It is possible that in the future changes in the Board’s composition, changes in the Takeover Panel’s interpretation of the Takeover Code, or other events may cause the Takeover Code to apply to us.

Rights of Minority Shareholders

Under Article 141 of the Jersey Companies Law, a shareholder may apply to court for relief on the grounds that the conduct of our affairs, including a proposed or actual act or omission by us, is “unfairly prejudicial” to the interests of our shareholders generally or of some part of our shareholders, including at least the shareholder making the application. What amounts to unfair prejudice is not defined in the Jersey Companies Law. There may also be common law personal actions available to our shareholders.

Under Article 143 of the Jersey Companies Law (which sets out the types of relief a court may grant in relation to an action brought under Article 141 of the Jersey Companies Law), the court may make an order regulating our affairs, requiring us to refrain from doing or continuing to do an act complained of, authorizing civil proceedings and providing for the purchase of common shares by us or by any of our other shareholders.

Jersey Regulatory Matters

The Jersey Financial Services Commission (“JFSC”) has given, and has not withdrawn, its consent under Article 2 of the Control of Borrowing (Jersey) Order 1958 to the issue of our common shares. The JFSC is protected by the Control of Borrowing (Jersey) Law 1947 against any liability arising from the discharge of its functions under that law.

A copy of this prospectus has been delivered to the Jersey Registrar of Companies in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002 and the Jersey Registrar of Companies has given, and has not withdrawn, his consent to its circulation.

It must be distinctly understood that, in giving these consents, neither the Jersey Registrar of Companies nor the JFSC takes any responsibility for the financial soundness of the Company or for the correctness of any statements made, or opinions expressed, with regard to it. If you are in any doubt about the contents of this prospectus, you should consult your stockbroker, bank manager, solicitor, accountant, or other financial adviser.

The price of securities and the income from them can go down as well as up. Nothing in this prospectus or anything communicated to holders or potential holders of any of our common shares (or interests in them) by or on behalf of the Company is intended to constitute or should be construed as advice on the merits of the purchase of or subscription for any common shares (or interests in them) for the purposes of the Financial Services (Jersey) Law 1998.

The directors of the Company have taken all reasonable care to ensure that the facts stated in this prospectus are true and accurate in all material respects, and that there are no other facts the omission of which would make misleading any statement in the prospectus, whether of facts or opinion. All the directors of the Company accept responsibility accordingly.

 

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Differences in Corporate Law

Set forth below is a comparison of certain shareholder rights and corporate governance matters under Delaware law and Jersey law:

 

Corporate law issue

  

Delaware law

  

Jersey law

Special Meetings of Shareholders   

Shareholders generally do not have the right to call meetings of shareholders unless that right is granted in the certificate of incorporation or by-laws.

 

However, if a corporation fails to hold its annual meeting within a period of 30 days after the date designated for the annual meeting, or if no date has been designated for a period of 13 months after its last annual meeting, the Delaware Court of Chancery may order a meeting to be held upon the application of a shareholder.

  

Shareholders holding 10% or more of the company’s voting rights and entitled to vote at the relevant meeting may legally require our directors to call a meeting of shareholders.

 

The JFSC may, at the request of any officer, secretary, or shareholder, call or direct the calling of an annual general meeting. Failure to call an annual general meeting in accordance with the requirements of the Jersey Companies Law is a criminal offense on the part of a Jersey company and its directors and secretary.

Interested Director Transactions   

Interested director transactions are permissible and may not be legally voided if:

 

•  either a majority of disinterested directors, or a majority in interest of holders of shares of the corporation’s capital stock entitled to vote upon the matter, approves the transaction upon disclosure of all material facts; or

 

•  the transaction is determined to have been fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the shareholders.

  

An interested director must disclose to the company the nature and extent of any interest in a transaction with the company, or one of its subsidiaries, which to a material extent conflicts or may conflict with the interests of the company and of which the director is aware. Failure to disclose an interest entitles the company or a shareholder to apply to the court for an order setting aside the transaction concerned and directing that the director account to the company for any profit.

 

A transaction is not voidable and a director is not accountable notwithstanding a failure to disclose an interest if the transaction is confirmed by special resolution and the nature and extent of the director’s interest in the transaction are disclosed in reasonable detail in

 

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Corporate law issue

  

Delaware law

  

Jersey law

     

the notice calling the meeting at which the resolution is passed.

 

Although it may still order that a director account for any profit, a court will not set aside a transaction unless it is satisfied that the interests of third parties who have acted in good faith would not thereby be unfairly prejudiced and the transaction was not reasonable and fair in the interests of the company at the time it was entered into.

Cumulative Voting    The certificate of incorporation of a Delaware corporation may provide that shareholders of any class or classes or of any series may vote cumulatively either at all elections or at elections under specified circumstances.    There are no provisions in the Jersey Companies Law relating to cumulative voting.
Approval of Corporate Matters by Written Consent    Unless otherwise specified in a corporation’s certificate of incorporation, shareholders may take action permitted to be taken at an annual or special meeting, without a meeting, notice, or a vote, if consents, in writing, setting forth the action, are signed by shareholders with not less than the minimum number of votes that would be necessary to authorize the action at a meeting. All consents must be dated and are only effective if the requisite signatures are collected within 60 days of the earliest dated consent delivered.    If permitted by the articles of association of a company, a written consent signed and passed by the specified majority of members may affect any matter that otherwise may be brought before a shareholders’ meeting, except for the removal of a company’s auditors. Such consent shall be deemed effective when the instrument, or the last of several instruments, is signed by the specified majority of members or on such later date as is specified in the resolution. However, it is intended that the right to pass written resolutions by the shareholders will be excluded in the articles of association if Carlyle owns less than 50% of our outstanding common shares.
Business Combinations    With certain exceptions, a merger, consolidation, or sale of all or substantially all the assets of a Delaware corporation must be approved by the board of directors    A sale or disposal of all or substantially all the assets of a Jersey company must be approved by the board of directors and, only if the articles of association of the company

 

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Corporate law issue

  

Delaware law

  

Jersey law

   and a majority of the outstanding shares entitled to vote thereon.    require, by the shareholders in general meeting. A merger involving a Jersey company must be generally documented in a merger agreement which must be approved by special resolution of that company.
Limitations on Director’s Liability and Indemnification of Directors and Officers   

A Delaware corporation may include in its certificate of incorporation provisions limiting the personal liability of its directors to the corporation or its shareholders for monetary damages for many types of breach of fiduciary duty. However, these provisions may not limit liability for any breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, the authorization of unlawful dividends, stock purchases, or redemptions, or any transaction from which a director derived an improper personal benefit. Moreover, these provisions would not be likely to bar claims arising under U.S. federal securities laws.

 

A Delaware corporation may indemnify a director or officer of the corporation against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in defense of an action, suit, or proceeding by reason of his or her position if (i) the director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and (ii) with respect to any criminal action or proceeding, the director or officer had no reasonable cause to believe his or her conduct was unlawful.

  

The Jersey Companies Law does not contain any provision permitting Jersey companies to limit the liabilities of directors for breach of fiduciary duty.

 

However, a Jersey company may exempt from liability, and indemnify directors and officers for, liabilities:

 

•  incurred in defending any civil or criminal legal proceedings where:

 

•  the person is either acquitted or receives a judgment in their favor;

 

•  where the proceedings are discontinued other than by reason of such person (or someone on their behalf) giving some benefit or suffering some detriment; or

 

•  where the proceedings are settled on terms that such person (or someone on their behalf) gives some benefit or suffers some detriment but in the opinion of a majority of the disinterested directors, the person was substantially successful on the merits in the person’s resistance to the proceedings;

 

•  incurred to anyone other than to the company if the person acted in good faith with a view to the best interests of the company;

 

•  incurred in connection with an application made to the court

 

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Corporate law issue

  

Delaware law

  

Jersey law

     

for relief from liability for negligence, default, breach of duty, or breach of trust under Article 212 of the Jersey Companies Law in which relief is granted to the person by the court; or

 

•  incurred in a case in which the company normally maintains insurance for persons other than directors.

Appraisal Rights    A shareholder of a Delaware corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights under which the shareholder may receive cash in the amount of the fair value of the shares held by that shareholder (as determined by a court) in lieu of the consideration the shareholder would otherwise receive in the transaction.    No appraisal rights.
Shareholder Suits    Class actions and derivative actions generally are available to the shareholders of a Delaware corporation for, among other things, breach of fiduciary duty, corporate waste, and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action.   

Under Article 141 of the Jersey Companies Law, a shareholder may apply to court for relief on the ground that the conduct of a company’s affairs, including a proposed or actual act or omission by a company, is “unfairly prejudicial” to the interests of shareholders generally or of some part of shareholders, including at least the shareholder making the application.

 

Under Article 143 of the Jersey Companies Law (which sets out the types of relief a court may grant in relation to an action brought under Article 141 of the Jersey Companies Law), the court may make an order regulating the affairs of a company, requiring a company to refrain from doing or continuing to do an act complained of, authorizing civil proceedings and providing for

 

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Corporate law issue

  

Delaware law

  

Jersey law

      the purchase of shares by a company or by any of its other shareholders. There may be customary personal law actions available to shareholders which would include certain derivate and other actions to bring proceedings against the directors of the company as well as the company.
Inspection of Books and Records    All shareholders of a Delaware corporation have the right, upon written demand, to inspect or obtain copies of the corporation’s shares ledger and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.    The register of shareholders and books containing the minutes of general meetings or of meetings of any class of shareholders of a Jersey company must during business hours be open to the inspection of a shareholder of the company without charge. The register of directors and secretaries must during business hours (subject to such reasonable restrictions as the company may by its articles of association or in general meeting impose, but so that not less than two hours in each business day be allowed for inspection) be open to the inspection of a shareholder or director of the company without charge.
Amendments to Charter    Amendments to the certificate of incorporation of a Delaware corporation require the affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon or such greater vote as is provided for in the certificate of incorporation. A provision in the certificate of incorporation requiring the vote of a greater number or proportion of the directors or of the holders of any class of shares than is required by Delaware corporate law may not be amended, altered or repealed except by such greater vote.    The memorandum of association and articles of association of a Jersey company may only be amended by special resolution (being a two-third majority if the articles of association of the company do not specify a greater majority) passed by shareholders in general meeting or by written resolution signed by all the shareholders entitled to vote.

 

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Transfer Agent and Registrar

The transfer agent and registrar for our common shares is AST. Its address is 6201 15th Avenue, Brooklyn, NY 11219 and its telephone number is (718) 921-8200.

Listing

We have applied for listing of our common shares on the New York Stock Exchange under the symbol “ATC.”

 

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COMMON SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common shares, and no predictions can be made about the effect, if any, that market sales of our common shares or the availability of such common shares for sale will have on the market price prevailing from time to time. Nevertheless, the actual sale of, or the perceived potential for the sale of, our common shares in the public market may have an adverse effect on the market price for our common shares and could impair our ability to raise capital through future sales of our securities. See “Risk Factors—Risks Related to this Offering and Ownership of our Common Shares—Future sales of our common shares in the public market could lower our share price, and any additional capital raised by us through the sale of equity or convertible debt securities may dilute your ownership in us and may adversely affect the market price of our common shares.”

Upon the completion of this offering, we will have                  common shares outstanding, assuming no exercise of outstanding options and assuming that the underwriters have not exercised their option to purchase additional common shares. Of these common shares,                  common shares will be freely transferable without restriction or further registration under the Securities Act by persons other than “affiliates,” as that term is defined in Rule 144 under the Securities Act. Generally, the balance of our outstanding common shares are “restricted securities” within the meaning of Rule 144 under the Securities Act, subject to the limitations and restrictions that are described below. Common shares purchased by our affiliates will be “restricted securities” under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 promulgated under the Securities Act.

Lock-Up Agreements

In connection with this offering, we, our executive officers and directors, certain of our employees and the selling shareholders have agreed, subject to certain exceptions, not to sell or transfer any common shares or securities convertible into, exchangeable for, exercisable for, or repayable with common shares, for 180 days after the date of this prospectus without first obtaining the written consent of two of the four representatives. See “Underwriting.”

Rule 144

In general, under Rule 144 as in effect on the date of this prospectus, beginning 90 days after the consummation of this offering, a person (or persons whose shares are required to be aggregated) who is an affiliate and who has beneficially owned our common shares for at least six months is entitled to sell in any three-month period several common shares that does not exceed the greater of:

 

   

1% of the number of common shares then outstanding, which will equal approximately                  common shares immediately after consummation of this offering; or

 

   

the average weekly trading volume in our common shares on the stock exchange on which our shares are listed during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such a sale.

Sales by our affiliates under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. An “affiliate” is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, an issuer.

Under Rule 144, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months (including the holding period of any prior owner other than an affiliate), would be entitled to sell those shares subject only to availability of current public information about us, and after beneficially owning such shares for at least 12 months (including the holding period of any prior owner

 

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other than an affiliate), would be entitled to sell an unlimited number of shares without restriction. To the extent that our affiliates sell their common shares, other than pursuant to Rule 144 or a registration statement, the purchaser’s holding period for the purpose of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Rule 701

In general, under Rule 701 as in effect on the date of this prospectus, any of our employees, directors, officers, consultants, or advisors who purchased common shares from us in reliance on Rule 701 in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased common shares from us after that date upon the exercise of options granted before that date, are eligible to resell such common shares 90 days after the effective date of this offering in reliance upon Rule 144. If such person is not an affiliate, such sale may be made subject only to the manner of sale provisions of Rule 144. If such a person is an affiliate, such sale may be made under Rule 144 without compliance with the holding period requirement, but subject to the other Rule 144 restrictions described above.

S-8 Registration Statement

In conjunction with this offering, we expect to file a registration statement on Form S-8 under the Securities Act, which will register up to             common shares underlying stock options or restricted stock awards or reserved for issuance under our equity incentive plans. That registration statement will become effective upon filing, and                 common shares covered by such registration statement are eligible for sale in the public market immediately after the effective date of such registration statement, subject to Rule 144 volume limitations applicable to affiliates, vesting restrictions with us and the lock-up agreements described above.

Registration Rights

We intend to enter into a new shareholders agreement in connection with the consummation of this offering, pursuant to which we will grant Carlyle the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common shares held by them and other shareholders party to that agreement or to piggyback on other registration statements in certain circumstances. See “Certain Relationships and Related Party Transactions—Shareholders Agreement.” These common shares will represent approximately     % of our outstanding common shares after this offering, or     % if the underwriters exercise their option to purchase additional common shares in full. These common shares also may be sold under Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of common shares held by persons deemed to be our affiliates. The shareholders agreement also requires us to indemnify certain of our shareholders and their affiliates in connection with any registrations of our securities. We do not anticipate that the shareholders agreement will contain any prescribed cash penalties or additional penalties as a result of delays in registering our common shares.

 

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TAXATION

Jersey Tax Considerations

This summary of Jersey taxation issues can only provide a general overview of this area and it is not a description of all the tax considerations that may be relevant to a decision to invest in the Company.

The following summary of the anticipated treatment of the Company and holders of common shares (other than residents of Jersey) is based on Jersey taxation law and practice as it is understood to apply at the date of this document and may be subject to any changes in Jersey law occurring after such date. It does not constitute legal or tax advice and does not address all aspects of Jersey tax law and practice (including such tax law and practice as it applies to any land or building situate in Jersey). Legal advice should be taken with regard to individual circumstances. Prospective investors in the common shares should consult their professional advisers on the implications of acquiring, buying, selling or otherwise disposing of common shares in the Company under the laws of any jurisdiction in which they may be liable to taxation.

Shareholders should note that tax law and interpretation can change and that, in particular, the levels and basis of, and reliefs from, taxation may change and may alter the benefits of investment in the Company.

Any person who is in any doubt about their tax position or who is subject to taxation in a jurisdiction other than Jersey should consult their own professional adviser.

Company Residence

Under the Income Tax (Jersey) Law 1961 (as amended) (“Tax Law”), the Company shall be regarded as resident in Jersey if it is incorporated under the Jersey Companies Law unless:

 

   

its business is centrally managed and controlled outside Jersey in a country or territory where the highest rate at which any company may be charged to tax on any part of its income is 10% or higher; and

 

   

the Company is resident for tax purposes in that country or territory.

It is intended that the Company will not be resident for tax purposes in Jersey and not subject to any rate of tax in Jersey as it will instead be resident in the United Kingdom where the tax rate is in excess of 10%.

Summary

Under current Jersey law, there are no capital gains, capital transfer, gift, wealth or inheritance taxes, or any death or estate duties. No capital or stamp duty is levied in Jersey on the issue, conversion, redemption, or transfer of common shares. On the death of an individual holder of common shares (whether or not such individual was domiciled in Jersey), duty at rates of up to 0.75% of the value of the relevant common shares may be payable on the registration of any Jersey probate or letters of administration which may be required in order to transfer, convert, redeem, or make payments in respect of, common shares held by a deceased individual sole shareholder, subject to a cap of £100,000.

Income Tax—The Company

The general rate of income tax under the Tax Law on the profits of companies regarded as resident in Jersey or having a permanent establishment in Jersey is 0% (“zero tax rating”). Certain exceptions from zero tax rating apply, namely:

 

  (1)   companies which are regulated by the Jersey Financial Services Commission under certain sections of the Financial Services (Jersey) Law 1998, the Banking Business (Jersey) Law 1991 or the Collective Investment Funds (Jersey) Law 1988, shall be subject to income tax at a rate of 10%, (these companies are defined as “financial services companies” in the Tax Law);

 

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  (2)   specifically identified utility companies shall be subject to income tax at a rate of 20%, (these companies are defined as “utility companies” in the Tax Law); and

 

  (3)   any income derived from the ownership or disposal of land in Jersey shall be subject to income tax at a rate of 20%.

Income Tax—Shareholders

Persons holding common shares who are not resident for taxation purposes in Jersey will be exempt from Jersey income tax on dividends from the Company.

Shareholders who are resident for income tax purposes in Jersey will be subject to income tax in Jersey at the standard rate of 20% on any dividends paid on common shares held by them or on their behalf and income tax may be withheld by the Company on payment of any such dividends.

Article 134A of the Tax Law contains a general anti-avoidance provision, which in the view of the Taxes Office may be utilized, in certain circumstances, in respect of individuals who are resident in Jersey and who invest in capital investments, where the main or one of the main purposes of the investment is the avoidance of tax.

Withholding Tax—The Company

For so long as the Company is rated for tax, or is not deemed to be resident for tax purposes in Jersey, no withholding in respect of Jersey taxation will be required on payments in respect of the common shares to any holder of the common shares not resident in Jersey.

Stamp Duty

In Jersey, no stamp duty is levied on the issue or transfer of the common shares (unless there is any element of Jersey residential property being transferred, in which case a land transaction tax may apply pursuant to the Taxation (Land Transactions) (Jersey) Law 2009) except that stamp duty is payable on Jersey grants of probate and letters of administration, which will generally be required to transfer common shares on the death of a holder of such common shares if such holder was entered as the holder of the shares on the register maintained in Jersey. In the case of a grant of probate or letters of administration, stamp duty is levied according to the size of the estate (wherever situated in respect of a holder of common shares domiciled in Jersey, or situated in Jersey in respect of a holder of common shares domiciled outside Jersey) and is payable on a sliding scale at a rate of up to 0.75% on the value of an estate with a maximum value of £13,360,000. The rules for joint holders and holdings through a nominee are different and advice relating to this form of holding should be obtained from a professional adviser.

Jersey does not otherwise levy taxes upon capital, inheritances, capital gains or gifts nor are there otherwise estate duties.

Goods and Services Tax

Pursuant to the Goods and Services Tax (Jersey) Law 2007 (“GST Law”), a tax rate which is currently 5% applies to the supply of goods and services, unless the supply is regarded as exempt or zero rated, or the relevant supplier or recipient of such goods and services is registered as an “international services entity.”

A company must register for GST if its turnover is greater than £300,000 in any 12 month period, and will then need to charge GST to its customers. Companies can also choose to register voluntarily.

 

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A company may apply to be registered as an International Services Entity (“ISE”) if it mainly serves non-Jersey residents. By virtue of a company being an ISE, it will not have to register for GST, will not charge GST on its supplies, and will not be charged GST on its purchases.

The Company will be an ISE within the meaning of the GST Law, as it satisfies the requirements of the Goods and Services Tax (International Services Entities) (Jersey) Regulations 2008, as amended. As long as it continues to be such an entity, a supply of goods or of a service made by or to the Company shall not be a taxable supply for the purposes of the GST Law.

Substance Legislation

With effect from January 1, 2019, Jersey implemented legislation to meet EU demands for companies to have substance in certain circumstances. Broadly, part of the legislation is intended to apply to holding companies managed and controlled in Jersey. It is not intended that the Company be managed and controlled in Jersey but rather that it is only tax resident in the United Kingdom and so this legislation will not apply to the Company on this basis.

The summary of certain Jersey tax issues is based on the laws and regulations in force as of the date of this document and may be subject to any changes in Jersey laws occurring after such date. Legal advice should be taken with regard to individual circumstances. Any person who is in any doubt as to his/her tax position or where he/she is resident, or otherwise subject to taxation, in a jurisdiction other than the United States, the UK and Jersey, should consult his/her professional adviser.

Material U.S. Federal Income Tax Consequences

The following discussion describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) under present law of the purchase, ownership, and disposition of our common shares issued pursuant to this offering. This summary applies only to U.S. Holders that acquire our common shares in exchange for cash in the offering, hold our common shares as capital assets within the meaning of Section 1221 of the Code (as defined below) and have the U.S. dollar as their functional currency.

This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Treasury regulations, and judicial and administrative interpretations thereof, all as available as of the date of this prospectus. All the foregoing authorities are subject to change or differing interpretation, and any such change or differing interpretation could apply retroactively and could affect the U.S. federal income tax consequences described below. The statements in this prospectus are not binding on the U.S. Internal Revenue Service (the “IRS”) or any court, and thus we can provide no assurance that the U.S. federal income tax consequences discussed below will not be challenged by the IRS or will be sustained by a court if challenged by the IRS. Furthermore, this summary does not address any estate or gift tax consequences, any state, local, or non-U.S. tax consequences or any other tax consequences other than U.S. federal income tax consequences.

The following discussion does not describe all the tax consequences that may be relevant to any particular U.S. Holders, including those subject to special tax situations such as:

 

   

banks and certain other financial institutions;

 

   

regulated investment companies;

 

   

real estate investment trusts;

 

   

insurance companies;

 

   

broker-dealers;

 

   

traders that elect to mark-to-market;

 

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tax-exempt entities or governmental organizations;

 

   

individual retirement accounts or other tax deferred accounts;

 

   

persons deemed to sell our common shares under the constructive sale provisions of the Code;

 

   

persons liable for alternative minimum tax or the Medicare contribution tax on net investment income;

 

   

U.S. expatriates;

 

   

persons holding our common shares as part of a straddle, hedging, constructive sale, conversion or integrated transaction;

 

   

persons that directly, indirectly, or constructively own 10% or more of the total combined voting power or total value of our common shares;

 

   

persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States;

 

   

persons who acquired our common shares pursuant to the exercise of any employee share option or otherwise as compensation;

 

   

persons subject to special tax accounting rules as a result of any item of gross income with respect to our common shares being taken into account in an applicable financial statement; or

 

   

persons holding our common shares through partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes.

PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF OUR COMMON SHARES.

As used herein, the term “U.S. Holder” means a beneficial owner of our common shares that, for U.S. federal income tax purposes, is or is treated as:

 

   

an individual who is a citizen or resident of the United States;

 

   

a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

   

an estate whose income is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust that (1) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

The tax treatment of a partner (or other owner) in an entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds our common shares, and such entity or arrangement, generally will depend on such partner’s (or other owner’s) status and the activities of such entity or arrangement. A U.S. Holder that is a partner (or other owner) in such an entity or arrangement should consult its tax advisor.

Dividends and Other Distributions on Our Common Shares

Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by the Company with respect to our common shares (including the amount of non-U.S. taxes withheld therefrom, if any) generally will be includible as dividend income in a U.S. Holder’s gross income in the year received, to the extent such distributions are paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Because we do not maintain calculations of our earnings

 

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and profits under U.S. federal income tax principles, a U.S. Holder should expect all cash distributions will be reported as dividends for U.S. federal income tax purposes. Such dividends will not be eligible for the dividends-received deduction allowed to U.S. corporations with respect to dividends received from other U.S. corporations.

Dividends received by certain non-corporate U.S. Holders (including individuals) may be “qualified dividend income,” which is taxed at the lower applicable capital gains rate, provided that (1) our common shares are readily tradable on an established securities market in the United States, (2) we are neither a passive foreign investment company (as discussed below) nor treated as such with respect to the U.S. Holder for our taxable year in which the dividend is paid or the preceding taxable year, (3) the U.S. Holder satisfies certain holding period requirements, and (4) the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. Under IRS authority, common shares generally are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on the New York Stock Exchange, as our common shares are expected to be. U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for dividends paid with respect to our common shares.

The amount of any distribution paid in foreign currency will be equal to the U.S. dollar value of such currency, translated at the spot rate of exchange on the date such distribution is actually or constructively received by the U.S. Holder, regardless of whether the payment is in fact converted into U.S. dollars at that time. A U.S. Holder generally should not recognize any foreign currency gain or loss in respect of such distribution if such foreign currency is converted into U.S. dollars on the date received by the U.S. Holder. Any further gain or loss on a subsequent conversion or other disposition of the currency for a different U.S. dollar amount will be U.S. source ordinary income or loss.

Dividends on our common shares generally will constitute foreign source income for foreign tax credit limitation purposes. Subject to certain complex conditions and limitations, non-U.S. taxes withheld, if any, on any distributions on our common shares may be eligible for credit against a U.S. Holder’s U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by the Company with respect to our common shares will generally constitute “passive category income.” The U.S. federal income tax rules relating to foreign tax credits are complex, and U.S. Holders should consult their tax advisors regarding the availability of a foreign tax credit in their particular circumstances and the possibility of claiming an itemized deduction (in lieu of the foreign tax credit) for any foreign taxes paid or withheld.

Sale or Other Taxable Disposition of Our Common Shares

Subject to the passive foreign investment company rules discussed below, upon a sale or other taxable disposition of our common shares, a U.S. Holder will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in such common shares. Any such gain or loss generally will be treated as long-term capital gain or loss if the U.S. Holder’s holding period in common shares exceeds one year. Non-corporate U.S. Holders (including individuals) generally will be subject to U.S. federal income tax on long-term capital gain at preferential rates. The deductibility of capital losses is subject to significant limitations. Gain or loss, if any, recognized by a U.S. Holder on the sale or other taxable disposition of our common shares generally will be treated as U.S. source gain or loss for U.S. foreign tax credit limitation purposes.

If the consideration received upon the sale or other disposition of our common shares is paid in foreign currency, the amount realized will be the U.S. dollar value of the payment received, translated at the spot rate of exchange on the date of the sale or other taxable disposition. If our common shares are treated as traded on an established securities market, a cash basis U.S. Holder or an accrual basis U.S. Holder who has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS) will determine the U.S. dollar value of the amount realized in foreign currency by translating the amount

 

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received at the spot rate of exchange on the settlement date of the sale. If our common shares are not treated as traded on an established securities market, or the relevant U.S. Holder is an accrual basis taxpayer that does not make the special election, such U.S. Holder will recognize foreign currency gain or loss to the extent attributable to any difference between the U.S. dollar amount realized on the date of sale or disposition (as determined above) and the U.S. dollar value of the currency received translated at the spot rate on the settlement date.

A U.S. Holder’s initial U.S. federal income tax basis in our common shares generally will equal the cost of such common shares. If a U.S. Holder used foreign currency to purchase the common shares, the cost of the common shares will be the U.S. dollar value of the foreign currency purchase price on the date of purchase, translated at the spot rate of exchange on that date. If our common shares are treated as traded on an established securities market and the relevant U.S. Holder is either a cash basis taxpayer or an accrual basis taxpayer who has made the special election described above, the U.S. Holder will determine the U.S. dollar value of the cost of such common shares by translating the amount paid at the spot rate of exchange on the settlement date of the purchase.

Passive Foreign Investment Company Considerations

We will be classified as a passive foreign investment company (a “PFIC”) for any taxable year if either: (1) at least 75% of our gross income is “passive income” for purposes of the PFIC rules or (2) at least 50% of the value of our assets (determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. For this purpose, we will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

Under the PFIC rules, if we were considered a PFIC at any time that a U.S. Holder holds our common shares, we would continue to be treated as a PFIC with respect to such U.S. Holder unless (1) the Company ceases to qualify as a PFIC under the income and asset tests discussed in the prior paragraph and (2) the U.S. Holder has made a “deemed sale” election under the PFIC rules.

Based on the anticipated market price of our common shares in the offering and the current and anticipated composition of our income, assets and operations, we do not expect to be treated as a PFIC for the current taxable year or in the foreseeable future. This is a factual determination, however, that depends on, among other things, the composition of our income and assets and the market value of our shares and assets from time to time, and thus the determination can only be made annually after the close of each taxable year. Therefore, there can be no assurance that we will not be classified as a PFIC for the current taxable year or for any future taxable year.

If we are considered a PFIC at any time that a U.S. Holder holds our common shares, any gain recognized by a U.S. Holder on a sale or other disposition of our common shares, as well as the amount of any “excess distribution” (defined below) received by the U.S. Holder, would be allocated ratably over the U.S. Holder’s holding period for our common shares. The amounts allocated to the taxable year of the sale or other disposition (or the taxable year of receipt, in the case of an excess distribution) and to any year prior to the year in which we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed. For the purposes of these rules, an excess distribution is the amount by which any distribution received by a U.S. Holder on its common shares exceeds 125% of the average of the annual distributions on our common shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter.

Certain elections may be available that would result in alternative treatments (such as qualified electing fund treatment or mark-to-market treatment) of our common shares if we are considered a PFIC. We do not intend to provide the information necessary for U.S. Holders of our common shares to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for an

 

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investment in a PFIC described above. If we are treated as a PFIC with respect to a U.S. Holder for any taxable year, the U.S. Holder will be deemed to own shares in any of our subsidiaries that are also PFICs. However, an election for mark-to-market treatment would likely not be available with respect to any such subsidiaries.

If we are considered a PFIC, a U.S. Holder will also be subject to annual information reporting requirements. U.S. Holders should consult their tax advisors about the potential application of the PFIC rules to an investment in our common shares.

U.S. Information Reporting and Backup Withholding

Dividend payments with respect to our common shares and proceeds from the sale, exchange or redemption of our common shares may be subject to information reporting to the IRS and possible U.S. backup withholding. A U.S. Holder may be eligible for an exemption from backup withholding if the U.S. Holder furnishes a correct taxpayer identification number and makes any other required certification or is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status may be required to provide such certification on IRS Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federal income tax liability, and such U.S. Holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing an appropriate claim for refund with the IRS and furnishing any required information.

Additional Information Reporting Requirements

Certain U.S. Holders who are individuals (and certain entities) that hold an interest in “specified foreign financial assets” (which may include our common shares) are required to report information relating to such assets, subject to certain exceptions (including an exception for common shares held in accounts maintained by certain financial institutions). Penalties can apply if U.S. Holders fail to satisfy such reporting requirements. U.S. Holders should consult their tax advisors regarding the applicability of these requirements to their acquisition and ownership of our common shares.

THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE IMPORTANT TO YOU. EACH PROSPECTIVE PURCHASER SHOULD CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF AN INVESTMENT IN OUR COMMON SHARES UNDER THE INVESTOR’S OWN CIRCUMSTANCES.

 

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Certain United Kingdom Tax Considerations

The following statements are of a general nature and do not purport to be a complete analysis of all potential UK tax consequences of acquiring, holding, and disposing of our common shares. They are based on current UK tax law and on the current published practice of Her Majesty’s Revenue and Customs (“HMRC”) (which may not be binding on HMRC), as of the date of this prospectus, all of which are subject to change, possibly with retrospective effect. They are intended to address only certain United Kingdom tax consequences for holders of our common shares who are tax resident in (and only in) the United Kingdom, and in the case of individuals, domiciled in (and only in) the United Kingdom (except where expressly stated otherwise) who are the absolute beneficial owners of our common shares and any dividends paid on them and who hold our common shares as investments (other than in an individual savings account or a self-invested personal pension). They do not address the UK tax consequences which may be relevant to certain classes of holders of our common shares such as traders, brokers, dealers, banks, financial institutions, insurance companies, investment companies, collective investment schemes, tax-exempt organizations, trustees, persons connected with the Company or any member of a group of which the Company forms part, persons holding their common shares as part of hedging or conversion transactions, shareholders who have (or are deemed to have) acquired their common shares by virtue of an office or employment, and shareholders who are or have been officers or employees of the Company or a company forming part of a group of which the Company forms part. The statements do not apply to any shareholder who either directly or indirectly holds or controls 10% or more of the Company’s share capital (or class thereof), voting power or profits.

The following is intended only as a general guide and is not intended to be, nor should it be considered to be, legal or tax advice to any particular prospective subscriber for, or purchaser of, our common shares. Accordingly, prospective subscribers for, or purchasers of, our common shares who are in any doubt as to their tax position regarding the acquisition, ownership or disposition of our common shares or who are subject to tax in a jurisdiction other than the United Kingdom should consult their own tax advisers.

The Company

It is the intention of the directors of the Company to conduct the affairs of the Company so that the central management and control of the Company is exercised in the United Kingdom for UK tax purposes. As a result, the Company is expected to conduct the affairs of the Company so that it is treated as resident in the United Kingdom for UK tax purposes. Accordingly, the Company is expected to be subject to UK tax on its worldwide income and gains, except where an exemption or relief applies.

It is not intended that the Company will be treated as a dual resident company for UK tax purposes, however, if it were to be so treated, the Company’s right to claim certain reliefs from UK tax may be restricted, and changes in law or practice in the United Kingdom could result in the imposition of further restrictions on the Company’s right to claim UK tax reliefs.

Taxation of dividends

Withholding tax

The Company will not be required to withhold UK tax at source when paying dividends. The amount of any liability to UK tax on dividends paid by the Company will depend on the individual circumstances of a holder of our common shares.

Income tax

An individual holder of our common shares who is resident for tax purposes in the United Kingdom may, depending on his or her particular circumstances, be subject to UK tax on dividends received from the Company. An individual holder of our common shares who is not resident for tax purposes in the United Kingdom should

 

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not be chargeable to UK income tax on dividends received from the Company unless he or she carries on (whether solely or in partnership) any trade, profession, or vocation in the United Kingdom through a branch or agency to which our common shares are attributable. There are certain exceptions for trading in the United Kingdom through independent agents, such as some brokers and investment managers.

All dividends received by a UK resident individual holder of our common shares from the Company or from other sources will form part of that shareholder’s total income for income tax purposes and will constitute the top slice of that income. A nil rate of income tax will apply to the first £2,000 of taxable dividend income received by a holder of our common shares in a tax year. Income within the nil rate band will be taken into account in determining whether income in excess of the nil rate band falls within the basic rate, higher rate or additional rate tax bands. Where the dividend income is above the £2,000 dividend allowance, the first £2,000 of the dividend income will be charged at the nil rate and any excess amount will be taxed at 7.5%, to the extent that the excess amount falls within the basic rate tax band, 32.5%, to the extent that the excess amount falls within the higher rate tax band or 38.1%, to the extent that the excess amount falls within the additional rate tax band.

Corporation tax

Corporate holders of our common shares which are resident for tax purposes in the United Kingdom, or which are not so resident in the United Kingdom by which are carrying on a trade in the United Kingdom through a permanent establishment in connection with which our common shares are used or held, should not be subject to UK corporation tax on any dividend received from the Company so long as the dividends qualify for exemption (as is likely) and certain conditions are met (including anti-avoidance conditions). Corporate holders of our common shares which are not resident in the United Kingdom and which are not carrying on a trade in the United Kingdom through a permanent establishment in connection with which our common shares are used or held or acquired will not generally be subject to UK corporation tax on dividends.

A holder of our common shares who is resident outside the United Kingdom may be subject to non-UK taxation on dividend income under local law.

Taxation of Capital Gains

UK resident shareholders

A disposal or deemed disposal of our common shares by an individual or corporate holder of our common shares who is tax resident in the United Kingdom may, depending on that shareholder’s circumstances and subject to any available exemptions or reliefs, give rise to a chargeable gain or allowable loss for the purposes of UK taxation of chargeable gains.

Any chargeable gain (or allowable loss) will generally be calculated by reference to the consideration received for the disposal of our common shares less the allowable cost to the shareholder of acquiring such common shares.

The applicable tax rates for individual holders of our common shares realizing a gain on the disposal of such shares is, broadly, 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers.

Non-UK shareholders

Holders of our common shares who are not resident in the United Kingdom and, in the case of an individual shareholder, not temporarily non-resident, should not be liable for UK tax on capital gains realized on a sale or other disposal of our common shares unless (i) such common shares are used, held or acquired for the purposes of a trade, profession or vocation carried on in the United Kingdom through a branch or agency or, in the case of a corporate holder of our common shares used, held, or acquired for the purposes of a trade carried on in the

 

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United Kingdom through a permanent establishment or (ii) where certain conditions are met, the Company derives 75% or more of its gross asset value from UK land. Holders of our common shares who are not resident in the United Kingdom may be subject to non-UK taxation on any gain under local law.

Generally, an individual holder of our common shares who has ceased to be resident in the United Kingdom for UK tax purposes for a period of five years or less and who disposes of our common shares during that period may be liable on their return to the United Kingdom to UK taxation on any capital gain realized (subject to any available exemption or relief).

UK Stamp Duty (“stamp duty”) and UK Stamp Duty Reserve Tax (“SDRT”)

The statements in this section are intended as a general guide to the current position relating to stamp duty and SDRT and apply to any holders of our common shares irrespective of their place of tax residence. Certain categories of person, including intermediaries, brokers, dealers, and persons connected with depositary receipt arrangements and clearance services, may not be liable to stamp duty or SDRT or may be liable at a higher rate or may, although not primarily liable for the tax, be required to notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.

No stamp duty or SDRT will be payable on the issue of our common shares, subject to the comments below.

Stamp duty will in principle be payable on any instrument of transfer of our common shares that is executed in the United Kingdom or that relates to any property situated, or to any matter or thing done or to be done, in the United Kingdom. An exemption from stamp duty is available on an instrument transferring our common shares where the amount or value of the consideration is £1,000 or less and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions in respect of which the aggregate amount or value of the consideration exceeds £1,000. Holders of our common shares should be aware that, even where an instrument of transfer is in principle subject to stamp duty, stamp duty is not required to be paid unless it is necessary to rely on the instrument for legal purposes, for example to register a change of ownership or in litigation in a UK court.

Provided that our common shares are not registered in any register maintained in the United Kingdom by or on behalf of us and are not paired with any shares issued by a UK incorporated company, any agreement to transfer our common shares will not be subject to SDRT. We currently do not intend that any register of our common shares will be maintained in the United Kingdom.

If our common shares were to be registered in a register maintained in the United Kingdom by or on behalf of us or paired with any shares issued by a UK incorporated company then, where our common shares are transferred or issued to, or to a nominee or agent for, a person whose business is or includes the provision of clearance services or issuing depositary receipts (but not including CREST), SDRT may be payable at a rate of 1.5% of the amount or value of the consideration payable for (or, in certain circumstances, the value of) our common shares. This liability for SDRT will strictly be accountable by the clearance service or depositary receipt system, as the case may be, but will, in practice, generally be reimbursed by participants in the clearance service or depositary receipt system.

 

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ENFORCEABILITY OF CIVIL LIABILITIES

U.S. laws do not necessarily extend either to us or our officers or directors. We are organized under the laws of the Bailiwick of Jersey. Many of our directors and officers reside outside of the United States. Substantially all the assets of both us and our directors and officers are located outside the United States. As a result, it may not be possible for investors to effect service of process on either us or our officers and directors within the United States, or to enforce against these persons or us, either inside or outside the United States, a judgment obtained in a U.S. court predicated upon the civil liability provisions of the federal securities or other laws of the United States or any U.S. state.

We have appointed Alpha US Bidco, Inc., as our agent to receive service of process with respect to any action brought against us in the United States under the federal securities laws of the United States or of the laws of any state of the United States.

A judgment of a U.S. court is not directly enforceable in Jersey, but constitutes a cause of action which will be enforced by Jersey courts provided that:

 

   

the applicable U.S. courts had jurisdiction over the case, as recognized under Jersey law;

 

   

the judgment is given on the merits and is final, conclusive and non-appealable;

 

   

the judgment relates to the payment of a sum of money, not being taxes, fines or similar governmental penalties;

 

   

the defendant is not immune under the principles of public international law;

 

   

the same matters at issue in the case were not previously the subject of a judgment or disposition in a separate court;

 

   

the judgment was not obtained by fraud or duress and was not based on a clear mistake of fact; and

 

   

the recognition and enforcement of the judgment is not contrary to public policy in Jersey, including observance of the principles of what are called “natural justice,” which among other things require that documents in the U.S. proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal.

Jersey courts award compensation for the loss or damage actually sustained by the plaintiff. Although punitive damages are generally unknown to the Jersey legal system, there is no prohibition on them either by statute or customary law. Whether a particular judgment may be deemed contrary to Jersey public policy depends on the facts of each case, though judgments found to be exorbitant, unconscionable, or excessive will generally be deemed as contrary to public policy. Moreover, certain defendants may qualify for protection under Protection of Trading Interests Act 1980, an act of the U.K. extended to Jersey by the Protection of Trading Interests Act 1980 (Jersey) Order, 1983. This Act provides that a qualifying defendant is not liable for multiple damages, in excess of that required for actual compensation. A “qualifying defendant” for these purposes is a citizen of the U.K. and its colonies, a corporation or other limited liability entity organized under the laws of the U.K., Jersey or other territory for whose international relations the U.K. is responsible or a person conducting business in Jersey.

Jersey courts cannot enter into the merits of the foreign judgment and cannot act as a court of appeal or review over the foreign courts. In addition, a plaintiff who is not resident in Jersey may be required to provide a security bond in advance to cover the potential of the expected costs of any case initiated in Jersey. In addition, we have been further advised by our legal counsel in Jersey, that it is uncertain as to whether the courts of Jersey would entertain original actions, including based on U.S. federal or state securities laws, or enforce judgments from U.S. courts against us or our officers and directors which originated from actions alleging civil liability under U.S. federal or state securities laws.

 

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UNDERWRITING

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, BofA Securities, Inc., and J.P. Morgan Securities LLC are acting as joint book-running managers of the offering and as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of common shares set forth opposite the underwriter’s name.

 

Underwriter

   Number
of Common Shares
 

Citigroup Global Markets Inc.

                   

Credit Suisse Securities (USA) LLC

  

BofA Securities, Inc.

  

J.P. Morgan Securities LLC

  
  

 

 

 

Total

  
  

 

 

 

The underwriting agreement provides that the obligations of the underwriters to purchase the common shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the common shares (other than those covered by the over-allotment option described below) if they purchase any of the common shares.

Common shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any common shares sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $                    per common share. If all the common shares are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. The representatives have advised us and the selling shareholders that the underwriters do not intend to make sales to discretionary accounts.

If the underwriters sell more common shares than the total number set forth in the table above, the selling shareholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to                      additional common shares at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase several additional common shares approximately proportionate to that underwriter’s initial purchase commitment. Any common shares issued or sold under the option will be issued and sold on the same terms and conditions as the other common shares that are the subject of this offering.

We, our executive officers and directors, and the selling shareholders have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of two of the four representatives, dispose of or hedge any shares or any securities convertible into or exchangeable for our common shares, subject to customary exceptions. Two of the four representatives, in their sole discretion, may release any of the securities subject to these lock-up agreements at any time, which, in the case of officers and directors, shall be with notice.

Prior to this offering, there has been no public market for our common shares. Consequently, the initial public offering price for the common shares was determined by negotiations among us, the selling shareholders and the representatives. Among the factors considered in determining the initial public offering price were our results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the common shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our common shares will develop and continue after this offering.

 

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We have applied to have our common shares listed on the New York Stock Exchange under the symbol “ATC.”

The following table shows the underwriting discounts and commissions that we and the selling shareholders are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.

 

     Paid by Atotech
Limited
     Paid by Selling Shareholders  
            No Exercise      Full Exercise  

Per share

   $                $ —        $                

Total

   $        $ —        $    

We estimate that the total expenses of this offering, excluding underwriting discounts and commissions, will be $                     . The underwriters have agreed to reimburse us for certain expenses incurred by us in connection with this offering.

In connection with the offering, the underwriters may purchase and sell common shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases.

 

   

Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering.

 

   

“Covered” short sales are sales of shares in an amount up to the number of shares represented by the underwriters’ over-allotment option.

 

   

“Naked” short sales are sales of shares in an amount in excess of the number of shares represented by the underwriters’ over-allotment option.

 

   

Covering transactions involve purchases of shares either pursuant to the underwriters’ over-allotment option or in the open market in order to cover short positions.

 

   

To close a naked short position, the underwriters must purchase shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

 

   

To close a covered short position, the underwriters must purchase shares in the open market or must exercise the over-allotment option. In determining the source of shares to close the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

 

   

Stabilizing transactions involve bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum.

The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the underwriters, in covering short positions or making stabilizing purchases, repurchase common shares originally sold by that syndicate member.

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the common shares. They may also cause the price of the common shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

 

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Conflicts of Interest

The underwriters are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing, and brokerage activities. The underwriters and their respective affiliates have in the past performed commercial banking, investment banking, and advisory services for us from time to time for which they have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. In addition, affiliates of some of the underwriters are lenders, and in some cases agents or managers for the lenders, under our credit facility. Certain of the underwriters or their affiliates that have a lending relationship with us routinely hedge their credit exposure to us consistent with their customary risk management policies. A typical such hedging strategy would include these underwriters or their affiliates hedging such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, and J.P. Morgan Securities LLC or their respective affiliates provided debt financing commitments to Carlyle in connection with the Acquisition Transactions and are lenders and/or agents under, and receive (or will receive) fees in connection with, our senior secured credit facilities. In addition, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, and J.P. Morgan Securities LLC or their respective affiliates acted as initial purchasers in connection with the issuance of the Opco Notes and in connection with the issuance of the Holdco Notes.

We and the selling shareholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.

Notice to Prospective Investors in Canada

The common shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the common shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”),

 

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the underwriter is not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Notice to Prospective Investors in the European Economic Area

In relation to each member state of the European Economic Area, (each a “Member State”) no offer of the common shares which are the subject of the offering has been, or will be, made to the public in that Member State, other than under the following exemptions under the Prospectus Directive:

 

  a)   to any legal entity which is a qualified investor as defined in the Prospectus Regulation;

 

  b)   to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or

 

  c)   in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of the common shares referred to in (a) to (c) above shall result in a requirement for us or any representative to publish a prospectus pursuant to Article 3 of the Prospectus Regulation, or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

Each person located in a Member State to whom any offer of our common shares is made or who receives any communication in respect of an offer of our common shares, or who initially acquires any of our common shares will be deemed to have represented, warranted, acknowledged, and agreed to and with each representative and us that (1) it is a “qualified investor” within the meaning of Article 2(e) of the Prospectus Regulation; and (2) in the case of any common shares being offered to or acquired by it as a financial intermediary as that term is used in Article 3(2) of the Prospectus Regulation, the common shares acquired by it in the offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any common shares to the public other than their offer or resale in any Member State to qualified investors, as that term is defined in the Prospectus Regulation, or in circumstances in which the prior consent of the representatives has been given to the offer or resale;

We, the selling shareholders, the representatives, and their respective affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgments, and agreements.

This prospectus has been prepared on the basis that any offer of our common shares in any Member State will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of shares. Accordingly, any person making or intending to make an offer in that Member State of our common shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for us, the selling shareholders, or any of the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither we, the selling shareholders, nor the representatives have authorized, nor do they authorize, the making of any offer of our common shares in circumstances in which an obligation arises for us, the selling shareholders, or the representatives to publish a prospectus for such offer.

For the purposes of this provision, the expression an “offer of our common shares to the public” in relation to any of our common shares in any Member State means the communication in any form and by any means; presenting sufficient information on the terms of the offer and our common shares to be offered so as to enable an investor to decide to purchase or subscribe our common shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

 

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The above selling restriction is in addition to any other selling restrictions set out below.

Notice to Prospective Investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Regulation) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, and/or (ii) who are high-net-worth bodies corporate, unincorporated associations and partnerships and trustees of high-value trusts (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”).

This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole of in part) or disclosed by recipients to any other person in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.

Notice to Prospective Investors in France

Neither this prospectus nor any other offering material relating to the common shares described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The common shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the common shares has been or will be:

 

   

released, issued, distributed, or caused to be released, issued, or distributed to the public in France; or

 

   

used in connection with any offer for subscription or sale of the common shares to the public in France.

Such offers, sales and distributions will be made in France only:

 

   

to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;

 

   

to investment services providers authorized to engage in portfolio management on behalf of third parties; or

 

   

in a transaction that, in accordance with article L.411-2-II-1° -or-2° -or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne).

The common shares may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.

Notice to Prospective Investors in Hong Kong

The common shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance

 

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(Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the common shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to common shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in Japan

The common shares offered in this prospectus have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The common shares have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law, and (ii) in compliance with any other applicable requirements of Japanese law.

Notice to Prospective Investors in Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common shares may not be circulated or distributed, nor may the common shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1) or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Where the common shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

 

   

a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

 

   

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the common shares pursuant to an offer made under Section 275 of the SFA except:

 

  (i)   to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

 

  (ii)   where no consideration is or will be given for the transfer;

 

  (iii)   where the transfer is by operation of law;

 

  (iv)   as specified in Section 276(7) of the SFA; or

 

  (v)   as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

 

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EXPENSES RELATED TO THE OFFERING

The actual and estimated expenses in connection with this offering, all of which will be borne by us, are as follows:

 

SEC Registration Fee

   $                

FINRA Filing Fee

  

Printing and Engraving Expense

  

Legal Fees

  

Accounting Fees

  

Blue Sky Fees

  

Stock Exchange Listing Fees

  

Transfer Agent Fee

  

Miscellaneous

  
  

 

 

 

Total

   $    
  

 

 

 

 

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VALIDITY OF COMMON SHARES

The validity of the issuance of the common shares being sold in this offering and other matters under Jersey law will be passed upon for us by Ogier, our Jersey counsel. Certain other matters under U.S. federal law will be passed upon for us by Latham & Watkins LLP, Washington, District of Columbia. Certain legal matters will be passed upon for the underwriters by Milbank LLP, New York, New York.

EXPERTS

The consolidated financial statements of Atotech UK Topco Limited, or the Successor, and its subsidiaries, consisting of consolidated balance sheets as of December 31, 2018 and December 31, 2017, and the related consolidated statement of income (loss), consolidated statement of comprehensive income (loss), consolidated statement of changes in equity, and consolidated statement of cash flows for the two years ended December 31, 2018, and the consolidated statements of income (loss), consolidated statements of comprehensive income (loss), consolidated statements of changes in equity, and consolidated statements of cash flows for the period from January 1, 2017 through January 31, 2017 and the year ended December 31, 2016 of Atotech B.V., or the Predecessor, and its subsidiaries, included in this prospectus, have been included in reliance on the reports of KPMG AG Wirtschaftsprüfungsgesellschaft (“KPMG AG”), an independent registered public accounting firm, given on KPMG AG’s authority as experts in auditing and accounting. KPMG AG is a member of the Chamber of Public Accountants (Wirtschaftsprüferkammer), Berlin, Germany.

In connection with the Company’s filing for an initial public offering of its common shares, we requested our independent auditor to affirm its independence relative to the rules and regulations of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC for the year ended December 31, 2018 and German independence rules for Public Auditors, being the German legal regulations and rules of professional conduct (in particular, Sections 319, 319a and 319b of the German Commercial Code [HGB], 43, 49 of the German Public Accountants Regulation [WPO] and Section 28 et seqq. of the Professional Charter for Auditors/Chartered Accountants [BS WP/vBP]), for the years ended December 31, 2017 and 2016. The independence evaluation procedures of KPMG AG, our registered independent public accountants, identified a non-audit service at an affiliated entity under common control with the Company that is not permissible under SEC independence rules. A KPMG member firm provided a bookkeeping service, which included temporarily hosting the affiliated entity’s data, which was deemed to be a management function. The service described herein was between another KPMG member firm of the KPMG International Cooperative (“KPMG member firms”) and an affiliated entity controlled by The Carlyle Group. The engagement existed during 2018, and was completed by the time the service was identified. The KPMG member firm referenced above does not participate in the audit engagement and the services and other relationships did not have any direct or indirect financial impact or effect on the Company.

KPMG AG considered whether the matter noted above impacted its objectivity and ability to exercise impartial judgment with regard to its engagement as our auditors and have concluded that there has been no impairment of KPMG AG’s objectivity and ability to exercise impartial judgment on all matters encompassed within its audits. After taking into consideration the facts and circumstances of the above matter and KPMG AG’s determination, our Board of Directors also concluded that KPMG AG’s objectivity and ability to exercise impartial judgment has not been impaired.

 

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form F-1 pursuant to the Securities Act, covering the common shares being offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all the information set forth in the registration statement. For further information about us and our common shares, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed.

As a result of the offering, we will be subject to the information reporting requirements of the Exchange Act, applicable to foreign private issuers. As a foreign private issuer, we are exempt from certain rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our common shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we will file with the SEC an annual report on Form 20-F containing financial statements audited by an independent accounting firm. Our annual report on Form 20-F will be due within four months after the end of the fiscal year starting with the report for the fiscal year ending December 31, 2019. We also intend to furnish reports on Form 6-K containing unaudited financial information for the first three quarters of each fiscal year and other material information.

 

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INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF ATOTECH UK TOPCO LIMITED

For the years ended December 31, 2017 and 2018 and for the three and nine months ended September 30, 2018 and 2019

 

Unaudited Consolidated Financial Statements

  

Presentation of the Atotech Group

     F-3  

Condensed Consolidated Financial Statements

     F-3  

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

     F-4  

Unaudited Condensed Consolidated Balance Sheets

     F-5  

Unaudited Condensed Consolidated Statement of Cash Flows

     F-6  

Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity

     F-7  

Notes to the Condensed Consolidated Financial Statements

     F-8  

Audited Consolidated Financial Statements

  

Report of Independent Registered Public  Accounting Firm

     F-28  

Consolidated Statements of Income (Loss)

     F-29  

Consolidated Statements of Comprehensive Income (Loss)

     F-30  

Consolidated Balance Sheets

     F-31  

Consolidated Statements of Cash Flow

     F-32  

Consolidated Statements of Changes in Shareholders’ Equity

     F-33  

Notes to Consolidated Financial Statements

     F-34  

 

F-1


Table of Contents

 

LOGO

Atotech UK Topco Limited

Unaudited Interim Condensed Consolidated Financial Statements

Registered number 10533697

As of September 30, 2019

 

F-2


Table of Contents

Condensed Consolidated Financial Statements

Unaudited Condensed Consolidated Statements of Income/(Loss)

 

($ million, except per share data)

   Note     Nine Months
ended
September 30,
2019
    Three
Months
ended
September 30,
2019
    Nine
Months
ended
September 30,
20181
    Three
Months
ended
September 30,
20181
 

Revenue

     (10     877.4       306.0       919.4       305.8  
    

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales, exclusive of depreciation and amortization

       (360.2     (129.0     (381.5     (123.0

Depreciation and amortization

       (121.9     (38.1     (125.8     (41.1

Selling, general and administrative expenses

       (205.2     (66.7     (217.0     (67.6

Research and development expenses

       (39.9     (12.1     (44.9     (14.9

Restructuring expenses

     (11)       (13.7     (14.0     (12.2     (1.5
    

 

 

   

 

 

   

 

 

   

 

 

 

Operating Profit

       136.5       46.1       138.0       57.7  
    

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

       (113.6     (36.4     (97.3     (37.9

Other income (expense) net

       27.0       25.5       (9.7     (5.2
    

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

       49.9       35.2       31.0       14.6  
    

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

     (8     (37.9     (10.5     (30.7     (8.9
    

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income

       12.0       24.7       0.3       5.7  
    

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

          

Basic/diluted earnings (loss) per share

       (2.74     (0.12     (3.72     (0.85
    

 

 

   

 

 

   

 

 

   

 

 

 

 

1    The Company has initially applied IFRS 16 at January 1, 2019, using the simplified retrospective approach. Under this approach, comparative information is not restated (see Note 2).

 

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Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)

 

($ million)

   Nine Months
ended
September 30,
2019
    Three Months
ended
September 30,
2019
    Nine Months
ended
September 30,
20182
    Three Months
ended
September 30,
20182
 

Consolidated net income/(loss)

     12.0       24.7       0.3       5.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

        

Actuarial gains and losses

     (15.3     0.0       0.2       0.3  

Tax effect

     4.6       0.0       0.0       0.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Items not potentially reclassifiable to statement of income, net of tax

     (10.7     0.0       0.2       0.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Currency translation adjustment

     (86.1     (80.9     (97.5     (33.3

Hedge reserve

     7.1       6.7       8.9       8.2  

Thereof: Income (cost) of Hedging (OCI II)

     0.5       (0.8     5.3       2.7  

Other

     0.0       (1.0     (0.2     (0.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Items potentially reclassifiable to statement of income, net of tax

     (79.0     (75.2     (88.8     (25.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive loss (net amount)

     (89.7     (75.2     (88.6     (25.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss

     (77.7     (50.5     (88.3     (19.3
  

 

 

   

 

 

   

 

 

   

 

 

 

 

2    The Company has initially applied IFRS 16 at January 1, 2019, using the simplified retrospective approach. Under this approach, comparative information is not restated (see Note 2).

 

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Unaudited Condensed Consolidated Balance Sheets

 

($ million)

   Note     As of September 30, 2019     As of December 31, 20183  

ASSETS

      

Non-current assets

      

Property, Plant and Equipment

       358.1       382.4  

Intangible assets

       1,455.9       1,552.5  

Goodwill

       1,019.8       1,053.9  

Right-of-use assets

     (2     82.7       —    

Non-current financial assets

       33.0       18.1  

Other non-current assets

       6.6       17.2  
    

 

 

   

 

 

 

Total non-current assets

       2,956.1       3,024.1  
    

 

 

   

 

 

 

Current assets

      

Inventories

       124.5       121.5  

Trade and other receivables

       285.0       278.8  

Other financial assets

       4.5       1.6  

Current tax assets

       34.9       23.7  

Cash and cash equivalents

       247.2       386.2  
    

 

 

   

 

 

 

Total current assets

       696.1       811.8  
    

 

 

   

 

 

 

Total assets

       3,652.2       3,835.9  
    

 

 

   

 

 

 

LIABILITIES & SHAREHOLDERS’ EQUITY

      

Shareholders’ equity

      

Common shares and preferred shares

     (5     95.6       95.6  

Paid-in surplus and retained earnings

     (5     560.8       549.4  

Currency translation adjustment and other reserves

     (5     (30.0     59.7  
    

 

 

   

 

 

 

Total shareholders’ equity

       626.4       704.7  

Non-current liabilities

      

Non-current borrowings

     (6     2,102.8       2,219.6  

Deferred tax liabilities

     (8     340.7       374.0  

Employee benefits

       142.3       132.7  

Non-current provisions

       50.4       53.9  

Non-current lease liabilities

     (2     62.4       —    

Other non-current financial liabilities

     (7     1.8       0.1  

Other non-current liabilities

       —         9.6  
    

 

 

   

 

 

 

Total non-current liabilities

       2,700.4       2,789.9  

Current liabilities

      

Current borrowings

     (6     1.0       1.4  

Trade and other payables

       222.4       233.0  

Current tax liabilities

       49.7       53.1  

Current lease liabilities

     (2     11.4       —    

Other current financial liabilities

     (7     17.2       38.4  

Current provisions

     (11)       23.7       15.4  
    

 

 

   

 

 

 

Total current liabilities

       325.4       341.3  
    

 

 

   

 

 

 

Total liabilities & shareholders’ equity

       3,652.2       3,835.9  
    

 

 

   

 

 

 

 

3    The Company has initially applied IFRS 16 at January 1, 2019, using the simplified retrospective approach. Under this approach, comparative information is not restated (see Note 2).

 

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Unaudited Condensed Consolidated Statement of Cash Flows

 

($ million)

   Nine Months ended
September 30, 2019
    Nine Months ended
September 30, 20184
 

CASH PROVIDED BY OPERATING ACTIVITIES5

    

Consolidated net income

     12.0       0.3  

Depreciation and amortization

     121.9       125.8  

Non-current liabilities and deferred taxes

     45.2       40.2  

(Gains)/Losses on disposals of assets

     (5.8     0.7  

Net loss on financial instruments at fair value

     (25.5     (4.0

Accrued financial interest costs

     100.9       86.9  

Amortization of deferred financing cost, including original issuance discounts

     12.8       10.4  

Interest paid

     (101.0     (85.1

Taxes paid

     (63.6     (52.7

Other non-cash adjustments

     0.2       0.1  

Changes in working capital

     (30.8     (34.6

Inventories

     (10.2     (15.4

Accounts receivable

     (5.7     4.1  

Current tax assets

     (18.5     (10.0

Accounts payable

     3.6       (13.3
  

 

 

   

 

 

 

Cash provided by operating activities

     66.1       88.1  

CASH USED IN INVESTING ACTIVITIES

    

Acquisition of subsidiaries, net of cash acquired

     (4.5     —    

Intangible assets and property, plant and equipment additions

     (48.2     (31.3

Increase in non-current loans

     (0.1     (0.4

Proceeds from disposals of intangible assets and property, plant and equipment

     6.9       1.6  

Repayment of non-current loans

     0.2       0.3  
  

 

 

   

 

 

 

Cash used in investing activities

     (45.7     (29.8

CASH USED IN FINANCING ACTIVITIES5

    

Repayment of non-current debt

     (111.8     —    

Issuance of non-current debt

     —         500.0  

Increase in current borrowings, current financial assets and liabilities

     (6.4     (31.4

Dividends paid to shareholders

     —         (490.5

Payment of lease liabilities

     (11.5     —    

Payment of deferred finance costs

     (9.9     (12.6
  

 

 

   

 

 

 

Cash used in financing activities

     (139.6     (34.5
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (119.2     23.8  
  

 

 

   

 

 

 

Effect of exchange rates

     (19.8     (12.1

Cash and cash equivalents at the beginning of the year

     386.2       325.8  
  

 

 

   

 

 

 

Cash and cash equivalents at September 30

     247.2       337.5  
  

 

 

   

 

 

 

 

4    The Company has initially applied IFRS 16 at January 1, 2019, using the simplified retrospective approach. Under this approach, comparative information is not restated (see Note 2).
5   The Company has classified:
  -   Cash payments for the principal portion of lease payments as financing activities
  -   Cash payments for the interest portion as operating activities consistent with the presentation of interest payments chosen by the Company
  -   Short-term lease payments, payments for leases of low value assets and variable lease payments not included in the measurement of lease liability within operating activities.

 

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Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity

 

    Common Shares     Preference Shares     Paid-in
surplus
and
retained
earnings
    Currency
translation
adjustment
    Hedge
reserve
    Other     Total
shareholders’
equity
 

($ in millions, except per share data)

  Number in
thousands
    Amount     Number in
thousands
    Amount  

As of January 1, 20186

    26,155       2.6       1,218,855       121.9       1,035.5       176.4       (23.1     (1.3     1,312.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period

    —         —         —         —         0.3       —         —         —         0.3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(loss)

    —         —         —         —         —         (97.5     8.9       0.2       (88.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

    —         —         —         —         (0.2     —         —         —         (0.2
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss)

    —         —         —         —         0.1       (97.5     8.9       0.2       (88.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distribution to shareholders

    —         —         (289,485     (28.9     (461.6     —         —         —         (490.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share based payments

    —         —         —         —         0.1       —         —         —         0.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of September 30, 20186

    26,155       2.6       929,370       93.0       574.1       78.9       (14.2     (1.1     733.3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    Common Shares     Preference Shares     Paid-in
surplus
and
retained
earnings
    Currency
translation
adjustment
    Hedge
reserve
    Other     Total
shareholders’
equity
 

($ in millions, except per share data)

  Number in
thousands
    Amount     Number in
thousands
    Amount  

As of January 1, 2019

    26,155       2.6       929,370       93.0       549.4       72.1       (15.1     2.7       704.7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period restated

    —         —         —         —         12.0       —         —         —         12.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income/(loss)

    —         —         —         —         —         (86.1     7.1       (10.7     (89.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss)

    —         —         —         —         12.0       (86.1     7.1       (10.7     (77.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share-based payments

    —         —         —         —         0.1       —         —         —         0.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

    —         —         —         —         (0.7     —         —         —         (0.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of September 30, 2019

    26,155       2.6       929,370       93.0       560.8       (14.0     (8.0     (8.0     626.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

6    The Company has initially applied IFRS 16 at January 1, 2019, using the simplified retrospective approach. Under this approach, comparative information is not restated (see Note 2).

 

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Notes to the Condensed Consolidated Financial Statements

(1) General and Description of the Business

Atotech UK Topco Limited (the ‘‘Company’’) is a private company incorporated and domiciled in the United Kingdom, and the address of the registered office is William Street, West Bromwich, West Midlands, B70 OBG. The Company is a holding company of Alpha 3 B.V. and Alpha US Bidco, Inc. and their subsidiaries, together the Atotech Group, hereinafter referred to as “the Group’’.

The Group is one of the world’s leading suppliers of integrated production systems, chemistry, equipment, know-how and service for decorative and functional electroplating, semiconductor and printed circuit board manufacturing. Activities are divided into two offerings, Electronics (EL) and General Metal Finishing (GMF).

The Electronics offering supplies chemistry, production equipment and comprehensive services to the electronics industry, especially to the printed circuit board manufacturers, package substrate makers and semiconductor companies. Its product and technologies serve the main end-markets such as communication, computer, automotive, industrial, medical, aerospace and military industries.

The General Metal Finishing offering supplies chemistry, production technology and comprehensive services to the surface finishing industries in all areas of application. Its products and technologies serve the main end-markets such as automotive, consumer electronics, construction, sanitary, white goods and oil & gas industries.

The Group, with its headquarter in Berlin (Germany) where joint functions are hosted, employed in 2019 around 4,000 highly qualified people in around 40 countries. Further, Atotech operates 17 Technology Centers worldwide, providing advanced materials science and analytical support, maintains 15 chemistry production plants as well as 2 equipment production plants strategically located worldwide.

On October 6, 2016, Alpha 3 B.V. entered into the share purchase agreement with Total S.A. (the “Acquisition Agreement”) pursuant to which it would acquire all of the outstanding equity interests of Atotech B.V. (the “Acquisition”). The Acquisition closed on January 31, 2017. Each of Atotech UK Topco Limited, Alpha 3 B.V. and Alpha US Bidco, Inc. were formed by affiliates of The Carlyle Group (the “Sponsor”) to facilitate the Acquisition.

(2) Basis of Presentation

Basis of preparation

The interim condensed consolidated financial statements (abbreviated with “interim financial statements”) of the Group for the period ended September 30, 2019 are presented in U.S. dollars. Unless otherwise indicated, all amounts are shown in millions of U.S. dollars rounded to one decimal place in accordance with standard commercial practice, which may result in rounding differences and percentage figures presented may not exactly reflect the absolute figures they relate to.

The interim financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting” under Atotech UK Topco Limited’s board responsibility and should be read in conjunction with the Group’s last annual consolidated financial statements as of and for the year ended December 31, 2018.

The accounting policies (going concern, accrual basis of accounting, materiality and offsetting) applied for the interim financial statements as of September 30, 2019 have been prepared in accordance with IFRS as issued as by the International Accounting Standards Board (“IASB”) and IFRS interpretations as issued by the IFRS Interpretations Committee (“IFRIC”), together defined as IASB-IFRS. Of the new accounting standards or amendments which were mandatory for periods beginning on or after January 1, 2019, IFRS 16 (please refer to note 2) had the greatest impact on the Group’s interim financial statements as of and for the period ended September 30, 2019.

 

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The interim financial statements of the Group have been prepared on the going concern basis of accounting. The Directors have, at the time of approving these interim financial statements, a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing these interim financial statements. There is no non-controlling interest. There have been no other significant changes in the Group´s operations, absent the Acquisition in the prior year. Further, management believes that the Group has sufficient liquidity to meet all of its current and long-term obligations as they fall due.

The Group applied in these interim financial statements IFRS 16 Leases as of January 1, 2019. Changes to significant accounting policies are described in Note 3.

The preparation of the interim financial statements in accordance with IFRS requires Group Management to exercise judgement and to make estimates and assumptions that affect the application of policies, reported amounts of revenues, expenses, assets, liabilities and disclosures. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements, except for the new significant judgements related to the new standards and interpretations adopted by the Group as described below.

Certain accounting policies are particularly important to the preparation and explanation of the Group’s financial information. Key assumptions about the future and key sources of estimation uncertainty that have a risk of causing a material adjustment to the carrying value of assets and liabilities over the next twelve months are set out below.

If business conditions were different, or if different assumptions were used in the application of the Group’s policy for useful economic lives or residual values, materially different amounts could be reported in the Group’s interim financial statements.

New standards and interpretations adopted by the Group

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group´s annual consolidated financial statements for the year ended December 31, 2018, except for the adoption of new standards effective as of January 1, 2019. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The Group applied in these interim financial statements IFRS 16 Leases as of January 1, 2019. As required by IAS 34, the nature and effect of these changes are disclosed below.

Several other amendments and interpretations apply for the first time in 2019, but do not have a material impact on the interim financial statements of the Group.

IFRS 16 “Leases”

Nature of Change

In January 2016, the IASB published the financial reporting standard IFRS 16 “Leases”. The standard replaces the existing requirements relating to leases, including IAS 17 “Leases”, IFRIC 4 “Determining Whether

 

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Table of Contents

an Arrangement Contains a Lease”, SIC-15 “Operating leases—Incentives” and SIC-27 “Evaluating the Substance of Transactions involving the Legal Form of a Lease”. The Group recognizes a right-of-use asset and a lease liability at the commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date.

Date of adoption by the Group

IFRS 16 is initially effective for the financial years commencing on or after January 1, 2019. Atotech has applied the standard from its mandatory adoption date as of January 1, 2019, by using the simplified retrospective approach. Therefore, the Group has not restated the comparative amounts for the year prior to adoption, which have been accounted for in accordance with IAS 17 and IFRIC 4.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 is applied only to contracts entered into or changed on or after 1 January 2019.

As a result of the implementation of the new accounting standard, lessees are no longer required to classify leases as operating or finance leases under IAS 17. In almost all cases, lessees recognize leases on the balance sheet by recording a liability for lease obligations to be incurred in the future. Correspondingly, the right-of-use asset is capitalized, which corresponds to the present value of future lease payments plus directly attributable costs, and is amortized over its useful life.

Atotech also applies the practical expedients related to leases with terms of 12 months or less (short-term leases) or for which the underlying asset is of low value. In such cases, the right-of-use asset and a lease liability are not recognized. Leases related to the asset class “Land, building and improvements”, is capitalized regardless of the lease term.

Significant accounting policies

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Group has applied judgements to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognized.

 

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Impact

Atotech has analyzed the impacts of the initial application of IFRS 16 in a Group-wide project involving existing processes, systems and contracts. The Group’s leases primarly relate to office and factory spaces. Other leases are reported under “other” and primarily relate to transportation equipment.

Measurement of lease liabilities

On adoption of IFRS 16, the group recognized lease liabilities in relation to leases which had previously been classified as operating leases under IAS 17 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The weighted average incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 1.4%.

 

($ in millions)

   As of January 1, 2019  

Operating lease commitments disclosed at December 31, 2018

     51.5  
  

 

 

 

Discounted using the incremental borrowing rate at the date of initial application

     45.2  

(Less): short-term and low value leases recognized on a straight line basis as expense7

     (0.8

Add: adjustments as a result of different treatment of extension and termination options

     36.2  
  

 

 

 

Total

     80.6  
  

 

 

 

Measurement of right-of-use assets

The associated right-of-use assets were measured at an amount equal to the lease liability on initial application, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at December 31, 2018.

The recognized right-of-use assets relate to the following classifications:

 

($ in millions)

   As of January 1, 2019      As of September 30, 2019  

Land and buildings

     86.0        79.0  

Other

     4.3        3.7  
  

 

 

    

 

 

 

Total

     90.3        82.7  
  

 

 

    

 

 

 

“Other” mainly relates to transportation equipment.

IFRIC 23 “Uncertainty over Tax Treatments”

In June 2017, the IASB issued IFRIC Interpretation 23, “Uncertainty over Income Tax Treatments” IFRIC 23 is to be applied while performing the determination of taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments.

According to IFRIC 23, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates.

The interpretation is effective for annual periods beginning on or after January 1, 2019. The first-time adoption of this interpretation did not have any material impact on the Group’s interim financial statements.

 

7    Due to materiality reasons, the Company did not split short-term and low value leases. Atotech applies these practical expedients, with the exception of leased assets of the asset class “Land, building and improvements”, which is capitalized regardless of the lease term.

 

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(3) Summary of Significant Accounting Policies

Significant accounting policies used by the Group were disclosed in the Notes to the consolidated financial statements as of December 31, 2018.

Changes to those principles disclosed in the notes relate to the adoption of IFRS 16 from January 1, 2019 onwards and are discussed in more detail in Note 2.

The adoption of IFRS 16 is mandatory for financial years commencing on or after January 1, 2019. The Group has adopted the standard by using the simplified retrospective approach. IFRS 16 replaces the existing requirements relating to leases, including IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Lease”, SIC-15 “Operating leases—Incentives” and SIC-27 “Evaluating the Substance of Transactions involving the Legal Form of a Lease”. Refer to Note 2 for details about the effect of the introduction of IFRS 16.

Revenue from Sales

Revenue is recognized when or as the customer obtains control over the goods or services to be performed under the contract. For substantially all sales of chemistry products, the Group recognizes revenue at the point in time at which it transfers control of the goods to the customer. Depending on the contractually agreed incoterms, control is transferred either upon shipment or delivery, when the Group’s performance obligation has been fulfilled and collectability is probable. The Group recognizes revenue over time for contracts relating to the manufacturing, modifications and retrofits of equipment, as the equipment is built to customer specification and the Group has an enforceable right to payment for the performance completed. For these sales, the Group generally uses the cost-to-cost input method to measure progress. For substantially all equipment contracts and chemistry product sales, only one performance obligation per contract exists. Therefore, the allocation of the transaction price is not required. Revenue is recognized at an amount that reflects the consideration to which the entity expects to be entitled in exchange for fulfilling its performance obligations to a customer. Variable elements, if any, relate to volume rebates, discounts and returns.

(4) Business Combinations

On July 31, 2019, Atotech acquired 100% of the issued and registered share capital of the privately owned company J KEM International AB (“J-KEM”). J-KEM is a global supplier of chemical products and processes for the printed circuit board and general metal finishing industries. The Group acquired J-KEM for $4.5 million paid in cash and a contingent consideration payable in future periods if certain defined products exceed an agreed reference margin. In the preliminary purchase price allocation, the fair value of the acquired assets was mainly allocated to intangible assets consisting of acquired intellectual property.

(5) Shareholders’ Equity

In connection with the consummation of the Acquisition as of January 31, 2017, affiliates of The Carlyle Group contributed cash to Atotech UK Topco Limited in the aggregate amount of $1,245 million in exchange for 26.1 million Common Shares (nominal value of $0.10) and 1,219 million Preference Shares (nominal value of $0.10) of Atotech UK Topco Limited. Common Shares contain standard voting rights while Preference Shares contain no voting rights but are entitled to a 12% compounded annual dividend prior to any dividend distributions made to holders of Common Shares. Preference dividends are at the discretion of the Company and are not mandatory to be paid each period. Given that the Company has unilateral control over the payment of dividends to the holders of Preference Shares, the Preference Shares have been presented as equity.

 

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In connection with the issuance of the Holdco Notes and the incremental borrowing under Term B-1 loan in May 2018 (see Note 6), the Group paid $490.5 million to the holders of Preferred Shares consisting of $201.0 million of accrued and unpaid interest (from January 31, 2017) and $289.5 million to redeem 289,485,380 Preference Shares.

 

($ in millions)

   As of September 30,
2019
    As of December 31,
2018
 

Common shares

     2.6       2.6  

Preference shares

     93.0       93.0  

Paid-in surplus and retained earnings

     560.8       549.4  

Currency translation adjustments and other reserves

     (30.0     59.7  
  

 

 

   

 

 

 

Total shareholders’ equity—Group share

     626.4       704.7  
  

 

 

   

 

 

 

Currency translation adjustment and other reserves

The currency translation adjustment comprises the cumulative gains and losses arising from translating the interim financial statements of foreign operations that use functional currencies other than U.S. dollar. It also includes cumulative gains and losses from translating Term Loan B-3 from RMB into U.S. dollars (see Note 6).

The other reserves comprise the hedging reserve of the subsidiaries. The hedging reserve consists of the effective portion of the gains and losses on hedging instruments related to hedged transactions that have not occurred yet and cost of hedging (OCI II).

(6) Non-current and current Borrowings

 

($ in millions)

   As of September 30,
2019
     As of December 31,
2018
 

Other non-current financial borrowings

     1,380.4        1,496.6  

Opco Notes

     425.0        425.0  

Holdco Notes

     297.4        298.0  

Non-current borrowings

     2,102.8        2,219.6  
  

 

 

    

 

 

 

Current portion of non-current financial borrowings

     1.0        1.4  
  

 

 

    

 

 

 

Current borrowings

     1.0        1.4  
  

 

 

    

 

 

 

Total borrowings

     2,103.9        2,221.0  
  

 

 

    

 

 

 

The following is a summary of the Group’s current and non-current borrowings:

 

($ in millions)

   As of September 30,
2019
    As of December 31,
2018
 

Senior Secured Credit Facilities:

    

Revolving credit facility

    

Term Loan B-1

     952.7       1,060.0  

Term Loan B-3

     463.2       484.9  

6.25% Opco Notes

     425.0       425.0  

8.75%/9.50% Holdco Notes

     299.1       300.0  

Less—Deferred financing costs

     (37.4     (50.3

Other

     0.2        
  

 

 

   

 

 

 

Total non-current borrowings

     2,102.8       2,219.6  
  

 

 

   

 

 

 

Senior Secured Credit Facilities:

    

Revolving credit facility

    

Term Loan B-1

     11.0       11.0  

Term Loan B-3

     4.8       5.0  

Short-term financing costs

     (14.8     (14.6
  

 

 

   

 

 

 

Total current borrowings

     1.0       1.4  
  

 

 

   

 

 

 

Total borrowings

     2,103.9       2,221.0  
  

 

 

   

 

 

 

 

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On January 31, 2017 Alpha 3 B.V. and Alpha US Bidco, Inc. entered into the senior secured credit facilities which consist of a term loan facility due on January 31, 2024 and a multicurrency revolving credit facility due on January 31, 2022. The revolving credit facility provides for revolving loans and letters of credit pursuant to commitments in an aggregate principal amount of $250.0 million, with a letter of credit sublimit of $75.0 million. The Group intends to use future borrowings under the revolving credit facility to fund working capital and for other general corporate purposes, including permitted acquisitions and other investments. The Group’s ability to draw under on the revolving credit facility or issue letters of credit thereunder will be conditioned upon, among other things, delivery of required notices, accuracy of the representations and warranties contained in the credit agreement governing the new senior secured credit facilities and the absence of any default or event of default under the new senior secured credit facilities, subject to certain exceptions. At September 30, 2019 the Group had $227.5 million out of $250.0 million of available borrowings under its revolving credit facility due to the use of $22.5 million of Guaranty Facilities (Ancillary Facilities under the revolving credit facility).

As of January 31, 2017 (“Closing Date”), the Group issued $1,400.0 million of term loans, net of original issue discount (OID) of $7.0 million. Proceeds from the term loan were used in connection with the Acquisition. In connection with the issuance of the term loans, the Group capitalized $49.0 million of debt financing costs. The $1,400.0 million term loan facility consisted of two tranches: one tranche in the aggregate amount of $900.0 million that was incurred by both Alpha 3 B.V. and Alpha US Bidco, Inc. and a second tranche in the U.S. dollar equivalent amount of $500.0 million that was incurred by Alpha 3 B.V. (the “RMB Tranche”). The RMB Tranche was initially incurred entirely in U.S. dollars. As of September 30, 2019, Alpha 3 B.V. had redenominated all of the $500.0 million RMB Tranche to its RMB equivalent, per the terms of the original agreement. As of each day of redenomination, all redenominated debt was designated as a hedge of the foreign exchange rate movements of the Group’s net investment in its Chinese subsidiaries. Refer to Note 7 for further information on hedging. Associated with the redenomination, the Group capitalized an additional $30.7 million of redenomination related fees, of which $9.2 million remains to be paid in 2020. Principal repayments equivalent to 0.25% of the aggregate principal amount of the initial Term B-1 and Term B-2 loans are due quarterly beginning on September 30, 2017, with all unpaid aggregate amounts due on the maturity date. Principal repayments equivalent to 1.00% of the aggregate principal amount of the Term B-3 loans are due on an annual basis. During Q1 2019, per the terms of the original agreement, the Group made an early repayment of $99.0 million on the outstanding balance of the Term B-1 loans. As a result, the Group had a corresponding reduction of $2.1 million in capitalized financing fees related to the Term B-1 loans.

Borrowings under the revolving credit facility and portion of the term loan facility denominated in U.S. dollars bear interest at a floating rate which can be, at the Group’s option, (x) with respect to the term loan facility, either (i) LIBOR plus 3.00% or (ii) an alternate base rate plus 2.00% and (y) with respect to the revolving credit facility, either (i) LIBOR plus 3.75% or (ii) an alternate base rate plus 2.75% in either case, subject to LIBOR floor of 1.00% or a base rate floor of 2.00% in the case of the term loan facilities denominated in U.S. dollars and a LIBOR and Base Rate floor of 0.00%, in the case of the revolving facilities. The applicable margin for the Group’s revolving credit facilities is subject to adjustment based on the Group’s first lien net leverage ratio with two 25 basis point step-downs. The term loan facilities denominated in RMB incur interest based on a benchmark rate (the “PBOC Benchmark Rate”) specified by the Bank of China Limited, Shanghai Branch at the time the loans are redenominated. Such rate reflects the official lending rate per annum set by the People’s Bank of China. The margin applicable to such term loans denominated in RMB is 100% of the PBOC Benchmark Rate for five years following the Closing Date and 130% of the PBOC Benchmark Rate thereafter until final maturity. At September 30, 2019 the Group’s selected rate for U.S. dollar denominated loans was 5.10% based on LIBOR of 2.10% and the PBOC Benchmark Rate for RMB denominated loans was 4.90%. The Group’s revolving credit facility will mature on the fifth anniversary of the Closing Date and the Group’s term loan facility will mature on the seventh anniversary of the Closing Date.

On January 31, 2017, the Group issued fixed rate 6.25% Opco Notes in the amount of $425 million due on February 1, 2025 (the “Opco Notes”). Interest on the Opco Notes is due semi-annually in arrears on each February 1st and August 1st, starting August 1, 2017. There are no mandatory principal payments required until

 

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maturity. Proceeds from the Opco Notes were used in connection with the Acquisition. In connection with the issuance of the Opco Notes, the Group capitalized $1 million of debt financing costs, which is net of $15 million related to embedded derivatives identified in the indenture governing the Opco Notes and bifurcated and recorded separately for accounting purposes.

On May 30, 2018 Alpha 3 B.V. entered into an amendment to the senior secured credit facility to borrow $200.0 million in incremental Term B-1 loans. Principal repayments equivalent to 0.25% of the aggregate principal amount of the incremental Term B-1 loans are due quarterly. There were no other changes to the terms or maturity dates of the senior secured credit facility.

On May 30, 2018 Alpha 2 B.V. issued $300.0 million of 8.75%/9.50% Senior PIK Toggle Notes at an issue price of 99.010% (the “Holdco Notes”). The Holdco Notes are senior unsecured obligations and mature on June 1, 2023. The Holdco Notes bear interest at 8.750% per annum. Interest on the Holdco Notes is payable on June 1 and December 1 of each calendar year, with the first interest payment paid on December 1, 2018. The Holdco Notes permit Holdco, if certain conditions are met, to issue additional Holdco Notes in lieu of paying cash interest. Any additional Holdco Notes issued in lieu of paying cash interest will bear interest at the rate of 9.50%. The Holdco Notes are structurally subordinated to the senior secured credit facility and the Opco Notes and rank pari passu to all existing and future senior indebtedness of Alpha 2 B.V., and are effectively subordinated to any secured debt of Holdco to the extent of the value of assets securing such indebtedness.

On and after June 1, 2019, Alpha 2 B.V. may redeem the Holdco Notes in whole at any time or in part from time to time, upon notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

 

Period

   Redemption
Price
 

2019

     102.0

2020

     101.0

2021 and thereafter

     100.0

During Q1 2019, per the terms of the original agreement, the Group redeemed $0.9 million of Holdco Notes. Upon the occurrence of specific kinds of change in control, Holdco may be required to repurchase some or all of the outstanding Holdco Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, too, but excluding, the repurchase date. The redemption that occurred in Q1 2019 did not trigger this requirement.

The Group capitalized debt issuance costs of $2.9 million in connection with the May 30, 2018, senior secured credit facility amendment. The Group capitalized debt issuance costs of $9.7 million in connection with the issuance of the Holdco Notes (including $3.0 million of original issued discount). The debt issuance costs capitalized are amortized over the remaining term of the senior secured credit facility, Opco Notes, and the Holdco Notes using the effective interest method.

Proceeds from the incremental Term B-1 loan and issuance of the Holdco Notes were used to pay accrued interest on the Preferred Shares and redeem a certain number of Preferred Shares. The term loan, Opco Notes, and Holdco Notes are collateralized by substantially all the assets of the Group and both agreements include covenants that define maximum net leverage ratios. However, net leverage ratio is only applicable when drawing of revolving facility is higher than 35% of the revolving commitment. As of September 30, 2019, no drawing of the revolving credit facility occurred. Hence, the Group was in compliance with all financial covenants through the period to September 30, 2019.

 

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(7) Other non-current and current Financial Assets and Liabilities

 

($ in millions)

   As of September 30,
2019
     As of December 31,
2018
 

Fair value of non-current derivatives—assets

     33.0        18.1  
  

 

 

    

 

 

 

Other non-current financial assets

     33.0        18.1  
  

 

 

    

 

 

 

Fair value of non-current derivatives—liabilities

     0.5        —    

Non-curremt finance lease

     —          0.1  

Other

     1.3        0.1  
  

 

 

    

 

 

 

Other non-current financial liabilities

     1.8        0.1  
  

 

 

    

 

 

 

Factoring related assets

     1.7        1.4  

Fair value of current derivatives—assets

     2.7        0.2  
  

 

 

    

 

 

 

Other current financial assets

     4.5        1.6  
  

 

 

    

 

 

 

Current bank debt

     1.4        7.6  

Accrued interest on non-Group financial debt

     14.2        14.1  

Fair value of current derivatives—liabilities

     1.0        16.7  

Other

     0.7        —    
  

 

 

    

 

 

 

Other current financial liabilities

     17.2        38.4  
  

 

 

    

 

 

 

Total other financial assets

     37.5        19.7  
  

 

 

    

 

 

 

Total other financial liabilities

     19.0        38.5  
  

 

 

    

 

 

 

As of September 30, 2019 and December 31, 2018 Current bank debt represents amounts outstanding under the Group’s various local currency revolving lines of credit.

The following tables present the fair value of derivatives and their presentation on the balance sheet as of September 30, 2019 and as of December 31, 2018:

 

     Derivative Assets      Derivative Liabilities  

($ in millions)

   Balance Sheet Item      Fair Value as of
September 30,
2019
          Balance Sheet Item      Fair Value as of
September 30,
2019
 

Non-Current:

         Non-Current:      

Embedded Derivatives

     Financial assets        23.0           

Foreign exchange contracts

    
Financial assets
(Collars)
 
 
     10.0      Foreign exchange
contracts
    
Financial assets
(Forwards)
 
 
     0.5  

Current:

         Current:      

Foreign exchange contracts

    
Financial assets
(Forwards)
 
 
     0.4           

Foreign exchange contracts

    
Financial assets
(Collars)
 
 
     2.3      Foreign exchange
contracts
    
Financial assets
(Collars)
 
 
     1.0  
     

 

 

          

 

 

 

Total

        35.7      Total         1.4  
     

 

 

          

 

 

 

 

F-16


Table of Contents
     Derivative Assets      Derivative Liabilities  

($ in millions)

   Balance Sheet Item      Fair Value as of
December 31,
2018
            Balance Sheet Item      Fair Value as of
December 31,
2018
 

Non-Current:

              

Embedded Derivatives

     Financial assets        16.8           

Foreign exchange contracts

    
Financial assets
(Collars)
 
 
     1.3           

Current:

           Current:        

Foreign exchange contracts

    
Financial assets
(Forwards)
 
 
     0.2       
Foreign exchange
contract
 
 
    
Financial liabilities
(Collars)
 
 
     16.7  
     

 

 

          

 

 

 

Total

        18.3        Total         16.7  
     

 

 

          

 

 

 

The following tables present information on gains and losses on derivative instruments which are recorded in “Other income (expense), net” on the statement of income (loss) for the nine months ended September 30, 2019 and September 30, 2018 and for the three months ended September 30, 2019 and September 30, 2018:

 

($ in millions)

          Nine months ended September 30,
2019
    Three months ended September 30,
2019
 

Embedded derivatives

     Fair value of derivatives        6.3       9.5  

Foreign exchange contracts

     Fair value of derivatives        (0.3     1.3  
     

 

 

   

 

 

 

Total

        6.0       10.8  
     

 

 

   

 

 

 

 

($ in millions)

          Nine months ended September 30,
2018
    Three months ended September 30,
2018
 

Embedded derivatives

     Fair value of derivatives        (8.4     (3.0

Foreign exchange contracts

     Fair value of derivatives        (0.2     1.1  
     

 

 

   

 

 

 

Total

        (8.6     (1.9
     

 

 

   

 

 

 

(8) Income Taxes

In accordance with IAS 12, Income Taxes, current and deferred income taxes are recognized for the purpose of the interim financial statements taking into consideration local tax requirements. Income taxes are determined using the separate tax return approach under the assumption that the entities and tax groups of Atotech constitute separate taxable entities.

 

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Table of Contents

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the interim condensed consolidated statement of income are:

 

($ million)

   Nine months ended
September 30,
2019
    Three months ended
September 30,
2019
    Nine months ended
September 30,
2018
    Three months ended
September 30,
2018
 

Current income tax expense

     (57.4     (20.4     (61.9     (24.5

Deferred income tax expense relating to origination and reversal of temporary differences

     17.8       9.8       32.3       15.6  

Prior year adjustments

     1.7             (1.1     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

     (37.9     (10.5     (30.7     (8.9
  

 

 

   

 

 

   

 

 

   

 

 

 

(9) Share-Based Payment Plans

The Group operates certain equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of an equity-settled transaction, for example options, is recognized as an expense over the periods in which the performance conditions are fulfilled, ending on the vesting date of the award. The total amount to be expensed over the vesting period is determined by reference to the fair value of the equity instruments granted. Non-market vesting conditions are included in assumptions about the number of options expected to vest. At each balance sheet date, the Group revises its estimate of the number of options that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to common shares (nominal value) and additional paid in capital when the options are exercised.

The total grant-date fair value of the share based compensation issued during the nine months ended September 30, 2019 was $0.1 million, of which $0.1 million was recognized as personnel expense in the statement of profit and loss for the nine months ended September 30, 2019.

Long-term Incentive Plan

Share options to purchase Common Shares were granted beginning in May 2017 to certain employees of the Group pursuant to the Long-term Incentive Plan (“LTIP”). Options were granted with an exercise price that was fixed at the date of the grant. The contractual life and exercise terms of the options are dependent upon an Exit Event, which is defined further in the LTIP agreement. Options were valued using the Black-Scholes pricing model, and an estimate of approximate Exit Event timing. The Group has no legal or constructive obligation to repurchase or settle obligations in cash.

 

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Table of Contents

The fair value of the awards at the date of grant has been measured using a Black Scholes pricing model. The inputs used in the model for the year 2019 are set out below.

 

Year 2019

   Three months ended
September 30, 2019
    Three months ended
June 30, 2019
    Three months ended
March 31, 2019
 

Expected life of options (years)

     2.25       2.50       2.75  

Exercise price

   $ 1.00     $ 1.00     $ 1.00  

Market value of underlying shares

   $ 3.15     $ 3.15     $ 3.85  

Risk free rate

     2.47     2.47     2.81

Expected share price volatility

     20.00     20.00     20.00

Expected dividend yield

     0.00     0.00     0.00

Options issued

     50,000       28,275       24,000  

As of September 30, 2019 there were 603,075 share options of which none are exercisable.

Management Equity Plan

At the time of the Acquisition, the Group implemented an equity participation program to enable certain management of the Group to participate in any success of the Group. For this purpose, certain managers acquired interests in three pooling vehicles (the Pooling Vehicles). The three Pooling Vehicles are limited partnerships, with management representing the limited partners (the Participants) and their participation represented by a limited partnership interest in the Pooling Vehicles. The limited partnership interests held by the Participants correspond with the underlying Common Shares held by the Pooling Vehicles. The limited partnership interest of each Participant vests over time in accordance with the partnership agreement.

On January 31, 2017, 1.675 million Common Shares with a fair value of $1.20 per share were purchased by one of the Pooling Vehicles for $1.00 per share. Additionally, in August and September 2017, approximately 0.605 million Common Shares with a fair value of $1.20 per share were purchased by the Pooling Vehicles for $1.00 per share. The fair value of the shares at the purchase date have been determined on the basis of an option pricing model (Black-Scholes model), which reflects the preference entitlement of the Preferred Shares to receive distributions from UK Topco, and assumes that no dividends will be paid until the anticipated settlement date. The plan is equity settled, and the fair value was measured in reference to the acquisition discussed in Note 6. A total of $0.1 million of expenses were recorded for the period combined between the Management Equity Plan and the Long-term Incentive Plan discussed above.

In September 2018, 51,947 Common Shares with a fair value of $3.85 per share were purchased by the Pooling Vehicles for $3.85 per share. The fair value of the shares at the purchase date have been determined on the basis of an option pricing model, which reflects the preference entitlement of the Preference Shares to receive distributions from UK Topco, and assumes that no dividends will be paid until the anticipated settlement date.

In May 2019, 2,727 Ordinary Shares with a fair value of $3.15 per share were transferred between Pooling Vehicles for $3.85 per share. Furthermore, in May 2019, 470,672 Preference Shares with a fair value of $1.15 per share were purchased by a member of the board of directors for $1.04 per share.

The fair value of the shares at the purchase date have been determined on the basis of an option pricing model, which reflects the preference entitlement of the Preference Shares to receive distributions from UK Topco, and assumes that no dividends will be paid until the anticipated settlement date.

 

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Table of Contents

(10) Revenues from Sales

 

($ million)

  Nine months ended
September 30,
2019
    Three months ended
September 30,
2019
    Nine months ended
September 30,
2018
    Three months ended
September 30,
2018
 

General Metal Finishing revenues

    380.7       124.3       415.4       143.1  

Electronics revenues

    496.7       181.7       504.0       162.7  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    877.4       306.0       919.4       305.8  
 

 

 

   

 

 

   

 

 

   

 

 

 

Equipment revenues included an over-time portion of $33.4 million for EL and $37.3 million for GMF for the nine months ended September 30, 2019 and $2.4 million for EL and $14.1 million for GMF for the three months ended September 30, 2019. All other revenue is recognized at a point in time for each segment.

(11) Provisions

At the end of the third quarter of 2019, the Group recognized a provision in the amount of $13.2 million relating to restructuring costs in Germany. In the condensed consolidated statement of income or loss, the expense is included in the line item “restructuring expenses”.

(12) Financial Instruments by category in the statement of financial position

The Group holds the following financial instruments as of September 30, 2019:

 

($ in millions)

   Classification
pursuant to
IFRS 9
    Carrying
amounts as
per statement
of financial
positions
     Measured at
amortized cost
     Measured at
Fair value
     Total  

Trade and other receivables

     FAAC       248.1        248.1        —          248.1  

Cash and cash equivalents

     FAAC       247.2        247.2        —          247.2  

Embedded derivatives

     FAFV 1)      23.0        —          23.0        23.0  

Foreign exchanges contracts (“Forward”)

     FAFV 1)      10.4        —          10.4        10.4  

Foreign exchange contracts (“Collars”)

     FAFV 1)      2.3        —          2.3        2.3  
    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

       531.0        495.3        35.7        531.0  
    

 

 

    

 

 

    

 

 

    

 

 

 

Non-current financial debt

     FLAC       2,102.8        2,102.8        —          2,102.8  

Current financial debt

     FLAC       25.8        25.8        —          25.8  

Total debt

       2,128.6        2,128.6        —          2,128.6  

Accounts payable

     FLAC       111.8        111.8        —          111.8  

Other financial liabilities

     FLAC       1.9        1.9        —          1.9  

Foreign exchanges contracts (“Collars”)

     FLFV 1)      1.0        —          1.0        1.0  

Foreign exchanges contracts (“Forward”)

     FLFV 1)      0.5        —          0.5        0.5  
    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

       2,243.8        2,242.4        1.4        2,243.8  
    

 

 

    

 

 

    

 

 

    

 

 

 

 

1)   For these financial assets and liabilities, hedge accounting is applied.

FAAC = Financial assets at amortized costs, FAFV = Financial asset measured at fair value through profit or loss, FLAC = Financial liabilities at amortized cost, FLFV = Financial liabilities measured at fair value through profit or loss

During the period ended September 30, 2019, no financial assets have been reclassified from one category to another.

 

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The Group holds the following financial instruments as of December 31, 2018:

 

($ in millions)

  Classification
pursuant to
IFRS 9
    Carrying
amounts as
per statement
of financial
positions
    Measured at
amortized cost
    Measured at
Fair value
    IAS 17     Total  

Accounts receivables

    FAAC       259.0       259.0       —         —         259.0  

Cash and cash equivalents

    FAAC       386.2       386.2       —         —         386.2  

Embedded derivatives

    FAFV1)       16.8       —         16.8       —         16.8  

Foreign exchanges contracts (“Forward”)

    FLFV1)       0.2       —         0.2       —         0.2  

Foreign exchange contracts (“Collars”)

    FAFV1)       1.3       —         1.3       —         1.3  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financial assets

      663.5       645.2       18.3       —         663.5  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current financial debt

    FLAC       2,229.2       2,229.2       —         —         2,229.2  

Current financial debt

    FLAC       23.1       23.1       —         —         23.1  

Total debt

      2,252.3       2,252.3       —         —         2,252.3  

Accounts payable

    FLAC       108.2       108.2       —         —         108.2  

Finance lease

    FLAC       0.1       —         —         0.1       0.1  

Foreign exchange contracts (“Collars”)

    FLFV1)       16.7       —         16.7       —         16.7  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financial liabilities

      2,377.3       2,360.5       16.7       0.1       2,377.3  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1)   For these financial assets and liabilities, hedge accounting is applied.

FAAC = Financial assets at amortized costs, FAFV = Financial asset measured at fair value through profit or loss, FLAC = Financial liabilities at amortized cost, FLFV = Financial liabilities measured at fair value through profit or loss

During the year ended December 31, 2018, no financial assets have been reclassified from one category to another.

In accordance with IFRS 7.20 (a) “Financial Instruments: Disclosures,” net gains and losses of financial instruments are to be disclosed for each measurement category of IFRS 9 “Financial Instruments”.

 

Net income (loss) by measurement category

($ in millions)

   Nine months ended
September 30,
2019
    Three months ended
September 30,
2019
    Nine months ended
September 30,
2018
    Three months ended
September 30,
2018
 

FAAC

     (4.7     (1.0     (4.0     (1.3

FLAC

     (113.0     (40.6     (96.2     (41.8

Derivative financial instruments (Hedge Accounting)

     6.0       10.8       (8.6     (1.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     (111.8     (30.8     (108.8     (45.0
  

 

 

   

 

 

   

 

 

   

 

 

 

The net result of the FAAC measurement category contains impairment losses and reversals on trade receivables. The net result of the FAAC measurement category also includes interest income. The net result of the FLAC measurement category includes interest expenses for ongoing debt service as well as the result from loan amortization, which is also included in interest expense.

 

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As of September 30, 2019, the Group has classified its financial instruments into the three levels of the fair value hierarchy prescribed by IFRS 13 “Fair Value Measurement” as follows. For further information on these levels and the reliability of the input parameters used, as well as the valuation techniques used, please refer to Note 4 of the annual consolidated financial statements for the year ended December 31, 2018. For each balance sheet date, the Group obtains external expert valuations for all derivative instruments.

 

As of September 30, 2019

($ in millions)

   No Level      Level 1      Level 2      Level 3      Total  

Accounts receivable

     248.1        —          —          —          248.1  

Cash and cash equivalents

     247.2        —          —          —          247.2  

Embedded derivatives

     —          —          23.0        —          23.0  

Foreign exchanges contracts (“Forward”)

     —          —          10.4        —          10.4  

Foreign exchange contracts (“Collars”)

     —          —          2.3        —          2.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     495.3        —          35.7        —          531.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings

     2,103.9        —          —          —          2,103.9  

Redenomination fee

     9.2        —          —          —          9.2  

Current bank debt

     1.4        —          —          —          1.4  

Accrued interests

     14.2        —          —          —          14.2  

Total debt

     2,128.6        —          —          —          2,128.6  

Accounts payable

     111.8        —          —          —          111.8  

Other financial liabilities

     1.9        —          —          —          1.9  

Foreign exchanges contracts (“Collars”)

     —          —          1.0        —          1.0  

Foreign exchanges contracts (“Forwards”)

     —          —          0.5        —          0.5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

     2,240.4        —          2,130.1        —          2,243.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

During the nine months ended September 30, 2019, the Group has transferred the embedded derivatives with a fair value as of September 30, 2019, of $23.0 million out of level 3 to level 2 due to the fact, that all input factors for the valuation have become observable.

The following tables present the changes in level 2 items for the nine months ended September 30, 2019:

 

($ in millions)

   Embedded derivatives
(Opco Notes)
     Total  

Balance at January 1, 2019

     9.1        9.1  

Bifurcated from Opco Notes

     —          —    

Losses recognized in income statement

     8.3        8.3  

Gains/losses recognized in other comprehensive income

     —          —    
  

 

 

    

 

 

 

Closing balance September 30, 2019

     17.4        17.4  
  

 

 

    

 

 

 

 

($ in millions)

   Embedded derivatives
(Holdco Notes)
    Total  

Balance at January 1, 2019

     7.6       7.6  

Bifurcated from Holdco Notes

     —         —    

Losses recognized in income statement

     (2.0     (2.0

Gains/losses recognized in other comprehensive income

     —         —    
  

 

 

   

 

 

 

Closing balance September 30, 2019

     5.6       5.6  
  

 

 

   

 

 

 

 

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As of December 31, 2018, the Group has classified its financial instruments into the three levels of the fair value hierarchy prescribed by IFRS 13 “Fair Value Measurement” as follows. For further information on these levels and the reliability of the input parameters used, as well as the valuation techniques used, please refer to Note 4 of the annual consolidated financial statements for the year ended December 31, 2018. For each balance sheet date, the Group obtains external expert valuations for all derivative instruments.

 

As of December 31, 2018

($ in millions)

   No Level      Level 1      Level 2      Level 3      Total  

Accounts receivables

     259.0        —          —          —          259.0  

Cash and cash equivalents

     386.2        —          —          —          386.2  

Embedded derivatives

     —          —          —          16.8        16.8  

Foreign exchanges contracts (“Forward”)

     —          —          0.2        —          0.2  

Foreign exchange contracts (“Collars”)

     —          —          1.3        —          1.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     645.2        —          1.5        16.8        663.5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings

     2,221.0        —          —          —          2,221.0  

Redenomination fee

     9.6        —          —          —          9.6  

Current bank debt

     7.6              —          7.6  

Accrued interests

     14.1        —          —          —          14.1  

Total debt

     2,252.3        —          —          —          2,252.3  

Accounts payable

     108.2        —          —          —          108.2  

Finance lease

     —          —          0.1        —          0.1  

Foreign exchange contracts (“Collars”)

     —          —          16.7        —          16.7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

     2,360.5        —          16.8        —          2,377.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between the levels for recurring fair value measurements during the year.

The following table presents the changes in level 3 items for the period ended December 31, 2018:

 

($ in millions)

   Embedded derivatives
(Opco Notes)
    Total  

Balance at January 1, 2018

     14.1       14.1  

Bifurcated from Opco Notes

     0.0       0.0  

Losses recognized in income statement

     (5.0     (5.0

Gains/losses recognized in other comprehensive income

     —         —    
  

 

 

   

 

 

 

Closing balance September 30, 2018

     9.1       9.1  
  

 

 

   

 

 

 

 

($ in millions)

   Embedded derivatives
(Holdco Notes)
     Total  

Balance at January 1, 2018

     0.0        0.0  

Bifurcated from Holdco Notes

     6.9        6.9  

Losses recognized in income statement

     0.7        0.7  

Gains/losses recognized in other comprehensive income

     —          —    
  

 

 

    

 

 

 

Closing balance September 30, 2018

     7.6        7.6  
  

 

 

    

 

 

 

Offsetting and Transfers of Financial Assets

In cases where the Group has a legally enforceable right to offset financial liabilities and financial assets, and has the intention settle these financial instruments on a net basis, Atotech offsets these financial instruments and reports the net amount on the balance sheet.

As of September 30, 2019 as well as December 31, 2018, no financial instruments were subject to offsetting.

 

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The Group held no collateral of financial or non-financial assets as of September 30, 2019 as well as December 31, 2018 that it is permitted to sell or repledge in the absence of default by the owner.

(13) Segment Reporting

The following tables summarize selected financial information by segment:

 

     Nine months ended
September 30, 2019
     Three months ended
September 30, 2019
 

($ in millions)

   EL      GMF      Total      EL      GMF      Total  

Revenues1)

     496.7        380.7        877.4        181.7        124.3        306.0  

thereof Chemistry revenues

     436.9        349.7        786.6        161.3        119.7        281.0  

thereof Equipment revenues

     59.8        31.0        90.8        20.4        4.6        25.0  

Segment Adjusted EBITDA

     177.2        102.1        279.3        67.3        32.9        100.2  

 

     Nine months ended
September 30, 2018
     Three months ended
September 30, 2018
 

($ in millions)

   EL      GMF      Total      EL      GMF      Total  

Revenues1)

     504.0        415.4        919.4        162.7        143.1        305.8  

thereof Chemistry revenues

     429.1        379.4        808.5        147.4        121.9        269.3  

thereof Equipment revenues

     74.9        36.0        110.9        15.3        21.2        36.5  

Segment Adjusted EBITDA

     168.4        116.8        285.2        61.3        41.4        102.7  

 

1)   The Company has no inter-segment revenues.

Reconciliation of Segment Adjusted EBITDA to consolidated net income follows:

 

($ in millions)

  Nine months ended
September 30, 2019
    Three months ended
September 30, 2019
          Nine months ended
September 30, 2018
    Three months ended
September 30, 2018
 

EL Segment Adjusted EBITDA

    177.2       67.3           168.4       61.3  

GMF Segment Adjusted EBITDA

    102.1       32.9           116.8       41.4  
 

 

 

   

 

 

       

 

 

   

 

 

 

Non-cash adjustmentsa)

    6.8       13.2           (12.2     (4.7

Gain on disposal of fixed assetsb)

    6.1       —             —         —    

Foreign exchange gain/(loss)

    14.4       14.7           (1.2     (2.9

Restructuringd)

    (13.7     (14.0         (12.2     (1.5

Eliminated product categoriese)

    —         —             0.1       —    

Transaction related costsf)

    (4.9     (1.2         (7.3     (1.7

Management feeg)

    (1.9     (0.6         (1.7     (0.6

Interest expense, net

    (113.1     (36.3         (96.2     (37.3

Income taxes

    (37.9     (10.5         (30.7     (8.9

Depreciation and amortization (excluding impairment charges)

    (123.1     (40.8         (123.5     (39.4
 

 

 

   

 

 

       

 

 

   

 

 

 

Consolidated Net Income (Loss)

    12.0       24.7           0.3       5.7  

 

a)   Eliminates the non-cash impact of (1) share-based compensation, (2) impairment charges, and (3) mark-to-market adjustments related to the Company’s foreign currency derivative and bifurcated embedded derivatives related to certain redemption features of the Opco Notes and Holdco Notes.
b)   Eliminates the cash impact of gains on the sale of fixed assets.
c)   Eliminates net foreign currency transactional gains and losses.
d)   Eliminates charges resulting from restructuring activities principally from the Company’s cost reduction efforts.
e)  

In 2016, the Company determined to discontinue the sale of products containing Chrome VI and to exit the product lines for soldermasks and resists for secondary imaging technology, which the Company refers to as

 

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Table of Contents
 

the “EM” product line. Accordingly, this adjustment eliminates the EBITDA generated by sales of products containing Chrome VI and sales of products in the EM product line during the periods presented.

f)   Reflects an adjustment to eliminate (1) purchase accounting and transaction fees incurred as part of the Acquisition,(2) fees associated with the foreign currency exchange derivatives entered into in conjunction with the Acquisition, and (3) professional fees paid to third-party advisors in connection with the implementation of strategic initiatives.
g)   Reflects an adjustment to eliminate fees paid to Carlyle.

Geographic Data:

The information within the following tables provides disaggregated information related to the Company’s revenue and long-lived assets.

Revenue by region were as follows:

 

($ in millions)

   Nine months ended
September 30, 2019
     Three months ended
September 30, 2019
    

 

     Nine months ended
September 30, 2018
     Three months ended
September 30, 2018
 

China

     303.7        116.0             314.6        108.6  

Germany

     86.4        28.5             97.2        32.1  

Taiwan

     83.0        29.9             88.3        34.8  

Other countries

     404.3        131.6             419.3        130.3  
  

 

 

    

 

 

            

Total

     877.4        306.0             919.4        305.8  

For the three months ended and the nine months ended September 30, 2019, no customers accounted for 10% or more of the Company’s revenue.

Non-current assets by country were as follows8:

 

($ in millions)

   As of September 30,
2019
     As of September 30,
2018
 

China

     947.2        1,008.6  

Germany

     815.7        808.2  

Other countries

     1,158.9        1,209.7  
  

 

 

    

 

 

 

Total

     2,921.8        3,026.5  

(14) Related Parties

The Group entered into a consulting agreement with the Sponsor under which the Company, or its subsidiaries, will pay the Sponsor an annual fee of $1.8 million for consulting services to the Group. The annual fee is payable on a quarterly basis. For the nine months ended September 30, 2019, the Group paid the Sponsor $1.3 million of consulting services and $0.6 million of expense reimbursement.

Transactions with Key Management Personnel

Key management personnel consists of a total of thirteen individuals as of September 30, 2019, who constitute people having authority and responsibility for planning, directing, and controlling the Group’s activities. For the nine months ended September 30, 2019, key management personnel compensation related to share-based payments was less than $0.1 million. See Note 9 for further details regarding the share-based payment plans offered to employees.

 

8    Excluding financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts.

 

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As of September 30, 2019, the Senior Management Team of the Group consists of the CEO, CFO, COO, two Presidents and eight Vice Presidents.

Compensation of the Group`s key management personnel includes salaries, short- and long-term benefits as well as postemployments benefits. Additionally, the entire key management personnel participate in the Group´s Performance Shares Program.

 

($ in millions)

   Nine months
ended September 30,
2019
     Three months
ended September 30,
2019
 

Short-term employee benefits

     4.3        0.7  

Post-employment benefits

     0.2        0.1  

Termination benefits

     —          —    

Other benefits

     0.0        0.0  

Other long-term benefits

     —          —    

Share-based payments

     0.0        0.0  
  

 

 

    

 

 

 

Total

     4.5        0.8  

 

($ in millions)

   Nine months
ended September 30,
2018
     Three months
ended September 30,
2018
 

Short-term employee benefits

     4.9        0.9  

Post-employment benefits

     0.2        0.1  

Termination benefits

     —          —    

Other benefits

     —          —    

Other long-term benefits

     —          —    

Share-based payments

     —          —    
  

 

 

    

 

 

 

Total

     5.0        1.0  

 

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LOGO

Atotech UK Topco Limited

Condensed Consolidated Financial Statements

Registered number 10533697

As of December 31, 2018

 

F-27


Table of Contents

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Atotech UK Topco Limited:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Atotech UK Topco Limited and subsidiaries (Successor) as of December 31, 2018 and 2017, the related consolidated statements of income (loss), comprehensive income (loss), cash flows and changes in shareholders’ equity for the years ended December 31, 2018 and 2017, and for the year ended December 31, 2016 and for the period from January 1, 2017 to January 31, 2017, of Atotech B.V. and subsidiaries (Predecessor), and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Successor as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended December 31, 2018 and 2017, and of the Predecessor for the year ended December 31, 2016, and for the period from January 1, 2017 to January 31, 2017, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG AG Wirtschaftsprüfungsgesellschaft

We have served as the Company’s auditor since 2018.

Berlin, Germany

July 29, 2019

 

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Table of Contents

Atotech UK Topco Limited

Consolidated Statements of Income (Loss)

 

           Predecessor     Predecessor           Successor     Successor  

($ in millions, except per share data)

   Notes     Year ended
December 31, 2016
    Period from
January 1, 2017
to January 31,
2017
          Year ended
December 31, 2017
    Year ended
December 31, 2018
 

Revenues

     (24   $ 1,124.2     $ 91.3         $ 1,093.6     $ 1,212.8  

Cost of sales, excluding depreciation and amortization

       (470.4     (40.7         (513.7     (504.2

Depreciation and amortization

       (51.9     (4.0         (141.1     (171.6

Selling, general, and administrative expenses

       (266.4     (19.8         (250.7     (295.6

Research and development expenses

       (79.1     (6.3         (62.6     (58.0

Restructuring expenses

       (5.3     (0.4         (10.8     (14.8
    

 

 

   

 

 

       

 

 

   

 

 

 

Operating profit

       251.1       20.1           114.7       168.6  

Interest expense

       (4.5     (0.1         (94.1     (134.7

Other income (expense), net

     (20     (9.3     (0.8         (23.7     (5.2

Acquisition related expenses

       —         —             (67.0     —    

Income (loss) before income taxes

       237.3       19.2           (70.1     28.7  

Income tax expense

     (15     (64.3     (6.0         (16.7     (52.4
    

 

 

   

 

 

       

 

 

   

 

 

 

Consolidated net income (loss)

     $ 173.0     $ 13.2         $ (86.8   $ (23.7

Earnings per share:

              
    

 

 

   

 

 

       

 

 

   

 

 

 

Basic/diluted earnings (loss) per share

     (23   $ —       $ —           $ (8.44   $ (5.70

The notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Atotech UK Topco Limited

Consolidated Statements of Comprehensive Income (Loss)

 

     Predecessor     Predecessor           Successor     Successor  

($ in millions)

   Year ended
December 31, 2016
    Period from January 1,
2017 to January 31,

2017
          Year ended
December 31, 2017
    Year ended
December 31, 2018
 

Consolidated net income (loss)

   $ 173.0     $ 13.2         $ (86.8   $ (23.7
  

 

 

   

 

 

       

 

 

   

 

 

 

Other comprehensive income

            

Actuarial gains and losses

     (12.4     23.0           (3.0     5.5  

Tax effect

     (4.4     (6.4         —         (1.5

Currency translation adjustment generated by the parent company

     (20.0     7.8           —         —    
  

 

 

   

 

 

       

 

 

   

 

 

 

Items not potentially reclassifiable to statement of income

     (36.8     24.4           (3.0     4.0  
  

 

 

   

 

 

       

 

 

   

 

 

 

Currency translation adjustment

     (10.2     2.9           176.4       (104.3

Cash flow hedge

     (0.4     0.2           —         —    

Hedge reserve

     —         —             (23.1     8.0  

Other

     —         —             3.4       (0.9
  

 

 

   

 

 

       

 

 

   

 

 

 

Items potentially reclassifiable to statement of income (loss), net of tax

     (10.6     3.1           156.7       (97.2
  

 

 

   

 

 

       

 

 

   

 

 

 

Total other comprehensive income (loss), net amount

     (47.4     27.5           153.7       (93.2
  

 

 

   

 

 

       

 

 

   

 

 

 

Comprehensive income (loss)

   $ 125.6     $ 40.7         $ 66.9     $ (116.9
  

 

 

   

 

 

       

 

 

   

 

 

 

The notes are an integral part of these consolidated financial statements.

 

F-30


Table of Contents

Atotech UK Topco Limited

Consolidated Balance Sheets

 

           Successor            Successor  

($ in millions)

   Notes     December 31, 2017            December 31, 2018  

Assets

           

Non-current assets

           

Property, plant and equipment

     (6   $ 437.4          $ 382.4  

Intangible assets

     (7     1,705.5            1,552.5  

Goodwill

     (7     1,101.7            1,053.9  

Non-current financial assets

     (13     14.1            18.1  

Deferred tax assets

     (15     0.1            —    

Other non-current assets

     (10     20.7            17.2  
    

 

 

        

 

 

 

Total non-current assets

       3,279.5            3,024.1  

Current assets

           

Inventories

     (8     112.8            121.5  

Trade and other receivables

     (9     297.2            278.8  

Other financial assets

     (13     —              1.6  

Current tax assets

     (15     22.5            23.7  

Cash and cash equivalents

       325.8            386.2  
    

 

 

        

 

 

 

Total current assets

       758.3            811.8  
    

 

 

        

 

 

 

Total assets

     $ 4,037.8          $ 3,835.9  
    

 

 

        

 

 

 

Liabilities & shareholders’ equity

           

Shareholders’ equity

           

Common shares and preferred shares

     (11   $ 124.5          $ 95.6  

Paid-in surplus and retained earnings

     (11     1,035.5            549.4  

Currency translation adjustment and other reserves

     (11     152.0            59.7  
    

 

 

        

 

 

 

Total shareholders’ equity

       1,312.0            704.7  

Non-current liabilities

           

Non-current borrowings

     (12     1,769.5            2,219.6  

Deferred tax liabilities

     (15     417.2            374.0  

Employee benefits

     (16     141.7            132.7  

Provisions

     (18     53.6            53.9  

Other non-current financial liabilities

     (13     23.2            0.1  

Other non-current liabilities

     (19     20.3            9.6  
    

 

 

        

 

 

 

Total non-current liabilities

       2,425.5            2,789.9  

Current liabilities

           

Current borrowings

     (12     0.8            1.4  

Trade and other payables

     (14     208.0            233.0  

Current tax liabilities

     (15     43.7            53.1  

Other current financial liabilities

     (13     33.7            38.4  

Provisions

     (18     14.1            15.4  
    

 

 

        

 

 

 

Total current liabilities

       300.3            341.3  
    

 

 

        

 

 

 

Total liabilities & shareholders’ equity

     $ 4,037.8          $ 3,835.9  
    

 

 

        

 

 

 

The notes are an integral part of these consolidated financial statements.

 

F-31


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Atotech UK Topco Limited

Consolidated Statements of Cash Flows

 

    Predecessor     Predecessor           Successor     Successor  

($ in millions)

  Year ended
December 31, 2016
    Period from January 1,
2017 to January 31,
2017
          Year ended
December 31, 2017
    Year ended
December 31, 2018
 

Operating activities

           

Consolidated net income (loss)

  $ 173.0     $ 13.2         $ (86.8   $ (23.7

Adjustment to reconcile net income (loss) to cash provided by operating activities:

           

Depreciation and amortization

    51.9       4.0           141.1       171.6  

Non-current liabilities and deferred taxes

    71.1       5.7           1.8       63.9  

Losses on disposals of assets

    —         —             1.1       0.7  

Net loss on financial instruments at fair value

    —         —             10.6       (5.9

Accrued financial interest costs

    —         —             83.4       120.7  

Amortization of deferred financing cost, including original issuance discounts

    —         —             11.0       14.0  

Interest paid

    (3.0     (0.1         (71.1     (118.9

Taxes paid

    (65.7     (9.2         (48.4     (65.3

Other

    (0.7     (1.6         (3.9     (1.0

Change in working capital

    3.0       (20.7         68.4       10.6  

Inventories

    12.3       1.6           62.4       (13.9

Accounts receivable

    (15.5     1.4           (25.2     46.1  

Current tax assets

    (12.4     (0.2         2.4       (7.3

Accounts payable

    18.6       (23.5         28.8       (14.3
 

 

 

   

 

 

       

 

 

   

 

 

 

Cash flow provided by (used in) operating activities

    229.6       (8.7         107.2       166.7  

Investing activities

           

Intangible assets and property, plant, and equipment additions

    (84.0     (3.6         (47.8     (56.6

Acquisition of Atotech B.V., net of cash acquired

    —         —             (2,693.9     —    

Other investments

    (0.1     —             —         (0.1

Increase in non-current loans

    (2.9     —             (0.2     (0.3

Proceeds from disposals of intangible assets and property, plant and equipment

    1.3       —             0.7       2.7  

Proceeds from non-current investments

    —         —             2.9       —    

Repayment of non-current loans

    2.5       0.3           2.0       0.4  
 

 

 

   

 

 

       

 

 

   

 

 

 

Cash flow used in investing activities

    (83.2     (3.3         (2,736.3     (53.9

Financing activities

           

Dividends paid

    (210.3     (110.6         —         (490.5

Issuance of shares to Atotech UK Topco Limited shareholders

    —         —             1,245.0       —    

Issuance of non-current debt

    1.8       —             1,838.2       500.0  

Repayment of non-current debt

    (9.4     (6.7         (7.1     (29.7

Increase (decrease) in current borrowings

    18.9       (23.0         (62.8     (3.3

Increase (decrease) in current financial assets and liabilities

    —         —             —         (1.4

Payment of deferred finance costs

    —         —             (79.7     (12.8
 

 

 

   

 

 

       

 

 

   

 

 

 

Cash flow provided by (used in) financing activities

    (199.0     (140.3         2,933.6       (37.7
 

 

 

   

 

 

       

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

    (52.6     (152.3         304.5       75.1  
 

 

 

   

 

 

       

 

 

   

 

 

 

Effect of exchange rates

    (19.9     4.4           21.3       (14.7

Cash and cash equivalents at the beginning of the period

    405.0       332.5           —         325.8  
 

 

 

   

 

 

       

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

  $ 332.5     $ 184.6         $ 325.8     $ 386.2  
 

 

 

   

 

 

       

 

 

   

 

 

 

The notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Atotech UK Topco Limited

Consolidated Statements of Changes in Shareholders’ Equity

Predecessor:

 

    Common shares
issued
    Paid-in surplus
and retained
earnings
    Currency
translation
adjustment
    Shareholders’
equity
    Total
shareholders’
equity
 

($ in millions, except per share data)

  Number     Amount  

As of December 31, 2015

    1,055     $ 0.6     $ 783.6     $ (47.0   $ 737.2     $ 737.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period

    —         —         173.0       —         173.0       173.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive Income

    —         —         (17.2     (30.2     (47.4     (47.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

    —         —         155.8       (30.2     125.6       125.6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividend

    —         —         (210.3     —         (210.3     (210.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share-based payments

    —         —         1.9       —         1.9       1.9  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

    —         —         (5.5     —         (5.5     (5.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2016

    1,055     $ 0.6     $ 725.5     $ (77.2   $ 648.9     $ 648.9  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the period

    —         —         13.2       —         13.2       13.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive Income

    —         —         16.8       10.7       27.5       27.5  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

    —         —         30.0       10.7       40.7       40.7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividend

    —         —         (110.6     —         (110.6     (110.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital increase

    —         —         40.2       —         40.2       40.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of January 31, 2017

    1,055     $ 0.6     $ 685.1     $ (66.5   $ 619.2     $ 619.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Successor:

 

    Common Shares     Preference Shares     Paid-in
surplus and
retained
earnings
    Currency
translation
adjustment
    Hedge
reserve
    Other     Total
shareholders’
equity
 

($ in millions, except per share
data)

  Number in
thousands
    Amount     Number in
thousands
    Amount  

As of January 1, 2017

    —       $ —         —       $ —       $ —       $ —       $ —       $ —       $ —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Issuance of shares

    26,155       2.6       1,218,855       121.9       1,120.5       —         —         —         1,245.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss for the period

    —         —         —         —         (86.8     —         —         —         (86.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive Income

    —         —         —         —         —         176.4       (23.1     (1.3     152.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

    —         —         —         —         1.7       —         —         —         1.7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

    —         —         —         —         (85.1     176.4       (23.1     —         66.9  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share based payments

    —         —         —         —         0.1       —         —         —         0.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2017

    26,155     $ 2.6       1,218,855     $ 121.9     $ 1,035.5     $ 176.4     $ (23.1   $ (1.3   $ 1,312.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss for the period

    —         —         —         —         (23.7     —         —         —         (23.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive Income

    —         —         —         —         —         (104.3     8.0       4.0       (92.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

    —         —         —         —         (0.9     —         —         —         (0.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

    —         —         —         —         (24.6     (104.3     8.0       4.0       (116.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distribution to shareholders

    —         —         (289,485     (28.9     (461.6     —         —         —         490.5

Share based payments

    —         —         —         —         0.1       —         —         —         0.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2018

    26,155     $ 2.6       929,370     $ 93.0     $ 549.4     $ 72.1     $ (15.1   $ 2.7     $ 704.7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The notes are an integral part of these consolidated financial statements.

 

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Notes to Consolidated Financial Statements

(1) General and Description of the Business

Successor

On October 6, 2016, Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with its corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66940532 (“Opco”) entered into the share purchase agreement (“the Acquisition Agreement”) with Total Holdings Europe, a French société par actions simplifiée and Total Gestion USA, a French société a` responsabilité limitée (collectively, “TOTAL”) pursuant to which Atotech UK Topco Limited indirectly acquired all of the outstanding equity interests of Atotech B.V. on January 31, 2017 (the “Acquisition”). The Acquisition closed on January 31, 2017. Accordingly, on January 31, 2017 Atotech UK Topco Limited became the ultimate parent company of the Atotech B.V. Each of Atotech UK Topco Limited, Alpha 3 B.V. and Alpha US Bidco, Inc. were formed by affiliates of The Carlyle Group (the “Sponsor”) to facilitate the Acquisition. See Note 5 for more information concerning the Acquisition.

When referring to Atotech UK Topco Limited and its subsidiaries collectively, they are referred to herein as the “Successor”.

Predecessor

Atotech B.V. was a private company incorporated and whose registered office was located at Strijkviertel 35-2, 3454 PJ De Meern, Netherland with regional headquarters in Berlin, Germany, Rock Hill, United States, and Yokohama, Japan. Until January 31, 2017, the parent company of Atotech B.V. was Total Holdings Europe S.A.S.

When referring to Atotech B.V. and its subsidiaries, they are referred to herein as the “Predecessor”.

When referring to the Successor and Predecessor equally, they are referred to herein as “Atotech” or the “Company”.

The Company is a leading global provider of specialty electroplating solutions delivering chemistry, equipment, and service for high growth technology applications. The Company’s solutions are used in a wide variety of end markets, including smartphones, communication infrastructure, big data infrastructure, and automotive and automotive electronics.

The Company has two operating segments which are the Electronics (“EL”) segment and the General Metal Finishing (“GMF”) segment. The EL segment supplies chemistry, production equipment and comprehensive services to the electronics industry, especially to the printed circuit board manufacturers, package substrate makers and semiconductor companies. Its product and technologies serve the main end-markets such as communication, computer, automotive, industrial, medical, aerospace and military industries. The GMF segment supplies chemistry, production technology and comprehensive services to the surface finishing industries in all areas of application. Its products and technologies serve the main end-markets such as automotive, consumer electronics, construction, sanitary, white goods and oil & gas industries.

(2) Basis of Presentation

The principal accounting policies applied in the preparation of the financial statements of the Successor and Predecessor are set out below. These policies have been consistently applied for all periods presented, unless otherwise stated. They were authorized for issue by the Company’s board of directors on July 26, 2019.

Blackline Presentation

As a result of the acquisition of Atotech B.V. by subsidiaries wholly owned by Atotech UK Topco Limited on January 31, 2017, Atotech UK Topco Limited carries forward and continues to operate the Atotech B.V.

 

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business as of that date. International Financial Reporting Standards (“IFRS”) do not provide specific guidance for the preparation and presentation of historical information related to such transactions. The Successor and Predecessor Financial Statements have been prepared with a “black line presentation,” whereby a vertical black line separates the Successor and Predecessor. In addition, relevant footnotes have been presented for the Successor and Predecessor with the “black line presentation” to distinctly highlight the periods pre- and post- acquisition and their lack of comparability. Atotech UK Topco Limited was incorporated on December 20, 2016 and had no activity prior to the Acquisition.

The Successor and Predecessor Financial Statements, as defined below, are collectively presented in accordance with S-X Article 3, and prepared in accordance with IFRS as issued as by the International Accounting Standards Board (“IASB”) and IFRS interpretations as issued by the IFRS Interpretations Committee (“IFRIC”), together defined as IASB-IFRS. The Successor and Predecessor Financial Statements are defined as follows:

 

   

The Consolidated Financial Statements of Atotech UK Topco Limited, consisting of Consolidated Balance Sheets of Atotech UK Topco Limited and its subsidiaries as of December 31, 2017 and as of December 31, 2018 and the related Consolidated Statements of Income (Loss), Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows for the year ended December 31, 2017 and as of December 31, 2018 (the “Successor Financial Statements”).

 

   

The Consolidated Statements Income (Loss), Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows of Atotech B.V. and its subsidiaries for the period from January 1, 2017 through January 31, 2017 and the year ended December 31, 2016 (the “Predecessor Financial Statements”).

It should be noted that the comparability of the Successor periods to the Predecessor periods is affected by the application of acquisition accounting pursuant to IFRS 3 “Business Combinations,” see Note 5.

The consolidated financial statements of the Company are presented in millions of U.S. dollars, unless otherwise stated.

The preparation of the consolidated financial statements in accordance with IFRS requires management to exercise judgement and to make estimates and assumptions that affect the application of policies, reported amounts of revenues, expenses, assets, liabilities, and disclosures. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. New accounting standards or amendments which were mandatory for periods presented did not have a material impact on the Company’s consolidated financial statements.

New standards and interpretations adopted by the Company

The accounting standards and interpretations adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2017, except for the adoption of new standards effective as of January 1, 2018. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The Company applied in these consolidated financial statements, for the first time, IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. For further information on the implementation of IFRS 15, refer to Note 3. The Company’s assessment of the impact of IFRS 9 is set out below.

 

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Several other amendments and interpretations apply for the first time in 2018, but do not have a material impact on the consolidated financial statements of the Company.

IFRS 9 “Financial Instruments”

Nature of change

In July 2014, the IASB published IFRS 9 “Financial Instruments”, which replaces IAS 39. IFRS 9 addresses the classification, recognition, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

Date of adoption by Company

The adoption of IFRS 9 is mandatory for financial years commencing on or after January 1, 2018. The Company has adopted IFRS 9 on a cumulative effective basis with no restatement of the comparative period. Changes in accounting policies resulting from the adoption of IFRS 9 applied retrospectively, except as described below:

 

  1.   Differences in carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 will be recognized in retained earnings and reserves as at January 1, 2018; and

 

  2.   The new hedge accounting requirements should be applied prospectively.

Impact

The Company has reviewed its financial assets and liabilities and has determined the following impact from the adoption of the new standard on January 1, 2018.

Classification and measurement of financial assets and financial liabilities

IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, FVOCI and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.

The adoption of IFRS 9 has not had a significant effect on the Company’s accounting policies related to financial liabilities and derivative financial instruments (for derivatives that are used as hedging instruments).

For an explanation of how the Company classifies and measures financial instruments and accounts for related gains and losses under IFRS 9, see Note 3.

Impairment of financial assets

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The new impairment model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under IFRS 9, credit losses are recognized earlier than under IAS 39—see Note 3.

 

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The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The loss allowance provision as at January 1, 2018 also incorporated forward looking information. For all the other financial instruments in scope of the IFRS 9 impairment-rules the Company applies the general approach.

The impact of implementing IFRS 9 on the consolidated financial statements as of December 31, 2018 is immaterial. Atotech determined that the valuation allowances increases by $0.3 million in the prior period. This resulted in a decrease on retained earnings as of January 1, 2018.

Under IFRS 9, the equity instruments held by the Company are to be measured at fair value, either through profit or loss or at fair value through other comprehensive income. The Company also maintains immaterial equity investments held at cost, for which the cost is deemed to approximate fair value. If changes in carrying amounts are recognized in other comprehensive income, they are no longer to be reclassified to profit or loss when these instruments are sold. Equity instruments at fair value through other comprehensive income are not subject to an impairment assessment under IFRS 9. In addition, some debt instruments will be measured at fair value through profit or loss due to the new classification requirements of IFRS 9. The new standard also allows the exclusion of certain components of derivatives from designation to a hedge relationship and to defer the changes in these components’ fair value in other comprehensive income.

Hedge accounting

The Company has elected to adopt the new general hedge accounting model in IFRS 9. This requires the Company to ensure that hedge accounting relationships are aligned with its risk management objectives and strategy and to apply a more qualitative and forward-looking approach to assessing hedge effectiveness.

The Company uses forward foreign exchange contracts to hedge the variability in cash flows arising from changes in foreign exchange rates. The Company designates only the change in fair value of the spot element of the forward exchange contract as the hedging instrument in cash flow hedging relationships. The effective portion of changes in fair value of hedging instruments is accumulated in a cash flow hedge reserve as a separate component of equity.

For an explanation of how the Company applies hedge accounting under IFRS 9, see Note 3.

Transition

Changes in accounting policies resulting from the adoption of IFRS 9 have been applied retrospectively, except as described below.

 

   

The Company has used an exemption not to restate comparative information for prior periods with respect to classification and measurement (including impairment) requirements. Therefore, comparative periods have been restated only for retrospective application of the cost of hedging approach for forward points (see below). Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 are recognized in retained earnings and reserves as at January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9, but rather those of IAS 39.

 

   

The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.

 

   

The determination of the business model within which a financial asset is held.

 

   

The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL.

 

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The designation of certain investments in equity instruments not held for trading as at FVOCI.

 

   

If an investment in a debt security had low credit risk at the date of initial application of IFRS 9, then the Company has assumed that the credit risk on the asset had not increased significantly since its initial recognition.

 

   

Changes to hedge accounting policies have been applied prospectively except for the cost of hedging approach for forward points, which has been applied retrospectively to hedging relationships that existed on or were designated after January 1, 2017.

 

   

All hedging relationships designated under IAS 39 at December 31, 2017 met the criteria for hedge accounting under IFRS 9 at January 1, 2018 and are therefore regarded as continuing hedging relationships.

On the date of initial application, the Company’s financial instruments were as follows, with any applicable reclassifications:

 

($ in millions)

   Original
classification
under IAS 39
   New
classification
under IFRS 9
   Original
carrying
amount

under
IAS 39
     New
carrying
amount
under

IFRS 9
 

Financial assets

           

Accounts receivables

   Loans and Receivables
(LAR)
   Financial assets at
amortized costs (FACC)
     282.4        282.1  

Cash and cash equivalents

   Loans and Receivables
(LAR)
   Financial assets at
amortized costs (FACC)
     325.8        325.8  

Embedded derivatives

   Fair value—hedging
instrument
   Fair value—hedging
instrument
     14.1        14.1  
        

 

 

    

 

 

 

Total financial assets

         $ 622.3      $ 622.0  
        

 

 

    

 

 

 

Financial liabilities

           

Non-current financial debt

   Financial Liabilities at
Cost (FLAC)
   Financial Liabilities at
Cost (FLAC)
     1,789.8        1,789.8  

Current financial debt

   Financial Liabilities at
Cost (FLAC)
   Financial Liabilities at
Cost (FLAC)
     24.3        24.3  

Accounts payable

   Financial Liabilities at
Cost (FLAC)
   Financial Liabilities at
Cost (FLAC)
     117.6        117.6  

Finance lease

   Financial Liabilities at
Cost (FLAC)
   Financial Liabilities at
Cost (FLAC)
     0.1        0.1  

Net investment hedge—foreign exchanges contracts (“Forward”)

  

 

Fair value—hedging
instrument

  

 

Fair value—hedging
instrument

  

 

 

 

23.1

 

 

  

 

 

 

23.1

 

 

Net investment hedge—foreign exchange contracts (“Collars”)

  

 

Fair value—hedging
instrument

  

 

Fair value—hedging
instrument

  

 

 

 

10.2

 

 

     10.2  
        

 

 

    

 

 

 

Total financial liabilities

         $ 1,965.1      $ 1,965.1  
        

 

 

    

 

 

 

New hedge designations from January 1, 2018

Cash flow hedges that qualify for hedge accounting

The Company only uses foreign currency forward contracts to hedge forecast transactions. Following the adoption of IFRS 9, the Company designates the change in value of foreign currency forwards depending on

 

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change in forward rates (also referred to as forward-to-forward-designation) as hedging instruments. Gains or losses relating to the effective portion of the change in value of the hedging instrument are recognized in the cash flow hedge reserve within equity. The difference between the overall market value of the forwards and the as hedging instrument designated parts is referred to “cost of hedging”. The changes in the value of the cost of hedging that relate to the hedged item are recognized within Other Comprehensive Income (OCI) in the costs of hedging reserve within equity.

Net investment hedges that qualify for hedge accounting

The Company uses foreign currency options and a foreign currency forward to hedge its foreign currency denominated net investments. Following the adoption of IFRS 9 the Company is now designating only the intrinsic value of foreign currency options. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in the cash flow hedge reserve within equity. The changes in the time value of the options that relate to the hedged item (‘aligned time value’) are recognized within OCI in the costs of hedging reserve within equity. The excluded portion of the designated hedging instrument at the date of designation, to the extent that it relates to the hedged item, is amortized on a systematic and rational basis over the period during which the hedge adjustment for the designated hedging instrument could affect profit or loss, or OCI if the hedged item is an equity instrument for which the entity has elected to present changes in fair value in OCI.

When forward contracts are used for a net investment hedge, the Company designates the change in value of foreign currency forwards depending on changes in forward rates (also referred to as forward-to-forward-designation) as hedging instruments, similarly to cash flow hedges. Gains or losses relating to the effective portion of the change in value of the hedging instrument are recognized in the cash flow hedge reserve within equity. The difference between the overall market value of the forwards and the as hedging instrument designated parts is referred to “cost of hedging”. The changes in the value of the cost of hedging that relate to the hedged item are recognized within OCI in the costs of hedging reserve within equity.

Ongoing hedge designations from past years

The Company also has one ongoing designated hedge including a foreign currency forward in a net investment hedge relationship. The foreign currency forward as of December 31, 2017 qualified as a cash flow hedge under IFRS 9. The Company’s risk management strategies and hedge documentation are aligned with the requirements of IFRS 9 and these relationships are therefore treated as continuing hedges. Under IAS 39, the change of value of foreign currency forwards depending on changes in forward rates was designated as hedging instruments. Therefore under IFRS 9 the Company is prospectively recognizing effective changes in the value of the hedging instruments in account of the other comprehensive income and changes in the value of cost of hedging in a separate account of the other comprehensive income.

Examination of the effects on the consolidated financial statements of applying IFRS 9 with regard to classification and measurement, impairment and hedge accounting indicates no material impact on the Company’s profitability, liquidity and capital resources or financial position. At the date of initial application of IFRS 9, all gains and losses arising from the Company’s cash flow hedging relationships was presented under other comprehensive income, not to be reclassified to profit and loss.

The classification of financial liabilities under IFRS 9 does not follow the approach for the classification of financial assets; rather it remains broadly the same as under IAS 39. IFRS 9 requires contingent consideration liabilities to be treated as financial instruments measured at fair value, where the changes in fair value will be recognized in the statement of profit and loss.

The comparative information for the periods beginning January 1, 2016 and 2017 will not be restated. However, the opening balance of retained earnings as at January 1, 2018 was as disclosed in the table above. The

 

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disclosures for the comparative periods in the notes to the financial statements will follow the classifications and requirements of IAS 39.

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations are not required to be applied for the year ended December 31, 2018 and have not been early adopted by the Company. The Company’s assessment of the impact of the new standard and interpretations is set out below.

IFRS 16 “Leases”

Nature of change

In January 2016, the IASB published the financial reporting standard IFRS 16 “Leases”. The standard replaces the existing requirements relating to leases, including IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Lease”, SIC-15 “Operating leases—Incentives” and SIC-27 “Evaluating the Substance of Transactions involving the Legal Form of a Lease”. The Company recognizes a right-of-use asset and a lease liability at the commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date.

Date of adoption by Company

IFRS 16 is initially effective for the financial years commencing on or after January 1, 2019. Atotech will apply the standard from its mandatory adoption date of January 1, 2019, by using the simplified retrospective approach. Therefore, the Company will not restate the comparative amounts for the year prior to adoption, as allowed by IFRS 16.C7, and will continue to report them under IAS 17 and IFRIC 4.

As a result of the implementation of the new accounting standard, lessees are no longer required to classify leases as operating or finance leases under IAS 17. In almost all cases, lessees will recognize leases on the balance sheet by recording a liability for lease obligations to be incurred in the future. Correspondingly, the right-of-use asset is capitalized, which corresponds to the present value of future lease payments plus directly attributable costs, and is amortized over its useful life.

According to IFRS 16.5, a lessee may elect, for leases with a lease term of 12 months or less (short-term leases) or for leases for which the underlying asset is of low value, not to recognize a right-of-use asset and a lease liability. Atotech will apply these practical expedients, with the exception of leased assets of the asset class “Land, building and improvements”, which will be capitalized regardless of the lease term.

There is no material change in the recognition requirements for lessors compared with IAS 17.

Impact

Atotech has analyzed the impacts of the initial application of IFRS 16 in a Company—wide project involving existing processes, systems and contracts. After review of all of the Company’s leasing arrangements, the following categories of leases have been identified where agreements previously recognized as operating leases are required to be recognized on the balance sheet according to IFRS 16: Furniture, fixtures and equipment, Lab equipment, Land, building and improvements, Lab equipment and Transportation equipment.

The actual impacts of adopting the standard on January 1, 2019 may change because:

 

   

the Company has not finalized the testing and assessment of controls over its new IT systems; and

 

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the new accounting policies are subject to change until the Company presents its first financial statements that include the date of initial application.

In the context of initial application, the Company expects to recognize right-of-use-assets of approximately $84.5 million and lease liabilities of $84.5 million in the Balance Sheet as of January 1, 2019. The Company does not expect the adoption of IFRS 16 to impact its ability to comply with the term loan, Opco Notes, and Holdco Notes loan covenants as described in Note 13.

The Company does not expect any material changes from a lessor’s perspective.

IFRIC 23 “Uncertainty over Tax Treatments”

In June 2017, the IASB issued IFRIC Interpretation 23, “Uncertainty over Income Tax Treatments” IFRIC 23 is to be applied while performing the determination of taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments.

According to IFRIC 23, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates.

The interpretation is effective for annual periods beginning on or after January 1, 2019, it provides a choice of two transition approaches:

 

   

full retrospective using IAS 8, only if the application is possible without the use of hindsight; or

 

   

modified retrospective with the cumulative effect of the initial application recognized as an adjustment to equity on the date of initial application. In this approach, comparative information is not restated.

IFRIC 23 permits early adoption. At this stage, the Company does not intend to adopt the standard before its effective date. The adoption of this interpretation is not expected to have a material impact on the Company’s consolidated financial statements. There are no other IFRS or IFRIC interpretations that are not effective that are expected to have a material impact.

Revision of previously issued financial statements

The Company has previously issued financial statements for both the Predecessor as of and for the year ended December 31, 2016, and as of and for the month ended January 31, 2017, and the Successor as of and for the year ended December 31, 2017 in connection with the financial reporting requirements for the senior secured credit facilities and Opco Notes. Subsequently, the Company has revised both the Predecessor and Successor financial statements to give effect to certain adjustments. Refer to Note 4 for a discussion of the revisions identified, and their impact on the Predecessor and Successor financial statements.

(3) Summary of Significant Accounting Policies

Basis of Consolidation

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control commences until the date on which control ceases.

All internal balances, transactions, and income are eliminated.

 

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Business Combinations

Business combinations are accounted for using the acquisition method according to IFRS 3 “Business Combinations”.

The purchase price allocation is finalized up to a maximum of one year from the acquisition date.

The acquirer shall recognize goodwill at the acquisition date, being the excess of:

 

   

The consideration transferred, measured generally at fair value, the amount of non-controlling interests and, in business combinations achieved in stages, the fair value at the acquisition date of the investment previously held in the acquired company;

 

   

Over the amount of acquired identifiable assets and assumed liabilities, measured generally at fair value, at the acquisition date.

If the difference is negative, an additional analysis is performed on the identification and valuation of the identifiable assets and liabilities. After having completed such additional analysis, any residual gain on a bargain purchase is recorded as income.

The Company elects on a transaction-by-transaction basis whether to measure non-controlling interests at their fair value or at their proportionate share of the recognized amount of the identifiable net assets, at the acquisition date.

Acquisition related transaction costs are expensed as incurred.

Fair values were not adjusted for the year ended December 31, 2018 compared to December 31, 2017. See Note 5 to the consolidated financial statement as of December 31, 2017 for a summary of the purchase price and final allocation.

Foreign Currency Translation

The Company’s consolidated financial statements are presented in U.S. Dollars. The financial statements of the Company and its subsidiaries are prepared in the currency that most clearly reflects their business environment. This is referred to as their functional currency. The functional currency of certain subsidiaries are their respective local currencies. Transactions denominated in foreign currencies other than the functional currency of the entities of the Company are translated at the exchange rate on the transaction date. The income and cash flow statements are translated using the average exchange rates for the period (if deemed a reasonable proxy of transactions’ exchange rates). At each balance sheet date, monetary and non-monetary assets and liabilities are translated to U.S. Dollars at the closing rate and the resulting exchange differences are recognized in the statement of income or, if applicable, presented on the line “Currency translation adjustment” of other comprehensive income, within “Items potentially re-classifiable to profit or loss.”

Property, Plant and Equipment

Property, plant and equipment are carried at their historical cost, after deducting any accumulated depreciation and accumulated impairment losses. This cost includes borrowing costs directly attributable to the acquisition or production of a qualifying asset incurred until assets are placed in service.

Routine maintenance and repairs are charged to expense as incurred.

 

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Property, plant and equipment are depreciated using the straight-line method over their expected useful lives, which are as follows:

 

•  Furniture, office equipment, machinery and tools

     3-10 years     

•  Transportation equipment, machinery, Computer & networking, Lab equipment

     3-15 years     

•  Building & improvements

     10-33 years     

•  Land improvements & Leasehold improvement

     9-10 years     

Useful lives are reviewed on a regular basis. Such a review takes into consideration the nature of the assets, their intended use including but not limited to the closure of facilities and the evolution of the technology and competitive pressures that may lead to technical obsolescence.

See in Note 6 for the changes in property, plant and equipment.

Impairment of property, plant and equipment

Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. If such an indication exists, the asset’s recoverable amount is estimated to determine the extent of the impairment loss, if any. In the event that the asset did not generate any cash flows which are independent from other assets, the Company determines the recoverable amount of the cash generating unit to which the asset belongs pursuant to the business segment. Examples of indicators of impairment could be the unfavorable development of a business under competitive pressures or severe economic slowdown in a given market.

Intangible Assets and Goodwill

Intangible assets primarily include trade name, developed technology and customer relationships resulting from the Acquisition.

Intangible assets are carried at historical cost, less any accumulated amortization and losses.

All of the Company’s identifiable intangible assets have a finite useful life and are amortized on a straight-line basis:

 

•  Customer Relationships

     13-20 years     

•  Developed Technology

     14-16 years     

•  Trade names

     20 years     

•  Capitalized development costs

     15 years     

•  Other intangible assets

     5-10 years     

Useful lives are reviewed on a regular basis. Such a review takes into consideration the nature of the assets, their intended use including but not limited to the closure of facilities and the evolution of the technology and competitive pressures that may lead to technical obsolescence.

Research and Development

Research and development costs that are directly attributable to the design and testing of newly developed products or processes are recognized as an expense at the time they are incurred unless they meet the recognition criteria of IAS 38 “Intangible Assets”. The Company assesses the progress of all development projects on a

 

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monthly basis under the recognition criteria under IAS 38, capitalizing the development costs once all criteria are met, and beginning amortization once projects are complete and ready for use. Development costs previously recognized as an expense are not capitalized in a subsequent period.

Impairment of non-current Assets (including Goodwill)

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortized but is tested for impairment.

Goodwill is subject to an impairment test at least annually in accordance with IAS 36 “Impairment of Assets”, as well as when there are indicators of impairment at the reporting date. For the purposes of impairment testing, goodwill is allocated to both CGU’s, which are the Company’s two operating segments (EL and GMF).

An asset’s CGU is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. If the recoverable amount cannot be determined for an individual asset, the lowest aggregation of assets that generates largely independent cash inflows is identified.

Impairment is recognized if the carrying amount of the individual CGU to which the goodwill is allocated exceeds the recoverable amount. The recoverable amount is defined as the larger of the CGU’s fair value less costs of disposal and its value in use.

An impairment loss is first recorded against goodwill and then distributed on a pro rata basis to the remaining non-current assets. If a higher recoverable amount of the asset or the CGU is generated at a later date in accordance with the impairment loss in previous years, the impairment loss is reversed up to a maximum of the amortized cost. Reversals of impairments on goodwill are not taken as they are not permitted under IAS 36 “Impairment of Assets.”

Inventories

Inventories are measured at the lower of cost and net realizable value. Costs for chemical inventories are measured using the weighted-average cost method.

Cost of manufactured chemical product inventories consist of raw material costs, direct labor costs, and an allocation of production overheads. Start-up costs, general administrative costs and financing costs are excluded from the cost of these inventories.

Cost of equipment inventories consist of cost incurred in the production of equipment, including direct labor costs and an allocation of production overheads.

Product inventories purchased from entities external to the Company are valued at their purchase cost plus costs of transport.

Financial Instruments

Recognition and initial measurement

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

 

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Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI—debt investment; FVOCI—equity investment; or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

 

   

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

 

   

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

 

   

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

 

   

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL (see Note 22). On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets—Subsequent measurement and gains and losses:

 

Financial assets at FVTPL    These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss. However, see Note 22 for derivatives designated as hedging instruments.
Financial assets at amortized cost    These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Debt investments at FVOCI    These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI    These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

 

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Prior to the application of IFRS 9, the Company classified its financials assets into the category loans and receivables (“LAR”), which was measured at amortized cost using the effective interest method.

Financial liabilities

On initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI—debt investment; FVOCI—equity investment; or FVTPL.

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

See Note 22 for financial liabilities designated as hedging instruments.

Derecognition

Financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized. Refer to Note 13 for further discussion of the Company’s factoring arrangements during the periods presented.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

Current and Non-current Non-derivative Financial Liabilities Measured at Amortized Cost

The Company has the following non-derivative financial liabilities measured at amortized cost: financial debt and trade and other payables. Non-derivative financial liabilities are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

 

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Fair Value of Financial Instruments

Forward and option exchange contracts are valued on the basis of a comparison of the negotiated forward rates with the rates in effect on the financial markets at year-end for similar maturities.

All financial assets and liabilities are measured at fair value when first recorded. For current receivables and liabilities, their net book value is deemed to correspond to a reasonable approximation of their fair value due to their short term nature.

Fair Value Measurements on a Recurring Basis

The following describes the Company’s assets and liabilities that are measured at fair value on a recurring basis. The balance sheet classifications of the Company’s derivative instruments are presented in Note 13 Non-current Financial Assets. The derivative instruments primarily consist of foreign exchange forwards and collars, all of which are valued on a market based approach utilizing both spot and forward prices of the underlying currencies as key market observable data inputs and classified as level 2 in the fair value hierarchy.

Level 1:

The fair value of financial instruments consisting of borrowings, bank debt, and hedging derivatives traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.

Level 2:

The fair value of financial instruments consisting of borrowings, bank debt, and hedging derivatives that are not traded in an active market is determined by using valuation techniques based on quoted prices for identical or similar instruments in active markets, or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3:

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments consisting of embedded derivatives include:

 

   

the use of quoted market prices or dealer quotes for similar instruments

 

   

the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

 

   

the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

See Note 22 for further details.

Additionally, the Company has bifurcated several embedded options related to the indenture governing its Holdco and Opco Notes. These options are valued as a single compound derivative based on a set of discounted cash flow scenarios in which binomial interest rate trees are created utilizing market based volatility assumptions and constant interest rate spreads to determine scenarios in which each option would be rationally exercised. The bifurcated embedded derivative is classified as level 3 in the fair value hierarchy, due to the key unobservable input related to probability of a change of control event occurring. From the Company’s perspective, the value of

 

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the bifurcated derivative increases as the probability of change of control decreases, and vice versa. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. However, there were no transfers between any of the levels during the periods presented.

Financial Instruments Not Measured at Fair Value

The Company’s financial instruments with short-term maturities include current receivables, payables, and current financial debt. Given the short term nature of these financial instruments, their net book value is deemed to correspond to a reasonable approximation of their fair value. As of December 31, 2017 and 2018, the Company’s book value of their non-current financial debt approximates fair value. The fair value of non-current financial debt is estimated based on pricing vendor quotes which are derived primarily from dealer quotes and bond market activity, and classified as level 2 in the fair value hierarchy.

Derivative Instruments

The Company uses derivative instruments to manage its exposure to risks of changes in foreign exchange rates. Derivative instruments are measured at fair value. Changes in fair value of derivative instruments are recognized in the statement of income or, if cash flow or net investment hedge accounting is applied, in other comprehensive income for the effective portion of changes in fair value, and are recognized in the balance sheet in the accounts corresponding to their nature. The derivative instruments used by the Company are foreign currency forwards and options exclusively. The Company does not use any other derivatives; however, on occasion the Company is required to bifurcate and account for separately derivatives that are embedded in other contracts. Embedded derivatives are measured at fair value and recognized in the balance sheet accounts corresponding to their nature. Changes in fair value of such derivatives are recognized in the statement of income.

Financial Derivatives

In the normal course of business, the Company may enter into derivative contracts for risk management purposes. For financial reporting purposes, a derivative instrument is designated in one of the following categories: (a) hedging instruments designated as a qualifying hedge under derivative accounting principles; (b) a non-designated economic hedge; and (c) bifurcated embedded derivatives. The derivative instruments held are predominantly options and forward contracts. All freestanding derivatives, including bifurcated embedded derivatives, are stated at fair value.

Derivatives Held for Risk Management Purposes

The Company’s risk management policy requires to identify, analyze, and manage risks arising from the activities conducted during the normal course of business. The Company uses derivative instruments as a risk management tool to manage the exposures to foreign currency risks in existing assets, liabilities, and equity. The accounting for changes in fair value of a derivative instrument depends on whether the derivative has been designated and qualifies for hedge accounting under derivative accounting principles of IFRS 9.

Accounting principles for qualifying hedges require detailed documentation that describes the relationship between the hedging instrument and the hedged item, including, but not limited to, the risk management objectives and hedging strategy and the methods to assess the effectiveness of the hedging relationship. The Company designates derivative instruments to offset the foreign exchange risk arising from balance sheet assets, liabilities, and equity in foreign subsidiary investments. The Company assesses the hedging relationships, both at the inception of the hedge and on an ongoing basis, using a regression approach to determine whether the designated hedging instrument is highly effective in offsetting changes in the value due to foreign exchange rate fluctuation of the hedged item. The Company discontinues hedge accounting when it is determined that a

 

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derivative is not expected to be highly effective going forward or has ceased to be highly effective as a hedge, the hedging instrument is terminated, or when the designation is removed by the Company. At December 31, 2018, the Company held foreign exchange options and a foreign exchange forward designated as hedging instruments under IFRS 9. Realized and unrealized gains and losses related to the effective portion of hedges are recorded through “Other comprehensive income” while the ineffective portions are recognized through fair value of derivatives. The asset and liability positions are reflected as “Other non-current financial assets or liabilities” for the foreign exchange options and “Other current financial assets or liabilities” for the foreign exchange forwards. As of December 31, 2018, $0.8 million amounts in “Other comprehensive income” attributable to hedge accounting were reclassified to profit and loss. Additionally, as of December 31, 2018, the Company held RMB denominated debt designated as a hedging instrument under IFRS 9.

Other Derivatives—Economic Hedges

Derivative instruments determined to be economic hedges that are not designated as hedging instruments under IFRS 9 are recorded at fair value through profit or loss. Realized and unrealized gains and losses are recognized in fair value of derivatives while the derivative asset or liability positions are reflected as Non-current financial assets or liabilities or other current financial liability. In all periods presented, the Company held no derivative instruments utilized as economic hedges.

Other Derivatives—Embedded Derivatives

On January 31, 2017, in connection with the Acquisition, an indenture governing the Opco Notes was signed by the Company to issue $425.0 million of 6.25% Opco Notes to private investors. On May 30, 2018 Alpha 2 B.V. issued $300.0 million of 8.75%/9.50% Senior PIK Toggle Notes. Both agreements contained several embedded features required to be bifurcated and accounted for separately as derivatives under IFRS 9 “Financial Instruments”, related to prepayment call options available to the Company and put options available to the holder. Realized and unrealized gains and losses are recognized in fair value of derivatives while the derivative asset positions are reflected as non-current financial assets and non-current financial debt.

Fair Value Determination

A number of accounting and valuation methods require that the fair value of both financial and non-financial assets and liabilities be determined. The fair value is the price that independent market participants would pay on the relevant day under normal market conditions if the asset were sold or the liability was transferred.

Fair value is measured using a three-level hierarchy based on the valuation parameters used.

Level 1: Unchanged adoption of listed prices on active markets for identical assets or liabilities.

Level 2: Use of valuation parameters whose prices are not the listed prices referred to in level 1, but which can be observed either directly or indirectly for the asset or liability in question.

Level 3: Use of factors not based on observable market data for the measurement of the asset or liability (non-observable valuation parameters).

For the purpose of performing the annual impairment test the Company has applied the Level 3 data. Refer to the discussion below the heading “Financial Instruments” for the use of the fair value hierarchy for the Company’s financial assets and liabilities.

Revenue from Contracts with Customers

The Company early adopted IFRS 15 “Revenue from Contracts with Customers” on January 31, 2017 (Predecessor) and at December 31, 2017 (Successor) using the full retrospective method, which means that the

 

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standard is applied retrospectively to each applicable prior reporting period presented in accordance with IFRS. The adoption of IFRS 15 “Revenue from Contracts with Customers” did not impact the revenue recognition related to sales of chemistry which historically has constituted approximately 85% of the Company’s consolidated revenues. IFRS 15 “Revenue from Contracts with Customers” does affect the timing of revenue recognition for a certain amount of revenue from the manufacturing of production equipment, and an immaterial amount of revenue from the modifications and retrofits for equipment.

Accounting policy for revenue recognition

The principles in IFRS 15 “Revenue from Contracts with Customers” must be applied using the following 5 step model:

1.    Identify the contract (s) with a customer

2.    Identify the performance obligations in the contract

3.    Determine the transaction price

4.    Allocate the transaction price to the performance obligations in the contract

5.    Recognize revenue when or as the entity satisfies its performance obligations

Identifying performance obligations

The Company must assess whether the goods or services promised in a contract are (a) distinct—to be accounted for as separate performance obligations, (b) not distinct—to be combined with other promised goods or services until a bundle is identified that is distinct or (c) part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer.

The sale of chemistry includes standard terms and conditions, results from spot orders of customers and shipment of chemistry to the customers based on incoterms, primarily ex works. Additionally, contracts for the manufacturing of production equipment, modifications and retrofits for such equipment to customer specifications each constitute only one performance obligation.

Determining and allocating the transaction price

At contract inception the total transaction price is estimated, being the amount to which the Company expects to be entitled and has rights to under the present contract. In almost all cases, the transaction price does not include a variable element. Variable elements, if any, relate to volume rebates, discounts and returns for chemistry sales. Equipment contracts typically do not include variable elements.

Estimates for volume rebates, discounts and returns of chemistry sales are accounted for as reductions of revenue when the earnings process is complete. Volume rebates and discounts are typically earned by customers based on annual sales volume targets. The Company records an estimate for these accruals based on contract terms and its historical experience with similar programs. An estimate for future expected sales returns is recorded based on historical experience with product returns within the defined period of time to return these products; however, changes to these estimates may be required if the historical data used in the calculation differs from actual experience. Differences between these estimates and actuals are typically immaterial and are recognized as a reduction of revenues in the period such differences are determined. In 2018, no returns were recorded. Variable consideration for volume rebates, discounts and expected returns are recorded as contract liabilities and settled with the customer in accordance with the terms of the applicable contract, typically when program requirements are achieved by the customer.

The Company applies the constraint included in IFRS 15.56 for estimating the consideration and includes in the transaction price only the amount of the variable consideration to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 

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For substantially all equipment contracts and chemistry product sales, only one performance obligation per contract exists. Therefore, the allocation of the transaction price is not required.

Recognizing revenue

For each performance obligation to be recognized over time, the Company applies a measure of progress that faithfully depicts the Company’s performance in transferring control of the goods or services to the customer. The Company applies the relevant output or input method consistently to similar performance obligations. If performance obligations in a contract do not meet the over time criteria, the Company recognizes revenue at a point in time.

Revenue from chemistry products

For substantially all sales of chemistry products, the Company recognizes revenue at the point in time at which it transfers control of the goods to the customer. Depending on the contractually agreed incoterms, control is transferred either upon shipment or delivery, when the Company’s performance obligation has been fulfilled and collectability is probable.

If products are delivered to a customer’s warehouse on consignment, the Company normally retains control. Revenue is recognized at the point in time when the customer retrieves the goods from the warehouse.

Revenue from production equipment

The Company recognizes revenue over time for contracts relating to the manufacturing, modifications and retrofits of equipment, as the equipment is built to customer specification and the Company has an enforceable right to payment for the performance completed. For these sales, the Company uses the cost-to-cost input method to measure progress. In cases, where cost-to-cost is not proportionate to the Company’s progress in satisfying the performance obligation because of uninstalled materials, the Company adjusts the measure of progress and recognizes revenue to the extent of cost incurred to satisfy the performance obligation under the contract.

Contract assets and contract liabilities

The Company’s customer contracts related to the sale of equipment as well as modifications and retrofits for equipment may include a diverse range of payment schedules dependent upon the nature and type of goods and services being provided. The Company often agrees payment schedules under which it receives payments throughout the term of the contracts.

Where payments made are greater than the revenue recognized at the period end date, the Company recognizes a contract liability for this difference. Where payments made are less than the revenue recognized at the period end date, the Company recognizes a contract asset for this difference. Where the Company has an unconditional right to payment or an advance, it recognizes a trade receivable.

Significant judgments for revenue recognition

In determining the amount of revenue and profits to record, and related balance sheet items (such as contract assets, contract liabilities and trade receivables) to recognize in the period, management is required to form a number of key judgements and assumptions:

 

   

Determining whether contracts with multiple components contain distinct goods or services;

 

   

For sales of equipment, assessing the nature of the goods or services that the Company has promised to transfer, as well as the timing of when the goods and services are provided and control transfers to the customer in determining whether to recognize revenue at a point in time or over time; and

 

   

Assessing the timing of satisfaction of performance obligations.

 

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Predecessor

Consolidated statement of income restatement under IFRS 15

 

     Predecessor     Year ended December 31, 2016  

($ in millions)

   As reported     Impact of IFRS 15     Note      Restated  

Revenues

   $ 1,102.0     $ 22.5       A      $ 1,124.5  

Cost of sales, excluding depreciation and amortization

     (452.6     (18.8     B        (471.4

Depreciation and amortization

     (54.1     —            (54.1

Selling, general, and administrative expenses

     (266.4     —            (266.4

Research and development expenses

     (97.1     —            (97.1

Restructuring expenses

     (5.3     —            (5.3

Operating profit

     226.5       3.7          230.2  

Interest expense

     (3.0     —            (3.0

Other expense, net

     (10.8     —            (10.8
  

 

 

   

 

 

      

 

 

 

Income before tax

     212.7       3.7          216.4  
  

 

 

   

 

 

      

 

 

 

Income tax expense

     (61.7     —         C        (61.7
  

 

 

   

 

 

      

 

 

 

Consolidated net income

   $ 151.0     $ 3.7        $ 154.7  
  

 

 

   

 

 

      

 

 

 

Consolidated statement of comprehensive income restatement under IFRS 15

 

     Predecessor     Year ended December 31, 2016  

($ in millions)

   As reported     Impact of IFRS 15     Restated  

Consolidated net income

   $ 151.0     $ 3.7     $ 154.7  
  

 

 

   

 

 

   

 

 

 

Other comprehensive income

      

Actuarial gains and losses

     (12.4     —         (12.4

Tax effect

     (4.4     —         (4.4

Currency translation adjustment generated by the parent company

     (20.0     —         (20.0
  

 

 

   

 

 

   

 

 

 

Items not potentially reclassifiable to profit and loss

     (36.8     —         (36.8
  

 

 

   

 

 

   

 

 

 

Currency translation adjustment

     (10.6     (0.2     (10.8

Cash flow hedge

     (0.4     —         (0.4
  

 

 

   

 

 

   

 

 

 

Items potentially reclassifiable to statement of income

     (11.0     (0.2     (11.2
  

 

 

   

 

 

   

 

 

 

Total other comprehensive income

     (47.8     (0.2     (48.0
  

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 103.2     $ 3.5     $ 106.7  
  

 

 

   

 

 

   

 

 

 

Consolidated statement of changes in equity restatement under the new revenue standard IFRS 15

No reconciliation of the restated consolidated statement of changes in equity is presented as the only changes to this primary statement for the relevant period presented are as follows:

Recognition of the restated consolidated net loss for the year ended December 31, 2016 as presented in the restated consolidated income statement for this year; and

Recognition of the restated currency translation adjustment and other reserves for the year ended December 31, 2016 as presented in the restated consolidated statement of comprehensive income for this period.

Notes to the financial statements restatement under the new revenue standard IFRS 15

Management has undertaken an extensive analysis to consider the Company’s major contractual arrangements as part of the implementation of IFRS 15 “Revenue from Contracts with Customers”. The area

 

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identified for adjustment relates to the contracts regarding the sale of equipment as well as the modifications and retrofits for equipment. Under the previous accounting standards, revenue for contracts regarding the sale of equipment was recognized under the completed-contract method. Under the new revenue standard IFRS 15, revenue for these contracts is recognized over time. The adjustments are discussed in the relevant sections below.

Consolidated income statement and consolidated balance sheet restatement under the new revenue standard IFRS 15

A. Revenues

Under the new revenue standard IFRS 15, the pattern and timing of revenue recognition for sales of equipment has changed, resulting in an overall increase of $22.5 million in revenue for the year ended December 31, 2016. Equipment revenues from GMF increased by $21.4 million, and equipment revenues from EL increased by $1.1 million.

Equipment revenues as of December 31, 2016 included an over-time portion of $71.1 million for EL and $54.7 million for GMF. All other revenue is recognized at a point in time for each segment.

B. Cost of sales

In line with the development of revenues, cost of sales increased by $18.8 million for the year ended December 31, 2016.

C. Taxation

Due to the changes in assets, liabilities, income and expenses recognized as a result of the application of the new revenue standard IFRS 15, there are IAS 12 “Income Taxes” differences that arise as discussed below:

Current tax assets and tax liabilities: There is no current tax expense impact for the year ended December 31, 2016.

Deferred taxes: Due to the changes in the pattern and timing of revenue recognition under the new revenue standard IFRS 15, a deferred tax liability is recognized as of January 1, 2016, which will be recorded through the statement of income in later periods.

D. Currency translation adjustment and other reserves

Due to the changes in income and expenses recognized as a result of the adoption of the new revenue standard IFRS 15 and the different exchange rates that have to be used to translate income statement items as opposed to balance sheet items into the functional currency, unrealized exchange differences arise that have to be recognized in other comprehensive income. For the year ended December 31, 2016 an unrealized exchange loss of $0.2 million is recognized as a currency translation adjustment.

 

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Predecessor

Consolidated statement of income restatement under IFRS 15

 

     Predecessor     Period from January 1, 2017 to January 31, 2017  

($ in millions)

   As reported     Impact of IFRS 15     Note      Restated  

Revenues

   $ 81.3     $ 9.4       A      $ 90.7  

Cost of sales, excluding depreciation and amortization

     (32.2     (8.1     B        (40.3

Depreciation and amortization

     (4.2     —            (4.2

Selling, general and administrative expenses

     (21.8     —            (21.8

Research and development expenses

     (7.8     —            (7.8

Restructuring expenses

     (0.4     —            (0.4

Operating Profit

     14.9       1.3          16.2  

Interest expense

     (0.1     —            (0.1

Other income (expense) net

     (0.8     —            (0.8
  

 

 

   

 

 

      

 

 

 

Income before tax

     14.0       1.3          15.3  
  

 

 

   

 

 

      

 

 

 

Income tax expense

     (5.9     —         C        (5.9
  

 

 

   

 

 

      

 

 

 

Consolidated net income

   $ 8.1     $ 1.3        $ 9.4  
  

 

 

   

 

 

      

 

 

 

Consolidated statement of comprehensive income restatement under IFRS 15

 

     Predecessor     Period from January 1, 2017 to January 31, 2017  

($ in millions)

   As reported     Impact of IFRS 15      Restated  

Consolidated net income

   $ 8.1     $ 1.3      $ 9.4  
  

 

 

   

 

 

    

 

 

 

Other comprehensive income

       

Actuarial gains and losses

     23.0       —          23.0  

Tax effect

     (6.4     —          (6.4

Currency translation adjustment generated by the parent company

     7.8       —          7.8  
  

 

 

   

 

 

    

 

 

 

Items not potentially reclassifiable to profit and loss

     24.4       —          24.4  
  

 

 

   

 

 

    

 

 

 

Currency translation adjustment

     2.8       —          2.8  

Cash flow hedge

     0.2       —          0.2  
  

 

 

   

 

 

    

 

 

 

Items potentially reclassifiable to statement of income

     3.0       —          3.0  
  

 

 

   

 

 

    

 

 

 

Total other comprehensive income

     27.4       —          27.4  
  

 

 

   

 

 

    

 

 

 

Comprehensive income

   $ 35.5     $ 1.3      $ 36.8  
  

 

 

   

 

 

    

 

 

 

Consolidated statement of changes in equity restatement under the new revenue standard IFRS 15

No reconciliation of the restated consolidated statement of changes in equity is presented as the only changes to this primary statement for the relevant period presented are as follows:

Recognition of the restated consolidated net loss for the year ended January 31, 2017 as presented in the restated consolidated income statement for this year; and

Recognition of the restated currency translation adjustment and other reserves for the year ended January 31, 2017 as presented in the restated consolidated statement of comprehensive income for this period.

 

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Notes to the financial statements restatement under the new revenue standard IFRS 15

Management has undertaken an extensive exercise to consider the Company’s major contractual arrangements as part of the implementation of the new revenue standard IFRS 15. The area identified for adjustment relates to the contracts regarding the sale of equipment as well as the modifications and retrofits for equipment. Under the previous accounting standards, revenue for contracts regarding the sale of equipment was recognized under the completed-contract method. Under the new revenue standard IFRS 15, revenue for these contracts is recognized over time. The adjustments are discussed in the relevant sections below.

Consolidated income statement restatement under the new revenue standard IFRS 15

A. Revenues

Under the new revenue standard IFRS 15, the pattern and timing of revenue for sales of equipment recognition has changed, resulting in an overall increase of $9.4 million in revenue for the month ended January 31, 2017. Equipment revenues from GMF increased by $6.6 million, and equipment revenues from EL increased by $2.8 million.

Equipment revenues as of January 31, 2016 included an over-time portion of $4.3 million for EL and $4.6 million for GMF. All other revenue is recognized at a point in time for each segment.

B. Cost of sales

In line with the development of revenues, cost of sales increased by $8.1 million for the year ended January 31, 2017.

C. Taxation

Due to the changes in assets, liabilities, income and expenses recognized as a result of the application of the new revenue standard IFRS 15, there are IAS 12 “Income Taxes” differences that arise as discussed below:

Current tax assets and tax liabilities: There is no current tax expense impact for the month ended January 31, 2017.

Deferred taxes: Due to the changes in the pattern and timing of revenue recognition under the new revenue standard IFRS 15, a deferred tax liability is recognized as of January 1, 2016, which will be recorded through the statement of income in later periods.

 

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Successor

Consolidated statement of income restatement under IFRS 15

 

     Successor     Year ended December 31, 2017  

($ in millions)

   As reported     Impact of IFRS 15     Note      Restated  

Revenues

   $ 1,111.3     $ (17.5     A      $ 1,093.8  

Cost of sales, excluding depreciation and amortization

     (539.5     26.2       B        (513.3

Depreciation and amortization

     (136.2     —            (136.2

Selling, general, and administrative expenses

     (252.2     —            (252.2

Research and development expenses

     (74.5     —            (74.5

Restructuring expenses

     (10.8     —            (10.8

Operating Profit

     98.1       8.7          106.8  

Interest expense

     (94.1     —            (94.1

Other expense, net

     (26.2     —            (26.2

Acquisition related expenses

     (67.0     —            (67.0
  

 

 

   

 

 

      

 

 

 

Loss before tax

     (89.2     8.7          (80.5
  

 

 

   

 

 

      

 

 

 

Income tax expense

     (16.7     (2.6     C        (19.3
  

 

 

   

 

 

      

 

 

 

Consolidated net loss

   $ (105.9   $ 6.1        $ (99.8
  

 

 

   

 

 

      

 

 

 

Consolidated statement of comprehensive income restatement under IFRS 15

 

     Successor     Year ended December 31, 2017  

($ in millions)

   As reported     Impact of IFRS 15      Restated  

Consolidated net loss

   $ (105.9   $ 6.1      $ (99.8
  

 

 

   

 

 

    

 

 

 

Other comprehensive income

       

Currency translation adjustment

     177.5       0.5        178.0  

Hedge reserve

     (23.1     —          (23.1

Other

     (0.6     —          (0.6
  

 

 

   

 

 

    

 

 

 

Items potentially reclassifiable to statement of income

     153.8       0.5        154.3  
  

 

 

   

 

 

    

 

 

 

Total other comprehensive income

     153.8       0.5        154.3  
  

 

 

   

 

 

    

 

 

 

Comprehensive income

   $ 47.9     $ 6.6      $ 54.5  
  

 

 

   

 

 

    

 

 

 

 

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Consolidated balance sheet restatement under IFRS 15

 

     Successor      As of December 31, 2017  

($ in millions)

   As reported      Impact of IFRS 15     Note      Restated  

Assets

          

Non-current assets

          

Property, plant and equipment

   $ 441.4      $ —          $ 441.4  

Intangible assets

     1,692.0        —            1,692.0  

Goodwill

     1,100.6        1.5       I        1,102.1  

Non-current financial assets

     14.1        —            14.1  

Deferred tax assets

     0.2        —         C        0.2  

Other non-current assets

     23.8        —            23.8  
  

 

 

    

 

 

      

 

 

 

Total non-current assets

     3,272.1        1.5          3,273.6  

Current assets

          

Inventories

     151.5        (34.9     E        116.6  

Trade and other receivables

     286.1        6.5       F        292.6  

Current tax assets

     24.2        —         C        24.2  

Cash and cash equivalents

     325.8        —            325.8  
  

 

 

    

 

 

      

 

 

 

Total current assets

     787.6        (28.4        759.2  
  

 

 

    

 

 

      

 

 

 

Total assets

   $ 4,059.7      $ (26.9      $ 4,032.8  
  

 

 

    

 

 

      

 

 

 

Liabilities & shareholders’ equity

          

Shareholders’ equity

          

Common shares and preferred shares

   $ 124.5      $ —          $ 124.5  

Paid-in surplus and retained earnings

     1,014.1        6.1       G        1,020.2  

Currency translation adjustment and other reserves

     154.4        0.5       D        154.9  
  

 

 

    

 

 

      

 

 

 

Total shareholders’ equity

     1,293.0        6.6          1,299.6  

Non-current liabilities

          

Non-current borrowings

     1,756.3        —            1,756.3  

Deferred income taxes

     420.2        2.0       C        422.2  

Employee benefits

     141.7        —            141.7  

Provisions

     53.6        —            53.6  

Other non-current financial liabilities

     23.2        —            23.2  

Other non-current liabilities

     19.3        —            19.3  
  

 

 

    

 

 

      

 

 

 

Total non-current liabilities

     2,414.3        2.0          2,416.3  

Current liabilities

          

Current borrowings

     14.0        —            14.0  

Trade and other payables

     245.0        (35.5     H        209.5  

Current tax liabilities

     44.8        —         C        44.8  

Other current financial liabilities

     33.7        —            33.7  

Provisions

     14.9        —            14.9  
  

 

 

    

 

 

      

 

 

 

Total current liabilities

     352.4        (35.5        316.9  
  

 

 

    

 

 

      

 

 

 

Total liabilities & shareholders’ equity

   $ 4,059.7      $ (26.9      $ 4,032.8  
  

 

 

    

 

 

      

 

 

 

Consolidated cash flow statement restatement under the new revenue standard IFRS 15

As a result of the adoption of the new revenue standard IFRS 15, in 2017 the Company recognized new contract assets and contract liabilities as well as changes in prepayments from customers and the inventory

 

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position (refer to adjustment F, G and I below). Hence, certain reclassifications are required in relation to the respective cash flow movements between relevant balance sheet accounts.

There has been no change in the net cash generated from operations as a result of these reclassifications or restatement of these balance sheet accounts.

Notes to the financial statements restatement under the new revenue standard IFRS 15

Management has undertaken an extensive exercise to consider the Company’s major contractual arrangements as part of the implementation of the new revenue standard IFRS 15. The area identified for adjustment relates to the contracts regarding the sale of equipment as well as the modifications and retrofits for equipment. Under the previous accounting standards, revenue for contracts regarding the sale of equipment was recognized under the completed-contract method. Under the new revenue standard IFRS 15, revenue for these contracts is recognized over time. The adjustments are discussed in the relevant sections below.

Consolidated income statement and consolidated balance sheet restatement under the new revenue standard IFRS 15

A. Revenues

Under the new revenue standard IFRS 15, the pattern and timing of revenue recognition for sales of equipment has changed, resulting in an overall decrease of $17.5 million in revenue for the year ended December 31, 2017. Equipment revenues from GMF decreased by $16.2 million, and equipment revenues from EL decreased by $1.3 million.

Equipment revenues as of December 31, 2017 included an over-time portion of $70.1 million for EL and $33.6 million for GMF. All other revenue is recognized at a point in time for each segment.

Equipment revenues as of December 31, 2018 included an over-time portion of $55.1 million for EL and $36.2 million for GMF. All other revenue is recognized at a point in time for each segment.

B. Cost of sales

In line with the development of revenues, cost of sales decreased by $26.2 million for the year ended December 31, 2017.

C. Taxation

Due to the changes in assets, liabilities, income and expenses recognized as a result of the application of the new revenue standard IFRS 15, there are IAS 12 “Income Taxes” differences that arise as discussed below:

Current tax assets and tax liabilities: There is a $2.6 million current tax expense impact for the year ended December 31, 2017.

Deferred taxes: Due to the changes in the pattern and timing of revenue recognition under the new revenue standard IFRS 15, a deferred tax liability is recognized as of January 1, 2016, which will be recorded through the statement of income in later periods.

D. Currency translation adjustment and other reserves

Due to the changes in income and expenses recognized as a result of the adoption of the new revenue standard IFRS 15 and the different exchange rates that have to be used to translate income statement items as opposed to balance sheet items into the functional currency, unrealized exchange differences arise that have to be recognized in other comprehensive income. For the year ended December 31, 2017 an unrealized exchange gain of $0.5 million is recognized as a currency translation adjustment.

 

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E. Inventories

For the year ended December 31, 2017 inventories decreased by $34.9 million, which is generally attributable to decreases in work-in-progress due to the increase in cost of sales caused by the earlier recognition of revenue on equipment sales.

F. Trade and other receivables

The adoption of the new revenue standard IFRS 15 requires that when payments made are less than the revenue recognized at the period end date a contract asset for this difference must be recognized. For the year ended December 31, 2017, Atotech recognizes contract assets amounting to $6.5 million.

G. Paid-in surplus and retained earnings

Due to the changes in income and expenses recognized as a result of the adoption of the new revenue standard IFRS 15, the retained earnings position changes in correspondence to the net consolidated loss for the year ended December 31, 2017 ($6.1 million).

H. Trade and other payables

The adoption of the new revenue standard IFRS 15 requires that when payments made are greater than the revenue recognized at the period end date a contract liability for this difference must be recognized. For the year ended December 31, 2017 Atotech recognizes contract liabilities amounting to $2.1 million. Prepayments received from customers decreased by $37.6 million for the year ended December 31, 2017 due to the earlier recognition of revenue on equipment sales.

I. Goodwill

The portion of inventory step-up related to equipment inventory originally recorded in purchase accounting is devalued as a result of the implementation of IFRS 15. As a result, inventory is decreased, and a corresponding increase in goodwill of $1.5 million is recognized as of December 31, 2017. No further material changes in goodwill are recognized as of December 31, 2017.

Taxes

Tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

Interest and penalties related to income taxes, including uncertain tax treatments, are accounted for under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets.” Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax basis, and on carry-forwards of unused tax losses and tax credits.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective periods of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognized to the extent that it is probable that they will be able to be

 

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utilized against future taxable income, based on the Company’s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full.

Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

Employee Benefits

In accordance with the laws and practices of each country in which the Company operates, the Company participates in employee benefit plans offering retirement, death and disability, healthcare, and special termination benefits. These plans provide benefits based on various factors such as length of service, salaries, and contributions made to the governmental bodies responsible for the payment of benefits.

These plans can be either defined contribution or defined benefit pension plans and may be entirely or partially funded with investments made in various mutual funds and insurance contracts.

For defined contribution plans, expenses correspond to the contributions paid.

Defined benefit obligations are determined according to the projected unit cost method (PUCM). Plan assets are measured at fair value. Actuarial gains and losses may arise from differences between actuarial valuation and projected commitments and between projected and actual return of plan assets. Such gains or losses are recognized immediately in the statement of Other comprehensive income (loss) and are not subsequently recycled to the statement of income (loss).

Past service cost is recorded immediately in the statement of income, whether vested or unvested.

The net interest expense and service cost is recognized under “Selling, general, and administrative expenses.”

Share-based Payments

Predecessor

The parent company of the Predecessor, Total Holdings Europe S.A.S., granted employees stock options, employee share purchase plans, and offered its employees the opportunity to subscribe to reserved capital increases. These employee benefits are recognized as expenses.

The expense is equal to the fair value of the instruments granted. The expense is recognized on a straight-line basis over the period in which the awards are vested.

The fair value of the options was calculated using the Black-Scholes model at the grant date.

For restricted share plans, the fair value was calculated using the market price of shares at the grant date after deducting the expected distribution rate during the vesting period.

The number of allocated equity instruments can be revised during the vesting period in cases of non-compliance with performance conditions, with the exception of market conditions, or according to the rate of turnover of the beneficiaries.

 

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The cost of employee-reserved capital increases is immediately expensed. A discount reduces the expense in order to account for the non-transferability of the shares awarded to the employees over a period of five years.

Successor

The Company awards certain employees equity-settled, share-based compensation benefits on a discretionary basis through the Long-term Incentive Plan (see Note 17) and the Management Equity Plan (see Note 17), respectively.

The fair value of the awards is recognized as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the awards granted, excluding the impact of any non-market vesting conditions (for example, profitability and revenue growth targets). Non-market vesting conditions are included in assumptions about the number of awards that are expected to vest. At each balance sheet date, the Company revises its estimates of the number of awards that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. When options granted are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to common shares (nominal value) and additional paid in capital when the options are exercised.

The Company has applied IFRS 2 “Share Based Payment” and has adopted the Black-Scholes model for the purposes of measuring fair value for the awards.

Provisions

Provisions comprise liabilities of uncertain timing or amount that arise from environmental risks, legal and tax risks, litigation, and other risks. A provision is recognized when the Company has a present obligation (legal or constructive) as a result of a past event for which it is probable that an outflow of resources will be required and when a reliable estimate can be made regarding the amount of the obligation. The amount of the liability corresponds to the best possible estimate.

Leases

A finance lease transfers substantially all the risks and rewards incidental to ownership from the lessor to the lessee. These contracts are capitalized as assets at fair value or, if lower, at the present value of the minimum lease payments according to the contract. A corresponding financial debt is recognized as a financial liability. These assets are depreciated over the corresponding useful life used by the Company. The Company does not have any material finance leases.

Leases that are not finance leases as defined above are recorded as operating leases. Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease.

Certain arrangements do not take the legal form of a lease but convey the right to use an asset or a group of assets in return for fixed payments. Such arrangements are accounted for as leases and are analyzed to determine whether they should be classified as operating leases or as finance leases.

(4) Revision of Previously Issued Financial Statements

On May 5, 2017 Atotech B.V. (Predecessor) previously issued its audited financial statements as of and for the year ended December 31, 2016 (the “fiscal 2016 financial statements”). On March 16, 2018, Atotech UK Topco Limited (Successor) previously issued its audited financial for statements as of and for the year ended December 31, 2017 (the “fiscal 2017 financial statements”). The fiscal 2016 financial statements and fiscal 2017 financial statements were prepared on the basis of IFRS as adopted by the European Union and did not reflect the

 

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early adoption of IFRS 15 “Revenue from Contracts with Customers” on a fully retrospective basis (see Note 3). In addition to the adoption of IFRS 15, the Company has recorded adjustments to the Consolidated Balance Sheet as of December 31, 2017 as well as to the Consolidated Statement of Income, and Consolidated Statement of Cash Flows for its fiscal 2016 and fiscal 2017 financial statements for the following items: (1) capitalization of development activities that were previously expensed (impacting Intangible assets, Research and development expenses, and Depreciation and amortization), (2) increase in depreciation for fixed assets acquired in conjunction with the acquisition of Atotech B.V. by Atotech UK Topco (impacting Property, plant and equipment and Depreciation and amortization); (3) elimination of intercompany profit in inventory (impacting Inventories and Cost of sales, exclusive of depreciation and amortization); (4) tax impact of the aforementioned revisions (impacting Income tax benefit (expense), Deferred tax assets, and Deferred tax liabilities); and (5) tax litigation provisions identified in connection with the Business Combination in India and Thailand that related to facts and circumstances that existed as of January 1, 2016 (impacting Provisions and Retained earnings). All financial information contained in the accompanying notes has been revised to reflect these changes.

The following tables present the effect of the aforementioned revisions:

Predecessor

 

     Predecessor     For the year ended December 31,
2016
 

($ in millions)

   As reported,
restated for IFRS
15
    Adjustment     As revised  

Consolidated statement of income

      

Revenue

   $  1,124.5     $  (0.3)     $  1,124.2  

Operating profit

     230.2       20.9       251.1  

Income before income taxes

     216.4       20.9       237.3  

Consolidated net income

     154.7       18.3       173.0  

Consolidated statement of cash flows

      

Cash flow from operating activities

     211.6       18.0       229.6  

Cash flow used in investing activities

     (65.2     (18.0     (83.2

Predecessor

 

     Predecessor     For the period ended January 31,
2017
 

($ in millions)

   As reported,
restated for IFRS
15
    Adjustment     As revised  

Consolidated statement of income

      

Revenue

   $ 90.7     $ 0.6     $ 91.3  

Operating profit

     16.2       3.9       20.1  

Income before income taxes

     15.3       3.9       19.2  

Consolidated net loss

     9.4       3.8       13.2  

Consolidated statement of cash flows

      

Cash flow used in operating activities

     (10.2     1.5       (8.7

Cash flow used in investing activities

     (1.8     (1.5     (3.3

 

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Successor

 

     Successor     For the year ended December 31,
2017
 

($ in millions)

   As reported,
restated for IFRS
15
    Adjustment     As revised  

Consolidated balance sheet

      

Total non-current assets

   $ 3,273.6     $ 5.9     $ 3,279.5  

Total current assets

     759.2       (0.9     758.3  

Total assets

     4,032.8       5.0       4,037.8  

Total shareholders’ equity

     1,299.6       12.4       1,312.0  

Total non-current liabilities

     2,416.3       9.2       2,425.5  

Total current liabilities

     316.9       (16.6     300.3  

Total liabilities and shareholders’ equity

     4,032.8       5.0       4,037.8  

Consolidated statement of income

      

Revenue

     1,093.8       (0.2     1,093.6  

Operating profit

     106.8       7.9       114.7  

Loss before income taxes

     (80.5     10.4       (70.1

Consolidated net loss

     (99.8     13.0       (86.8

Consolidated statement of cash flows

      

Cash flow from operating activities

     95.3       11.9       107.2  

Cash flow used in investing activities

     (2,724.4     (11.9     (2,736.3

(5) Business Combinations

As discussed in Note 1, on January 31, 2017 all of the outstanding equity interests of Atotech B.V. were acquired by Alpha 3 B.V. This transaction was treated as a business combination in accordance with IFRS 3 “Business Combinations”, with Alpha 3 B.V. deemed the accounting acquirer for accounting purposes.

 

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A summary of the purchase price and final allocation at January 31, 2017 is as follows ($ in millions):

 

IFRS 3 consideration paid for the share capital of Atotech  B.V.:

 

  $ 2,878.5  
    Preliminary
fair value as of
January 31, 2017
    Measurement
period
adjustments
    Fair value  

Allocated to:

     

Intangible assets

  $ 1,639.1     $ 29.7     $ 1,668.8  

Property, plant and equipment

    446.3       (27.5     418.8  

Other assets

    5.5       —         5.5  

Other non-current assets

    12.6       —         12.6  

Inventories

    159.3       (1.3     158.0  

Accounts receivable

    245.0       —         245.0  

Other current assets

    44.4       —         44.4  

Cash

    184.6       —         184.6  

Deferred tax liabilities

    (462.6     22.4       (440.2

Deferred tax assets

    0.2       —         0.2  

Employee benefits

    (126.1     —         (126.1

Provisions and other non-current liabilities

    (36.5     (16.0     (52.5

Non-current financial debt

    (0.1     —         (0.1

Accounts payable

    (95.8     —         (95.8

Other creditors and accrued liabilities

    (114.0     (2.4     (116.4

Current financial debt

    (57.7     —         (57.7
 

 

 

   

 

 

   

 

 

 

Net assets acquired

  $ 1,844.2     $ 4.9     $ 1,849.1  
 

 

 

   

 

 

   

 

 

 

Goodwill as of February 1, 2017

  $ 1,034.3     $ (4.9   $ 1,029.4  
 

 

 

   

 

 

   

 

 

 

Foreign exchange rate impact

        72.3  
     

 

 

 

Goodwill as of December 31, 2017

      $ 1,101.7  
     

 

 

 

The measurement period adjustments reflect new information obtained about facts and circumstances that existed at the closing date of the Acquisition, primarily related to intangible assets, property, plant and equipment, inventories, provisions and other liabilities, other creditors and accrued liabilities and finalization of the Company’s opening balance sheet tax basis and the related deferred income taxes.

The excess of the purchase price over the estimated fair value of the assets and liabilities was recorded as goodwill and generally reflects the value paid by Alpha 3 B.V. for the general reputation of the business and collective experience of the management and employees of Atotech B.V. The Company operates as two CGUs. None of the goodwill created as a result of this transaction is deductible for tax purposes. Total IFRS 3 consideration paid was $2,878.5 million. There was no contingent consideration issued pursuant to the share purchase agreement and no post-acquisition adjustments to consideration paid.

The fair values of intangible assets were estimated using an income approach, either the excess earnings method (customer relationships) or the relief from royalty method (technology and trademarks). Under the excess earnings method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows attributable solely to the intangible asset over its remaining useful life. Under the relief from royalty method, fair value is measured by estimating future revenue associated with the intangible asset over its useful life and applying a royalty rate to the revenue estimate. These intangible assets enable the Company to develop new products to meet the evolving business needs as well as competitively produce existing products.

The fair value of real properties acquired was based on the consideration of their highest and best use in the market. The fair values of property, plant, and equipment, other than real properties, were based on the

 

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consideration that unless otherwise identified, they will continue to be used “as is” and as part of the ongoing business. In contemplation of the in-use premise and the nature of the assets, the fair value was developed primarily using a cost approach. The determination of the fair value of assets acquired and liabilities assumed involves assessing factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.

The difference between the fair value of inventories and their book value as of the acquisition date is recognized as an expense upon the sale of the inventories. For the year ending December 31, 2017 and December 31, 2018, a charge of $54.0 million and $0.9 million, respectively, has been included in Cost of sales, excluding depreciation and amortization.

The trade receivables comprise gross contractual amounts due of $257.7 million, of which $12.7 million was expected to be uncollectible at the date of acquisition. $50.9 million of transaction costs were recorded as a result of the Acquisition and is presented within Acquisition related expenses in the consolidated statement of income (loss).

If the acquisition had occurred on January 1, 2017, management estimates that consolidated revenue would have been $1,184.9 million, and consolidated loss for the year would have been $90.7 million. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same as if the acquisition had occurred on January 1, 2017.

(6) Property, Plant and Equipment

Changes in property, plant and equipment are analyzed in the following tables:

Predecessor

 

As of January 31, 2017    Cost  

($ in millions)

   January 1, 2017      Additions      Disposals     Currency
translation
adjustment
     Reclassifications     January 31, 2017  

Land and land improvements

   $ 26.3      $ 0.1      $ —       $ 0.3      $ —       $ 26.7  

Buildings and infrastructures

     193.1        —          —         3.0        —         196.1  

Complex installations and development work

     0.9        —          —         —          —         0.9  

Other tangible assets

     396.8        0.5        (0.1     7.0        0.3       404.5  

Construction in progress

     36.9        1.5          0.5        (0.3     38.6  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 654.0      $ 2.1      $ (0.1   $ 10.8      $ —       $ 666.8  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

As of January 31, 2017   Depreciation & Impairment        

($ in millions)

  January 1,
2017
    Increases     Decreases     Currency
translation
adjustment
    Reclassifications     January 31,
2017
    Net
book
value
Jan
2017
 

Land and land improvements

  $ (2.5   $ —       $ —       $ 0.1     $ —       $ (2.4   $ 24.3  

Buildings and infrastructures

    (81.3     (0.7     —         (1.5     —         (83.5     112.6  

Complex installations and development work

    (0.9     —         —         —         —         (0.9     —    

Other tangible assets

    (250.4     (2.9     0.1       (4.5     —         (257.7     146.8  

Construction in progress

    —         —         —         —         —         —         38.6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ (335.1   $ (3.6   $ 0.1     $ (5.9   $ —       $ (344.5   $ 322.3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Successor

 

As of December 31, 2017   Cost  

($ in millions)

  January 1,
2017
    Acquired via
Business
Combination
    Additions     Disposals     Currency
translation
adjustment
    Reclassifications     December 31,
2017
 

Land and land improvements

  $ —       $ 38.6     $ —       $ —       $ 2.4     $ —       $ 41.0  

Buildings and infrastructures

    —         144.8       7.3       (0.5     11.6       9.2       172.4  

Machinery and equipment

    —         124.6       3.0       (1.0     9.9       1.0       137.5  

Laboratory equipment

    —         43.1       0.8       (1.2     2.7       7.0       52.4  

Other tangible assets

    —         29.1       15.3       —         2.8       7.4       54.6  

Construction in progress

    —         38.6       6.3       (0.2     2.1       (24.6     22.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ —       $ 418.8     $ 32.7     $ (2.9   $ 31.5     $ —       $ 480.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

As of December 31, 2017   Depreciation & Impairment        

($ in millions)

  January 1,
2017
    Depreciation
charge
    Impairment     Disposals     Currency
translation
adjustment
    Reclassifications     December 31,
2017
    Net book
value
Dec. 31,
2017
 

Land and land improvements

  $ —       $ (0.7   $ —       $ —       $ —       $ —       $ (0.7   $ 40.3  

Buildings and infrastructures

    —         (5.1     —         0.5       (0.2     —         (4.8     167.6  

Machinery and equipment

    —         (15.4     —         (0.5     (0.5     —         (16.4     121.1  

Laboratory equipment

    —         (9.5     —         (0.4     (0.3     —         (10.2     42.2  

Other tangible assets

    —         (7.6     —         —         (0.1     —         (7.7     46.9  

Construction in progress

    —         —         (2.7     —         (0.2     —         (2.9     19.3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ —       $ (38.3   $ (2.7   $ (0.4   $ (1.3   $ —       $ (42.7   $ 437.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

As of December 31, 2018    Cost  

($ in millions)

   January 1,
2018
     Additions      Disposals     Currency
translation
adjustment
    Reclassifications     December 31,
2018
 

Land and land improvements

   $ 41.0      $ —        $ (0.8   $ (1.6   $ (0.5   $ 38.1  

Buildings and infrastructures

     172.4        0.3        (1.2     (8.1     0.5       163.9  

Machinery and equipment

     137.5        2.4        (2.3     (6.1     9.6       141.1  

Laboratory equipment

     52.4        1.5        (2.2     (1.8     5.5       55.4  

Other tangible assets

     54.6        6.3        (2.3     (2.7     (3.2     52.7  

Construction in progress

     22.2        18.0        (1.6     (1.5     (17.2     19.9  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 480.1      $ 28.5      $ (10.4   $ (21.8   $ (5.3   $ 471.1  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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As of December 31, 2018   Depreciation & Impairment        

($ in millions)

  January 1,
2018
    Depreciation
charge
    Impairment     Disposals     Currency
translation
adjustment
    Reclassifications     December 31,
2018
    Net book
value
Dec. 31,
2018
 

Land and land improvements

  $ (0.7)     $ (0.2   $ —       $ —       $  0.1     $ (0.3   $ (1.1   $ 37.0  

Buildings and infrastructures

    (4.8     (14.3     (1.3     0.6       0.5       —         (19.3     144.6  

Machinery and equipment

    (16.4     (11.9     (1.5     1.5       1.0       (2.6     (29.9     111.2  

Laboratory equipment

    (10.2     (11.7     (1.1     1.4       0.6       (0.1     (21.1     34.3  

Other tangible assets

    (7.7     (13.4     (0.5     0.5       1.1       2.8       (17.2     35.5  

Construction in progress

    (2.9     —         —         —         —         2.8       (0.1     19.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $  (42.7)     $  (51.5)     $ (4.4   $  4.0     $ 3.3     $ 2.6     $ (88.7   $ 382.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

In January 2017 additions amounted to $2.1 million (acquisition and net variation of assets under construction). The capital expenditures have been mainly made for laboratory and multi plate equipment in Korea ($1.0 million), for multi plate equipment in Germany ($0.6 million) and the investments to the Development Center in India ($0.4 million). The capital expenditures is also influenced by the Chemistry Production plant in Yangzhou (China) with an amount of $0.1 million. On the other hand the depreciation and impairment amounted to $3.6 million.

In 2017 additions amounted to $32.7 million. Capital expenditures have been mainly made for the Development Center in India ($12.3 million) and in China for the Chongqing Tech Center ($6.2 million). Capital expenditures are also influenced by the Chemistry Production plant in Yangzhou (China) with an amount of $3.3 million and investments in multi plate technical center equipment in Germany and Taiwan (accumulated investments of $3.9 million).The impairment of $2.7 million relates to an equipment line intended to serve experimental purposes.

In 2018 additions amounted to $28.5 million. Capital expenditures have been mainly made for the Chemistry Production plant in Yangzhou (China) with an amount of $9.2 million, for the Development Center in India ($3.1 million) and equipment at customer totaling $5.5 million. Capital expenditures are also influenced by investments in IT hardware with an amount of $3.8 million. The impairment of $4.4 million primarily relates to the relocation of production facilities in Southeast Asia ($1.8 million) and a reduction of fair value of our tech center in India ($1.4 million).

The net movement of $2.7 million in the reclassifications is due to an asset transfer from Property, plant & equipment to Inventories in 2018.

 

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(7) Goodwill and Other Intangible Assets

Intangible assets are analyzed in the following tables:

Predecessor

 

As of January 31, 2017    Cost  

($ in millions)

   January 1, 2017      Additions      Disposals      Currency
translation
adjustment
     Reclassifications      January 31, 2017  

Goodwill

   $ 47.4      $ —        $ —        $ 0.6      $ —        $ 48.0  

Other intangible assets

     138.2        —          —          2.5        —          140.7  

Capitalized development costs

     22.5        1.7        —          0.1        —          24.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 208.1      $ 1.7      $ —        $ 3.2      $ —        $ 213.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

As of January 31, 2017    Amortization & Impairment  

($ in millions)

   January 1, 2017     Increases     Decreases      Currency
translation
adjustment
    January 31,
2017
    Net book
value
Jan 2017
 

Goodwill

   $ (18.2   $ —       $ —        $ (0.7   $ (18.9   $ 29.1  

Other intangible assets

     (100.8     (0.6     —          0.1       (101.3     39.4  

Capitalized development costs

     —         —         —          —         —         24.3  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ (119.0   $ (0.6   $ —        $ (0.6   $ (120.2   $ 92.8  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Successor

 

As of December 31, 2017   Cost  

($ in millions)

  January 1, 2017     Acquired via
Business
Combination
    Additions     Disposals     Currency
translation
    Reclassifications     December 31,
2017
 

Goodwill

  $ —       $ 1,029.4     $ —       $ —       $ 72.3     $ —       $ 1,101.7  

Customer relationships

    —         1,013.0       —         —         74.7       —         1,087.7  

Developed technology

    —         542.0       —         —         40.0       —         582.0  

Trade name

    —         79.0       —         —         5.8       —         84.8  

Other intangible assets

    —         32.1       4.6       (0.5     3.6       —         39.8  

Capitalized development costs

    —         2.6       13.6       (2.6     0.2       —         13.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ —       $ 2,698.1     $ 18.2     $ (3.1   $ 196.6     $ —       $ 2,909.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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As of December 31, 2017   Amortization & Impairment        

($ in millions)

  January 1,
2017
    Amortization
charge
    Impairment     Disposals     Currency
translation
    Reclassifications     December 31,
2017
    Net book
value
Dec. 31,
2017
 

Goodwill

  $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ 1,101.7  

Customer relationships

    —         (55.6     —         —         (1.9     —         (57.5     1,030.2  

Developed technology

    —         (34.2     —         —         (1.2     —         (35.4     546.6  

Trade name

    —         (3.8     —         —         (0.1     —         (3.9     80.9  

Other intangible assets

    —         (5.2     —         —         (0.6     —         (5.8     34.0  

Capitalized development costs

    —         —         —         —         —         —         —         13.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ —       $ (98.8   $ —       $ —       $ (3.8   $ —       $ (102.6   $ 2,807.2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

As of December 31, 2018   Cost  

($ in millions)

  January 1, 2018     Additions     Disposals     Currency
translation
    Reclassifications     December 31,
2018
 

Goodwill

  $ 1,101.7     $ —       $ —       $ (47.8   $ —       $ 1,053.9  

Customer relationships

    1,087.7       —         —         (46.5     —         1,041.2  

Developed technology

    582.0       —         —         (24.9     —         557.1  

Trade name

    84.8       —         —         (3.6     —         81.2  

Other intangible assets

    39.8       1.7       (0.1     (1.8     (3.1     36.5  

Capitalized development costs

    13.8       30.4       —         (0.4     3.2       47.0  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 2,909.8     $ 32.1     $ (0.1   $ (125.0   $ 0.1     $ 2,816.9  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

As of December 31, 2018   Amortization & Impairment        

($ in millions)

  January 1,
2018
    Amortization
charge
    Impairment     Disposals     Currency
translation
    Reclassifications     December 31,
2018
    Net book
value
Dec. 31,
2018
 

Goodwill

  $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ 1,053.9  

Customer relationships

    (57.5     (61.7     —         —         4.2       —         (115.0     926.2  

Developed technology

    (35.4     (38.1     —         —         2.6       —         (70.9     486.2  

Trade name

    (3.9     (4.3     —         —         0.3       —         (7.9     73.3  

Other intangible assets

    (5.8     (5.7     (1.3     0.1       0.5       —         (12.2     24.3  

Capitalized development costs

    —         (0.4     (4.2     —         0.1       —         (4.5     42.5  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ (102.6)     $ (110.2)     $ (5.5   $ 0.1     $ 7.7     $ —       $ (210.5   $ 2,606.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Impairment of non-financial Assets (including Goodwill)

Successor

The annual impairment test was carried out in the fourth quarter of 2017 and 2018 in order to test the goodwill for impairment. Impairment shall be recognized if, with regard to the individual CGU, the carrying amount of the goodwill exceeds the recoverable amount. This recoverable amount corresponds to the higher of fair value less costs of disposal and its value in use. The recoverable amount of the performed impairment tests was based on the concept of the fair value less costs of disposal (FVlCoD), measured using discounted cash flow projections.

The goodwill was allocated to the CGUs of the Company as follows:

 

($ in millions)

   Successor
December 31, 2017
     Successor
December 31, 2018
 

GMF

   $ 451.7      $ 432.1  

EL

     650.0        621.8  
  

 

 

    

 

 

 

Total

   $ 1,101.7      $ 1,053.9  
  

 

 

    

 

 

 

The following table shows the material assumptions used in determining the fair value less costs of disposal, including the input factors used for cash flow projections and the weighted cost of capital for each CGU as of December 31, 2017 and 2018:

 

Planning Assumptions

   December 31, 2017     December 31, 2018  
       GMF         EL         GMF         EL    

Revenue growth p.a. in the planning period (CAGR)

     2.3     3.5     3.1     4.8

Growth rate in the terminal period

     2.0     2.0     2.0     2.0

WACC

     10.0     10.1     9.6     9.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of Disposal

     1.0     1.0     1.0     1.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Planning assumptions are based on market studies of third parties and other internal and external planning data. The financial planning process for each CGU is based on a structured approach that is carried out once a year. The first (full) planning year (in this case 2019) is planned in detail. From 2020 onwards, a four-year high level budget has been applied for impairment test purposes. The applied budget is in line with the Company’s mid-term plan. At this level besides cash flow and net debt the focus of the presented planning data is on revenue growth. After the mid-term plan period a terminal value is determined based on the expected long-term growth rate applicable to each CGU.

For discounting the future cash flows a post-tax weighted average cost of capital (WACC) of 9.6% has been applied to the GMF CGU and 9.4% to the EL CGU.

A long-term growth rate of 2.0% was ascertained on the basis of the forecast for long-term annual average industry developments and applied in determining the terminal value for both CGUs.

As part of the annual impairment testing as at October 1, 2018, a sensitivity analysis was also conducted. A decrease in the long-term growth rate of a half percent was assumed which also indicated no impairment, due to the excess headroom when comparing the analysis to the carrying value of each CGU. There is no reasonably possible change in a key assumption on which management has based its determination of the CGUs (GMF and EL) recoverable amounts that would cause the CGUs carrying amounts to exceed its recoverable amounts.

 

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(8) Inventories

 

     Successor     Successor  

($ in millions)

   As of December 31,
2017
    As of December 31,
2018
 

Chemical products inventories

   $ 94.7     $ 90.0  

Equipment inventories

     33.6       45.6  

Other inventories

     0.1       (0.2

Valuation allowance on chemical product inventories

     (7.4     (2.8

Valuation allowance on Equipment inventories

     (8.2     (11.1
  

 

 

   

 

 

 

Total

   $ 112.8     $ 121.5  
  

 

 

   

 

 

 

The difference between the fair value of inventories and their book value as of the Acquisition date of $52.4 million were recognized as an expense upon the sale of the inventories.

Inventories comprise of the following:

 

     Successor      Successor  

($ in millions)

   As of December 31,
2017
     As of December 31,
2018
 

Raw materials

   $ 38.4      $ 37.3  

Finished and unfinished goods

     74.4        84.2  
  

 

 

    

 

 

 

Total

   $ 112.8      $ 121.5  
  

 

 

    

 

 

 

(9) Trade and other current Receivables

 

     Successor     Successor  

($ in millions)

   As of December 31,
2017
    As of December 31,
2018
 

Customers

   $ 282.8     $ 257.2  

Notes receivable

     7.7       7.0  

Allowance for doubtful accounts

     (14.6     (13.1

Contract assets

     6.5       7.9  
  

 

 

   

 

 

 

Trade receivables, net

     282.4       259.0  
  

 

 

   

 

 

 

Other debtors

     4.3       6.7  

Advance payments to suppliers

     3.0       7.8  

Impairment on other debtors

     (0.2     (0.2
  

 

 

   

 

 

 

Other current receivables, net

     7.1       14.3  
  

 

 

   

 

 

 

Prepaid expenses

     7.5       5.3  

Receivables from personnel and social security organization

     0.2       0.2  
  

 

 

   

 

 

 

Total trade and other current receivables

   $ 297.2     $ 278.8  
  

 

 

   

 

 

 

Allowance for doubtful accounts represent the Company’s estimate of losses that could arise from the failure or inability of customers to make payments when due. These estimates are based on the ageing of customers’ balances, specific credit circumstances and the Company’s historical collection experience. During fiscal 2017, the Company incurred an additional allowance of $1.9 million, of which $1.1 million is due to currency translation adjustment. During fiscal 2018, the net allowance decreased by $1.5 million, of which $0.8 million is due to currency translation adjustment.

 

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Aging

 

     Successor      Successor  

($ in millions)

   As of December 31,
2017
     As of December 31,
2018
 

Trade receivables, net

   $ 282.4      $ 259.0  

Other operating receivables, net

     7.1        14.3  
  

 

 

    

 

 

 

Total

     289.5        273.3  
  

 

 

    

 

 

 

Not past due receivables

     254.1        238.1  

Past due receivables

     32.1        31.8  

- within 90 days

     29.2        26.3  

- between 90 days and 6 months

     2.0        3.3  

- between 6 months and 12 months

     0.3        1.3  

- more than 12 months

     0.6        0.9  

Past due receivables which are partially impaired

     3.3        2.4  

Receivables from partners

     —          1.0  
  

 

 

    

 

 

 

Total

   $ 289.5      $ 273.3  
  

 

 

    

 

 

 

Weighted average loss rate

 

Weighted average loss rate

   As of December 31,
2018
 

Not past due receivables

     2.2

Past due receivables

  

- within 90 days

     3.7

- between 90 days and 6 months

     26.6

- between 6 months and 12 months

     46.7

- more than 12 months

     95.2
  

 

 

 

Based on the historic trend and expected performance of the customers, the Company believes that the above allowance for doubtful receivables sufficiently covers the risk of default.

In 2017 maturity of prepaid expenses of $7.5 million and receivables from personnel and social security organization of $0.2 million is less than 12 months.

In 2018 maturity of prepaid expenses of $5.3 million and receivables from personnel and social security organization of $0.2 million is less than 12 months.

(10) Other non-current Assets

Other non-current assets are analyzed in the following table:

 

     Successor      Successor  

($ in millions)

   As of December 31,
2017
     As of December 31,
2018
 

Advanced payments for land use

   $ 11.8      $ 11.0  

Prepaid expenses

     5.3        3.9  

Receivables from personnel

     1.0        1.1  

Surplus pension assets

     0.9        —    

Equity method investment

     1.7        1.2  
  

 

 

    

 

 

 

Other non-current assets

   $ 20.7      $ 17.2  
  

 

 

    

 

 

 

 

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Prepaid expenses fully comprise of prepaid insurance premium which are amortized over the maturity of the insurance policy.

The surplus of pension assets in Atotech Deutschland is analyzed in the following table:

 

     Successor  

($ in millions)

   As of December 31,
2017
 

Fair value of pension assets

   $ 31.2  

Related pension liabilities

     (30.3
  

 

 

 

Pension assets surplus

   $ 0.9  
  

 

 

 

Atotech Deutschland invested in a pension fund in order to meet its obligations to a part of its former employees. The pension fund is held in trust by Allianz Pensionsfonds AG. The fair value of the plan asset is netted with the related pension liabilities. As of December 31, 2017 the surplus is totaling $0.9 million due to asset ceiling. The valuation of the plan assets is based on the plan asset data provided by Allianz Pensionsfonds AG. The book value corresponds to the quoted market price.

(11) Shareholders’ Equity

Successor

In connection with the consummation of the Acquisition, affiliates of The Carlyle Group contributed cash to Atotech UK Topco Limited in the aggregate amount of $1,245 million in exchange for 26.2 million Common Shares (nominal value of $0.10) and 1,219 million Preferred Shares (nominal value of $0.10) of Atotech UK Topco Limited. Common Shares contain standard voting rights while Preferred Shares contain no voting rights but are entitled to a 12% compounded annual dividend prior to any dividend distributions made to holders of Common Shares. Preferred dividends are at the discretion of the Company and are not mandatory to be paid each period. Given that the Company has unilateral control over the payment of dividends to the holders of Preferred Shares, the Preferred Shares have been presented as equity.

In connection with the issuance of the Holdco Notes and the incremental borrowing under Term B-1 loan in May 2018 (see Note 12), the Group paid $490.5 million to the holders of Preferred Shares consisting of $201.0 million of accrued and unpaid interest (from January 31, 2017) and $289.5 million to redeem 289,485,380 Preference Shares.

Shareholders’ equity is as follows:

 

($ in millions)

   As of December 31,
2017
     As of December 31,
2018
 

Shareholders’ equity

     

Common shares

   $ 2.6      $ 2.6  

Preferred shares

     121.9        93.0  

Paid-in surplus and retained earnings

     1,035.5        549.4  

Currency translation adjustment and other reserves

     152.0        59.7  
  

 

 

    

 

 

 

Total shareholders’ equity

   $ 1,312.0      $ 704.7  
  

 

 

    

 

 

 

Currency translation adjustment and other reserves

The currency translation adjustment comprises the cumulative gains and losses arising from translating the financial statements of foreign operations that use functional currencies other than U.S. dollar. It also includes cumulative gains and loss from translating Term Loan B-3 from RMB into U.S. dollars (see Note 13).

 

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The other reserves comprise the hedging reserve of the subsidiaries. The hedging reserve consists of the effective portion of the gains and losses on hedging instruments related to hedged transactions that have not occurred yet.

(12) Non-current and current Borrowings

Successor

 

($ in millions)

   As of December 31,
2017
     As of December 31,
2018
 

Other non-current financial borrowings

   $ 1,344.5      $ 1,496.6  

Opco Notes

     425.0        425.0  

Holdco Notes

     —          298.0  

Non-current borrowings

     1,769.5        2,219.6  
  

 

 

    

 

 

 

Current portion of non-current financial borrowings

     0.8        1.4  
  

 

 

    

 

 

 

Current borrowings

     0.8        1.4  
  

 

 

    

 

 

 

Total borrowings

   $ 1,770.3      $ 2,221.0  
  

 

 

    

 

 

 

The following is a summary of the Company’s current and non-current borrowings:

 

($ in millions)

   As of
December 31, 2017
    As of
December 31, 2018
 

Senior Secured Credit Facilities:

    

Revolving credit facility

    

Term Loan B-1

   $ 886.5     $ 1,060.0  

Term Loan B-3

     517.9       484.9  

6.25% Opco Notes

     425.0       425.0  

8.75%/9.50% Holdco Notes

     —         300.0  

Less – Deferred financing costs

     (59.9     (50.3
  

 

 

   

 

 

 

Total non-current borrowings

     1,769.5       2,219.6  
  

 

 

   

 

 

 

Senior Secured Credit Facilities:

    

Revolving credit facility

    

Term Loan B-1

     0.8       11.0  

Term Loan B-3

     —         5.0  

Short-term financing costs

     —         (14.6
  

 

 

   

 

 

 

Total current borrowings

     0.8       1.4  
  

 

 

   

 

 

 

Total borrowings

   $ 1,770.3     $ 2,221.0  
  

 

 

   

 

 

 

On January 31, 2017 Alpha 3 B.V. and Alpha US Bidco, Inc. entered into the senior secured credit facilities which consist of a term loan facility due on January 31, 2024 and a multicurrency revolving credit facility due on January 31, 2022. The revolving credit facility provides for revolving loans and letters of credit pursuant to commitments in an aggregate principal amount of $250.0 million, with a letter of credit sublimit of $75.0 million. The Company intends to use future borrowings under the revolving credit facility to fund working capital and for other general corporate purposes, including permitted acquisitions and other investments. The Company’s ability to draw under on the revolving credit facility or issue letters of credit thereunder will be conditioned upon, among other things, delivery of required notices, accuracy of the representations and warranties contained in the credit agreement governing the new senior secured credit facilities and the absence of any default or event of default under the new senior secured credit facilities, subject to certain exceptions. At December 31, 2018 the Company had $250 million of available borrowings under its revolving credit facility.

 

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As of January 31, 2017 (“Closing Date”), the Company issued $1,400.0 million of term loans, net of original issue discount (OID) of $7.0 million. Proceeds from the term loan were used in connection with the Acquisition. In connection with the issuance of the term loans, the Company capitalized $49.0 million of debt financing costs. The $1,400.0 million term loan facility consisted of two tranches: one tranche in the aggregate amount of $900.0 million that was incurred by both Alpha 3 B.V. and Alpha US Bidco, Inc. and a second tranche in the U.S. dollar equivalent amount of $500.0 million that was incurred by Alpha 3 B.V. (the “RMB Tranche”). The RMB Tranche was initially incurred entirely in U.S. dollars. As of December 31, 2018, Alpha 3 B.V. had redenominated all of the $500.0 million RMB Tranche to its RMB equivalent, per the terms of the original agreement. As of each day of redenomination, all redenominated debt was designated as a hedge of the foreign exchange rate movements of the Company’s net investment in its Chinese subsidiaries. Refer to Note 3 for further information on hedging. Associated with the redenomination, the Company capitalized an additional $32.0 million of redenomination related fees, of which $20.3 million remains to be paid in 2019 and 2020. Principal repayments equivalent to 0.25% of the aggregate principal amount of the initial Term B-1 and Term B-2 loans are due quarterly beginning on September 30, 2017, with all unpaid aggregate amounts due on the maturity date. Principal repayments equivalent to 1.00% of the aggregate principal amount of the Term B-3 loans are due on an annual basis.

Borrowings under the revolving credit facility and portion of the term loan facility denominated in U.S. dollars bear interest at a floating rate which can be, at the Company’s option, (x) with respect to the term loan facility, either (i) LIBOR plus 3.00% or (ii) an alternate base rate plus 2.00% and (y) with respect to the revolving credit facility, either (i) LIBOR plus 3.75% or (ii) an alternate base rate plus 2.75% in either case, subject to LIBOR floor of 1.00% or a base rate floor of 2.00% in the case of the term loan facilities denominated in U.S. dollars and a LIBOR and Base Rate floor of 0.00%, in the case of the revolving facilities. The applicable margin for the Company’s revolving credit facilities is subject to adjustment based on the Company’s consolidated first lien net leverage ratio with two 25 basis point step-downs. The term loan facilities denominated in RMB incur interest based on a benchmark rate (the “PBOC Benchmark Rate”) specified by the Bank of China Limited, Shanghai Branch at the time the loans are redenominated. Such rate reflects the official lending rate per annum set by the People’s Bank of China. The margin applicable to such term loans denominated in RMB is 100% of the PBOC Benchmark Rate for five years following the Closing Date and 130% of the PBOC Benchmark Rate thereafter until final maturity. At December 31, 2018 the Company’s selected rate for U.S. dollar denominated loans was 5.39% based on LIBOR of 2.39% and the PBOC Benchmark Rate for RMB denominated loans was 4.90%. The Company’s revolving credit facility will mature on the fifth anniversary of the Closing Date and the Company’s term loan facility will mature on the seventh anniversary of the Closing Date.

On January 31, 2017, the Company issued fixed rate 6.25% Opco Notes in the amount of $425 million due on February 1, 2025 (the “Opco Notes”). Interest on the Opco Notes is due semi-annually in arrears on each February 1st and August 1st, starting August 1, 2017. There are no mandatory principal payments required until maturity. Proceeds from the Opco Notes were used in connection with the Acquisition. In connection with the issuance of the Opco Notes, the Company capitalized $1 million of debt financing costs, which is net of $15 million related to embedded derivatives identified in the indenture governing the Opco Notes and bifurcated and recorded separately for accounting purposes.

On May 30, 2018 Alpha 3 B.V. entered into an amendment to the senior secured credit facility to borrow $200.0 million in incremental Term B-1 loans. Principal repayments equivalent to 0.25% of the aggregate principal amount of the incremental Term B-1 loans are due quarterly. There were no other changes to the terms or maturity dates of the senior secured credit facility.

On May 30, 2018 Alpha 2 B.V. issued $300.0 million of 8.75%/9.50% Senior PIK Toggle Notes at an issue price of 99.010% (the “Holdco Notes”). The Holdco Notes are senior unsecured obligations and mature on June 1, 2023. The Holdco Notes bear interest at 8.750% per annum. Interest on the Holdco Notes is payable on June 1 and December 1 of each calendar year, with the first interest payment paid on December 1, 2018. The

 

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Holdco Notes permit Holdco, if certain conditions are met, to issue additional Holdco Notes in lieu of paying cash interest. Any additional Holdco Notes issued in lieu of paying cash interest will bear interest at the rate of 9.50%. The Holdco Notes are structurally subordinated to the senior secured credit facility and the Opco Notes and rank pari passu to all existing and future senior indebtedness of Alpha 2 B.V., and are effectively subordinated to any secured debt of Holdco to the extent of the value of assets securing such indebtedness.

On and after June 1, 2019, Alpha 2 B.V. may redeem the Holdco Notes in whole at any time or in part from time to time, upon notice, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

 

Period

   Redemption Price  

2019

     102.0

2020

     101.0
  

 

 

 

2021 and thereafter

     100.0
  

 

 

 
  

 

 

 

To date, no Holdco Notes have been redeemed. Upon the occurrence of specific kinds of change in control, Holdco may be required to repurchase some or all of the outstanding Holdco Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

The Company capitalized debt issuance costs of $2.9 million in connection with the May 30, 2018, senior secured credit facility amendment. The Company capitalized debt issuance costs of $9.7 million in connection with the issuance of the Holdco Notes (including $3.0 million of original issued discount). The debt issuance costs capitalized are amortized over the remaining term of the senior secured credit facility, Opco Notes, and the Holdco Notes using the effective interest method.

Proceeds from the incremental Term B-1 loan and issuance of the Holdco Notes were used to pay accrued interest on the Preferred Shares and redeem a certain number of Preferred Shares (see Note 11).The term loan, Opco Notes, and Holdco Notes are collateralized by substantially all the assets of the Company and both agreements include covenants that define maximum net leverage ratios. However, net leverage ratio is only applicable when drawing of revolving facility is higher than 35% of the revolving commitment. As of December 31, 2018, no drawing of the revolving credit facility occurred. Hence, the Company was in compliance with all financial covenants through the period to December 31, 2018.

 

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Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

 

($ in millions)

              Cash Changes     Non-cash Changes        
  As of
January 1,
2018
    Borrowings
obtained

during
2018
    LOGO

 

    LOGO

 

    LOGO

 

    LOGO

 

    LOGO

 

    LOGO

 

   

 

LOGO

 

    LOGO

 

    As of
December 31,
2018
 

Long-term borrowings

  $ 1,769.5     $ 500.0     $ (12.6   $ (29.7   $ —       $ 6.9     $ 14.0     $ (0.6   $ (27.9   $ —       $ 2,219.6  

Term Loans (B-1/B-2/B-3)

    1,344.5       200.0       (2.9     (29.7     —         —         14.0       (1.3     (27.9     —         1,496.7  

Opco Notes

    425.0       —         —         —         —         —         —         —         —         —         425.0  

Holdco Notes

    —         300.0       (9.7     —         —         6.9       —         0.7       —         —         297.9  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Short-term borrowings

    13.0       0.0       —         —         —         —         —         0.8       (0.2     1.9       15.5  

Term Loans (B-1/B-2/B-3)

    0.8       —         —         —         —         —         —         1.4       (0.2     —         2.0  

Holdco Notes

    —         —         —         —         —         —         —         (0.6     —         —         (0.6

Accrued Interests (Term Loans, Opco Notes)

    12.2       —         —         —         —         —         —         —         —         1.9       14.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Lease liabilities

    —         —       —         —         —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities from financing activities

  $ 1,782.5     $ 500.0     $ (12.6   $ (29.7   $ —       $ 6.9     $ 14.0     $ 0.2     $  (28.1   $ 1.9     $ 2,235.1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(13) Non-current and current Financial Assets and Liabilities

 

     Successor      Successor  

($ in millions)

   As of December 31,
2017
     As of December 31,
2018
 

Fair value of non-current derivatives—assets

   $ 14.1      $ 18.1  

Non-current financial assets

     14.1        18.1  

Fair value of non-current derivatives—liabilities

     23.1        —    

Finance lease

     0.1        0.1  
  

 

 

    

 

 

 

Non-current financial liabilities

     23.2        0.1  
  

 

 

    

 

 

 

Factoring related assets

     —          1.4  

Fair value of current derivatives—assets

     —          0.2  

Current financial assets

     —          1.6  

Current bank debt

     11.3        7.6  

Accrued interest on non-Group financial debt

     12.2        14.1  

Fair value of current derivatives—liabilities

     10.2        16.7  

Current financial liabilities

     33.7        38.4  

Total financial assets

     14.1        19.7  

Total financial liabilities

   $ 56.9      $ 38.5  
  

 

 

    

 

 

 

 

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In 2017 and 2018 Current bank debt represents amounts outstanding under the Company’s various local currency revolving lines of credit.

The following table presents the fair value of derivatives and their location on the balance sheet at December 31, 2018:

 

    Derivative Assets    

Derivative Liabilities

 
          Fair Value as of               Fair Value as of  

($ in millions)

  Balance Sheet Item     December 31,
2018
        Balance Sheet Item     December 31,
2018
 

Embedded Derivatives

   
Non-current
financial assets
 
 
  $ 16.8         $ —    

Foreign exchange contracts

   
Non-current financial
assets (Collar)
 
 
    1.3           —    

Foreign exchange contracts

   
Current financial
assets (Forwards)
 
 
    0.2    

Foreign exchange contract (Forward)

   
Current financial
liabilities
 
 
    16.7  
   

 

 

       

 

 

 

Total

    $ 18.3         $ 16.7  
   

 

 

       

 

 

 

The following table presents information on gains and losses on derivative instruments which are recorded in “Other income (expense), net” on the statement of income (loss):

 

            Amount of Gain (Loss)
Recognized in Income on
Derivatives
 

($ in millions)

          Year ended December 31,
2018
 

Embedded Derivatives

     Fair value of derivatives      $ (4.3

Foreign exchange contracts

     Fair value of derivatives        (1.5
     

 

 

 

Total

      $ (5.8
     

 

 

 

Transfer of financial assets

Factoring transactions with substantially all risks and rewards being transferred.

In 2018, Atotech entered into a factoring transaction under which a buyer of receivables is required to purchase current trade receivables. The bank’s purchase obligation revolves on a monthly basis and covers a maximum receivables amount of $5.7 million when translated in USD. The agreement has an indefinite term. The risks relevant for the risk assessment with respect to the receivables sold are the credit risk and the risk of late payments (late-payment risk). The credit risk represents substantially all the risks and rewards of ownership of the receivables and is transferred to the buyer of the receivables in full in return for payment of a fixed purchase price discount. The late-payment risk continues to be borne in full by Atotech. The maximum exposure to loss resulting from late-payment risk relating to the receivables sold and derecognized as of December 31, 2018 (nominal volume $1.9 million when translated in USD) is $0.0 million. At the derecognition date, the fixed purchase price discount was expensed. The expected loss resulting from the late-payment risk represents Atotech’s entire continuing involvement. Atotech expensed $0.0 million when translated in USD in total in the 2018 financial year from program fees (interest and bank margin). As of December 31, 2018, a total provision of $0.0 million was recognized for the receivables management to be performed by Atotech.

Factoring transactions involving the splitting of significant risks and rewards with control remaining at Atotech.

In 2018, Atotech entered into a secured factoring transaction under which it sells trade receivables on a revolving basis. The bank’s purchase obligation revolves on a monthly basis and covers a maximum receivables

 

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amount of $5 million. The agreement has an indefinite term. The risks relevant for the risk assessment with respect to the receivables sold are the credit risk, the risk of late payments (late-payment risk) and the f/x risk. As of December 31, 2018 the amount of receivables sold and derecognized was $5 million.

The maximum credit risk to be borne by Atotech amounts to $0.5 million as of the reporting date. The other credit risk-related losses are borne by the buyer. The late-payment risk continues to be borne in full by Atotech. The maximum exposure to loss for Atotech resulting from credit risk, late-payment risk and f/x risk relating to the receivables sold at the reporting date is $0.6 million. Substantially all the risks and rewards of ownership of the receivables were neither transferred nor retained (allocation of the material risks and rewards between Atotech and the buyers).

Atotech continues to perform servicing for the receivables sold. Atotech continues to recognize the trade receivables sold to the extent of its continuing involvement, i.e., in the maximum amount with which it is still liable for the credit risk, late-payment risk and f/x risk inherent in the receivables sold, and recognizes a corresponding associated liability presented other liabilities. The receivables and the associated liability are then derecognized to the extent to which Atotech’s continuing involvement is reduced (particularly when payment is made by the customer). The carrying amount of the receivables is subsequently reduced by the extent to which the actual losses to be borne by Atotech resulting from the credit risk, the late-payment risk and f/x risk exceed the losses initially expected. This amount is recognized as an expense. Atotech’s continuing involvement as of December 31, 2018 amounted to $0.6 million, and the carrying amount of the associated liability was $0.6 million.

Atotech presents the purchase price payments received from the buyers under cash generated from operations where these relate to the derecognized portion of the receivables, and under net cash from/used in financing activities where they relate to the portion of the receivables that is still recognized.

The carrying amount of the provision recognized by Atotech as of December 31, 2018 for the receivables management to be performed is $0.

(14) Trade and other current payables

 

     Successor     Successor  

($ in millions)

   As of December 31,
2017
    As of December 31,
2018
 

Trade payables

   $ 117.6     $ 108.2  

Payables to personnel and social security organization

     52.1       50.1  

Payables customers

     11.9       12.8  

Contract liabilities

     2.1       6.6  

Other current liabilities

     24.3       55.3  
  

 

 

   

 

 

 

Total trade and other current payables

   $ 208.0     $ 233.0  
  

 

 

   

 

 

 

(15) Income Taxes

Predecessor

For the year ended December 31, 2016, the income of Atotech B.V. is taxed in accordance with the Netherlands tax regime. In main geographical areas (Germany, United-States, China and the UK), there are no specific tax advantages that benefits to the Company. Income taxes to be paid and tax credits to be received on dividend distributions from the Company subsidiaries are recorded in the statement of income.

 

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The income tax expense recognized in the statement of income is as follows:

 

($ in millions)

   For the year ended
December 31, 2016
 

Current income taxes

   $ (63.9

Deferred income taxes

     (0.4
  

 

 

 

Total income tax expense

   $ (64.3
  

 

 

 

The net operating losses and carried forward tax credits ($33.7 million) relate to Germany and can be carried forward for an indefinite period of time.

Reconciliation of Effective Tax Rate

 

($ in millions)

   For the year ended
December 31, 2016
 

Consolidated net income

   $ 173.0  

Income taxes

     (64.3
  

 

 

 

Pre-tax income

     237.3  
  

 

 

 

Netherlands statutory tax rate

     25.0
  

 

 

 

Theoretical tax charge

   $ (59.4 ) 
  

 

 

 

Difference between Netherlands and foreign income tax rates

     (0.7

Permanent differences

     (0.2

Adjustments on prior years income taxes

     —    

Changes in valuation allowance of deferred tax assets

     (4.0
  

 

 

 

Income tax expense

   $ (64.3
  

 

 

 

The Netherlands statutory tax rate was 25% in 2016.

Permanent differences are mainly due to withholding tax on dividends and specific taxations rules applicable to certain activities.

Predecessor

For the month ended January 31, 2017, the income of Atotech B.V. is taxed in accordance with the Netherlands tax regime. On main geographical areas (Germany, United-States, China and the UK), there are no specific tax advantages that benefits to the Company. Income taxes to be paid and tax credits to be received on dividend distributions from the Company entities are recorded in the statement of income.

The income tax expense recognized in the statement of income is as follows:

 

($ in millions)

   Period from January 1, 2017 to
January 31, 2017
 

Current income taxes

   $ (5.1

Deferred income taxes

     (0.9
  

 

 

 

Total income tax expense

   $ (6.0
  

 

 

 

The net operating losses and carried forward tax credits ($36.9 million) relate to Germany and can be carried forward for an indefinite period of time.

 

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Reconciliation of Effective Tax Rate

 

($ in millions)

   Period from January 1,
2017 to January 31, 2017
 

Consolidated net income

   $ 13.2  

Income taxes

     (6.0
  

 

 

 

Pre-tax income

     19.2  
  

 

 

 

Netherlands statutory tax rate

     25.0
  

 

 

 

Theoretical tax charge

     (4.8
  

 

 

 

Difference between Netherlands and foreign income tax rates

     0.2  

Permanent differences

     —    

Adjustments on prior years income taxes

     —    

Changes in valuation allowance of deferred tax assets

     (1.4
  

 

 

 

Income tax expense

   $ (6.0
  

 

 

 

The Netherlands statutory tax rate was 25% in January 2017.

Permanent differences are mainly due to withholding tax on dividends and specific taxations rules applicable to certain activities.

Successor

The company’s effective income tax rate for the year ended December 31, 2017 was negative 23.8%. The rate was primarily impacted by the Company’s global mix of income and the impact from the Acquisition, such as non-deductible acquisition cost or purchase price accounting. None of the Company’s goodwill is deductible for income tax purposes.

On main geographical areas (Germany, United States, China and the UK), there are no specific tax advantages that benefit the Atotech Group. Taxes to be paid and tax credits to be received are recorded in the statement of income.

The income tax expense recognized in the statement of income is as follows:

 

($ in millions)

   As of December 31, 2017  

Current income tax

   $ (71.1

Deferred income benefits

     54.4  
  

 

 

 

Total tax expense

   $ (16.7
  

 

 

 

Deferred Taxes

Deferred taxes are presented in the balance sheet as follows:

 

($ in millions)

   As of December 31, 2017  

Deferred tax assets non-current

   $ 0.1  

Deferred tax liabilities non-current

     (417.2
  

 

 

 

Net amount

   $ (417.1
  

 

 

 

In Germany an amount of $9.5 million unused tax loss was incurred, that cannot be utilized in the foreseeable future. Due to the fiscal unity to be completed for FY 2018 those tax losses will be ring-fenced for at

 

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least five years. In the Netherlands an amount of unused tax loss of $90 million was incurred, that cannot be utilized in the foreseeable future as well, since there will not be enough positive income to be offset. In both cases no deferred tax assets were recognized. In addition, in the United States federal tax loss carryforwards are available, which result from fiscal year 2017 and for which deferred tax assets totaling $3.8 million were recognized as of December 31, 2017. The Company’s net operating losses have no expiration date.

The Company has no temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognized.

The deferred taxes mainly consist of a deferred tax liability on purchase price allocation in relation to the Acquisition. That amount is partially offset by deferred tax assets arising from provisions for employee benefits and other temporarily non-deductible provisions. The variation in deferred taxes was only charged against profit / loss for the year.

 

($ in millions)

   As of
January 1,
2017
     Acquired via
Business
Combination
    Recognized
in income
statement
    Valuation
Adjustment
     As of
December 31,
2017
 

Net operating losses and tax carried forward

   $ —        $ 3.2     $ 0.6     $ —        $ 3.8  

Employee benefits

     —          26.5       (2.9     —          23.6  

Other temporary non-deductible provisions

     —          13.7       (3.2     —          10.5  

PP&E

     —          (22.7     1.0       0.3        (21.4

Intangibles

     —          (434.9     (5.0     11.4        (428.5

Inventories

     —          (15.4     15.2       —          (0.2

Favorable / Unfavorable Leases

     —          (5.9     (0.1     —          (6.0

Other temporary tax deductions

     —          (4.8     5.9       —          1.1  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net deferred tax liability

   $ —        $ (440.3   $ 11.5     $ 11.7      $ (417.1
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

The net deferred tax variation in the balance sheet is analyzed as follows:

 

($ in millions)

   As of December 31,
2017
 

January 1, 2017

  

Acquired via Business Combination

   $ (440.3

Deferred tax on shareholders’ equity

     (0.6

Deferred tax on income:

     54.4  

Deferred tax on income

     5.0  

Release of deferred tax liabilities due to PPA

     37.7  

Changes due to statutory rate changes

     11.7  

Currency translation adjustment

     (30.6
  

 

 

 

December 31, 2017

   $ (417.1
  

 

 

 

 

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Reconciliation of Effective Tax Rate

 

($ in millions)

   As of December 31, 2017  

Consolidated net loss

   $ (86.8

Income taxes

     (16.7
  

 

 

 

Pre-tax loss

     (70.1
  

 

 

 

UK statutory tax rate

     19.25
  

 

 

 

Theoretical tax benefit

     13.5  
  

 

 

 

Difference between UK and foreign income tax rates

     12.5  

Difference due to change of statutory tax rate

     11.7  

Benefit on previously unrecognized tax loss

     3.4  

Deferred tax not recognized

     (24.5

Permanent differences

     (33.8

Other

     0.5  
  

 

 

 

Income tax expense

   $ (16.7
  

 

 

 

The statutory tax rate of UK was 20% in 2017 until March 2017, then it was reduced to 19% from April 2017 on. Therefore the Company used an iterated tax rate of 19.25%. On December 22, 2017, the United States Government enacted comprehensive tax legislation which, among other things, changed the Federal tax rate to 21% from January 1, 2018. This revised rate has been used to measure the deferred tax assets and liabilities in the United States, leading to a non-cash income tax benefit in the income statement of approximately $11 million (the net deferred tax liabilities position largely relates to basis differences on intangible assets).

For losses that cannot be utilized in the foreseeable future deferred taxes were not realized. Out of these losses 80% would expire in nine years.

The UK statutory tax rate will be further reduced to 17% from April 2020.

Successor

The Company’s effective income tax rate for the year ended December 31, 2018 was 183%. The effective tax rate is affected primarily by the fact that tax losses are incurred for which no deferred tax assets are recognized as well as by other permanent differences.

On main geographical areas (Germany, United States, China and the UK), there are no specific tax advantages that benefit the Atotech Group. Taxes to be paid and tax credits to be received are recorded in the statement of income.

The income tax expense recognized in the statement of income is as follows:

 

($ in millions)

   As of December 31, 2018  

Current income tax

   $ (80.1

Deferred income benefits

     27.7  
  

 

 

 

Total tax expense

   $ (52.4
  

 

 

 

 

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Deferred Taxes

Deferred taxes are presented in the balance sheet as follows:

 

($ in millions)

   As of December 31, 2018  

Deferred tax assets non-current

   $ —    

Deferred tax liabilities non-current

     (374.0
  

 

 

 

Net amount

   $ (374.0
  

 

 

 

In Germany an amount of about $5.0 million unused tax loss was incurred, that cannot be utilized in the foreseeable future. In the Netherlands an amount of unused tax loss of $115.0 million was incurred, that cannot be utilized in the foreseeable future as well, since there will not be enough positive income to be offset. In both cases no deferred tax assets were recognized. In addition, in the United States federal tax loss carryforwards of $7.0 million and interest carryforwards of $7.0 million are available, which result from fiscal years 2017 and 2018 and for which deferred tax assets totaling $1.5 million were recognized as of December 31, 2018. The Company’s net operating losses have no expiration date.

The Company has no temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not been recognized.

 

($ in millions)

   As of January 1,
2018
    Total change 2018     As of December 31,
2018
 

Net operating losses and tax carried forward

   $ 3.8     $ (2.3   $ 1.5  

Employee benefits

     23.6       (1.4     22.2  

Other temporary non-deductible provisions

     10.5       (6.0     4.5  

PP&E

     (21.4     0.1       (21.3

Intangibles

     (434.5     39.1       (395.4

Inventories

     (0.2     10.1       9.9  

Other temporary tax deductions

     1.1       3.5       4.6  
  

 

 

   

 

 

   

 

 

 

Net deferred tax liability

   $ (417.1   $ 43.1     $ (374.0
  

 

 

   

 

 

   

 

 

 

The net deferred tax variation in the balance sheet is analyzed as follows:

 

($ in millions)

   As of December 31, 2018  

January 1, 2018

   $ (417.1

Deferred tax recognized in profit and loss

     27.7  

Deferred tax recognized in other comprehensive income:

     (1.6

Currency translation adjustment

     17.0  
  

 

 

 

December 31, 2018

   $ (374.0
  

 

 

 

 

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Reconciliation of Effective Tax Rate

 

($ in millions)

   As of December 31, 2018  

Consolidated net loss

   $ (23.7

Income taxes

     (52.4
  

 

 

 

Pre-tax income

     28.7  
  

 

 

 

UK statutory tax rate

     19.0
  

 

 

 

Theoretical tax expense

     (5.5
  

 

 

 

Difference between UK and foreign income tax rates

     (8.8

Difference due to change of statutory tax rate

     (0.6

Deferred tax not recognized

     (24.7

Permanent differences

     (14.7

Prior-year effects

     2.1  

Other

     (0.2
  

 

 

 

Income tax expense

   $ (52.4
  

 

 

 

Permanent differences result from withholding taxes, changes in provisions for tax litigation and expenses, which are non-deductible for tax purposes. Deferred tax assets for future tax reductions resulting from the expected utilization of existing unused tax losses and comparable items in subsequent years were only recognized, as far as their realization is sufficiently probable.

The UK statutory tax rate of 19% will be further reduced to 17% in April 2020.

(16) Employee Benefits Obligations

Liabilities for employee benefits obligations consist of the following:

 

     Successor     Successor  

($ in millions)

   As of December 31,
2017
    As of December 31,
2018
 

Pension benefits liabilities

   $ 141.6     $ 132.0  

Restructuring reserves (early retirement plans)

     0.1       0.7  
  

 

 

   

 

 

 

Total

   $ 141.7     $ 132.7  
  

 

 

   

 

 

 

Description of Plans and Risk Management

The Company operates, for the benefit of its current and former employees, both defined benefits plans and defined contribution plans.

The main defined benefits pension plans are located in Germany. Their main characteristics, depending on the country-specific regulatory environment, are the following:

 

   

the benefits are usually based on the final salary and seniority;

 

   

they are usually funded (pension fund or insurer);

 

   

they are usually closed to new employees who benefits from defined contribution pension plans; and

 

   

they are paid in annuity or in lump sum.

The pension benefits also include termination indemnities and early retirement benefits. The other benefits are employer contributions to post-employment medical care.

 

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To finance its pension obligations Atotech Deutschland invested in a pension fund in order to meet its obligations to a part of its former employees. The target asset allocation is reviewed regularly. Accordingly, plan assets are aligned with long-term development of its obligations, taking into consideration the risks associated with the specific asset classes and the regulations relating to the investment of plan assets. The existing portfolio structure is oriented toward the target asset allocation. In addition, current market assessments are taken into consideration. In order to mitigate risks and maximize returns, a widely spread global portfolio of individual asset classes is held.

To limit the risks of changing financial market conditions as well as demographic developments, several employees have been almost exclusively offered defined contributions plans for future years of service in recent years.

Atotech’s management monitors the risks of all pension plans of the Company especially regarding the governance and risk management of pension plans and the portfolio structure of the existing plan assets. In some countries—especially in Germany—there are pension obligations subject to government supervision or similar legal restrictions. For example, there are minimum funding requirements to cover pension obligations, which are based on actuarial assumptions that may differ from those in IAS 19 “Employee Benefits.”

The obligations and the plan assets used to fund the obligations are exposed to demographic, legal and economic risks. Economic risks are primarily due to unforeseen developments on commodity and capital markets. They affect, for example, pension adjustments based on the level of inflation in Germany, as well as the impact of the discount rate on the amount of the defined benefit obligation. The usual closing of these defined benefit plans to new employees led to a reduction in risk with regard to future benefit levels.

The strategy of the Atotech Group with regard to financing pension commitments is aligned with country-specific supervisory and tax regulations.

Headcount of active and non-active candidate with regard to defined benefit obligations are disclosed in the following table:

 

     Predecessor           Successor     Successor  

Headcount

   2016           2017     2018  

Employed candidates

     106           101       89  

Non-employed candidates

     64           62       58  

Pensioners

     190           192       206  

 

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Change in Benefit Obligations and Plan Assets

Movements in the defined benefit obligation and plan assets in the consolidated financial statements are detailed as follows:

 

     Successor     Successor  

($ in millions)

   As of December 31, 2017     As of December 31, 2018  

Change in benefit obligation

    

Benefit obligation beginning of the year

   $ —       $ 173.7  

Acquired via Business Combination

     143.9       —    

Current service cost

     2.4       2.5  

Interest cost

     2.8       2.7  

Past service cost

     (0.2     (0.6

Settlements

     0.1       —    

Benefit paid

     (3.7     (4.3

Actuarial losses (gains)

     1.7       (5.8

Foreign currency translation and others

     26.7       (7.6
  

 

 

   

 

 

 

Benefit obligation at end of the year

     173.7       160.6  
    

Change in fair value of plan assets

    

Fair value of plan assets at beginning of the year

     —         (32.0

Acquired via Business Combination

     (27.1     —    

Interest income and costs

     (0.5     (0.5

Actuarial losses (gains)

     (0.5     1.1  

Employer contributions

     (2.3     0.2  

Benefits paid

     2.0       2.2  

Foreign currency translation and other

     (3.6     0.1  
  

 

 

   

 

 

 

Fair value of plan assets at end of the year

     (32.0     (28.9
  

 

 

   

 

 

 

Net defined benefit liability

   $ 141.7     $ 131.7  
  

 

 

   

 

 

 

The fair value of the defined benefit obligations equals the carrying amount.

As at December 31, 2017, the contribution from the main geographical areas for the net pension benefits liability in the balance sheet is 98% from the Euro zone and 2% from Asia.

As at December 31, 2018, the contribution from the main geographical areas for the net pension benefits liability in the balance sheet is 98% from the Euro zone and 2% from Asia.

 

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The amounts recognized in the consolidated statement of income and in the consolidated statement of comprehensive income for defined benefit plans are detailed as follows:

 

     Predecessor     Predecessor           Successor     Successor  

($ in millions)

   Year ended
December 31, 2016
    Period from January 1,
2017 to January 31,

2017
          Year ended
December 31, 2017
    Year ended
December 31, 2018
 

Current service cost

   $ 3.8     $ 0.3         $ 2.4     $ 2.5  

Past service cost

     (1.6     —             (0.2     (0.6

Settlements

     —         —             0.1       —    

Net interest cost

     3.4       —             2.3       2.2  
  

 

 

   

 

 

       

 

 

   

 

 

 

Benefit amounts recognized on income

     5.6       0.3           4.6       4.1  
  

 

 

   

 

 

       

 

 

   

 

 

 

Actuarial losses (gains):

            

Effect of changes in demographic assumptions

     (0.7     —             —         1.9  

Effect of changes in financial assumptions

     25.2       —             4.4       (4.3

Effect of experience adjustments

     (1.0     —             (0.9     (3.7

Actuarial return on plan assets (excluding interest income)

     (11.1     —             (0.5     1.3  

Asset ceiling

     —         —             —         (0.7
  

 

 

   

 

 

       

 

 

   

 

 

 

Benefit amounts recognized in other comprehensive income

     12.4       —             3.0       (5.5
  

 

 

   

 

 

       

 

 

   

 

 

 

Total benefit amounts recognized in comprehensive income

   $ 18.0     $ 0.3         $ 7.6     $ (1.4
  

 

 

   

 

 

       

 

 

   

 

 

 

Expected Future Cash Out Flow

The average duration of accrued benefits is approximately 17 years for defined pension benefits.

 

Estimated future payments

($ in millions)

   Pension benefits  

2019

   $ 4.7  

2020

     5.1  

2021

     5.5  

2022

     5.9  

2023

     6.0  

2024-2028

   $ 34.6  

In addition, the Company expects to pay employer contributions of $7.3 million in respect of funded pension plans in 2019.

 

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Type of assets

 

Asset allocation

As of December 31, 2017

   Pension benefits  
   $ in millions      in%  

Debt securities

   $ 21.8        66

Equity securities

     8.8        27

Cash and Cash equivalents

     2.3        7
  

 

 

    

 

 

 

Total

   $ 32.9        100

 

Asset allocation

As of December 31, 2018

   Pension benefits  
   $ in millions      in%  

Debt securities

   $ 19.4        69

Equity securities

     6.8        22

Cash and Cash equivalents

     2.6        9
  

 

 

    

 

 

 

Total

   $ 28.8        100
  

 

 

    

 

 

 

At December 31, 2018, $28.9 million of total pension assets are presented as part of the employee benefits in the Consolidated Financial Statements.

Investments on equity and debt markets are quoted on active markets.

Main Actuarial Assumptions and Sensitivity Analysis

 

     Successor     Successor  

Assumptions used to determine benefits obligations

   As of December 31, 2017     As of December 31, 2018  

Discount rate (weighted average for all regions)

     1.65     1.74

Inflation rate (weighted average for all regions)

     1.38     1.77

The discount rate retained is determined by reference to the high quality rates for AA-rated corporate bonds for a duration equivalent to that of the obligations. It derives from a benchmark per monetary area of different market data at the closing date.

A 0.5% increase or decrease in discount rate all other things being equal would have the following approximate impact on the benefit obligation:

 

     Successor      Successor  
     As of December 31, 2017      As of December 31, 2018  

($ in millions)

   0.5 %
Increase
    0.5 %
Decrease
     0.5 %
Increase
    0.5 %
Decrease
 

Benefit obligation

     (8.7     19.1        (8.1     17.0  

A 0.5% increase or decrease in inflation rate all other things being equal, would have the following approximate impact on the benefit obligation:

 

     Successor     Successor  
     As of December 31, 2017     As of December 31, 2018  

($ in millions)

   0.5 %
Increase
     0.5 %
Decrease
    0.5 %
Increase
     0.5 %
Decrease
 

Benefit obligation

     14.0        (4.5     12.5        (4.5

 

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(17) Share-Based Payment Plans

Predecessor

The Company’s former Parent, Total, maintained the following share-based payment plan that was settled in shares of Total.

Options are exercisable, subject to a continuous employment condition, after a 2-year period from the date of grant and expire eight years after the grant date. The underlying shares may not be transferred during four years from the date of grant. For the 2007 to 2011 Plans, the 4-year transfer restriction period does not apply to employees of non-French subsidiaries as of the date of the grant, who may transfer the underlying shares after a 2-year period from the date of the grant.

Since the 2011 Plan, no new Total share subscription option plan or Total share purchase plan was decided.

 

     2010 Plan      2011 Plan  

Date of the Shareholders’ meeting

     05/21/2010        05/21/2010  

Date of the award (a)

     09/14/2010        09/14/2011  

Exercise price

     38.20        33.00  

Expiry date

     09/14/2018        09/14/2019  

Number of options granted

     54,640        18,600  

 

(a)   The grant date is the date of the Board meeting awarding the share subscription options.

Performance Share Grants

 

     2012 Plan      2013 Plan      2014 Plan      2015 Plan      2016 Plan  

Date of the Shareholders’ meeting

     05/13/2011        05/13/2011        05/16/2014        05/16/2014        05/24/2016  

Date of the award (a)

     07/26/2012        07/25/2013        07/29/2014        07/28/2015        07/27/2016  

Date of the final award (b)

     07/27/2014        07/26/2016        07/30/2017        07/29/2018        07/28/2019  

Transfer authorized as from

     07/27/2016        07/26/2018        07/30/2019        07/29/2020        07/28/2021  

Number of performance shares granted

     81,100        80,900        75,260        82,890        111,960  

 

(a)   The grant date is the date of the Board meeting awarding the performance shares

 

(b)   End of the vesting period

2016 Plan

For the 2016 Plan, all shares were subject to a continued employment condition and two performance conditions. The two performance conditions are the following:

 

-   For 50% of the granted shares, the performance condition is based on the Company ranking relative to its peers (ExxonMobil, Royal Dutch Shell, BP and Chevron) according to the Total Shareholder Return (TSR). The TSR corresponds to the shareholder yield over a determined period of time (the share price variation between the beginning and the end of the period, as well as the dividends received during that period).

 

-   For 50% of the granted shares, the performance condition is based on the Company ranking relative to its peers (ExxonMobil, Royal Dutch Shell, BP and Chevron) comparing the yearly variation in the net cash-flow per share, defined as the operating cash-flow minus investment cash-flow including acquisitions and divestments.

For both performance conditions the average of the three “attribution rates” (on each of the three financial years on which the performance conditions are based) determines the shares definitely granted.

 

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Ranking percentages are determined as following:

 

-   1st 180% of the grant

 

-   2nd 130% of the grant

 

-   3rd 80% of the grant

 

-   4th and 5th 0% of the grant

Each beneficiary of more than 150 shares (other than Atotech Chief Executive Officer, at the time, and other senior executives), and subject to the continuous employment condition, the shares in excess of this threshold will be subject to the performance conditions described above and will finally be granted if such performance conditions are met.

Share-based Payments Expenses

Share-based payment expense in connection with the Total Group plans before tax amounted to $1.9 million for the year ended in December 31, 2016. No share-based payment expense in connection with the Total Group plans before tax for the month ended in January 31, 2017 was recognized.

Share-based payments charged by Total were expensed as incurred. Outstanding equity awards of the Predecessor in the amount of $1.4 million were recognized as part of the acquisition and were considered in the Purchase Price Allocation.

Successor

The total grant-date fair value of the share based compensation issued during 2017 was $0.7 million, of which $0.1 million was recognized as personnel expense in the statement of profit and loss for financial year 2017.

The total grant-date fair value of the share based compensation issued during 2018 was $0.1 million, of which $0.1 million was recognized as personnel expense in the statement of profit and loss for financial year 2018.

Long-term Incentive Plan

Share options to purchase Common Shares were granted in May 2017 to certain employees of the Company pursuant to the Long-term Incentive Plan (“LTIP”). Options were granted with an exercise price that was fixed at the date of the grant. The contractual life and exercise terms of the options are dependent upon an exit event, as defined in the LTIP. Options were valued using the Black-Scholes pricing model, and an estimate of approximate exit event timing. The Company has no legal or constructive obligation to repurchase or settle obligations in cash.

The fair value of the awards at the date of grant has been measured using a Black Scholes pricing model. The inputs used in the model for the years 2017 and 2018 are set out below.

 

Year 2017

      

Expected life of options (years)

     5  

Exercise price

   $ 1.00  

Market value of underlying shares

   $ 1.20  

Risk free rate

     1.98

Expected share price volatility

     20.00

Expected dividend yield

     0.16

Options issued

     477,300  

 

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Year 2018

      

Expected life of options (years)

     3.5  

Exercise price

   $ 1.00  

Market value of underlying shares

   $ 3.85  

Risk free rate

     1.98

Expected share price volatility

     20.00

Expected dividend yield

     0.16

Options issued

     25,000  

As of December 31, 2017 and 2018 no share options are exercisable.

Management Equity Plan

At the time of the Acquisition, the Group implemented an equity participation program to enable certain management of the Group to participate in any success of the Group. For this purpose, certain managers acquired interests in three pooling vehicles (the Pooling Vehicles). The three Pooling Vehicles are limited partnerships, with management representing the limited partners (the Participants) and their participation represented by a limited partnership interest in the Pooling Vehicles. The limited partnership interests held by the Participants correspond with the underlying Common Shares held by the Pooling Vehicles. The limited partnership interest of each Participant vests over time in accordance with the partnership agreement.

On January 31, 2017, 1.675 million Common Shares with a fair value of $1.20 per share were purchased by one of the Pooling Vehicles for $1.00 per share. Additionally, in August and September 2017, approximately 0.605 million Common Shares with a fair value of $1.20 per share were purchased by the Pooling Vehicles for $1.00 per share. The fair value of the shares at the purchase date have been determined on the basis of an option pricing model (Black-Scholes model), which reflects the preference entitlement of the Preferred Shares to receive distributions from UK Topco, and assumes that no dividends will be paid until the anticipated settlement date. The plan is equity settled, and the fair value was measured in reference to the acquisition discussed in Note 5. A total of $0.1 million of expenses were recorded for the Successor period combined between the Management Equity Plan and the Long-term Incentive Plan discussed above.

In September 2018, 51,947 Common Shares with a fair value of $3.85 per share were purchased by the Pooling Vehicles for $3.85 per share. The fair value of the shares at the purchase date have been determined on the basis of an option pricing model, which reflects the preference entitlement of the Preference Shares to receive distributions from UK Topco, and assumes that no dividends will be paid until the anticipated settlement date.

The inputs used in the model for the years 2017 and 2018 are set out below.

 

(Year 2017, $ in millions, except per share  data)

      

Equity value

     1,117.6  

Strike price

     2,148.0  

Expected share price volatility

     20.00

Risk free rate

     1.98

Time to expiration

     5 years  

Expected dividend yield

     0.16

Common shares issued

     2,279,599  

 

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(Year 2018, $ in millions, except per share  data)

      

Equity value

     1,100.0  

Strike price

     1,412.2  

Expected share price volatility

     20.00

Risk free rate

     2.81

Time to expiration

     3.5 years  

Expected dividend yield

     0.00

Common shares issued

     51,947  

(18) Non-current and current Provisions

Predecessor

Changes in provisions:

 

($ in millions)

   As of
January 1, 2017
     Additions      Reversals     Currency
translation
adjustment
    Other     As of
January 1,
2017
 

Current

   $ —        $ —        $ —       $ —       $ —       $ —    

Non-current

   $ 45.4      $ 27.0      $ (19.3   $ (1.5   $ (0.5   $ 51.1  

Successor

Provisions by nature are as follows:

 

($ in millions)

   Current      Non-current      As of
December 31,
2017
 

Provisions for non-tax litigation

   $ —        $ 0.1      $ 0.1  

Provisions for income tax litigation and uncertain tax positions

     2.4        28.9        31.3  

Provisions for other operating items

     9.0        18.0        27.0  

Provisions for termination plans, excluding early retirement

     0.1        1.3        1.4  

Provisions for other non-operating items

     2.6        5.3        7.9  
  

 

 

    

 

 

    

 

 

 

Total

   $ 14.1      $ 53.6      $ 67.7  
  

 

 

    

 

 

    

 

 

 

Provisions for income tax litigation and uncertain tax positions mainly relate to a potential reassessment of an indirect tax position in Thailand and direct tax positions in India.

Provisions for other items mainly relate to human resources items.

Provision for termination plans mainly relate to reorganizations in Germany.

Changes in provisions:

 

($ in millions)

  As of January 1,
2017
    Acquired via
Business
Combination
    Additions     Release     Consumption     Currency
translation
adjustment
    Reclassifications     As of
December 31,
2017
 

Current

  $ —     $ —       $ 2.7     $ —       $ —       $ 0.7     $ 10.7     $ 14.1  

Non-current

  $ —       $ 52.5     $ 17.1     $ (3.3   $ (13.3   $ 3.7     $ (3.1   $ 53.6  

 

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Provisions by nature are as follows:

 

($ in millions)

   Current      Non-current      As of
December 31,
2018
 

Provisions for non-tax litigation

   $  0.5      $  0.7      $ 1.2  

Provisions for income tax litigation and uncertain tax positions

     3.7        28.7        32.4  

Provisions for other operating items

     6.4        18.6        25.0  

Provisions for termination plans, excluding early retirement

     0.7        0.5        1.2  

Provisions for other non-operating items

     4.1        5.4        9.5  
  

 

 

    

 

 

    

 

 

 

Total

   $ 15.4      $ 53.9      $ 69.3  
  

 

 

    

 

 

    

 

 

 

Provisions for income tax litigation and uncertain tax positions mainly relate to an indirect tax position in Thailand and direct tax positions in India.

Provisions for other items mainly relate to human resource items.

Provision for termination plans mainly relate to reorganizations in Germany.

Changes in provisions:

 

($ in millions)

  As of January 1,
2018
    Additions     Release     Consumption     Currency
translation
adjustment
    Reclassifications     As of
December 31,
2018
 

Current

  $ 14.1   $ 5.8     $ (1.8   $ (2.2   $ (0.8   $ 0.3     $ 15.4  

Non-current

  $ 53.6     $ 15.0     $ (1.6   $ (8.3   $ (2.5   $ (2.3   $ 53.9  

(19) Other non-current Liabilities

As of December 31, 2017, accrued non-current liabilities of $20.3 million comprise the long-term portion of redenomination fees which is payable by January 31, 2019 (30%) and January 31, 2020 (30%).

As of December 31, 2018, accrued non-current liabilities of $9.6 million comprise the long-term portion of redenomination fees which is payable by January 31, 2019 (30%) and January 31, 2020 (30%).

(20) Other Income & Expenses

Other income are presented in the following table:

 

     Predecessor     Predecessor           Successor     Successor  

($ in millions)

   Year ended
December 31,
2016
    Period from January 1,
2017 to January 31,
2017
          Year ended
December 31,
2017
    Year ended
December 31,
2018
 

Financial income on marketable securities and cash equivalents

   $ 3.2     $ 0.1         $ 0.8     $ 1.4  

Exchange gains

     —         —             —         0.2  

Other financial income

     1.8       1.1           0.6       2.0  
  

 

 

   

 

 

       

 

 

   

 

 

 

Other income

   $ 5.0     $ 1.2         $ 1.4     $ 3.6  
  

 

 

   

 

 

       

 

 

   

 

 

 

 

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Other expenses are presented in the following table:

 

     Predecessor     Predecessor           Successor     Successor  

($ in millions)

   Year ended
December 31,
2016
    Period from January 1,
2017 to January 31,
2017
          Year ended
December 31,
2017
    Year ended
December 31,
2018
 

Exchange losses

   $ (3.0   $ (1.7       $ (7.0   $ —    

Losses on disposal of PP&E and Intangible assets

     —         —             (1.1     (0.7

Other financial expenses

     (1.1     (0.3         (17.0     (8.1

Cost sharing expenses

     (10.2     —             —         —    
  

 

 

   

 

 

       

 

 

   

 

 

 

Other expenses

   $ (14.3   $ (2.0       $ (25.1   $ (8.8
  

 

 

   

 

 

       

 

 

   

 

 

 

In year-ended 2016, Other financial expenses mainly relate to interest charges from Total treasury. Cost sharing expenses mainly relate to Cost Sharing Agreements between Atotech entities of internal IP. Other financial income mainly relate to Atotech Chemicals China (TOTAL Corporate Management (Beijing) headed Citibank Cash-Pool and current-account interest income).

In year-ended 2017, Other financial expenses consists primarily of a loss of $15.2 million from the mark to market valuation of the Company’s embedded derivatives related to the Opco Notes, mark to market valuation of the Company’s foreign exchange forward and collar.

In year-ended 2018, Other financial expenses consists primarily of a loss of $5.7 million from the mark to market valuation of the Company’s embedded derivatives related to the Opco Notes and Holdco Notes and mark to market valuation of the Company’s foreign exchange forward and collar.

(21) Personnel expenses

 

     Predecessor     Predecessor           Successor     Successor  
     For the year ended
December 31, 2016
    Period from January 1,
2017 to January 31,
2017
          For the year ended
December 31, 2017
    For the year ended
December 31, 2018
 

Wages and salaries incl. other pension costs

   $ 232.0     $ 19.3         $ 236.4     $ 257.6  

Social security costs

     41.7       3.3           38.6       40.5  
  

 

 

   

 

 

       

 

 

   

 

 

 

Total

   $ 273.7     $ 22.6         $ 275.0     $ 298.1  
  

 

 

   

 

 

       

 

 

   

 

 

 

 

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(22) Financial Instruments

Classification and Measurement of Financial Instruments

The Company holds the following financial instruments as of December 31, 2017:

 

($ in millions)

  Classification
pursuant to
IAS 39
    Carrying
amounts as
per statement
of financial
positions
    Measured at
amortized cost
    Measured at
Fair value
    IAS 17     Total  

Accounts receivables

    LAR     $ 282.4     $ 282.4     $ —       $   —       $ 282.4  

Cash and cash equivalents

    LAR       325.8       325.8       —         —         325.8  

Embedded derivatives

     1  )      14.1       —         14.1       —         14.1  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financial assets

      622.3       608.2       14.1       —         622.3  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current financial debt

    FLAC       1,789.8       1,789.8       —         —         1,789.8  

Current financial debt

    FLAC       24.3       24.3       —         —         24.3  

Total debt

      1,814.1       1,814.1       —         —         1,814.1  

Accounts payable

    FLAC       117.6       117.6       —         —         117.6  

Finance lease

    FLAC       —         —         —         0.1       0.1  

Net investment hedge—foreign exchanges contracts (“Forward”)

     1  )      23.1       —         23.1       —         23.1  

Net investment hedge—foreign exchange contracts (“Collars”)

     1  )      10.2       —         10.2       —         10.2  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financial liabilities

    $ 1,965.1     $ 1,931.7     $ 33.3     $ 0.1     $ 1,965.1  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1)   Designated derivative financial instruments are not included in the classification categories of IAS 39 “Financial Instruments: Recognition and Measurement”.

During the year ended December 31, 2017, no financial assets have been reclassified from one category to another.

The Company holds the following financial instruments as of December 31, 2018:

 

($ in millions)

  Classification
pursuant to
IFRS 9
    Carrying
amounts as
per statement
of financial
positions
    Measured at
amortized cost
    Measured at
Fair value
    IAS 17     Total  

Accounts receivables

    FACC     $ 259.0     $ 259.0     $ —     $   —     $ 259.0  

Cash and cash equivalents

    FACC       386.2       386.2       —       —       386.2  

Embedded derivatives

     1  )      16.8       —         16.8       —         16.8  

Foreign exchanges contracts (“Forward”)

     1  )      0.2       —         0.2       —         0.2  

Foreign exchanges contracts (“Collars”)

     1  )      1.3       —         1.3       —         1.3  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financial assets

      663.5       645.2       18.3       —         663.5  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current financial debt

    FLAC       2,229.2       2,229.2       —         —         2,229.2  

Current financial debt

    FLAC       23.1       23.1       —         —         23.1  

Total debt

      2,252.3       2,252.3       —         —         2,252.3  

Accounts payable

    FLAC       108.2       108.2       —         —         108.2  

Finance lease

    FLAC       0.1       —         —         0.1       0.1  

Net investment hedge—foreign exchanges contracts (“Forward”)

     1  )      —         —         —         —             

Net investment hedge—foreign exchange contracts (“Collars”)

     1  )      16.7       —         16.7       —         16.7  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financial liabilities

    $ 2,377.3     $ 2,360.5     $ 16.7     $ 0.1     $ 2,377.3  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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FACC = Financial assets at amortized costs, FLAC = Financial Liabilities at Cost, FVTPL = Fair value through profit and loss

 

1)   Designated derivative financial instruments are not included in the classification categories of IFRS 9 “Financial Instruments”.

During the year ended December 31, 2018, no financial assets have been reclassified from one category to another.

In accordance with IFRS 7.20 (a) “Financial Instruments: Disclosures,” net gains and losses of financial instruments are to be disclosed for each measurement category of IFRS 9 “Financial Instruments”.

 

Net income (loss) by measurement category

($ in millions)

  Successor 2017     Successor 2018  

FACC

  $ (7.1   $ (4.4

FLAC

    (93.3     (134.3

Derivative financial instruments (Hedge Accounting)

    (15.2     (5.7
 

 

 

   

 

 

 

Total

  $ (115.6   $ (144.4
 

 

 

   

 

 

 

The net result of the FACC measurement category contains impairment losses and reversals on trade receivables. The net result of the FACC measurement category also includes interest income. The net result of the FLAC measurement category includes interest expenses for ongoing debt service as well as the result from loan amortization, which is also included in interest expense.

Successor

As of December 31, 2017, the Company has classified its financial instruments into the three levels of the fair value hierarchy prescribed by IFRS 13 “Fair Value Measurement” as follows. For further information on these levels and the reliability of the input parameters used, as well as the valuation techniques used, please refer to Note 3. For each balance sheet date, the Company obtains external expert valuations for all derivative instruments.

 

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Successor

 

As of December 31, 2017

($ in millions)

   No Level      Level 1      Level 2      Level 3      Total  

Accounts receivables

   $ 282.4      $ —        $ —        $ —        $ 282.4  

Cash and cash equivalents

     325.8        —          —          —          325.8  

Embedded derivatives

     —          —          —          14.1        14.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     608.2        —          —          14.1        622.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings

     —          —          1,770.3        —          1,770.3  

Redenomination fee

     —          —          20.3        —          20.3  

Current bank debt

     —          —          11.3        —          11.3  

Accrued interests

     —          —          12.2        —          12.2  

Total debt

     —          —          1,814.1        —          1,814.1  

Accounts payable

     117.6        —          —          —          117.6  

Finance lease

     —          —          0.1           0.1  

Net investment hedge—foreign exchanges contracts (“Forward”)

     —          —          23.1        —          23.1  

Net investment hedge—foreign exchange contracts (“Collars”)

     —          —          10.2        —          10.2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 117.6      $ —        $ 1,847.5      $ —        $ 1,965.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between the levels for recurring fair value measurements during the year.

The following table presents the changes in level 3 items for the period ended December 31, 2017:

 

($ in millions)

   Embedded
derivatives

(Opco Notes)
    Total  

Balance at January 1, 2017

   $ —       $ —    

Bifurcated from Opco Notes

     14.8       14.8  

Losses recognized in income statement

     (0.7     (0.7

Gains/losses recognized in other comprehensive income

     —         —    
  

 

 

   

 

 

 

Closing balance December 31, 2017

   $ 14.1     $ 14.1  
  

 

 

   

 

 

 

 

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As of December 31, 2018, the Company has classified its financial instruments into the three levels of the fair value hierarchy prescribed by IFRS 13 “Fair Value Measurement” as follows. For further information on these levels and the reliability of the input parameters used, as well as the valuation techniques used, please refer to Note 3. For each balance sheet date, the Company obtains external expert valuations for all derivative instruments.

 

As of December 31, 2018

($ in millions)

   No Level      Level 1      Level 2      Level 3      Total  

Accounts receivables

   $ 259.0      $   —        $ —        $ —        $ 259.0  

Cash and cash equivalents

     386.2        —          —          —          386.2  

Embedded derivatives

     —          —          —          16.8        16.8  

Foreign exchanges contracts (“Forward”)

     —          —          0.2        —          0.2  

Foreign exchanges contracts (“Collars”)

     —          —          1.3        —          1.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     645.2                  1.5        16.8        663.5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Borrowings

     —          —          2,221.0        —          2,221.0  

Redenomination fee

     —          —          9.6        —          9.6  

Current bank debt

     —          —          7.6        —          7.6  

Accrued interests

     —          —          14.1        —          14.1  

Total debt

     —          —          2,252.3        —          2,252.3  

Accounts payable

     108.2        —          —          —          108.2  

Finance lease

     —          —          0.1           0.1  

Net investment hedge—foreign exchanges contracts (“Forward”)

     —          —          —          —              

Net investment hedge—foreign exchange contracts (“Collars”)

     —          —          16.7        —          16.7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

   $ 108.2      $         $ 2,269.1      $         $ 2,377.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

There were no transfers between the levels for recurring fair value measurements during the year.

The following table presents the changes in level 3 items for the period ended December 31, 2018:

 

($ in millions)

   Embedded
derivatives

(Opco Notes)
    Total  

Balance at January 1, 2018

   $ 14.1     $ 14.1  

Bifurcated from Opco Notes

     0.0       0.0  

Losses recognized in income statement

     (5.0     (5.0

Gains/losses recognized in other comprehensive income

     —         —    
  

 

 

   

 

 

 

Closing balance December 31, 2018

   $ 9.1     $ 9.1  

 

($ in millions)

   Embedded
derivatives

(Holdco Notes)
     Total  

Balance at January 1, 2018

   $ 0.0      $  

Bifurcated from Holdco Notes

     6.9        6.9  

Losses recognized in income statement

     0.7        0.7  

Gains/losses recognized in other comprehensive income

     —          —    
  

 

 

    

 

 

 

Closing balance December 31, 2018

   $ 7.6      $ 7.6  
  

 

 

    

 

 

 

Valuation inputs and relationships to fair value

The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value instruments.

 

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An unobservable input factor in the valuation of the embedded derivative is the probability of a change of control (CoC) event. A CoC event in the next five years until 2023 with the following sensitivities would lead to the following impacts on the fair value and income statement:

 

($ in millions)                             

Description

  Fair value
as of
December 31,
2018
     Fair value
as of
December 31,
2017
    

Unobservable inputs

   Range of
inputs 2018
    Relationships of
unobservable inputs to
fair value

Embedded derivatives (Opco Notes)

 

 

 

 

9.1

 

 

  

 

 

 

14.1

 

 

  

 

Change of control (CoC)

  

 

 

 

0

 

 

 

Fair value of
$9.1 million

        Change of control (CoC)      5   Fair value of $7.7
million Decreased by
$1.4 million
        Change of control (CoC)      10   Fair value of $6.3
million Decreased by
$2.8 million
        Change of control (CoC)      15   Fair value of $5.2
million Decreased by
$3.9 million

In addition to the CoC probability, the risk premium of the Company is another unobservable input factor. A 1% higher or lower risk premium would have led to decrease by $8.4 million or increase by $11.9 million to the fair value.

 

($ in millions)                             

Description

  Fair value
as of
December 31,
2018
     Fair value
as of
December 31,
2017
    

Unobservable inputs

   Range of
inputs 2018
    Relationships of
unobservable inputs to
fair value

Embedded derivatives (Holdco Notes)

 

 

 

 

7.6

 

 

  

 

 

 

0.0

 

 

  

 

Change of control (CoC)

  

 

 

 

0

 

 

 

Fair value of $7.6
million

        Change of control (CoC)      5   Fair value of $7.4
million Decreased by
$0.2 million
        Change of control (CoC)      10   Fair value of $7.2
million Decreased by
$0.4 million
        Change of control (CoC)      15   Fair value of $7.0
million Decreased by
$0.6 million

In addition to the CoC probability, the risk premium of the Company is another unobservable input factor. A 1% higher or lower risk premium would have led to decrease by $5.5 million or increase by $6.8 million to the fair value.

Offsetting and Transfers of Financial Assets

In cases where the Company has a legally enforceable right to offset financial liabilities and financial assets, and has the intention settle these financial instruments on a net basis, Atotech offsets these financial instruments and reports the net amount on the balance sheet.

As of December 31, 2018, no financial instruments were subject to offsetting.

 

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The Company held no collateral of financial or non-financial assets as of December 31, 2018 that it is permitted to sell or repledge in the absence of default by the owner.

Financial Risk Management

In the course of its business, the Company is exposed to a number of financial risks, including market risks (including foreign exchange rate risk and interest rate risk), credit risk and liquidity risk. The Company seeks to manage and control these risks to mitigate potential financial losses. At each balance sheet date, the Company notes no risk concentrations.

Market Risk

Interest rate risk

The Company is exposed to the risk that the fair value of future cash flows will fluctuate as a result of changes in prevailing market conditions. In order to manage that risk, the Company conducted a mix of loans with fixed and floating interest rates. The total nominal loan exposure of drawn debt amounts to $2,325.0 million of which $1,225.0 million bear interests at a fixed rate.

Based on the structure of drawn debt at year end, an increase of interest rates of 100 basis points would cause additional expense in the amount of $12.0 million.

Credit Risk

The Company is exposed to the risk of losses due to the default of a counterparty to fulfill its contractual obligations. The Company has established a credit policy under which individual credit evaluations are performed to determine credit limits and payment terms applicable to customers. Equipment projects will be monitored via internal process, the risks will be managed by Letter of Credits, Bank Guarantees and payment flows which are covering the open risk position.

To further minimize credit risk, the Company will implement certain working capital optimization measures and factoring instruments in 2019.

The carrying amount of financial assets represents the maximum credit exposure.

Foreign Exchange Risk

The Company is exposed to foreign exchange risks from transactions and translations. Translation risks arise from consolidation of financial statements of foreign operations into U.S. dollars, which is in principal not hedged. Transaction risks arise from transactions in foreign currency such as operating business, financing, planned sales as well as raw material purchased. These risks are constantly monitored by the Company. To mitigate the risk of changes in exchange rates, the Company uses FX forwards, non-deliverable FX forwards and currency options.

At December 31, 2017 the Company had the following open foreign currency contracts:

 

   

USDCNY FX forward of $200 million due on January 23, 2019

 

   

USDCNY FX collar options of $200 million due on January 23, 2018

In order to hedge the risks arising from its investments in consolidated subsidiaries with CNY as their functional currency, the Company has designated collar options and forwards into a hedge of a net investment in a foreign operation. The hedging instruments used are CNH denominated and hedge CNH 2,897 million of the

 

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initial investment amounting to CNH 2,903 million. Due to the high correlation of the subsidiary’s functional currency and the CNH, the Company considers the hedge relationship to be highly effective. For the period ending on December 31, 2017, an ineffectiveness of $9.9 million has been recorded in profit or loss.

IFRS 7 requires a sensitivity analysis. The sensitivity analysis is conducted by simulating a 10% appreciation of the respective functional currencies (CNY and EUR) against USD. The effect would have been a decreasing net result of $3.8 million and decreasing EBITDA of $20.7 million (Requested Non USD portion of net result and EBITDA) as of December 31, 2017.

In 2018, the Company expanded its hedging activities. In order to hedge the risks arising from its investments in consolidated subsidiaries with CNY as their functional currency, the Company has designated a collar option and a forward into a hedge of a net investment in a foreign operation.

In addition to the net investment hedges of the prior year, the Company now aims to hedge uncertain future cash flows arising from their operations in different countries around the globe that have different currency than the company’s functional currency. The company hedges the cash flows arising from cost-sharing agreements in Taiwan, China and Japan. It further hedges highly probable future transactions in India and Japan. All future cash flows are estimated to be highly probable.

The Company uses cash flow hedge accounting in accordance with IFRS 9. It uses foreign exchange forwards and non-deliverable forwards as hedging instruments. The company uses the hypothetical derivative method to calculate hedge effectiveness. The hedges are considered to be highly effective:

 

   

in the currencies TWD, JPY and INR due to the fact that the critical terms of hedging instrument and hedged items match (“Critical Terms Match Method”)

 

   

in the currency CNH due to the fact that the changes in the offshore foreign exchange rate CNH /USD and onshore foreign exchange rate CNY/USD are highly correlated; the prospective hedge effectiveness is assessed by a regression analysis

Hedge effectiveness is assessed at inception of the hedge, at each reporting date, and upon a significant change in the circumstances affecting the hedge effectiveness requirements. The effect of credit risk is considered minimal due to the highly rated counterparties and does not significantly influence the value changes that result from economic relationship. Potential sources of ineffectiveness are changes of the payment dates or a reduction in the total amount of the hedged item and a significant change of the credit risk of either party to the hedging relationship. For the CNY-hedged items, a significant decrease of the correlation between the offshore and onshore Renminbi is also considered as a potential source of ineffectiveness.

The effective change in value resulting from the spot and time component of the derivatives are recognized in the cash flow hedge reserve of other comprehensive income. The effective change in value resulting from the cross currency basis is recognized in the cost of hedging reserve of other comprehensive income, as permitted under IFRS 9.

 

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The table below summarizes the Company’s items designated as hedging instruments for cash flow hedges and net investment hedges.

 

December 31, 2018

                  

($ in millions)

   Notional    Carrying
amount
Financial assets
   Carrying amount
Financial
liabilities
  Change in value of the hedging
instrument used for calculating hedge
ineffectiveness  (designated component)

Foreign Exchange Risk

                  

Cash flow hedge

                  

FX Forward

     $ 1.6      $ —        $ (0.1 )     $ (0.1 )

FX non-deliverable forward

       17.3        0.2        (0.2 )       —  

FX Collar

       200.0        1.3        —         —  

Net investment hedge

                  

FX Forward

       200.0        —          (16.4 )       (11.0 )
    

 

 

      

 

 

      

 

 

     

 

 

 

Notional value of Derivative Contracts

The table below summarizes the Notional value of the Company’s of derivative contracts:

 

December 31, 2018

                           

($ in millions)

   Less than
12 months
     1 – 5
years
     More than
5 years
     Notional  

Foreign Exchange Risk

           

FX Forward

           

USD—CNH

   $ 200.0      $ —        $ —        $ 200.0  

EUR—JPY

     1.3        —          —          1.3  

EUR—CNH

     0.2        —          —          0.2  

FX non-deliverable forward

                  

USD—CNH

     10.0        —          —          10.0  

EUR—TWD

     10.0        —          —          10.0  

EUR—INR

     2.7        —          —          2.7  

FX Collar

                  

USD—CNH

     —          200.0        —          200.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

The table below summarizes disclosures related to hedged items for the Company’s cash flow hedges

 

December 31, 2018

    

($ in millions)

   Change in value of the hedged item used
for calculating hedge ineffectiveness

Foreign Exchange Risk

    

Designated components

     $ 11.3

Non-designated components

       (5.7 )
    

 

 

 

 

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The table below summarizes disclosures related to the development of the Company’s cash flow hedge reserve:

 

December 31, 2018

    

($ in millions)

   Change in value of the hedged item used
for calculating hedge ineffectiveness

Foreign Exchange Risk

     $ (0.4 )
    

 

 

 

 

December 31, 2018

       Hedge reserve (OCI I)*    Hedge reserve (OCI I)*    

($ in millions)

   Cost of hedging
reserve
  Intrinsic value of
options
   Designated component
of currency forwards
  Total hedge
reserves

Opening balance January 1, 2018

     $ —       $ —        $ (13.7 )     $ (13.7 )

Add: Change in fair value of hedging instrument recognized in OCI

       —         —          3.6       3.6

Add: Costs of hedging deferred and recognized in OCI

       5.3       —          —         5.3

Less: reclassified from OCI to profit or loss

       (0.1 )       —          0.9       0.8

Less: Deferred tax

       —         —          —         —  

Closing balance December 31, 2018

     $ 5.4     $ —        $ (11.0 )     $ (5.6 )
    

 

 

     

 

 

      

 

 

     

 

 

 

 

*   The amount deferred in the costs of hedging reserve includes $0.9 million in respect of time value of options and $4.4 million in respect of cross currency basis spreads.

The table below summarizes the sensitivity in market value of all hedging instruments for FX risk:

 

December 31, 2018

        

($ in millions)

   Increase in FX rate by 10%   Decrease in FX rate by 10%

Foreign Exchange Risk

        

USD—CNH

       28.0       (32.2 )

EUR—JPY

       0.1       (0.1 )

EUR—CNH

       —         —  

USD—TWD

       0.9       (1.1 )

USD—INR

       (0.3 )       0.3
    

 

 

     

 

 

 

Successor

As of December 31, 2017, the Company held deposits of $325.8 million. In order to facilitate Company-wide liquidity, the Company entered into a Revolving Credit Facility (RCF) as well as bilateral credit lines that allow the Company to account for dynamically changing liquidity requirements.

 

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The table below summarizes the Company’s financial liabilities (both derivative and non-derivative) according to their respective contractual maturities, based on undiscounted cash flows. Due to materiality considerations, balances due within the next 12 months equal their carrying amounts, as the effect of discounting is considered immaterial.

 

December 31, 2017

                                         

($ in millions)

   Less than
12 months
     1 – 3
years
     3 – 5
years
     More than
5 years
     Total      Carrying
amount
 

Non-derivative instruments

                 

Trade payables

   $ 117.6      $ —        $ —        $ —        $ 117.6      $ 117.6  

Borrowings

     109.4        216.5        213.5        1,908.9        2,448.3        1,770.3  

Current bank debt

     11.3        —          —          —          11.3        11.3  

Accrued interest

     12.2        —          —          —          12.2        12.2  

Redenomination fee

     10.2        10.1        —          —          20.3        20.3  

Finance lease liabilities

     0.1        —          —          —          0.1        0.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     260.8        226.6        213.5        1,908.9        2,609.8        1,931.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative instruments

     10.2        23.1        —          —          33.3        33.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 271.0      $ 249.7      $ 213.5      $ 1,908.9      $ 2,643.1      $ 1,965.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The Company considers no early repayment during the financial year 2018. As of December 31, 2017, there are no risk concentrations at the Company with regard to liquidity risk.

As of December 31, 2018, the Company held deposits of $386.2 million. In order to facilitate Company-wide liquidity, the Company entered into a Revolving Credit Facility (RCF) as well as bilateral credit lines that allow the Company to account for dynamically changing liquidity requirements.

The table below summarizes the Company’s financial liabilities (both derivative and non-derivative) according to their respective contractual maturities, based on undiscounted cash flows. Due to materiality considerations, balances due within the next 12 months equal their carrying amounts, as the effect of discounting is considered immaterial.

 

December 31, 2018

                                         

($ in millions)

   Less than
12 months
     1 – 3
years
     3 – 5
years
     More than
5 years
     Total      Carrying
amount
 

Non-derivative instruments

                 

Trade payables

   $ 108.2      $ —        $ —        $ —        $ 108.2      $ 108.2  

Borrowings

     155.8        309.2        591.9        1,953.6        3,010.5        2,221.0  

Current bank debt

     7.6        —          —          —          7.6        7.6  

Accrued interest

     14.1        —          —          —          14.1        14.1  

Redenomination fee

     9.6        9.6        —          —          19.2        19.2  

Finance lease liabilities

     0.1        —          —          —          0.1        0.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     295.4        318.8        591.9        1,953.6        3,159.7        2,370.2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative instruments

     16.7        16.7        —          —          33.4        33.4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $  312.1      $ 335.5      $ 591.9      $ 1,953.6      $ 3,193.1      $ 2,403.6  

The Company considers early repayment during the financial year 2019. As of December 31, 2018, there are no risk concentrations at the Company with regard to liquidity risk.

(23) Earnings per Common Share

Basic earnings per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net income by the weighted average number of common shares outstanding for the period.

 

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Diluted earnings per common share includes the effect of potential dilution from the exercise of outstanding stock options. Potentially dilutive securities have been excluded in the weighted average number of common shares used for the calculation of earnings per share in periods of net loss because the effect of such securities would be antidilutive. A reconciliation of the Company’s basic and diluted earnings per common share is as follows:

 

For the year ended December 31, 2017

 

($ in millions, except share data)

   2017  

Net Loss

   $ (86.8

Interest accrued on preferred shares

     (133.8
  

 

 

 

Net loss attributable to shareholders

   $ (220.6

Weighted average shares outstanding for basic and diluted income per share(1)

     26,155,000  

Earnings per Common Share:

  

Basic net income (loss) per common share attributable to Atotech shareholders

     (8.44

Diluted net income per common share attributable to Atotech shareholders

   $ (8.44

 

(1)   The number of anti-dilutive shares (stock options) that have been excluded in the computation of diluted earnings per share for the years ended December 31, 2017 were 477,300.

 

For the year ended December 31, 2018

 

($ in millions, except share data)

   2018  

Net Loss

   $ (23.7

Interest accrued on preferred shares

     (125.4
  

 

 

 

Net loss attributable to shareholders

   $ (149.1

Weighted average shares outstanding for basic and diluted income per share(1)

     26,155,000  

Earnings per Common Share:

  

Basic net income (loss) per common share attributable to Atotech shareholders

     (5.70

Diluted net income per common share attributable to Atotech shareholders

   $ (5.70

 

(1)   The number of anti-dilutive shares (stock options) that have been excluded in the computation of diluted earnings per share for the years ended December 31, 2018 were 502,300.

As a result of the Acquisition on January 31, 2017, the Company has not presented earnings per share for the year-ended December 31, 2016 and for the one month-ended January 31, 2017 periods due to the significant change in the capital structure of Atotech UK Topco Limited compared to the predecessor parent entity.

(24) Segment Reporting

The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker (CODM) as defined under IFRS 8 “Operating Segments” to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information.

The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. The Company’s CODM is identified as Geoffrey Wild, CEO and member of Board of Directors, because he has final authority over performance assessment and resource allocation decisions. The Company’s segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.

The EL segment services the electronics supply chain, with specialty chemicals used in the plating process for PCBs embedded in smartphones, computing hardware, tablets, semiconductor packing, other electronic devices and production equipment which are a critical element of the electronics value chain.

 

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The GMF segment supplies specialty plating chemicals for functional and decorative surface finishing applications to a diverse set of customers, including automotive, building products, heavy machinery, household fixtures, decorative hardware, as well as production equipment.

The CODM assesses the performance of the operating segments based on Segment Adjusted EBITDA. This measure is defined as EBITDA (consolidated net income (loss) before interest, taxes, depreciation and amortization, excluding impairment charges) adjusted for certain items which management believes do not reflect the core operating performance of the operating segments. Such adjustments described below in more detail include non-cash effects of non-operating costs such as share-based compensation and impairments, foreign currency transaction losses, net, restructuring costs, the impact of discontinued activities, certain costs related to business combinations, and management fees paid to Carlyle.

No segment asset or liability measures are reported to the CODM, and such measures are not used for purposes of assessing performance or allocating resources.

The following tables summarize selected financial information by segment:

Predecessor—Year ended December 31, 2016

 

($ in millions)

   EL      GMF      Total  

Revenues(1)

   $ 593.0      $ 531.2      $ 1,124.2  

thereof Chemistry revenues

     481.0        471.6        952.6  

thereof Equipment revenues

     112.0        59.6        171.6  

Segment Adjusted EBITDA

   $ 175.3      $ 118.7      $ 294.0  

Predecessor—Period from January 1, 2017 to January 31, 2017

 

($ in millions)

   EL      GMF      Total  

Revenues(1)

   $ 45.8      $ 45.5      $ 91.3  

thereof Chemistry revenues

     39.0        37.9        76.9  

thereof Equipment revenues

     6.8        7.6        14.4  

Segment Adjusted EBITDA

   $ 14.4      $ 10.7      $ 25.1  

Successor—Year ended December 31, 2017

 

($ in millions)

   EL      GMF      Total  

Revenues(1)

   $ 603.0      $ 490.6      $ 1,093.6  

thereof Chemistry revenues

     488.9        449.6        938.5  

thereof Equipment revenues

     114.1        41.0        155.1  

Segment Adjusted EBITDA

   $ 193.7      $ 127.5      $ 321.2  

Successor—Year ended December 31, 2018

 

($ in millions)

   EL      GMF      Total  

Revenues(1)

   $ 669.4      $ 543.4      $ 1,212.8  

thereof Chemistry revenues

     568.5        498.0        1,066.5  

thereof Equipment revenues

     100.9        45.4        146.3  

Segment Adjusted EBITDA

   $ 227.2      $ 146.5      $ 373.7  

 

(1)   The Company has no inter-segment revenues.

 

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Reconciliation of Segment Adjusted EBITDA to consolidated net income follows:

 

     Predecessor     Predecessor            Successor     Successor  

($ in millions)

   For the year
ended
December 31,
2016
    Period from
January 1, 2017
to January 31,
2017
           For the year
ended
December 31,
2017
    For the year
ended
December 31,
2018
 

EL Segment Adjusted EBITDA

   $ 175.3     $ 14.4          $ 193.7     $ 227.2  

GMF Segment Adjusted EBITDA

     118.7       10.7            127.5       146.5  
  

 

 

   

 

 

        

 

 

   

 

 

 

Non-cash adjustments(a)

     (3.9     —              (14.6     (16.9

Foreign exchange loss(b)

     (3.0     (1.7          (7.0     0.2  

Restructuring(c)

     (5.3     (0.4          (10.8     (14.8

Eliminated product categories(d)

     6.8       0.2            1.0       0.1  

Transaction related costs(e)

     —         —              (126.2     (16.4

Management fee(f)

     —         —              (2.0     (2.2

Interest expense, net

     (1.3     —              (93.3     (133.3

Income taxes

     (64.3     (6.0          (16.7     (52.4

Depreciation and amortization (excluding impairment charges)

     (50.0     (4.0          (138.4     (161.7
  

 

 

   

 

 

        

 

 

   

 

 

 

Consolidated Net Income (Loss)

   $ 173.0     $ 13.2          $ (86.8   $ (23.7
  

 

 

   

 

 

        

 

 

   

 

 

 

 

(a)   Eliminates the non-cash impact of (1) share-based compensation, (2) gains or losses on the sale of fixed assets, (3) impairment charges, and (4) mark-to-market adjustments related to the Company’s foreign currency derivative and bifurcated embedded derivatives related to certain redemption features of the Opco Notes and Holdco Notes.
(b)   Eliminates net foreign currency transactional gains and losses.
(c)   Eliminates charges resulting from restructuring activities principally from the Company’s cost reduction efforts.
(d)   In 2016, the Company determined to discontinue the sale of products containing Chrome VI and to exit the product lines for soldermasks and resists for secondary imaging technology, which the Company refers to as the “EM” product line. Accordingly, this adjustment eliminates the EBITDA generated by sales of products containing Chrome VI and sales of products in the EM product line during the periods presented.
(e)   Reflects an adjustment to eliminate (1) purchase accounting and transaction fees incurred as part of the Acquisition,(2) fees associated with the foreign currency exchange derivatives entered into in conjunction with the Acquisition, and (3) professional fees paid to third-party advisors in connection with the implementation of strategic initiatives.
(f)   Reflects an adjustment to eliminate fees paid to Carlyle.

Geographic Data:

The information within the following tables provides disaggregated information related to the Company’s revenue and long-lived assets.

Revenue by region were as follows:

 

     Predecessor      Predecessor     

 

     Successor      Successor  
($ in millions)    For the year ended
December 31, 2016
     Period from
January 1, 2017 to
January 31, 2017
            For the year ended
December 31, 2017
     For the year ended
December 31, 2018
 

China

   $ 349.2      $ 30.6           $ 365.2      $ 412.6  

Germany

     150.5        11.9             101.3        106.6  

Taiwan

     107.4        6.6             110.1        129.4  

Other countries

     517.1        42.2             517.0        564.2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,124.2      $ 91.3           $ 1,093.6      $ 1,212.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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For the fiscal 2016, fiscal 2017 and fiscal 2018 financial statements, no customers accounted for 10% or more of the Company’s revenue.

Non-current assets by country were as follows (1):

 

     Predecessor     

 

     Successor      Successor  
($ in millions)    As of
December 31, 2016
            As of
December 31, 2017
     As of
December 31, 2018
 

Germany

   $ 145.3           $ 862.3      $ 800.0  

China

     90.1             1,091.2        992.1  

Other countries

     186.6             1,309.3        1,212.7  
  

 

 

         

 

 

    

 

 

 

Total

   $ 422.0           $ 3,262.7      $ 3,004.8  
  

 

 

         

 

 

    

 

 

 

 

(1)   Excluding financial instruments, deferred tax assets, post-employment benefit assets, and rights arising under insurance contracts.

Increase in non-current assets during the financial year 2017 is largely driven by the fair value of assets acquired as described in the Business Combinations footnote. Refer to Note 5 for additional detail.

(25) Related Parties

Predecessor

The ultimate parent company of Atotech B.V. is Total S.A.

The transactions with related parties are executed on an arm’s length basis.

 

($ in millions)

Statement of Income

   For the year ended
December 31,
2016
    Related parties
with TOTAL
 

Revenue

   $ 1,124.2     $ 0.5  

Cost of sales, excluding depreciation and amortization

     (470.4     (6.3

Depreciation and amortization

     (51.9     —    

Selling, general and administrative expenses

     (266.4     —    

Research and development expenses

     (79.1     —    

Restructuring expenses

     (5.3     —    
  

 

 

   

 

 

 

Operating Profit

     251.1       (5.8

Interest expense

     (4.5     (0.4

Other income (expense) net

     (9.3     1.8  
  

 

 

   

 

 

 

Income before income taxes

     237.3       (4.4

Income tax expense

     (64.3     (0.6
  

 

 

   

 

 

 

Consolidated net income

   $ 173.0     $ (5.0
  

 

 

   

 

 

 

The Cost of goods sold with Total is mainly related to Atotech Deutschland relations with Total S.A. and Total Global Services.

Other income (expense) net are mainly derived from relations with Total Treasury and Total Deutschland and are mainly related to Atotech Deutschland.

 

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Income taxes are mainly derived from relations with Total Delaware and only relate to Atotech USA which participated in a tax sharing agreement with Total Delaware.

Predecessor

Statement of Income

 

($ in millions)    Period from January 1,
2017 to January 31, 2017
    Related Parties
with TOTAL
 

Revenue

   $ 91.3     $ 0.1  

Cost of sales, excluding depreciation and amortization

     (40.7     —    

Depreciation and amortization

     (4.0     —    

Selling, general and administrative expenses

     (19.8     —    

Research and development expenses

     (6.3     —    

Restructuring expenses

     (0.4     —    

Operating Profit

     20.1       0.1  

Interest expense

     (0.1     (0.1

Other expense net

     (0.8     —    
  

 

 

   

 

 

 

Income before income taxes

     19.2       (0.0 ) 
  

 

 

   

 

 

 

Income tax expense

     (6.0     (0.1
  

 

 

   

 

 

 

Consolidated net income

   $ 13.2     $ (0.1 ) 
  

 

 

   

 

 

 

Transactions with Key Management Personnel

The Operations Committee of the Company consists of 10 Vice Presidents and the President himself as of January 31, 2017.

Compensation of the Company’s key management personnel includes salaries, short- and long-term benefits as well as post-employments benefits. Additionally, the members of the Operations Committee participate in The Company’s Performance Shares Program (see also Note 17).

 

($ in millions)    Period from
January 1, 2017 to
January 31, 2017
 

Short-term employee benefits

   $ 0.4  

Post-employment benefits

     0.1  

Other long-term benefits

     —    

Termination benefits

     —    

Share-based payments

     —    
  

 

 

 

Total

   $ 0.5  
  

 

 

 

Successor

During 2017 all of the Company’s shares were acquired by The Carlyle Group. The previous ultimate controlling party of Atotech Company with holding company Atotech B.V. until January 31, 2017 was TOTAL S. A. The Carlyle Group was the ultimate Controlling party of the Company with holding company Atotech UK Topco Limited as of December 31, 2017.

The Sponsor was the ultimate Controlling party of the Company with holding company Atotech UK Topco Limited as of December 31, 2017. On January 31, 2017, the Company entered into a consulting agreement with

 

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the Sponsor under which the Company, or its subsidiaries, will pay the Sponsor an annual fee of $1.8 million for consulting services to the Company. The annual fee is payable on a quarterly basis. For the year ended December 31, 2017, the Company paid the Sponsor $2.0 million of consulting services (net of $0.2 million of expense reimbursement). The Sponsor also received a payment of $26.3 million at the closing of the Acquisition consisting of a one-time transaction fee of $25.0 million and $1.3 million of expense reimbursement, respectively, all of which was expensed during the period as a transaction related cost.

Transactions with Key Management Personnel

Key management personnel consists of a total of thirteen individuals as of December 31, 2017, who constitute people having authority and responsibility for planning, directing, and controlling the Company’s activities. For the Year ended December 31, 2017, key management personnel compensation related to share-based payments was less than $0.1 million. See Note 17 for further details regarding the share-based payment plans offered to employees.

As of December 31, 2017, the Senior Management Team of the Company consists of the CEO, CFO, COO, two Presidents, one Vice President, and seven Directors.

Compensation of the Company’s key management personnel includes salaries, short- and long-term benefits as well as post-employments benefits. Additionally, the entire key management personnel participate in the Company’s Performance Shares Program. Lastly, a loan was issued to one of the Company’s key management personnel in 2015 in the amount of EUR 17,000 ($20,000), which was fully repaid in 2017.

 

($ in millions)    For the
year ended
December 31,
2017
 

Short-term employee benefits1

   $ 4.5  

Post-employment benefits*

     0.6  

Termination benefits

     1.7  

Share-based payments

     0.1  
  

 

 

 

Total

   $ 6.9  
  

 

 

 

 

1   Short-term employee benefits include $0.2 million of fringe benefits.
*   The benefits provided for the Senior Management Team of the Company include supplementary pension schemes and insurance plans, which represent in the balance sheet: $0.5 million provisioned as of December 31, 2017.

The Sponsor was the ultimate Controlling party of the Company with holding company Atotech UK Topco Limited as of December 31, 2018. For the year ended December 31, 2018, the Company paid the Sponsor $2.2 million of consulting services (net of $0.4 million of expense reimbursement) under the consulting agreement referred to above.

Transactions with Key Management Personnel

Key management personnel consists of a total of thirteen individuals as of December 31, 2018, who constitute people having authority and responsibility for planning, directing, and controlling the Company’s activities. For the year ended December 31, 2018, key management personnel compensation related to share-based payments was $0.1 million. See Note 17 for further details regarding the share-based payment plans offered to employees.

 

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As of December 31, 2018, the Senior Management Team of the Company consists of the CEO, CFO, COO, two Presidents, one Vice President, and seven Directors.

Compensation of the Company’s key management personnel includes salaries, short- and long-term benefits as well as post-employments benefits. Additionally, the entire key management personnel participate in the Company’s Performance Shares Program.

 

($ in millions)    For the
year ended
December 31,
2018
 

Short-term employee benefits1

   $ 6.5  

Post-employment benefits*

     0.2  

Share-based payments

     0.1  
  

 

 

 

Total

   $ 6.8  
  

 

 

 

 

1   Short-term employee benefits include $0.2 million of fringe benefits.
*   The benefits provided for the Senior Management Team of the Company include supplementary pension schemes and insurance plans, which represent in the balance sheet: $0.1 million provisioned as of December 31, 2018.

(26) List of Subsidiaries

As of December 31, 2016, 31 entities are consolidated. As of December 31, 2017, 38 entities are consolidated. As of December 31, 2018, 38 entities are consolidated. The table below sets forth all Company consolidated entities:

 

List of Entities

  December 31, 2016   December 31, 2017   December 31, 2018
    Consolidation
method
  % of
interest
  Immediate
Parent

Company
  Consolidation
method
  % of
interest
  Immediate
Parent
Company
  Consolidation
method
  % of
interest
  Immediate
Parent
Company

Alpha 2 B.V.

  Did not exist       Full
Consolidation
  100%   Atotech UK
Topco Ltd.
  Full
Consolidation
  100%   Atotech UK
Topco Ltd.

Alpha 3 B.V.

  Did not exist       Full
Consolidation
  100%   Atotech
Alpha 2 B.V.
  Full
Consolidation
  100%   Atotech
Alpha 2 B.V.

Alpha US Bidco, Inc.

  Did not exist       Full
Consolidation
  100%   Atotech
Alpha 3 B.V.
  Full
Consolidation
  100%   Atotech
Alpha 3 B.V.

Atotech B.V.

  Did not exist       Full
Consolidation
  100%   Atotech
Alpha 3 B.V.
  Full
Consolidation
  100%   Atotech
Alpha 3 B.V.

Atotech Do Brasil Galvanotécnica Ltda.

  Full
Consolidation
  99.99%*   Global
Integration
  Full
Consolidation
  99.99%*   Atotech B.V.   Full
Consolidation
  99.99%*   Atotech B.V.

Atotech Canada Ltd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech B.V.   Full
Consolidation
  100%   Atotech B.V.

Alpha 4 B.V.

  Did not exist       Full
Consolidation
  100%   Atotech B.V.   Full
Consolidation
  100%   Atotech B.V.

Alpha 5 B.V.

  Did not exist       Full
Consolidation
  100%   Atotech B.V.   Full
Consolidation
  100%   Atotech B.V.

Alpha Germany Bidco GmbH

  Did not exist       Full
Consolidation
  100%   Alpha 4 B.V.   Full
Consolidation
  100%   Alpha 4 B.V.

Atotech Beteiligungs und Management GmbH & Co KG

  Did not exist       Full
Consolidation
  100%   Alpha 4 B.V.   Full
Consolidation
  100%   Alpha 4 B.V.

Atotech USA, LLC.

  Full

Consolidation

  100%   Global
Integration
  Full
Consolidation
  100%   Alpha US
Bidco, Inc.
  Full
Consolidation
  100%   Alpha US
Bidco, Inc.

Atotech de México S.A. de C.V.

  Full
Consolidation
  99.99%*   Global
Integration
  Full
Consolidation
  99.99%*   Atotech B.V.   Full
Consolidation
  99.99%*   Atotech B.V.

Atotech China Chemicals Ltd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech B.V.   Full
Consolidation
  100%   Atotech B.V.

 

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Table of Contents

List of Entities

  December 31, 2016   December 31, 2017   December 31, 2018
    Consolidation
method
  % of
interest
  Immediate
Parent

Company
  Consolidation
method
  % of
interest
  Immediate
Parent
Company
  Consolidation
method
  % of
interest
  Immediate
Parent
Company

Atotech Asia Pacific Ltd.****

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech India Private
Limited

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  99.99%**   Atotech
B.V.
  Full
Consolidation
  99.99%**   Atotech
B.V.

Atotech Japan K.K.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Korea Ltd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Malaysia Sdn. Bhd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech (Singapore) Chemicals Pte. Ltd. (formerly Atotech S.E.A. Pte. Ltd.)

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Taiwan Limited

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Thailand Ltd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Vietnam C.o. Ltd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Deutschland GmbH

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  94%***   Atotech
Beteiligungs
und
Management
GmbH &
Co. KG
  Full
Consolidation
  94%***   Atotech
Beteiligungs
und
Management
GmbH &
Co. KG

Atotech Istanbul Kimya Sanayi Ticaret Ltd Sti.

  Full
Consolidation
  94.99%*   Global
Integration
  Full
Consolidation
  99.26%*   Atotech
B.V.
  Full
Consolidation
  99.26%*   Atotech
B.V.

UAB Atotech Chemata (Lithuania)

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech CZ, a.s.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Österreich GmbH

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
Beteiligungs
und
Management
GmbH &
Co. KG
  Full
Consolidation
  100%   Atotech
Beteiligungs
und
Management
GmbH &
Co. KG

Atotech Slovenija d.d.

  Full

Consolidation

  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
Beteiligungs
und
Management
GmbH &
Co. KG
  Full
Consolidation
  100%   Atotech
Beteiligungs
und
Management
GmbH &
Co. KG

Atotech Poland Sp. z.o.o.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Skandinavien AB

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech UK Ltd.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Espana S.A.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech France S.A.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  99.99%**   Atotech
B.V.
  Full
Consolidation
  99.99%**   Atotech
B.V.

Atotech Italia S.r.l.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Nederland B.V.

  Full
Consolidation
  100%   Global
Integration
  Merged to
Atotech B.V.
         

Atotech Servicios de México S.A. de C.V.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech de
México S.A.
de C.V.
  Full
Consolidation
  100%   Atotech de
México
S.A. de
C.V.

Atotech SK, s.r.o.

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech CZ,
a.s.
  Full
Consolidation
  100%   Atotech CZ,
a.s.

 

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List of Entities

  December 31, 2016   December 31, 2017   December 31, 2018
    Consolidation
method
  % of
interest
  Immediate
Parent

Company
  Consolidation
method
  % of
interest
  Immediate
Parent
Company
  Consolidation
method
  % of
interest
  Immediate
Parent
Company

Atotech Development Center Private Limited

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  99.99%**   Atotech
B.V.
  Full
Consolidation
  99.99%**   Atotech
B.V.

Atotech (Yangzhou) Chemicals Ltd

  Full
Consolidation
  100%   Global
Integration
  Full
Consolidation
  100%   Atotech
B.V.
  Full
Consolidation
  100%   Atotech
B.V.

Atotech Argentina
S.A.

  Non-consolidated   100%   Atotech
B.V.
  Non-consolidated   100%   Atotech
B.V.
  Non-consolidated   100%   Atotech
B.V.

OOO Atotech-Chemeta (Russia)

  Non-consolidated   100%   Atotech
B.V.
  Non-consolidated   100%   Atotech
B.V.
  Non-consolidated   100%   Atotech
B.V.

Atotech Australia PTY Ltd.

  Non-consolidated   100%   Atotech
B.V.
  Non-consolidated   100%   Atotech
B.V.
  Non-consolidated   100%   Atotech
B.V.

 

*   Minority interest is owned by Atotech Deutschland GmbH.

 

**   Minority interest is owned by Management staff.

 

***   Atotech B.V. holds 6% in Atotech Deutschland GmbH.

 

****   Atotech Asia Pacific Ltd. includes two immaterial entities.

(27) Off Balance Sheet Commitments

The Company’s off balance sheet commitments are mainly driven by the operating lease of the headquarter buildings in Berlin which hosts local and worldwide functions (Sales, R&D, Administration).

Successor

As of December 31, 2017

 

($ in millions)

   Total      less than 1
year
     between 1
and 3 years
     between 3
and 5
years
     more than
5 years
 

Tangible and intangible asset

   $ 11.8      $ 8.9      $ 2.4      $ 0.5      $ —    

Other purchasing obligations

     10.0        10.0        —          —          —    

Customers guarantees

     0.1        0.1        —          —          —    

Government guarantees

     2.4        —          0.8        0.3        1.3  

Other commitments given

     0.6        0.3        0.1        0.1        0.1  

Letters of credit issued

     1.8        1.8        —          —          —    

Operating leases

     67.7        14.7        22.2        13.4        17.4  

Finance lease

     0.1        0.1        —          —          —    

Total commitments given

     94.5        35.9        25.5        14.3        18.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Guaranties received from clients

     —          —          —          —          —    

Letters of credit received

     5.2        5.2        —          —          —    

Other commitments received

     0.7        0.1        0.3        0.2        0.1  

Total commitments received

   $ 5.9      $ 5.3      $ 0.3      $ 0.2      $ 0.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

As of December 31, 2018

 

($ in millions)

   Total      less than 1
year
     between 1
and 3 years
     between 3
and 5
years
     more than
5 years
 

Tangible and intangible asset

   $ 9.6      $ 8.4      $ 1.2      $ —        $ —    

Other purchasing obligations

     17.2        17.2        —          —          —    

Customers guarantees

     0.1        0.1        —          —          —    

Government guarantees

     2.2        —          1.7        0.5        —    

Other commitments given

     0.5        0.2        0.1        0.1        0.1  

Letters of credit issued

     —          —          —          —          —    

Operating leases

     51.5        13.3        17.3        7.7        13.2  

Finance lease

     0.1        —          0.1        —          —    

Total commitments given

     81.2        39.2        20.4        8.3        13.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Guaranties received from clients

     —          —          —          —          —    

Letters of credit received

     12.4        12.4        —          —          —    

Other commitments received

     4.5        3.8        0.3        0.3        0.1  

Total commitments received

   $ 16.9      $ 16.2      $ 0.3      $ 0.3      $ 0.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Operating Lease

The Company leases a number of warehouse and factory facilities under operating lease agreements. There are no particular standard requirements regarding the lease period within the Company. The period depends on local needs and requirements. Some leases provide for additional rent payments that are based on changes in local price indices. For certain operating leases, the Company is restricted from entering into sub-lease arrangements.

The Company determined that the land and building elements of the warehouses and factory leases are operating lease. The rent paid to the landlord is adjusted to market rentals at regular intervals, and the Company does not have an interest in the residual value of the land and buildings. As a result, it was determined that substantially all of the risks and rewards of the land and buildings are with the landlord.

The Company incurred rent expense on its operating leases of $22.1 million, $1.8 million, $20.1 million, and $20.7 million for the Predecessor year ended December 31, 2016, the Predecessor period January 1, 2017 to January 31, 2017, and the Successor years ended December 31, 2017 and 2018, respectively.

The following tables are showing non-cancellable lease rentals:

Predecessor

 

($ in millions)

   As of December 31,
2016
 

2017

   $ 10.7  

2018

     8.6  

2019

     7.3  

2020

     6.6  

2021

     6.2  

2022 and beyond

     16.0  
  

 

 

 

Total

   $ 55.4  
  

 

 

 

 

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Table of Contents

Successor

 

($ in millions)

   As of December 31,
2017
 

2018

   $ 14.7  

2019

     12.7  

2020

     9.5  

2021

     8.5  

2022

     4.9  

2023 and beyond

     17.4  
  

 

 

 

Total

   $ 67.7  
  

 

 

 

 

($ in millions)

   As of December 31,
2018
 

2019

   $ 13.3  

2020

     9.4  

2021

     7.9  

2022

     4.5  

2023

     3.2  

2024 and beyond

     13.2  
  

 

 

 

Total

   $ 51.5  
  

 

 

 

(28) Subsequent Events

On July 5, 2019, Atotech signed an agreement to acquire all shares of J-KEM International AB, Norköpping, Sweden, a privately owned chemistry manufacturer and sales company for the global flex-PCB industry.

Under the terms of the share purchase agreement Atotech will acquire on July 31, 2019, 100% of the issued and registered share capital of J-KEM International AB for a purchase price of €4.0 million (approximately $4.5 million). According to the agreement the purchase price shall be adjusted if on closing date the amount of net debt or the amount of net working capital of J-KEM International AB differ from the agreed-upon reference amounts according to the agreement. Further, a supplemental purchase price shall be paid, if within three calendar years commencing at closing date, the margin of external sales minus variable raw material costs for certain defined products is exceeding an agreed reference margin amount.

 

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Table of Contents

 

 

Through and including                (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

            Common Shares

 

 

LOGO

 

 

PROSPECTUS

                , 2020

 

 

 

Citigroup    Credit Suisse
BofA Securities    J.P. Morgan

 

 

 


Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 6. Indemnification of Directors and Officers

Our amended and restated articles of association to be filed as an exhibit to this registration statement will provide for indemnification of the officers and directors to the full extent permitted by applicable law.

In addition, we will (to the fullest extent permitted by applicable law) enter into agreements to indemnify our directors and executive officers containing provisions, which are in some respects broader than the specific indemnification provisions contained in the articles of association. The indemnification agreements may require us, among other things, to indemnify such persons against expenses, including attorneys’ fees, judgments, liabilities, fines and settlement amounts incurred by any such person in actions or proceedings, including actions by us or in our right, that may arise by reason of their status or service as our director or executive officer and to advance expenses incurred by them in connection with any such proceedings. The proposed form of such indemnification agreement is filed as Exhibit                to this registration statement.

The proposed form of Underwriting Agreement, to be filed by amendment to this registration statement, will provide for indemnification by the underwriters of the registrant and its officers and directors for certain liabilities arising under the Securities Act, or otherwise.

Item 7. Recent Sales of Unregistered Securities.

On December 12, 2018, in connection with our formation, we issued one thousand of our common shares for a total consideration of $10 in cash in order to provide our initial capitalization.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. Individuals who purchased stock as described above represented their intention to acquire the stock for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates issued in such transactions.

Item 8. Exhibits and Financial Statement Schedules.

(A)    Exhibits

The exhibit index attached hereto is incorporated herein by reference.

(B)    Financial Statement Schedules

All supplemental schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the financial statements or notes thereto.

Item 9. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

 

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Table of Contents

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

We hereby undertake that:

 

  (i)   for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

  (ii)   for purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-2


Table of Contents

EXHIBIT INDEX

 

Exhibit No.

  

Description of Exhibit

    1.1*    Form of Underwriting Agreement
    3.1*   

Amended and Restated Memorandum of Association and Articles of Association of Atotech Limited

    4.1    Indenture governing the 6.250% Senior Notes due 2025, dated January 31, 2017, among Alpha  3 B.V. and Alpha US Bidco, Inc., as Issuers, the Guarantors named therein and Wilmington Trust, National Association, as Trustee
    4.2    Form of 6.250% Senior Note due 2025 (included in Exhibit 4.1)
    4.3    Indenture governing the 8.750%/9.500% Senior PIK Toggle Notes due 2023, dated May 30, 2018, between Alpha 2 B.V., as Issuer, and Wilmington Trust, National Association, as Trustee
    4.4    Form of 8.750%/9.500% Senior PIK Toggle Notes due 2023 (included in Exhibit 4.3)
    5.1*    Opinion of Ogier
  10.1    Credit Agreement, dated as of January 31, 2017, among Alpha  3 B.V., Alpha US Bidco, Inc., Atotech Deutschland GmbH, Atotech S.E.A. Pte Ltd (n/k/a Atotech (Singapore) Chemicals Pte. Ltd.) (collectively, the “Borrowers”), Alpha  2 B.V., the lenders and other financial institutions from time to time party thereto, Bank of China Limited, Shanghai Branch, as redenomination term facilities administrative agent, and Barclays Bank PLC, as administrative agent and collateral agent (the “Agent”)
  10.2    Amendment No. 1 to Credit Agreement, dated as of May 30, 2018, by and among the Borrowers, the guarantors party thereto, the lenders and other financial institutions and the Agent
  10.3*    Employment Agreement by and between Alpha US Bidco, Inc. and Geoff Wild, dated as of March 31, 2017
  10.4*    Secondment Agreement by and between Alpha US Bidco, Inc., Atotech USA LLC and Geoff Wild, dated as of April 13, 2017
  10.5*    Employment Agreement by and between Atotech (Thailand) Co Ltd and Geoff Wild, dated as of March 31, 2017
  10.6*    Managing Director Service Agreement by and between Atotech Deutschland GmbH and Peter Frauenknecht, dated as of April 10, 2017
  10.7*    Unofficial English translation of Employment Agreement by and between Atotech Deutschland GmbH and Harald Ahnert, dated as of March 16, 2001
  10.8*    Unofficial English translation of Amendment No. 1 to Employment Agreement by and between Atotech Deutschland GmbH and Harald Ahnert, dated as of January 1, 2001
  10.9*    Unofficial English translation of Employment Agreement by and between Atotech Deutschland GmbH and Gertjan van der Wal, dated as of July 1, 2008
  10.10*    Atotech Limited 2020 Incentive Award Plan
  10.11*    Form of Stock Option Award Agreement under the Atotech Limited 2020 Incentive Award Plan
  10.12*    Form of Restricted Share Award Agreement under the Atotech Limited 2020 Incentive Award Plan
  10.13*    Form of Restricted Share Unit Award Agreement under the Atotech Limited 2020 Incentive Award Plan

 

II-3


Table of Contents

Exhibit No.

    

Description of Exhibit

    10.14   

Atotech Limited 2020 Employee Share Purchase Plan

    10.15    Form of Director Indemnification and Advancement Agreement
    10.16      Consulting Services Agreement
    10.17    Amendment No. 1 to Consulting Services Agreement
    10.18    Principal Stockholders Agreement
  21.1      List of Subsidiaries
  23.1      Consent of KPMG AG
  23.2    Consent of Ogier (included in Exhibit 5.1)
  24.1      Powers of Attorney (included in the signature pages to this registration statement)
  99.1      Representation pursuant to Item 8.A.4 of Form 20-F
  99.2      Consent of Director Nominee (Brian A. Bernasek)
  99.3      Consent of Director Nominee (Herman H. Chang)
  99.4      Consent of Director Nominee (Charles W. Shaver)

 

*   To be filed by amendment.

 

II-4


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of NewYork, NewYork, on January 15, 2020.

 

Atotech Limited
By:  

/s/ Geoff Wild

Name:   Geoff Wild
Title:   President and Chief Executive Officer

Each person whose signature appears below constitutes and appoints Geoff Wild and Peter Frauenknecht, and each of them singly, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and as of the dates indicated.

 

  Signature

  

Title

 

Date

  /s/ Geoff Wild

  Geoff Wild

  

President, Chief Executive Officer and Director

(Principal Executive Officer)

  January 15, 2020

  /s/ Peter Frauenknecht

  Peter Frauenknecht

  

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

  January 15, 2020

  /s/ Gregor P. Boehm

  Gregor P. Boehm

   Director   January 15, 2020

  /s/ Friedel Drees

  Friedel Drees

   Director   January 15, 2020

  /s/ Gregory M. Nikodem

  Gregory M. Nikodem

   Director   January 15, 2020

  /s/ Martin W. Sumner

  Martin W. Sumner

   Director   January 15, 2020

 

II-5


Table of Contents

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of Atotech Limited, has signed this registration statement in the City of New York, State of New York, on January 15, 2020.

 

Alpha US Bidco, Inc.
By:  

/s/ Geoff Wild

Name:   Geoff Wild
Title:   President

 

II-6

EX-4.1

Exhibit 4.1

Execution Version

 

 

 

ALPHA 3 B.V.

and

ALPHA US BIDCO, INC.

as Issuers

and the Guarantors party hereto

6.250% Senior Notes due 2025

INDENTURE

Dated as of January 31, 2017

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

 

 

 

 


TABLE OF CONTENTS

 

         Page  
ARTICLE I  
DEFINITIONS AND INCORPORATION BY REFERENCE  

SECTION 1.1.

  Definitions      1  

SECTION 1.2.

  Other Definitions      45  

SECTION 1.3.

  Rules of Construction      47  
ARTICLE II  
THE NOTES  

SECTION 2.1.

  Form and Dating      47  

SECTION 2.2.

  Form of Execution and Authentication      51  

SECTION 2.3.

  Registrar and Paying Agent      52  

SECTION 2.4.

  Paying Agent to Hold Money in Trust      53  

SECTION 2.5.

  Lists of Holders of the Notes      53  

SECTION 2.6.

  Transfer and Exchange      53  

SECTION 2.7.

  Replacement Notes      62  

SECTION 2.8.

  Outstanding Notes      63  

SECTION 2.9.

  Treasury Notes      63  

SECTION 2.10.

  Temporary Notes      63  

SECTION 2.11.

  Cancellation      63  

SECTION 2.12.

  Payment of Interest; Defaulted Interest      63  

SECTION 2.13.

  CUSIP and ISIN Numbers      64  

SECTION 2.14.

  Record Date      65  

SECTION 2.15.

  Additional Amounts      65  

SECTION 2.16.

  Agreed Tax Treatment      67  
ARTICLE III  
COVENANTS  

SECTION 3.1.

  Payment of Notes      67  

SECTION 3.2.

  Reports and Other Information      68  

SECTION 3.3.

  Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock      71  

SECTION 3.4.

  Limitation on Restricted Payments      80  

SECTION 3.5.

  Liens      88  

SECTION 3.6.

  Dividend and Other Payment Restrictions Affecting Subsidiaries      89  

SECTION 3.7.

  Asset Sales      92  

SECTION 3.8.

  Transactions with Affiliates      95  

SECTION 3.9.

  Change of Control      99  

SECTION 3.10.

  Maintenance of Insurance      101  

SECTION 3.11.

  Future Guarantors      102  

SECTION 3.12.

  Compliance Certificate; Statement by Officers as to Default      102  

SECTION 3.13.

  [Reserved]      102  

 

-i-


         Page  

SECTION 3.14.

  Designation of Restricted and Unrestricted Subsidiaries      102  

SECTION 3.15.

  Covenant Suspension      103  

SECTION 3.16.

  Stay, Extension and Usury Laws      105  

ARTICLE IV

 

MERGER, CONSOLIDATION, AMALGAMATION OR SALE OF ASSETS

 

SECTION 4.1.

  When the Issuers and Guarantors May Merge, Amalgamate or Otherwise Dispose of Assets      105  

ARTICLE V

 

REDEMPTION OF NOTES

 

SECTION 5.1.

  Optional Redemption      108  

SECTION 5.2.

  Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions      108  

SECTION 5.3.

  Selection by Trustee of Notes to Be Redeemed      109  

SECTION 5.4.

  Notice of Redemption      109  

SECTION 5.5.

  Deposit of Redemption Price      110  

SECTION 5.6.

  Notes Payable on Redemption Date      110  

SECTION 5.7.

  Notes Redeemed in Part      111  

SECTION 5.8.

  Offer to Repurchase      111  

SECTION 5.9.

  Redemption for Taxation Reasons      113  

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

SECTION 6.1.

  Events of Default      114  

SECTION 6.2.

  Acceleration      115  

SECTION 6.3.

  Other Remedies      115  

SECTION 6.4.

  Waiver of Past Defaults      116  

SECTION 6.5.

  Control by Majority      116  

SECTION 6.6.

  Limitation on Suits      116  

SECTION 6.7.

  Rights of Holders to Receive Payment      117  

SECTION 6.8.

  Collection Suit by Trustee      117  

SECTION 6.9.

  Trustee May File Proofs of Claim      117  

SECTION 6.10.

  Priorities      117  

SECTION 6.11.

  Undertaking for Costs      117  

ARTICLE VII

 

TRUSTEE

 

SECTION 7.1.

  Duties of Trustee      118  

SECTION 7.2.

  Rights of Trustee      119  

SECTION 7.3.

  Individual Rights of Trustee      120  

SECTION 7.4.

  Disclaimer      120  

SECTION 7.5.

  Notice of Defaults      121  

SECTION 7.6.

  Compensation and Indemnity      121  

 

-ii-


         Page  

SECTION 7.7.

  Replacement of Trustee      121  

SECTION 7.8.

  Successor Trustee by Merger      122  

SECTION 7.9.

  Eligibility; Disqualification      122  

SECTION 7.10.

  Limitation on Duty of Trustee      123  

SECTION 7.11.

  Preferential Collection of Claims Against the Issuer      123  

SECTION 7.12.

  Reports by Trustee to Holders of the Notes      123  

ARTICLE VIII

 

DISCHARGE OF INDENTURE; DEFEASANCE

 

SECTION 8.1.

  Discharge of Liability on Notes; Defeasance      123  

SECTION 8.2.

  Conditions to Defeasance      124  

SECTION 8.3.

  Application of Trust Money      125  

SECTION 8.4.

  Repayment to Issuers      125  

SECTION 8.5.

  Indemnity for U.S. Government Obligations      126  

SECTION 8.6.

  Reinstatement      126  

ARTICLE IX

 

AMENDMENTS

 

SECTION 9.1.

  Without Consent of Holders      126  

SECTION 9.2.

  With Consent of Holders      127  

SECTION 9.3.

  Effect of Consents and Waivers      129  

SECTION 9.4.

  Notation on or Exchange of Notes      129  

SECTION 9.5.

  Trustee To Sign Amendments      129  

ARTICLE X

 

GUARANTEES

 

SECTION 10.1.

  Guarantees      130  

SECTION 10.2.

  Limitation on Liability; Termination, Release and Discharge      131  

SECTION 10.3.

  Right of Contribution      133  

SECTION 10.4.

  No Subrogation      133  

SECTION 10.5.

  [Reserved]      133  

SECTION 10.6.

  Execution and Delivery      133  

SECTION 10.7.

  Guarantors Incorporated or Organized in The Netherlands      133  

SECTION 10.8.

  Guarantors Incorporated or Organized in Sweden      134  

SECTION 10.9.

  Guarantors Incorporated or Organized in Poland      134  

SECTION 10.10.

  Guarantors Incorporated or Organized in Lithuania      134  

SECTION 10.11.

  Guarantors Incorporated or Organized in Mexico      134  

SECTION 10.12.

  Brazilian Law Waiver      136  

SECTION 10.13.

  Guarantors Incorporated or Organized in Germany      136  

SECTION 10.14.

  Guarantors Incorporated or Organized in Korea      138  

ARTICLE XI

 

INTENTIONALLY OMITTED

 

 

-iii-


         Page  

ARTICLE XII

 

MISCELLANEOUS

 

SECTION 12.1.

  Notices      139  

SECTION 12.2.

  Certificate and Opinion as to Conditions Precedent      140  

SECTION 12.3.

  Statements Required in Certificate or Opinion      141  

SECTION 12.4.

  Currency Indemnity      141  

SECTION 12.5.

  Rules by Trustee, Paying Agent and Registrar      142  

SECTION 12.6.

  Days Other than Business Days      142  

SECTION 12.7.

  Governing Law      142  

SECTION 12.8.

  Jurisdiction and Service      142  

SECTION 12.9.

  Waiver of Jury Trial      142  

SECTION 12.10.

  No Recourse Against Others      142  

SECTION 12.11.

  Successors      142  

SECTION 12.12.

  Multiple Originals      143  

SECTION 12.13.

  Variable Provisions      143  

SECTION 12.14.

  Table of Contents; Headings      143  

SECTION 12.15.

  Force Majeure      143  

SECTION 12.16.

  USA Patriot Act      143  

SECTION 12.17.

  Communication by Holders with Other Holders      143  

SECTION 12.18.

  TIA § 314(d) Not Applicable      143  

ARTICLE XIII

 

MEASURING COMPLIANCE

 

SECTION 13.1.

  Compliance in Connection with Certain Investments and Repayments      143  

EXHIBITS

    

EXHIBIT A

  Form of Note   

EXHIBIT B

  Form of Certificate of Transfer   

EXHIBIT C

  Form of Certificate of Exchange   

EXHIBIT D

  Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited Investors   

EXHIBIT E

  Form of Supplemental Indenture to Be Delivered by Subsequent Guarantors   

 

 

-iv-


INDENTURE, dated as of January 31, 2017, as amended or supplemented from time to time (this “Indenture”), among Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch Chamber of Commerce under number 66940532 (the “Dutch Co-Issuer”) and Alpha US Bidco, Inc., a Delaware corporation (the “U.S. Co-Issuer” and, together with the Dutch Co-Issuer, the “Issuers”), the Guarantors (as defined herein) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (in such capacity, the “Trustee”).

Recitals

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined herein) of the Notes (as defined herein):

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.1. Definitions.

144A Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that shall be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

Acquired Indebtedness” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged, amalgamated or consolidated with or into or becomes a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is Incurred in connection with, or in contemplation of, such other Person merging, amalgamating or consolidating with or into, or becoming a Restricted Subsidiary of, such specified Person, and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Acquisition” means the acquisition of the entities and assets comprising Atotech pursuant to the Acquisition Agreement as described in the Offering Memorandum under “The transactions.”

Acquisition Agreement” means that certain Share Purchase Agreement, dated as of October 6, 2016, among Total Holdings Europe, Total Gestion USA, the Dutch Co-Issuer and the other parties party thereto, together with all exhibits and schedules thereto and as amended through the Issue Date.

Additional Notes” means one or more series of additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.1, 2.2 and 3.3, whether or not they bear the same CUSIP number as the Initial Notes.

Adjusted Cash” means the amount of unrestricted cash after giving effect to unrealized gains and losses under (and as determined by) any Swap Contracts in place at the time of determination (but only with respect to the then-elapsed portion of the current monthly or quarterly (as applicable under the relevant Swap Contract) calculation period thereunder).

 

-1-


Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

Agent” means any Registrar, Paying Agent, co-registrar or additional paying agent.

Applicable Premium” means, with respect to any Note on any applicable Redemption Date, as calculated by the Issuers, the greater of:

(1) 1% of the then-outstanding principal amount of the Note; and

(2) the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of the Note at February 1, 2020, in the case of the Initial Notes, or at such first optional redemption date as may be specified by the Issuers in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes, in each case, as set forth in Section 5.1(a), plus (ii) all required interest payments due on the Note through February 1, 2020, in the case of the Initial Notes, or through such first optional redemption date as may be specified by the Issuers in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes (excluding accrued but unpaid interest to (but not including) the Redemption Date), in the case of each of clauses (i) and (ii) above, computed using a discount rate equal to the Treasury Rate plus 50 basis points; over (b) the then-outstanding principal amount of the Note.

The Trustee shall have no duty to calculate or verify the Issuers’ calculation of the Applicable Premium.

Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and/or Clearstream that apply to such transfer or exchange.

Asset Sale” means:

(1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) of the Dutch Co-Issuer or any Restricted Subsidiary, or

(2) the issuance or sale of Equity Interests (other than preferred stock of Restricted Subsidiaries issued in compliance with Section 3.3 and directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary of the Dutch Co-Issuer (other than to the Dutch Co-Issuer or another Restricted Subsidiary) (whether in a single transaction or a series of related transactions),

(each of the foregoing referred to in this definition as a “disposition”). Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(a) a sale, exchange or other disposition of cash, Cash Equivalents or Investment Grade Securities, or of obsolete, damaged, unnecessary, unsuitable or worn out equipment or other assets in the ordinary course of business, or dispositions of property no longer used, useful or economically practicable to maintain in the conduct of the business of the Dutch Co-Issuer and its Restricted Subsidiaries (including allowing any registrations or any applications for registration of any intellectual property or other intellectual property rights to lapse or become abandoned);

 

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(b) the sale, conveyance, lease or other disposition of all or substantially all of the assets of either of the Issuers in compliance with Section 4.1 or any disposition that constitutes a Change of Control;

(c) any Restricted Payment that is permitted to be made, and is made, under Section 3.4 or any Permitted Investment;

(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary, in a single transaction or series of related transactions, with an aggregate Fair Market Value of less than or equal to $20.0 million;

(e) any transfer or disposition of property or assets or issuance or sale of Equity Interests by a Restricted Subsidiary to the Dutch Co-Issuer or by the Dutch Co-Issuer or a Restricted Subsidiary to another Restricted Subsidiary;

(f) the creation of any Lien permitted under this Indenture;

(g) any issuance, sale, pledge or other disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(h) the sale, lease, assignment, license or sublease of inventory, equipment, accounts receivable, notes receivable or other current assets held for sale in the ordinary course of business or the conversion of accounts receivable to notes receivable or dispositions of accounts receivable in connection with the collection or compromise thereof;

(i) the lease, assignment, license, sublicense or sublease of any real or personal property in the ordinary course of business;

(j) a sale or transfer of accounts receivable, or participations therein, and related assets of the type specified in the definition of “Receivables Financing” to a Receivables Subsidiary in a Qualified Receivables Financing or in factoring or similar transactions;

(k) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;

(l) any exchange of assets for Related Business Assets (including a combination of Related Business Assets and a de minimis amount of cash or Cash Equivalents) of comparable or greater market value than the assets exchanged, as determined in good faith by the Dutch Co-Issuer;

(m) (i) non-exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles and (ii) exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles in the ordinary course of business of the Dutch Co-Issuer and the Restricted Subsidiaries of the Dutch Co-Issuer;

 

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(n) any Sale/Leaseback Transaction with respect to property acquired or built after the Issue Date by the Dutch Co-Issuer or any of its Restricted Subsidiaries; provided that such sale is for at least Fair Market Value;

(o) the surrender or waiver of obligations of trade creditors or customers or other contract rights that were incurred in the ordinary course of business of the Dutch Co-Issuer or any Restricted Subsidiary of the Dutch Co-Issuer, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or compromise, settlement, release or surrender of a contract, tort or other litigation claim, arbitration or other disputes;

(p) dispositions arising from foreclosures, condemnations, eminent domain, seizure, nationalization or any similar action with respect to assets, dispositions of property subject to casualty events and (except for purposes of calculating Net Cash Proceeds of any Asset Sale under Sections 3.7(b), (c), (d), (e) and (f)) dispositions necessary or advisable (as determined by the Dutch Co-Issuer in good faith) in order to consummate any acquisition of any Person, business or assets;

(q) dispositions of Investments (including Equity Interests) in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements or rights of first refusal between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(r) to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(s) the issuance of directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law;

(t) dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is purchased within 90 days of such disposition or (ii) the proceeds of such Asset Sale are applied within 90 days of such disposition to the purchase price of such replacement property (which replacement property is purchased within 90 days of such disposition);

(u) a sale or transfer of equipment receivables, or participations therein, and related assets; and

(v) any dispositions in connection with the Transactions.

For the avoidance of doubt, the unwinding of Swap Contracts shall not be deemed to constitute an Asset Sale.

Atotech” means Atotech B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 30128915.

Bankruptcy Law” means, any bankruptcy, insolvency, liquidation, conservatorship, assignment for the benefit of creditors, moratorium, rearrangement, receivership, judicial management, reorganization or other similar law, statute, rule, regulation or provision of any applicable jurisdiction (including any applicable foreign jurisdiction), including Title 11, United States Code and any similar Federal, state or foreign law for the relief of debtors and also including the Dutch Tax Collection Act (Invorderingswet 1990).

 

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beneficial owner” has the meaning given to that term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will not be deemed to have beneficial ownership of any securities that such “person” has the right to acquire or vote only upon the happening of any future event or contingency (including the passage of time) that has not yet occurred. The terms “beneficial ownership,” “beneficially owns” and “beneficially owned” have a corresponding meaning.

Board of Directors” means as to any Person, the board of directors, board of managers, sole member or managing member or other governing body of such Person, or if such Person is owned or managed by a single entity or has a general partner, the board of directors, board of managers, sole member or managing member or other governing body of such entity or general partner, or in each case, any duly authorized committee thereof, and the term “directors” means members of the Board of Directors.

Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law or regulation to close in the State of New York or, with respect to any payments to be made under this Indenture, the place of payment.

Capital Stock” means:

(1) in the case of a corporation or a company, corporate stock or share capital;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person (it being understood and agreed, for the avoidance of doubt, that “cash-settled phantom appreciation programs” in connection with employee benefits that do not require a dividend or distribution shall not constitute Capital Stock).

Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease or operating lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with IFRS.

Cash Capped Grower Amount” means the greater of (x) $295.0 million and (y) 100% of Consolidated EBITDA of the Dutch Co-Issuer for the most recently ended four full fiscal quarter period for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis.

Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of an Issuer or any Guarantor and designated as a “Cash Contribution Amount” as described in the definition of “Contribution Indebtedness.”

 

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Cash Equivalents” means:

(1) U.S. dollars, Canadian dollars, Japanese yen, pounds sterling, RMB, euros or the national currency of any participating member state of the European Union (as it is constituted on the Issue Date) and other currencies held by a Holdings Entity or Subsidiaries in the ordinary course of business;

(2) securities issued or directly guaranteed or insured by the government of the United States or any country that is a member of the European Union (as it is constituted on the Issue Date) or any agency or instrumentality thereof in each case with maturities not exceeding two years from the date of acquisition;

(3) money market deposits, certificates of deposit, time deposits and eurodollar time deposits with maturities of two years or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding two years, and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250.0 million in the case of domestic banks or $100.0 million (or the dollar equivalent thereof) in the case of foreign banks;

(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above and clause (6) below entered into with any financial institution or securities dealers of recognized national standing meeting the qualifications specified in clause (3) above;

(5) commercial paper or variable or fixed rate notes issued by a corporation or other Person (other than an Affiliate of the Dutch Co-Issuer) rated at least “A-2” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized rating agency) and in each case maturing within two years after the date of acquisition;

(6) readily marketable direct obligations issued by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized rating agency) in each case with maturities not exceeding two years from the date of acquisition;

(7) Indebtedness issued by Persons (other than the Sponsor) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition, and marketable short-term money market and similar securities having a rating of at least “A-2” or “P-2” from either S&P or Moody’s (or reasonably equivalent ratings of another internationally recognized rating agency);

(8) investment funds investing at least 95% of their assets in investments of the types described in clauses (1) through (7) above and (9) and (10) below;

(9) Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or reasonably equivalent ratings of another internationally recognized rating agency); and

(10) in the case of investments by any Foreign Subsidiary or investments made in a country outside the United States of America, other investments of comparable tenor and credit quality to those described in the foregoing clauses (1) through (9) customarily utilized in the countries where such Foreign Subsidiary is located or in which such investment is made.

 

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Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (1) above; provided that such amounts are converted into any currency listed in clause (1) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

Cash Management Services” means any of the following to the extent not constituting a line of credit (other than an overnight draft facility that is not in default): automated clearing house transactions, treasury and/or cash management services, including, without limitation, treasury, depository, overdraft, credit, purchasing or debit card, non-card e-payables services, electronic funds transfer, treasury management services (including controlled disbursement services, overdraft automatic clearing house fund transfer services, return items and interstate depository network services), other demand deposit or operating account relationships, foreign exchange facilities and merchant services.

CFC” means any Subsidiary of the U.S. Co-Issuer or any Subsidiary of a Guarantor organized in the United States, any state thereof or the District of Columbia, in each case, which Subsidiary is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

CFC Holdco” means any Subsidiary of the U.S. Co-Issuer or any Subsidiary of a Guarantor organized in the United States, any state thereof or the District of Columbia, in each case, which Subsidiary owns no material assets other than Capital Stock and/or indebtedness of one or more CFCs or another CFC Holdco.

Change of Control” means the occurrence of any of the following events:

(i) any person or “group” (within the meaning of Rule 13d-5 under the Exchange Act, but excluding any employee benefit plan and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders, acquires beneficial ownership of more than 50% of the Voting Stock (measured by reference to voting power) of the Dutch Co-Issuer (determined on a fully diluted basis); or

(ii) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Dutch Co-Issuer and its Subsidiaries, taken as a whole, to any Person other than one or more Permitted Holders;

provided that, in no case shall a Change of Control be deemed to have occurred if such Change of Control is also a Specified Change of Control Event.

Clearstream” means Clearstream Banking, société anonyme, or any successor securities clearing agency.

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

Company Order” means a written request or order signed in the name of each of the Issuers by any Officer of each of the Issuers.

 

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Consolidated EBITDA” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of such Person for such period:

(1) increased, in each case (other than with respect to clauses (k), (l) and (n) below) to the extent deducted and not added back in calculating such Consolidated Net Income (and without duplication), by:

(a) provision for taxes based on income, profits or capital, including federal, state, franchise, excise, property and similar taxes and foreign withholding taxes paid or accrued, including giving effect to any penalties and interest with respect thereto, and state taxes in lieu of business fees (including business license fees) and payroll tax credits, income tax credits and similar credits and including an amount equal to the amount of tax distributions actually made to the holders of Equity Interests of such Person or its Restricted Subsidiaries or any direct or indirect parent of such Person or its Restricted Subsidiaries in respect of such period (in each case, to the extent attributable to the operations of such Person and its Subsidiaries), which shall be included as though such amounts had been paid as income taxes directly by such Person or its Restricted Subsidiaries; plus

(b) Consolidated Interest Expense; plus

(c) all depreciation and amortization charges and expenses, including amortization or expense recorded for upfront payments related to any contract signing and signing bonus and incentive payments; plus

(d) the amount of any interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any Restricted Subsidiary of such Person that is not a Wholly Owned Restricted Subsidiary of such Person; plus

(e) the amount of management, monitoring, consulting, transaction and advisory fees (including termination fees) and related indemnities, charges and expenses paid or accrued to or on behalf of any direct or indirect parent of the Dutch Co-Issuer or any of the Permitted Holders, in each case, to the extent permitted under Section 3.8; plus

(f) earn-out obligations incurred in connection with any acquisition or other Investment and paid or accrued during the applicable period; plus

(g) all charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of equity interests held by management and all losses, charges and expenses related to payments made to holders of options or other derivative equity interests in the common equity of such Person or any direct or indirect parent of the Dutch Co-Issuer in connection with, or as a result of, any distribution being made to equityholders of such Person or any of its direct or indirect parents, which payments are being made to compensate such optionholders as though they were equityholders at the time of, and entitled to share in, such distribution; plus

(h) all non-cash losses, charges and expenses, including any write-offs or write-downs; provided that if any such non-cash charge represents an accrual or reserve for potential cash items in any future four-fiscal quarter period, (i) such Person may determine not to add back such non-cash charge in the period for which Consolidated EBITDA is being calculated and (ii) to the extent such Person does decide to add back such non-cash charge, the cash payment in respect thereof in such future four-fiscal quarter period will be subtracted from Consolidated EBITDA for such future four-fiscal quarter period; plus

(i) all costs and expenses in connection with pre-opening and opening and closure and/or consolidation of facilities that were not already excluded in calculating such Consolidated Net Income; plus

 

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(j) restructuring charges; accruals or reserves and business optimization expense, including any restructuring costs and integration costs incurred in connection with the Transactions and any other acquisitions; start-up costs (including entry into new market/channels and new service offerings); costs related to the closure, relocation, reconfiguration and/or consolidation of facilities and costs to relocate employees; integration and transaction costs; retention charges; severance; contract termination costs; recruiting and signing bonuses and expenses; future lease commitments; systems establishment costs; systems, facilities or equipment conversion costs; excess pension charges and consulting fees; expenses attributable to the implementation of costs savings initiatives; costs associated with tax projects/audits and costs consisting of professional consulting or other fees relating to any of the foregoing; plus

(k) Pro Forma Cost Savings; plus

(l) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” and “Pro Forma Adjusted EBITDA” (or similar pro forma non-IFRS measures) as set forth in footnote (3) in the section entitled “Summary—Summary historical consolidated and unaudited pro forma condensed consolidated financial information and other data” in the Offering Memorandum to the extent adjustments of such nature continue to be applicable during the period in which Consolidated EBITDA is being calculated; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Basis”; plus

(m) the amount of loss or discount on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Financing; plus

(n) with respect to any joint venture that is not a Restricted Subsidiary, an amount equal to the proportion of those items described in clauses (a), (b) and (c) above relating to such joint venture corresponding to such Person’s and the Restricted Subsidiaries’ proportionate share of such joint venture’s Consolidated Net Income (determined as if such joint venture were a Restricted Subsidiary) solely to the extent Consolidated Net Income was reduced thereby;

(2) decreased (without duplication and to the extent increasing such Consolidated Net Income for such period) by (i) non-cash gains or income, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that were deducted (and not added back) in the calculation of Consolidated EBITDA for any prior period ending after the Issue Date and (ii) the amount of any minority interest income consisting of a Subsidiary loss attributable to minority equity interest of third parties in any non-Wholly Owned Subsidiary (to the extent not deducted from Consolidated Net Income for such period);

(3) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any net cash or realized gains and losses relating to (i) amounts denominated in foreign currencies resulting from the application of IAS 21 (including net realized gains and losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains or losses from related Swap Contracts (entered into in the ordinary course of business or consistent with past practice)) or (ii) any other amounts denominated in or otherwise trued-up to provide similar accounting as if they were denominated in foreign currencies; and

(4) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any gain or loss relating to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice);

 

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provided that the Dutch Co-Issuer may, in its sole discretion, elect to not make any adjustment for any item pursuant to the foregoing clauses (1) through (4) above if any such item individually is less than $2.0 million in any fiscal quarter.

Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(a) the aggregate interest expense of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with IFRS, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including pay in kind interest payments, amortization of original issue discount, the interest component of Capitalized Lease Obligations and net payments and receipts (if any) pursuant to interest rate Swap Contracts (other than in connection with the early termination thereof) but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, discounts, fees and expenses and expensing of any bridge, commitment or other financing fees, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities, and all discounts, commissions, fees and other charges associated with any Receivables Financing); plus

(b) consolidated capitalized interest of the referent Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

(c) interest income of the referent Person and its Restricted Subsidiaries for such period;

provided that (a) when determining Consolidated Interest Expense in respect of any four-quarter period ending prior to the first anniversary of the Issue Date, Consolidated Interest Expense will be calculated by multiplying the aggregate Consolidated Interest Expense accrued since the Issue Date by 365 and then dividing such product by the number of days from and including the Issue Date to and including the last day of such period and (b) in the case of any Person that became a Restricted Subsidiary of such Person after the commencement of such four-quarter period, the interest expense of such Person paid in cash prior to the date on which it became a Restricted Subsidiary of such Person will be disregarded. For purposes of this definition, interest on Capitalized Lease Obligations will be deemed to accrue at the interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligations in accordance with IFRS.

Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with IFRS and before any reduction in respect of Preferred Stock dividends; provided that (without duplication):

(a) all net after-tax extraordinary, nonrecurring, exceptional or unusual gains, losses, income, expenses and charges, in each case as determined in good faith by such Person, and in any event including, without limitation, all restructuring, severance, relocation, retention and completion payments, consolidation, integration or other similar charges and expenses, contract termination costs, system establishment charges, conversion costs, start-up or closure or transition costs, expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to curtailments, settlements or modifications to pension and post-retirement employee benefit plans in connection with the Transactions or any acquisition or Permitted Investment, expenses

 

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associated with strategic initiatives, facilities shutdown and opening costs, and any fees, expenses, charges or change in control payments related to the Transactions or any acquisition or Permitted Investment (including any transition-related expenses (including retention or transaction-related bonuses or payments) incurred before, on or after the Issue Date), will be excluded;

(b) all (i) charges and expenses relating to the Transactions, (ii) transaction fees, costs and expenses incurred in connection with the consummation of any equity issuances, investments, acquisitions, dispositions, recapitalizations, mergers, amalgamations, option buyouts and the Incurrence, modification or repayment of Indebtedness permitted to be Incurred hereunder (including any Refinancing Indebtedness in respect thereof) or any amendments, waivers or other modifications under the agreements relating to such Indebtedness or similar transactions and (iii) without duplication of any of the foregoing, non-operating or non-recurring professional fees, costs and expenses for such period will be excluded;

(c) all net after-tax income, loss, expense or charge from abandoned, closed or discontinued operations and any net after-tax gain or loss on the disposal of abandoned, closed or discontinued operations (and all related expenses) other than in the ordinary course of business (as determined in good faith by such Person) will be excluded;

(d) all net after-tax gain, loss, expense or charge attributable to business dispositions and asset dispositions, including the sale or other disposition of any Equity Interests of any Person, other than in the ordinary course of business (as determined in good faith by such Person), will be excluded;

(e) all net after-tax income, loss, expense or charge attributable to the early extinguishment or cancellation of Indebtedness, Swap Contracts or other derivative instruments (including deferred financing costs written off and premiums paid) will be excluded;

(f) all non-cash gains, losses, expenses or charges attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments will be excluded;

(g) any non-cash or unrealized foreign currency translation or foreign currency transaction gains and losses related to changes in currency exchange rates (including remeasurements of Indebtedness and any net loss or gain resulting from Swap Contracts for currency exchange risk) will be excluded;

(h) (i) the net income for such period of any Person that is not a Restricted Subsidiary of the referent Person or that is accounted for by the equity method of accounting, will be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or converted into cash) with respect to such equity ownership to the referent Person or a Restricted Subsidiary thereof in respect of such period and (ii) the net income for such period will include any ordinary course dividends or distributions or other payments paid in cash (or converted into cash) with respect to such equity ownership received from any such Person during such period in excess of the amounts included in subclause (i) above;

(i) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies will be excluded;

 

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(j) the effects of purchase accounting, fair value accounting or recapitalization accounting adjustments (including the effects of such adjustments pushed down to the referent Person and its Restricted Subsidiaries) resulting from the application of purchase accounting, fair value accounting or recapitalization accounting in relation to the Transactions or any acquisition consummated before or after the Issue Date, and the amortization, write-down or write-off of any amounts thereof, net of taxes, will be excluded;

(k) all non-cash impairment charges and asset write-ups, write-downs and write-offs, in each case pursuant to IFRS, and the amortization of intangibles arising from the application of IFRS will be excluded;

(l) all non-cash expenses realized in connection with or resulting from equity or equity-linked compensation plans, employee benefit plans or agreements or post-employment benefit plans or agreements, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other similar rights will be excluded;

(m) any costs or expenses incurred in connection with the payment of dividend equivalent rights to option holders pursuant to any management equity plan, stock option plan or any other management or employee benefit plan or agreement or post-employment benefit plan or agreement will be excluded;

(n) accruals and reserves for liabilities or expenses that are established or adjusted as a result of the Transactions within 24 months after the Issue Date will be excluded;

(o) all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, fees and expenses, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities, and expensing of any bridge, commitment or other financing fees (including in connection with a transaction undertaken but not completed), will be excluded;

(p) all discounts, commissions, fees and other charges (including interest expense) associated with any Receivables Financing will be excluded;

(q) (i) the non-cash portion of “straight-line” rent expense will be excluded and (ii) the cash portion of “straight-line” rent expense that exceeds the amount expensed in respect of such rent expense will be included;

(r) expenses and lost profits with respect to liability or casualty events or business interruption will be disregarded to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer, but only to the extent that such amount (i) has not been denied by the applicable carrier in writing and (ii) is in fact reimbursed within 365 days of the date on which such liability was discovered or such casualty event or business interruption occurred (with a deduction for any amounts so added back that are not reimbursed within such 365-day period); provided that any proceeds of such reimbursement when received will be excluded from the calculation of Consolidated Net Income to the extent the expense or lost profit reimbursed was previously disregarded pursuant to this clause (r);

 

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(s) losses, charges and expenses that are covered by indemnification or other reimbursement provisions in connection with any asset disposition will be excluded to the extent actually reimbursed, or, so long as such Person has made a determination that a reasonable basis exists for indemnification or reimbursement, but only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days);

(t) non-cash charges or income relating to adjustments to deferred tax asset valuation allowances will be excluded;

(u) cash dividends or returns of capital from Investments (such return of capital not reducing the ownership interest in the underlying Investment), in each case received during such period, to the extent not otherwise included in Consolidated Net Income for that period or any prior period subsequent to the Issue Date will be included;

(v) solely for the purpose of determining the amount available for Restricted Payments under Section 3.4(a)(C) and without duplication of provisions under Section 3.4(a)(C) with respect to cash dividends or returns on Investments, the net income (or loss) for such period of any Restricted Subsidiary (other than the U.S. Co-Issuer or a Guarantor) will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to such Person or any of its Restricted Subsidiaries in respect of such period, to the extent not already included therein (subject, in the case of a dividend to another Restricted Subsidiary (other than the U.S. Co-Issuer or a Guarantor), to the limitation contained in this clause (v));

(w) any Initial Public Company Costs will be excluded; and

(x) any non-cash interest expense and non-cash interest income, in each case to the extent there is no associated cash disbursement or receipt, as the case may be, before the earlier of the maturity date of the Notes and the date on which all the Notes cease to be outstanding, shall be excluded;

provided that the Dutch Co-Issuer may, in its sole discretion, elect to not make any adjustment for any item pursuant to clauses (a) through (x) above if any such item individually is less than $2.0 million in any fiscal quarter.

For the purpose of Section 3.4 only, there shall be excluded from Consolidated Net Income any income arising from the sale or other disposition of Restricted Investments, from repurchases or redemptions of Restricted Investments, from repayments of loans or advances which constituted Restricted Investments or from any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries, in each case to the extent such amounts increase the amount of Restricted Payments permitted under Section 3.4(a)(C)(5) or 3.4(a)(C)(6).

Consolidated Net Tangible Assets” means the aggregate amount of assets (including deferred tax assets (without reducing such deferred tax assets by deferred tax liabilities), and less applicable reserves and other properly deductible items) after deducting therefrom all goodwill, indemnification assets in connection with the Transactions, trade names, trademarks, patents, unamortized debt discount and expense, investments, and other like intangibles, all as set forth in the most recent consolidated balance sheet of the Dutch Co-Issuer and its Restricted Subsidiaries and computed in accordance with IFRS, determined on a Pro Forma Basis.

 

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Consolidated Secured Indebtedness” means Consolidated Total Indebtedness of the Dutch Co-Issuer that is not subordinated in right of payment to the Notes and that is (i) secured by a Lien on the Collateral (as defined in the Senior Credit Agreement) or (ii) in an amount in excess of $100.0 million (in the aggregate for all such Indebtedness) and secured by a Lien on any asset or property of the Dutch Co-Issuer or any Restricted Subsidiary.

Consolidated Senior Secured Net Debt Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Secured Indebtedness as of such date minus (y) the amount of Adjusted Cash and Cash Equivalents of the Dutch Co-Issuer and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Dutch Co-Issuer for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis; provided that, in the event that the Dutch Co-Issuer shall classify Indebtedness Incurred on the date of determination as secured in part pursuant to clause (24) of the definition of “Permitted Liens” and in part pursuant to one or more other clauses of such definition (other than Liens Incurred under clause (6) thereof in respect of Indebtedness Incurred under clause (b)(i)(y) of Section 3.3) as provided in the final paragraph of such definition any calculation of Consolidated Secured Indebtedness for purposes of clause (x) above on such date (but not in respect of any future calculation following such date) shall not include any such Indebtedness (and shall not give effect to any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness from the proceeds thereof) to the extent secured pursuant to any such other clause of such definition. For purposes of calculating the Consolidated Senior Secured Net Debt Ratio with respect to any revolving Indebtedness Incurred under the Consolidated Senior Secured Net Debt Ratio, the Dutch Co-Issuer may elect, at any time (which election may not be changed with respect to such revolving Indebtedness), to either (x) give pro forma effect to the Incurrence of the entire committed amount of such Indebtedness, in which case such committed amount may thereafter be borrowed or reborrowed, in whole or in part, from time to time, without further compliance with the Consolidated Senior Secured Net Debt Ratio component of any provision hereunder, or (y) give pro forma effect to the Incurrence of the actual amount drawn under such revolving Indebtedness, in which case, the ability to Incur the amounts committed to under such Indebtedness will be subject to the Consolidated Senior Secured Net Debt Ratio (to the extent being Incurred pursuant to such ratio) at the time of each such Incurrence. The Dutch Co-Issuer hereby elects that on the Issue Date, the entire committed amount of the revolving portion of the Senior Credit Agreement on the Issue Date shall be deemed to have been Incurred under clause (b)(i)(x)(2) of Section 3.3 and not under the Consolidated Senior Secured Net Debt Ratio.

Consolidated Total Assets” means the total consolidated assets of the Dutch Co-Issuer and its Restricted Subsidiaries, as shown on the most recent consolidated balance sheet of the Dutch Co-Issuer and its Restricted Subsidiaries, determined on a Pro Forma Basis.

Consolidated Total Indebtedness” means all Indebtedness of the type described in clauses (1)(a), (1)(b) (but excluding surety bonds, performance bonds or other similar instruments), (1)(d) (but solely in respect of the amount of outstanding Indebtedness of the type described in (1)(d) that is in excess of $5.0 million) and (2) (in respect of Indebtedness of the type described in clauses (1)(a), (1)(b) (but excluding Indebtedness constituting surety bonds, performance bonds or other similar instruments) and (1)(d) (but solely in respect of the amount of Indebtedness of the type described in (1)(d) that is in excess of $5.0 million)) of the definition of “Indebtedness”, of a Person and its Restricted Subsidiaries on a consolidated basis, in an amount that would be reflected on a balance sheet prepared as of such date on a

 

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consolidated basis in accordance with IFRS (but (x) excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any acquisition and (y) any Indebtedness that is issued at a discount to its initial principal amount shall be calculated based on the entire stated principal amount thereof, without giving effect to any discounts or upfront payments), excluding obligations in respect of letters of credit, except to the extent of unreimbursed amounts thereunder. For the avoidance of doubt, it is understood that obligations (i) under Swap Contracts, Cash Management Services and any Receivables Financing and (ii) owed by Unrestricted Subsidiaries, do not constitute Consolidated Total Indebtedness.

Consolidated Total Net Debt Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Total Indebtedness of the Dutch Co-Issuer as of such date minus (y) the amount of Adjusted Cash and Cash Equivalents of the Dutch Co-Issuer and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Dutch Co-Issuer for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis.

Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds:

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.

Contribution Indebtedness” means Indebtedness of the Dutch Co-Issuer or any Restricted Subsidiary in an aggregate principal amount not greater than the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Dutch Co-Issuer or any Restricted Subsidiary (other than, in the case of such Restricted Subsidiary, contributions by the Dutch Co-Issuer or any other Restricted Subsidiary to its capital) after the Issue Date and designated as a Cash Contribution Amount; provided that such Contribution Indebtedness (a) is Incurred within 210 days after the making of such cash contributions and (b) is so designated as Contribution Indebtedness pursuant to an Officer’s Certificate on the Incurrence date thereof.

Corporate Trust Office” shall be at the address of the Trustee specified in Section 12.1 or such other address as to which the Trustee may give notice to the Dutch Co-Issuer or Holders pursuant to the procedures set forth in Section 12.1.

 

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Credit Agreement” means (i) the Senior Credit Agreement and (ii) whether or not the Senior Credit Agreement remains outstanding, if designated by the Issuers to be included in this definition of “Credit Agreement,” one or more (A) debt facilities, indentures or commercial paper facilities providing for revolving credit loans, term loans, notes, debentures, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, notes, mortgages, guarantees, collateral documents, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances) or (C) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrower(s) or issuer(s) and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, increased (provided that such increase in borrowings is permitted under this Indenture), replaced or refunded in whole or in part from time to time and whether by the same or any other agent, lender or investor or group of lenders or investors.

Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

Data Download Program” means the interactive electronic interface made available by the Board of Governors of the Federal Reserve System or any successor information system.

Default” means any event which is, or after notice or the passage of time or both would be, an Event of Default.

Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.6 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

Depositary” means DTC, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Dutch Co-Issuer.

Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Dutch Co-Issuer or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-cash Consideration.

Designated Non-Guarantor Subsidiary” means any Restricted Subsidiary of the Dutch Co-Issuer (x) that is prohibited by applicable law from providing a Guarantee, (y) that would require any consent, approval, license or authorization from any governmental authority to provide a Guarantee unless such consent, approval, license or authorization has been received or (z) that would be required to make any payment that is excessive (in the good faith determination of the Dutch Co-Issuer) to any governmental authority to provide a Guarantee, unless such payment has been made. It is understood and agreed that the Dutch Co-Issuer’s Restricted Subsidiaries organized under the laws of China are, as of the Issue Date, Designated Non-Guarantor Subsidiaries (and the only Designated Non-Guarantor Subsidiaries).

Designated Preferred Stock” means Preferred Stock of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, as applicable (other than Excluded Equity), that is issued after the Issue Date for cash and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate, on the issuance date thereof, the cash proceeds of which are contributed to the capital of the Dutch Co-Issuer (if issued by any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer) and excluded from the calculation set forth in Section 3.4(a)(C).

 

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Disqualified Stock” means, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is puttable, redeemable or exchangeable), in each case, at the option of the holder thereof or upon the happening of any event:

(1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Equity Interests than the asset sale and change of control provisions applicable to the Notes and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the Notes (including the purchase of any Notes tendered pursuant thereto)),

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock, or

(3) is redeemable at the option of the holder thereof, in whole or in part,

in each case, prior to the date that is 91 days after the earlier of the maturity date of the Notes and the date the Notes are no longer outstanding; provided that only the portion of Equity Interests that so mature or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Dutch Co-Issuer or its Subsidiaries or a direct or indirect parent of the Dutch Co-Issuer or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Dutch Co-Issuer or its Subsidiaries or a direct or indirect parent of the Dutch Co-Issuer in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided, further, that any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

Dutch Co-Issuer” has the meaning set forth in the preamble hereto.

Equity Contribution” means the equity contributions to the Dutch Co-Issuer made, either directly or indirectly, by the Sponsor in order to provide the Dutch Co-Issuer with capital, when taken together with the proceeds of the Initial Notes, and the borrowings under the Senior Credit Agreement, sufficient to consummate the Acquisition on the Issue Date.

Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any Capital Stock that arises only by reason of the happening of a contingency or any debt security that is convertible into, or exchangeable for, Capital Stock).

Equity Offering” means any public or private sale on or after the Issue Date of Capital Stock or Preferred Stock of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, as applicable (other than Disqualified Stock), other than:

(1) public offerings with respect to the Dutch Co-Issuer’s or such direct or indirect parent’s common stock registered on Form S-4 or Form S-8 or a successor form thereto;

 

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(2) issuances to any Subsidiary of the Dutch Co-Issuer; and

(3) any such public or private sale that constitutes an Excluded Contribution or Refunding Capital Stock.

Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

Exchange Rate” means, on any day, the rate at which the currency other than the Required Currency may be exchanged into the Required Currency at approximately 11:00 a.m., New York City time, on such date on the Bloomberg Key Cross Currency Rates Page for the relevant currency. To the extent that such rate does not appear on any Bloomberg Key Cross Currency Rate Page, the Exchange Rate shall be determined by the Issuers in good faith.

Excluded Contributions” means the Net Cash Proceeds and Cash Equivalents, or the Fair Market Value of other assets, received by the Dutch Co-Issuer after the Issue Date from:

(1) contributions to its common equity capital, and

(2) the sale of Capital Stock (other than Excluded Equity) of the Dutch Co-Issuer,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate, or that are utilized to make a Restricted Payment pursuant to Section 3.4(b)(ii). Excluded Contributions will be excluded from the calculation set forth in Section 3.4(a)(C).

Excluded Equity” means (i) Disqualified Stock, (ii) any Equity Interests issued or sold to a Restricted Subsidiary or any employee stock ownership plan or trust established by the Dutch Co-Issuer or any of its Subsidiaries or a direct or indirect parent of the Dutch Co-Issuer (to the extent such employee stock ownership plan or trust has been funded by the Dutch Co-Issuer or any Subsidiary or a direct or indirect parent of the Dutch Co-Issuer), (iii) any Equity Interest that has already been used or designated (x) as (or the proceeds of which have been used or designated as) a Cash Contribution Amount, Designated Preferred Stock, an Excluded Contribution or Refunding Capital Stock, or (y) to increase the amount available under Section 3.4(b)(iv)(a) or clause (14) of the definition of “Permitted Investments” or is proceeds of Indebtedness referred to in Section 3.4(b)(xiii)(b) and (iv) the Equity Contribution.

Exempted Indebtedness” means, as of any particular time, all then-outstanding Indebtedness of the Dutch Co-Issuer and Principal Property Subsidiaries incurred after the Issue Date and secured by any mortgage, security interest, pledge or lien other than those permitted by Section 3.5(b).

Fair Market Value” means, with respect to any asset or property, the price that could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction (as determined in good faith by the senior management or the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, whose determination will be conclusive for all purposes under this Indenture and the Notes).

 

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Fixed Charge Coverage Ratio means, with respect to any Person as of any date, the ratio of (1) Consolidated EBITDA of such Person for the most recent period of four consecutive fiscal quarters for which internal financial statements are available immediately preceding the date on which such calculation of the Fixed Charge Coverage Ratio is made, calculated on a Pro Forma Basis for such period to (2) the Fixed Charges of such Person for such period calculated on a Pro Forma Basis. In the event that the Dutch Co-Issuer or any of its Restricted Subsidiaries Incurs or redeems or repays any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing, unless the related commitments have been terminated and such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Preferred Stock or Disqualified Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to, substantially simultaneously with, or in connection with, the event for which the calculation of the Fixed Charge Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated on a Pro Forma Basis; provided that, in the event that the Dutch Co-Issuer shall classify Indebtedness Incurred on the date of determination as Incurred in part as Ratio Debt and in part pursuant to one or more clauses of Section 3.3(b) (other than in respect of clause (xv) of Section 3.3(b)) as provided in Section 3.3(c), any calculation of Fixed Charges pursuant to this definition on such date (but not in respect of any future calculation following such date) shall not include any such Indebtedness (and shall not give effect to any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness from the proceeds thereof) to the extent Incurred pursuant to any such other clause of such definition.

Fixed Charges” means, with respect to any Person for any period, the sum of:

(1) Consolidated Interest Expense of such Person for such period, and

(2) the product of (a) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries for such period and (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person and its Restricted Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and in accordance with IFRS.

Fixed IFRS Date” means the Issue Date after giving effect to the application of IFRS 16 as such standard is constituted as of the Issue Date (notwithstanding that IFRS 16 is not mandatorily applicable as of the Issue Date); provided that at any time and from time to time after the Issue Date, the Dutch Co-Issuer may by written notice to the Trustee elect to change the Fixed IFRS Date to be the date specified in such notice, and upon such notice, the Fixed IFRS Date shall be such date for all periods beginning on and after the date specified in such notice.

Fixed IFRS Terms” means (a) the definitions of the terms “Capitalized Lease Obligation,” “Consolidated Interest Expense,” “Consolidated Net Income,” “Consolidated Net Tangible Assets,” “Consolidated Total Assets,” “Consolidated Secured Indebtedness,” “Consolidated Senior Secured Net Debt Ratio,” “Consolidated Total Net Debt Ratio,” “Consolidated Total Indebtedness,” “Consolidated EBITDA” and “Indebtedness,” (b) all defined terms in this Indenture to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions, and (c) any other term or provision of this Indenture or the Notes that, at the Dutch Co-Issuer’s election, may be specified by the Dutch Co-Issuer by written notice to the Trustee from time to time; provided that the Dutch Co-Issuer may elect to remove any term from constituting a Fixed IFRS Term; provided further that for all purposes under this Indenture, the Dutch Co-Issuer hereby elects that “Fixed IFRS Terms” shall give effect to the application of IFRS 16 as such standard is constituted as of the Issue Date (notwithstanding that IFRS 16 is not mandatorily applicable as of the Issue Date).

 

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Foreign Subsidiary” means a Restricted Subsidiary not organized or existing under the laws of the United States of America, any state thereof or the District of Columbia and any direct or indirect Subsidiary of such Restricted Subsidiary.

GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession (but excluding the policies, rules and regulations of the SEC applicable only to public companies).

Global Note Legend” means the legend set forth in Section 2.1(b) hereof, which is required to be placed on all Global Notes issued under this Indenture.

Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Section 2.1 or 2.6 hereof.

guarantee” means, as to any Person, a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

Guarantee” means any guarantee of the Obligations of the Issuers under this Indenture and the Notes in accordance with the provisions of this Indenture.

Guarantors” means, collectively, each Restricted Subsidiary of the Dutch Co-Issuer (other than the U.S. Co-Issuer) that executes (or otherwise becomes a party to) this Indenture on the Issue Date and each other Restricted Subsidiary of the Dutch Co-Issuer that Incurs a Guarantee of the Notes; provided that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person automatically ceases to be a Guarantor.

Holder” means the Person in whose name a Note is registered on the registrar’s books.

Holdings Entities” means each of (a) Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66937442 so long as the Dutch Co-Issuer is a Wholly Owned Subsidiary of Alpha 2 B.V. and (b) Atotech UK Topco Limited, a private limited company incorporated in England and Wales, so long as the Dutch Co-Issuer is a Wholly Owned Subsidiary of Atotech UK Topco Limited.

IAI Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that shall be issued in a denomination equal to the outstanding principal amount of the Notes resold to IAIs.

IFRS” means the International Financial Reporting Standards as issued by the International Accounting Standards Board as in effect on the Fixed IFRS Date (for purposes of Fixed IFRS Terms) and as in effect from time to time (for all other purposes of this Indenture); provided that at any date after the Issue Date, the Dutch Co-Issuer may make an irrevocable election to establish that IFRS shall mean IFRS as in effect on a date that is on or prior to the date of such election, provided further that the Dutch Co-

 

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Issuer may at any time elect by written notice to the Trustee to use GAAP in lieu of IFRS for financial reporting purposes and, upon any such notice, references herein to IFRS shall thereafter be construed to mean (a) for periods beginning on and after the date specified in such notice, GAAP as in effect on the date specified in such notice (for purposes of the Fixed IFRS Terms) and as in effect from time to time (for all other purposes of this Indenture) and (b) for prior periods, IFRS as defined in the first sentence of this definition prior to the provisos. All ratios and computations based on IFRS contained in this Indenture shall be computed in conformity with IFRS.

Incur” means, with respect to any Indebtedness, Capital Stock or Lien, to issue, assume, guarantee, incur or otherwise become liable for such Indebtedness, Capital Stock or Lien, as applicable; provided that any Indebtedness, Capital Stock or Lien of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

Indebtedness” means, with respect to any Person, without duplication:

(1) the principal of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, (d) in respect of Capitalized Lease Obligations or (e) representing any Swap Contracts, in each case, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Swap Contracts) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with IFRS;

(2) to the extent not otherwise included, any guarantee by such Person of the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and

(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness shall be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person.

The term “Indebtedness” (x) shall include any lease, concession or license of property (or guarantee thereof) that would be considered an operating lease under IFRS as in effect on the Issue Date in accordance with the Fixed IFRS Terms and (y) shall not include any prepayments of deposits received from clients or customers in the ordinary course of business or consistent with past practices, or obligations under any license, permit or other approval (or guarantees given in respect of such obligations) Incurred prior to the Issue Date or in the ordinary course of business or consistent with past practices.

Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

(i) Contingent Obligations Incurred in the ordinary course of business or consistent with past practices;

(ii) obligations under or in respect of Receivables Financings;

(iii) any balance that constitutes a trade payable, accrued expense or similar obligation to a trade creditor, in each case Incurred in the ordinary course of business;

 

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(iv) intercompany liabilities that would be eliminated on the consolidated balance sheet of the Dutch Co-Issuer and its consolidated Subsidiaries;

(v) prepaid or deferred revenue arising in the ordinary course of business;

(vi) Cash Management Services;

(vii) in connection with the purchase by the Dutch Co-Issuer or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid in a timely manner;

(viii) obligations, to the extent such obligations would otherwise constitute Indebtedness, under any agreement that have been defeased or satisfied and discharged pursuant to the terms of such agreement;

(ix) for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or termination obligations, deferred compensatory or employee or director equity plans pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes; or

(x) Capital Stock (other than Disqualified Stock and Preferred Stock).

Indenture” has the meaning set forth in the preamble hereto.

Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing that is, in the good faith determination of the Dutch Co-Issuer, qualified to perform the task for which it has been engaged.

Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

Initial Notes” means the $425,000,000 in aggregate principal amount of 6.250% Senior Notes due 2025 of the Issuers issued under this Indenture on the Issue Date.

Initial Public Company Costs” means, as to any Person, costs relating to compliance with the provisions of the Securities Act and the Exchange Act (or similar regulations applicable in other listing jurisdictions), as applicable to companies with equity securities held by the public, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 (or similar non-U.S. regulations) and the rules and regulations promulgated in connection therewith (or similar regulations applicable in other listing jurisdictions), the rules of national securities exchange companies with listed equity, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees, in each case to the extent arising solely by virtue of the initial listing of such Person’s equity securities on a national securities exchange (or similar non-U.S. exchange); provided that any such costs arising from the costs described above in respect of the ongoing operation of such Person as a listed equity or its listed debt securities following the initial listing of such Person’s equity securities or debt securities, respectively, on a national securities exchange (or similar non-U.S. exchange) shall not constitute Initial Public Company Costs.

 

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Initial Purchasers” means J.P. Morgan Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, HSBC Bank plc, Nomura Securities International, Inc. and RBC Capital Markets, LLC, with respect to the offer and sale of the Initial Notes, and such other initial purchasers party to future purchase agreements entered into in connection with an offer and sale of any Additional Notes.

Interest Payment Date” means, in the case of the Initial Notes, February 1 and August 1 of each year, commencing on August 1, 2017 and, in the case of any Additional Notes, such interest payment dates as may be designated by the Issuers in accordance with the provisions of Section 2.2 hereof and, in each case, ending at the Stated Maturity of the Notes.

Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

Investment Grade Securities” means:

(1) securities issued or directly guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),

(2) securities that have an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Dutch Co-Issuer and its Subsidiaries,

(3) investments in any fund that invests at least 95% of its assets in investments of the type described in clauses (1) and (2) above and clause (4) below which fund may also hold immaterial amounts of cash pending investment and/or distribution, and

(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

Investments” means, with respect to any Person, (i) all investments by such Person in other Persons (including Affiliates) in the form of (a) loans (including guarantees of Indebtedness), (b) advances or capital contributions (excluding accounts receivable, trade credit and advances or other payments made to customers, dealers, suppliers and distributors and payroll, commission, travel and similar advances to officers, directors, managers, employees, consultants and independent contractors made in the ordinary course of business), and (c) purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any such other Person and (ii) investments that are required by IFRS to be classified on the balance sheet of the Dutch Co-Issuer in the same manner as the other investments included in clause (i) of this definition to the extent such transactions involve the transfer of cash or other property; provided that Investments shall not include, in the case of the Dutch Co-Issuer and the Restricted Subsidiaries, intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business. If the Dutch Co-Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Dutch Co-Issuer, the Dutch Co-Issuer shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. In no event shall a guarantee of an operating lease of the Dutch Co-Issuer or any Restricted Subsidiary be deemed an Investment. For purposes of the definition of “Unrestricted Subsidiary,” Section 3.4 and Section 3.14:

 

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(1) “Investments” shall include the portion (proportionate to the Dutch Co-Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Dutch Co-Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Dutch Co-Issuer shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Dutch Co-Issuer’s “Investment” in such Subsidiary at the time of such redesignation less

(b) the portion (proportionate to the Dutch Co-Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

The amount of any Investment outstanding at any time (including for purposes of calculating the amount of any Investment outstanding at any time under any provision of Section 3.4 and otherwise determining compliance with Section 3.4) shall be the original cost of such Investment (determined, in the case of any Investment made with assets of the Dutch Co-Issuer or any Restricted Subsidiary, based on the Fair Market Value of the assets invested and without taking into account subsequent increases or decreases in value), reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Dutch Co-Issuer or a Restricted Subsidiary in respect of such Investment, and shall be net of any Investment by such Person in the Dutch Co-Issuer or any Restricted Subsidiary.

Issue Date” means January 31, 2017.

Issuers” has the meaning set forth in the preamble hereto.

joint venture” means any joint venture or similar arrangement (in each case, regardless of legal formation), including but not limited to collaboration arrangements, profit sharing arrangements or other contractual arrangements.

JV Distributions” means, at any time, 50% of the aggregate amount of all cash dividends or distributions received by the Dutch Co-Issuer or any of its Restricted Subsidiaries as a return on an Investment in a Permitted Joint Venture during the period from the Issue Date through the end of the fiscal quarter most recently ended immediately prior to such date for which financial statements are internally available; provided that the Dutch Co-Issuer or any of its Restricted Subsidiaries are not required to reinvest such dividends or distributions in the Permitted Joint Venture.

Korean Corresponding Liabilities” shall mean the Guarantor Obligations of a Korean Guarantor, excluding its Korean Parallel Liability.

Korean Parallel Liability” shall mean a Korean Guarantor’s undertaking pursuant to Section 10.14(b).

 

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Lien” means, with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

Management Agreements” means those certain services agreements or monitoring agreements between the Dutch Co-Issuer or any of its Affiliates, on the one hand, and the Sponsor, on the other hand to be entered into in connection with the Acquisition, as the same may be amended, restated, modified or replaced, from time to time, to the extent such amendment, modification or replacement is not more disadvantageous to the Holders in any material respect than the applicable services agreement or monitoring agreement entered into in connection with the Acquisition.

Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

Net Cash Proceeds” means the aggregate cash proceeds (using the Fair Market Value of any Cash Equivalents) received by the Dutch Co-Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, and including any proceeds received as a result of unwinding any related Swap Contracts in connection with such transaction but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct cash costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to Section 3.7(b)) to be paid as a result of such transaction, any costs associated with unwinding any related Swap Contracts in connection with such transaction and any deduction of appropriate amounts to be provided by the Dutch Co-Issuer or any of its Restricted Subsidiaries as a reserve in accordance with IFRS against any liabilities associated with the asset disposed of in such transaction and retained by the Dutch Co-Issuer or any of its Restricted Subsidiaries after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

Non-Guarantor Subsidiary” means any Restricted Subsidiary of the Dutch Co-Issuer (other than the U.S. Co-Issuer) that is not a Guarantor.

Non-U.S. Person” means a Person who is not a U.S. Person.

Notes” means the Initial Notes and any Additional Notes, treated as a single class of securities except as otherwise provided in Section 2.2 and Section 9.2(a).

Notes Custodian” means the custodian with respect to the Global Note (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee.

Obligations” means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness.

 

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Offering Memorandum” means the Offering Memorandum related to the offering of the Initial Notes, dated January 25, 2017.

Officer” means, with respect to any Person, the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary (or any person serving the equivalent function of any of the foregoing) of such Person (or of any direct or indirect parent, general partner, managing member or sole member of such Person) or any individual designated as an “Officer” for purposes of this Indenture by the Board of Directors of such Person (or the Board of Directors of any direct or indirect parent or the general partner, managing member or sole member of such Person).

Officer’s Certificate” means a certificate signed on behalf of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer by an Officer of the Dutch Co-Issuer or such parent entity that meets the requirements set forth in this Indenture.

Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuers.

Pari Passu Indebtedness” means:

(1) with respect to the Issuers, the Notes and any Indebtedness that ranks pari passu in right of payment to the Notes; and

(2) with respect to any Guarantor, its Guarantee and any Indebtedness that ranks pari passu in right of payment to such Guarantor’s Guarantee.

Participant” means, with respect to the Depositary, Euroclear or Clearstream a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear or Clearstream).

Permanent Regulation S Global Note” means a permanent Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Temporary Regulation S Global Note upon expiration of the Restricted Period.

Permitted Asset Swap” means the purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the Dutch Co-Issuer or any of its Restricted Subsidiaries and another Person; provided that (1) such purchase and sale or exchange must occur within 90 days of each other and (2) any cash or Cash Equivalents received must be applied in accordance with Section 3.7.

Permitted Holders” means each of (a) the Sponsor, (b) managers and members of management of the Dutch Co-Issuer (or any Permitted Parent (other than clause (c) of the definition thereof)) or its Subsidiaries that have ownership interests in the Dutch Co-Issuer (or such Permitted Parent (other than clause (c) of the definition thereof)), (c) any other beneficial owner in the common equity of the Dutch Co-Issuer (or such Permitted Parent (other than clause (c) of the definition thereof)) as of the Issue Date,

 

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(d) any group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of which any of the Persons described in clauses (a), (b) and (c) above are members; provided that, without giving effect to the existence of such group or any other group, any of the Persons described in clauses (a), (b) and (c), collectively, beneficially own Voting Stock representing 50% or more of the total voting power of the Voting Stock of the Dutch Co-Issuer (or any Permitted Parent (other than clause (c) of the definition thereof)) then held by such group, and (e) any Permitted Parent. Any Person or group, together with its Affiliates, whose acquisition of beneficial ownership constitutes (1) a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture or (2) a Specified Change of Control Event, will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

Permitted Investments” means:

(1) any Investment in cash and Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;

(2) any Investment in the Dutch Co-Issuer (including the Notes) or any Restricted Subsidiary;

(3) any Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries;

(4) any Investment by the Dutch Co-Issuer or any Restricted Subsidiary in a Person that is primarily engaged in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Dutch Co-Issuer or a Restricted Subsidiary (and any Investment held by such Person that was not acquired by such Person in contemplation of so becoming a Restricted Subsidiary or in contemplation of such merger, consolidation, amalgamation, transfer, conveyance or liquidation);

(5) any Investment in securities or other assets received in connection with an Asset Sale made pursuant to Section 3.7 or any other disposition of assets not constituting an Asset Sale;

(6) any Investment (x) existing on the Issue Date, (y) made pursuant to binding commitments in effect on the Issue Date or (z) that replaces, refinances, refunds, renews or extends any Investment described under either of the immediately preceding clauses (x) or (y); provided that any such Investment is in an amount that does not exceed the amount replaced, refinanced, refunded, renewed or extended, except as contemplated pursuant to the terms of such Investment in existence on the Issue Date or as otherwise permitted under this definition or under Section 3.4;

(7) loans and advances to, or guarantees of Indebtedness of, employees, directors, officers, managers, consultants or independent contractors in an aggregate amount, taken together with all other Investments made pursuant to this clause (7) that are at the time outstanding, not in excess of $10.0 million outstanding at any one time in the aggregate;

(8) loans and advances to officers, directors, employees, managers, consultants and independent contractors for business-related travel and entertainment expenses, moving and relocation expenses and other similar expenses, in each case in the ordinary course of business;

 

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(9) any Investment (x) acquired by the Dutch Co-Issuer or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Dutch Co-Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization by the Dutch Co-Issuer or any such Restricted Subsidiary of such other Investment or accounts receivable, or (b) as a result of a foreclosure or other remedial action by the Dutch Co-Issuer or any of its Restricted Subsidiaries with respect to any Investment or other transfer of title with respect to any Investment in default and (y) received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Dutch Co-Issuer or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (B) litigation, arbitration or other disputes;

(10) Swap Contracts and Cash Management Services permitted under Section 3.3(b)(x);

(11) any Investment by the Dutch Co-Issuer or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) in an aggregate amount, taken together with all other Investments made pursuant to this clause (11) that are at the time outstanding, not to exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (11) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (11) for so long as such Person continues to be a Restricted Subsidiary;

(12) additional Investments by the Dutch Co-Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (12) that are at the time outstanding, not to exceed the greater of (x) $150.0 million and (y) 13.50% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (12) for so long as such Person continues to be a Restricted Subsidiary;

(13) any transaction to the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 3.8(b) (except transactions described in clause (ii), (iii), (iv), (viii), (ix), (xiii) or (xiv) of Section 3.8(b));

(14) Investments the payment for which consists of Equity Interests (other than Excluded Equity) of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, as applicable; provided, however, that such Equity Interests shall not increase the amount available for Restricted Payments under Section 3.4(a)(C);

(15) Investments consisting of the leasing, licensing, sublicensing or contribution of intellectual property in the ordinary course of business or pursuant to joint marketing arrangements with other Persons;

 

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(16) Investments consisting of purchases or acquisitions of inventory, supplies, materials and equipment or purchases, acquisitions, licenses, sublicenses or leases or subleases of intellectual property, or other rights or assets, in each case, in the ordinary course of business;

(17) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness;

(18) Investments of a Restricted Subsidiary acquired after the Issue Date or of an entity merged or amalgamated into or consolidated with a Restricted Subsidiary in a transaction that is not prohibited by Section 4.1 after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(19) repurchases of the Notes;

(20) guarantees of Indebtedness permitted to be Incurred under Section 3.3, and Obligations relating to such Indebtedness and guarantees (other than guarantees of Indebtedness) in the ordinary course of business;

(21) advances, loans or extensions of trade credit in the ordinary course of business by the Dutch Co-Issuer or any of its Restricted Subsidiaries;

(22) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business;

(23) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers;

(24) intercompany current liabilities owed to Unrestricted Subsidiaries or joint ventures Incurred in the ordinary course of business in connection with the cash management operations of the Dutch Co-Issuer and its Subsidiaries;

(25) Investments in joint ventures of the Dutch Co-Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (25) that are at the time outstanding, not to exceed the greater of (x) $75.0 million and (y) 6.75% of Consolidated Net Tangible Assets; provided that the Investments permitted pursuant to this clause (25) may be increased by the amount of JV Distributions, without duplication of dividends or distributions increasing amounts available pursuant to Section 3.4(a)(C);

(26) the Transactions (including payment of the purchase consideration under the Acquisition Agreement);

(27) accounts receivable, security deposits and prepayments and other credits granted or made in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and others, including in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, such account debtors and others, in each case, in the ordinary course of business;

 

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(28) Investments acquired as a result of a foreclosure by the Dutch Co-Issuer or any Restricted Subsidiary with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;

(29) Investments resulting from pledges and deposits that are Permitted Liens;

(30) acquisitions of obligations of one or more officers or other employees of any direct or indirect parent of the Dutch Co-Issuer, the Dutch Co-Issuer or any Subsidiary of the Dutch Co-Issuer in connection with such officer’s or employee’s acquisition of Equity Interests of any direct or indirect parent of the Dutch Co-Issuer, so long as no cash is actually advanced by the Dutch Co-Issuer or any Restricted Subsidiary to such officers or employees in connection with the acquisition of any such obligations;

(31) guarantees of operating leases (for the avoidance of doubt, excluding Capitalized Lease Obligations as determined without giving effect to the application of IFRS 16) or of other obligations that do not constitute Indebtedness, in each case, entered into by the Dutch Co-Issuer or any Restricted Subsidiary in the ordinary course of business;

(32) Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted by Section 3.4;

(33) non-cash Investments made in connection with tax planning and reorganization activities;

(34) Investments made pursuant to obligations entered into when the Investment would have been permitted hereunder so long as such Investment when made reduces the amount available under the clause under which the Investment would have been permitted; and

(35) Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client and customer contracts and loans or advances made to, and guarantees with respect to obligations of, distributors, suppliers, licensors and licensees in the ordinary course of business.

Permitted Joint Venture” means, with respect to any specified Person, a joint venture in any other Person engaged in a Similar Business in respect of which the Dutch Co-Issuer or a Restricted Subsidiary beneficially owns at least 35% of the shares of Equity Interests of such Person.

Permitted Liens” means, with respect to any Person:

(1) Liens Incurred in connection with workers’ compensation laws, unemployment insurance laws or similar legislation, or in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or to secure public or statutory obligations of such Person or to secure surety, stay, customs or appeal bonds to which such Person is a party, or as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2) Liens imposed by law, such as carriers’, warehousemen’s, landlords’, materialmen’s, repairman’s, construction contractors’, mechanics’ or other like Liens, in each case for sums not yet overdue by more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review (or which, if due and payable, are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained, to the extent required by IFRS) or with respect to which the failure to make payment could not reasonably be expected to have a material adverse effect as determined in good faith by management of the Dutch Co-Issuer or a direct or indirect parent of the Dutch Co-Issuer;

 

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(3) Liens for taxes, assessments or other governmental charges or levies (i) which are not yet due or payable, (ii) which are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained to the extent required by IFRS, or for property taxes on property such Person or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge, levy or claim is to such property, or (iii) with respect to which the failure to make payment could not reasonably be expected to have a material adverse effect as determined in good faith by management of the Dutch Co-Issuer or a direct or indirect parent of the Dutch Co-Issuer;

(4) Liens in favor of the issuers of performance and surety bonds, bid, indemnity, warranty, release, appeal or similar bonds or with respect to regulatory requirements or letters of credit or bankers’ acceptances issued and completion of guarantees provided for, in each case, pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely interfere with the ordinary conduct of the business of such Person;

(6) Liens Incurred to secure Obligations in respect of Indebtedness permitted to be Incurred pursuant to clause (i) or (iv) of Section 3.3(b) and obligations secured ratably thereunder; provided that, in the case of Section 3.3(b)(iv), such Lien extends only to the assets and/or Capital Stock, the acquisition, lease, construction, repair, replacement or improvement of which is financed thereby and any replacements, additions and accessions thereto and any income or profits thereof; provided, further, that individual financings provided by a lender may be cross-collateralized to other financings provided by such lender or its affiliates;

(7) Liens of the Issuers or any of the Guarantors existing on the Issue Date (other than Liens Incurred to secure Obligations under the Senior Credit Agreement);

(8) Liens on assets of, or Equity Interests in, a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (8), if a Person becomes a Subsidiary, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Issuers, and any assets of such Person or any Subsidiary of such Person shall be deemed acquired by the Issuers at the time of such merger, amalgamation or consolidation;

 

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(9) Liens on assets at the time the Dutch Co-Issuer or any Restricted Subsidiary acquired the assets, including any acquisition by means of a merger, amalgamation or consolidation with or into the Dutch Co-Issuer or such Restricted Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (9), if, in connection with an acquisition by means of a merger, amalgamation or consolidation with or into the Dutch Co-Issuer or any Restricted Subsidiary, a Person other than the Dutch Co-Issuer or a Restricted Subsidiary is the successor company with respect thereto, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Dutch Co-Issuer or any Restricted Subsidiary, and any assets of such Person or any such Subsidiary of such Person shall be deemed acquired by the Dutch Co-Issuer or any Restricted Subsidiary, at the time of such merger, amalgamation or consolidation;

(10) Liens securing Indebtedness or other obligations of an Issuer or a Guarantor owing to an Issuer or another Guarantor permitted to be Incurred in accordance with Section 3.3;

(11) Liens securing Swap Contracts Incurred in compliance with Section 3.3;

(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit entered into in the ordinary course of business issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(13) leases, subleases, licenses, sublicenses, occupancy agreements or assignments of or in respect of real or personal property;

(14) Liens arising from, or from Uniform Commercial Code financing statement filings regarding, operating leases or consignments entered into by the Issuers and the Guarantors in the ordinary course of business;

(15) Liens in favor of the Dutch Co-Issuer or any of its Restricted Subsidiaries;

(16) (i) Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing and (ii) Liens securing Indebtedness or other obligations of any Receivables Subsidiary;

(17) deposits made or other security provided in the ordinary course of business to secure liability to insurance carriers or under self-insurance arrangements in respect of such obligations;

(18) Liens on the Equity Interests of Unrestricted Subsidiaries;

(19) grants of intellectual property, software and other technology licenses;

(20) judgment and attachment Liens not giving rise to an Event of Default pursuant to clause (iv), (v), (vi) or (vii) of Section 6.1 and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

 

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(21) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(22) Liens Incurred to secure Cash Management Services and other “bank products” (including those described in clauses (x) and (xxiii) of Section 3.3(b));

(23) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in clauses (7), (8), (9), (11), (24) or (25) of this definition; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured (or, under the written arrangements under which the original Lien arose, could secure) the original Lien (plus any replacements, additions, accessions and improvements on such property), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (7), (8), (9), (11), (24) or (25) of this definition at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including unpaid accrued interest and the aggregate amount of premiums (including tender premiums), and underwriting discounts, defeasance costs and fees and expenses in connection therewith, related to such refinancing, refunding, extension, renewal or replacement, and (z) any amounts incurred under this clause (23) as refinancing indebtedness of clause (25) of this definition shall reduce the amount available under such clause (25);

(24) Liens securing Pari Passu Indebtedness permitted to be Incurred pursuant to Section 3.3; if, at the time of any Incurrence of such Pari Passu Indebtedness and after giving pro forma effect thereto, the Consolidated Senior Secured Net Debt Ratio would not exceed 4.50 to 1.00;

(25) other Liens securing obligations the principal amount of which does not exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets, at any one time outstanding;

(26) Liens on the Equity Interests or assets of a joint venture to secure Indebtedness of such joint venture Incurred pursuant to clause (xxi) of Section 3.3(b);

(27) Liens on equipment of an Issuer or any Guarantor granted in the ordinary course of business to such Issuer’s or such Guarantor’s client at which such equipment is located;

(28) Liens created for the benefit of (or to secure) all of the Notes or the related Guarantees;

(29) Liens on property or assets used to redeem, repay, defease or to satisfy and discharge Indebtedness; provided that such redemption, repayment, defeasance or satisfaction and discharge is not prohibited by this Indenture;

(30) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation and exportation of goods in the ordinary course of business;

 

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(31) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection; (ii) attaching to pooling, commodity trading accounts or other commodity brokerage accounts Incurred in the ordinary course of business; and (iii) in favor of banking or other financial institutions or entities, or electronic payment service providers, arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking or finance industry;

(32) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other Persons not given in connection with the issuance of Indebtedness; (ii) relating to pooled deposit or sweep accounts of the Issuers or any Guarantor to permit satisfaction of overdraft or similar obligations Incurred in the ordinary course of business of the Issuers and the Guarantors; or (iii) relating to purchase orders and other agreements entered into with customers of the Issuers or any Guarantor in the ordinary course of business;

(33) any encumbrance or restriction (including put and call arrangements) with respect to Equity Interests of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(34) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(35) Liens on vehicles or equipment of the Issuers or any of the Guarantors granted in the ordinary course of business;

(36) Liens on assets of Non-Guarantor Subsidiaries securing Indebtedness Incurred in accordance with clause (xx) of Section 3.3(b);

(37) Liens disclosed by the title insurance policies delivered on or subsequent to the Issue Date and any replacement, extension or renewal of any such Liens (so long as the Indebtedness and other obligations secured by such replacement, extension or renewal Liens are permitted by this Indenture); provided that such replacement, extension or renewal Liens do not cover any property other than the property that was subject to such Liens prior to such replacement, extension or renewal;

(38) Liens arising solely by virtue of any statutory or common law provision or customary business provision relating to banker’s liens, rights of set-off or similar rights, including any security interest or right of set off in favor of Dutch banks arising from their general banking conditions (algemene bankvoorwaarden);

(39) (a) Liens solely on any cash earnest money deposits made by the Dutch Co-Issuer or any Restricted Subsidiary in connection with any letter of intent or other agreement in respect of any Permitted Investment and (b) Liens on advances of cash or Cash Equivalents in favor of the seller of any property to be acquired in a Permitted Investment to be applied against the purchase price for such Investment;

(40) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

(41) Liens on securities that are the subject of repurchase agreements constituting Cash Equivalents under clause (4) of the definition thereof;

(42) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

 

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(43) rights reserved or vested in any Person by the terms of any lease, license, franchise, grant or permit held by the Dutch Co-Issuer or any of its Restricted Subsidiaries or by a statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or periodic payments as a condition to the continuance thereof;

(44) restrictive covenants affecting the use to which real property may be put; provided that the covenants are complied with;

(45) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;

(46) zoning by-laws and other land use restrictions, including, without limitation, site plan agreements, development agreements and contract zoning agreements;

(47) Liens created pursuant to the general conditions of a bank operating in the Netherlands based on the general conditions drawn up by the Netherlands Bankers’ Association (Nederlandse Vereniging van Banken) and the Consumers Union (Consumentenbond) or pursuant to any other general conditions of, or any contractual arrangement with, any such bank to substantially the same effect;

(48) Liens on cash proceeds of Indebtedness (and on the related escrow accounts) in connection with the issuance of such Indebtedness into (and pending the release from) a customary escrow arrangement to the extent such Indebtedness is Incurred in compliance with Section 3.3; and

(49) for purposes of cash management arrangements among the Dutch Co-Issuer and its Restricted Subsidiaries, Liens Incurred to secure back-to-back reimbursement obligations for working capital enhancement or other similar arrangements, the aggregate principal amount of which obligations or arrangements do not exceed $100.0 million at any one time outstanding.

For purposes of determining compliance with this definition, (x) a Lien need not be Incurred solely by reference to one category of Permitted Liens described in this definition but may be Incurred under any combination of such categories (including in part under one such category and in part under any other such category), (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Permitted Liens, the Dutch Co-Issuer shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition, and (z) in the event that a portion of Indebtedness secured by a Lien could be classified as secured in part pursuant to clause (6) or (24) above (giving effect to the Incurrence of such portion of such Indebtedness), the Dutch Co-Issuer, in its sole discretion, may classify such portion of such Indebtedness (and any Obligations in respect thereof) as having been secured pursuant to clause (6) or (24) above and thereafter the remainder of the Indebtedness as having been secured pursuant to one or more of the other clauses of this definition.

Permitted Parent” means (a) any direct or indirect parent of the Dutch Co-Issuer so long as a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof holds 50% or more of the Voting Stock of such direct or indirect parent of the Dutch Co-Issuer, (b) either Holdings Entity, so long as such entity constitutes a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof, and (c) any Public Company (or Wholly Owned Subsidiary of such Public Company) to the extent and until such time as any Person or group (other than a Permitted Holder under clause (a), (b), (c) or (d) of the definition thereof) is deemed to be or become a beneficial owner of Voting Stock of such Public Company representing more than 50% of the total voting power of the Voting Stock of such Public Company.

 

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Person” means any individual, corporation, company, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, government (or any agency or political subdivision thereof) or any other entity.

Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

Principal Property Subsidiary” means any Subsidiary that owns, operates or leases one or more Restricted Properties.

Private Placement Legend” means the legend set forth in Section 2.1(c) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions hereof.

Pro Forma Basis” means, with respect to the calculation of any test, financial ratio, basket or covenant under this Indenture, including the Consolidated Senior Secured Net Debt Ratio, the Consolidated Total Net Debt Ratio and the Fixed Charge Coverage Ratio and the calculation of Consolidated Net Tangible Assets and Consolidated Total Assets, of any Person and its Restricted Subsidiaries as of any date, that pro forma effect will be given to the Transactions, any acquisition, merger, amalgamation, consolidation, Investment, any issuance, Incurrence, assumption or repayment or redemption of Indebtedness (including Indebtedness issued, Incurred or assumed or repaid or redeemed as a result of, or to finance, any relevant transaction and for which any such test, financial ratio, basket or covenant is being calculated), any issuance or redemption of Preferred Stock or Disqualified Stock, all sales, transfers and other dispositions or discontinuance of any Subsidiary, line of business, division, segment or operating unit, any operational change (including the entry into any material contract or arrangement) or any designation of a Restricted Subsidiary to an Unrestricted Subsidiary or of an Unrestricted Subsidiary to a Restricted Subsidiary, in each case that have occurred during the four consecutive fiscal quarter period of such Person being used to calculate such test, financial ratio, basket or covenant (the “Reference Period”), or subsequent to the end of the Reference Period but prior to such date or prior to or substantially simultaneously with the event for which a determination under this definition is made (including any such event occurring at a Person who became a Restricted Subsidiary of the subject Person or was merged, amalgamated or consolidated with or into the subject Person or any other Restricted Subsidiary of the subject Person after the commencement of the Reference Period), as if each such event occurred on the first day of the Reference Period; provided that (x) pro forma effect will be given to reasonably identifiable and quantifiable pro forma cost savings or expense reductions related to operational efficiencies (including the entry into any material contract or arrangement), strategic initiatives or purchasing improvements and other cost savings, improvements or synergies, in each case, that have been realized, or are reasonably expected to be realized, by such Person and its Restricted Subsidiaries based upon actions to be taken within 24 months after the consummation of the action as if such cost savings, expense reductions, improvements and synergies occurred on the first day of the Reference Period and (y) no amount shall be added back pursuant to this definition to the extent duplicative of amounts that are otherwise included in computing Consolidated EBITDA for such Reference Period.

For purposes of making any computation referred to above:

(1) if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date for which a determination under this definition is made had been the applicable rate for the entire period (taking into account any Swap Contracts applicable to such Indebtedness if such Swap Contracts has a remaining term in excess of 12 months);

 

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(2) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of the Dutch Co-Issuer or a direct or indirect parent of the Dutch Co-Issuer to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with IFRS;

(3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Dutch Co-Issuer may designate;

(4) interest on any Indebtedness under a revolving credit facility or a Qualified Receivables Financing computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period; and

(5) to the extent not already covered above, any such calculation may include adjustments calculated in accordance with Regulation S-X under the Securities Act.

Any pro forma calculation may include, without limitation, (1) adjustments calculated in accordance with Regulation S-X under the Securities Act, (2) adjustments calculated to give effect to any Pro Forma Cost Savings and (3) all adjustments of the type used in connection with the calculation of “Adjusted EBITDA” and “Pro Forma Adjusted EBITDA” as set forth in footnote (3) in the section entitled “Summary—Summary historical consolidated and unaudited pro forma condensed consolidated financial information and other data” in the Offering Memorandum to the extent such adjustments, without duplication, continue to be applicable to the Reference Period; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Cost Savings.”

Pro Forma Cost Savings” means, without duplication of any amounts referenced in the definition of “Pro Forma Basis,” an amount equal to the amount of cost savings, operating expense reductions, operating improvements (including the entry into any material contract or arrangement) and acquisition synergies, in each case, projected in good faith to be realized (calculated on a pro forma basis as though such items had been realized on the first day of such period) as a result of actions taken or to be taken by the Dutch Co-Issuer (or any successor thereto) or any Restricted Subsidiary, net of the amount of actual benefits realized or expected to be realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions; provided that such cost savings, operating expense reductions, operating improvements and synergies are reasonably identifiable (as determined in good faith by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of the Dutch Co-Issuer (or any successor thereto) or of any direct or indirect parent of the Dutch Co-Issuer) and are reasonably anticipated to be realized within 24 months after the consummation of any change that is expected to result in such cost savings, expense reductions, operating improvements or synergies; provided that no cost savings, operating expense reductions, operating improvements and synergies shall be added pursuant to this definition to the extent duplicative of any expenses or charges otherwise added to Consolidated Net Income or Consolidated EBITDA, whether through a pro forma adjustment, add-back, exclusion or otherwise, for such period.

Public Company” means any Person with a class or series of Voting Stock that is traded on a stock exchange or in the over-the-counter market.

QIB” means any “qualified institutional buyer” (as defined in Rule 144A).

 

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Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:

(1) the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer shall have determined in good faith that such Receivables Financing (including financing terms, covenants, termination events and other provisions) is, in the aggregate, economically fair and reasonable to the Dutch Co-Issuer and its Restricted Subsidiaries,

(2) all sales of accounts receivable and related assets by the Dutch Co-Issuer or any Restricted Subsidiary to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Dutch Co-Issuer), and

(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms at the time the Receivables Financing is first introduced (as determined in good faith by the Dutch Co-Issuer) and may include Standard Securitization Undertakings.

The grant of a security interest in any accounts receivable of the Dutch Co-Issuer or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure any Credit Agreement shall not be deemed a Qualified Receivables Financing.

Rating Agency” means (1) each of Moody’s and S&P and (2) if Moody’s or S&P ceases to rate the Notes for reasons outside of the Dutch Co-Issuer’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3 under the Exchange Act selected by the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer as a replacement agency for Moody’s or S&P, as the case may be.

Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.

Receivables Financing” means any transaction or series of transactions that may be entered into by the Dutch Co-Issuer or any of its Subsidiaries pursuant to which the Dutch Co-Issuer or any of its Subsidiaries may sell, contribute, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Dutch Co-Issuer or any of its Subsidiaries), and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Dutch Co-Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Swap Contracts entered into by the Dutch Co-Issuer or any such Subsidiary in connection with such accounts receivable.

Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

Receivables Subsidiary” means a Restricted Subsidiary of the Dutch Co-Issuer (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Dutch Co-Issuer in which the Dutch Co-Issuer or any Subsidiary of the Dutch Co-Issuer or a direct or indirect parent of the Dutch Co-Issuer makes an Investment and to which the Dutch Co-Issuer or any Subsidiary of the

 

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Dutch Co-Issuer or a direct or indirect parent of the Dutch Co-Issuer transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Dutch Co-Issuer and its Subsidiaries or a direct or indirect parent of the Dutch Co-Issuer and all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer (as provided below) as a Receivables Subsidiary and:

(1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Dutch Co-Issuer or any other Subsidiary of the Dutch Co-Issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Dutch Co-Issuer or any other Subsidiary of the Dutch Co-Issuer in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Dutch Co-Issuer or any other Subsidiary of the Dutch Co-Issuer, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

(2) with which neither the Dutch Co-Issuer nor any other Subsidiary of the Dutch Co-Issuer has any material contract, agreement, arrangement or understanding other than on terms which the Dutch Co-Issuer reasonably believes to be no less favorable to the Dutch Co-Issuer or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Dutch Co-Issuer, and

(3) to which neither the Dutch Co-Issuer nor any other Subsidiary of the Dutch Co-Issuer has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

Any such designation by the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing conditions.

Record Date” for the interest payable on any applicable Interest Payment Date means, in the case of the Initial Notes, January 15 and July 15 (whether or not a Business Day) and, in the case of any Additional Notes, such record date (whether or not a Business Day) as may be designated by the Dutch Co-Issuer in accordance with the provisions of Section 2.2, in each case, next preceding such Interest Payment Date.

Regulation S” means Regulation S promulgated under the Securities Act.

Regulation S Global Note” means a Temporary Regulation S Global Note or Permanent Regulation S Global Note, as applicable, in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903.

Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided that any assets received by the Dutch Co-Issuer or a Restricted Subsidiary in exchange for assets transferred by the Dutch Co-Issuer or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless such Person is, or upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.

 

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Related Taxes” means any taxes, charges or assessments, including, but not limited to, sales, use, transfer, rental, ad valorem, value-added, stamp, property, consumption, franchise, license, capital, net worth, gross receipts, excise, occupancy, intangibles or similar taxes, charges or assessments (other than income taxes), required to be paid by a Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer by virtue of its being incorporated or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Dutch Co-Issuer, any of its Subsidiaries or any other direct or indirect parent of the Dutch Co-Issuer), or being a holding company parent of the Dutch Co-Issuer, any of its Subsidiaries or any other direct or indirect parent of the Dutch Co-Issuer or receiving dividends from or other distributions in respect of the Capital Stock of the Dutch Co-Issuer, any of its Subsidiaries or any other direct or indirect parent of the Dutch Co-Issuer, or having guaranteed any obligations of the Dutch Co-Issuer or any Subsidiary thereof, or having made any payment in respect of any of the items for which the Dutch Co-Issuer or any of its Subsidiaries is permitted to make payments to any parent entity pursuant to Section 3.4, or acquiring, developing, maintaining, owning, prosecuting, protecting or defending its intellectual property and associated rights (including but not limited to receiving or paying royalties for the use thereof) relating to the business or businesses of the Dutch Co-Issuer or any Subsidiary thereof.

Replacement Assets” means (1) substantially all the assets of a Person primarily engaged in a Similar Business or (2) a majority of the Voting Stock of any Person primarily engaged in a Similar Business that will become, on the date of acquisition thereof, a Restricted Subsidiary.

Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

Restricted Global Note” means a Global Note bearing the Private Placement Legend.

Restricted Investment” means an Investment other than a Permitted Investment.

Restricted Period” means, in relation to the Initial Notes, the 40 consecutive days beginning on and including the later of (A) the day on which the Initial Notes are offered to Persons other than distributors (as defined in Regulation S under the Securities Act) and (B) the Issue Date; and, in relation to any Additional Notes that bear the Private Placement Legend, the comparable period of 40 consecutive days.

Restricted Property” means (a) any manufacturing facility, or portion thereof, owned or leased by the Dutch Co-Issuer or any of its Subsidiaries and located within the continental United States, which, in the opinion of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, is of material importance to the business of the Dutch Co-Issuer and its Subsidiaries taken as a whole, but no such manufacturing facility, or portion thereof, shall be deemed of material importance if its gross book value (before deducting accumulated depreciation) is less than 5.0% of Consolidated Net Tangible Assets, or (b) any shares of capital stock of any Subsidiary owning any such manufacturing facility. As used in this definition, “manufacturing facility” means property, plant and equipment used for actual manufacturing such as quality assurance, engineering, maintenance, staging area for work in process materials, employees’ eating and comfort facilities and manufacturing administration, and it excludes sales offices, research facilities and facilities used only for warehousing or general administration.

 

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Restricted Subsidiary” means any Subsidiary of a Person other than an Unrestricted Subsidiary of such Person. Unless otherwise indicated in this Indenture, all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Dutch Co-Issuer (including the U.S. Co-Issuer).

RMB” means the currency of the People’s Republic of China.

Rule 144” means Rule 144 promulgated under the Securities Act.

Rule 144A” means Rule 144A promulgated under the Securities Act.

Rule 903” means Rule 903 promulgated under the Securities Act.

Rule 904” means Rule 904 promulgated under the Securities Act.

S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor to the rating agency business thereof.

Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Dutch Co-Issuer or a Restricted Subsidiary whereby the Dutch Co-Issuer or a Restricted Subsidiary transfers such property to a Person and the Dutch Co-Issuer or such Restricted Subsidiary leases it from such Person, other than leases between the Dutch Co-Issuer and a Restricted Subsidiary or between Restricted Subsidiaries.

SEC” means the U.S. Securities and Exchange Commission.

Secured Indebtedness” means any Indebtedness secured by a Lien other than Indebtedness with respect to Cash Management Services.

Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

Senior Credit Agreement” means the credit agreement, dated as of the Issue Date, among the Dutch Co-Issuer, the U.S. Co-Issuer, the guarantors from time to time party thereto, the financial institutions named therein and Barclays Bank PLC, as Administrative Agent, as described under “Description of new senior secured credit facilities” in the Offering Memorandum, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, supplemented, waived, renewed or otherwise modified from time to time, and as replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture or commercial paper facilities with banks or other institutional lenders or investors extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder permitted under Section 3.3 or altering the maturity thereof or adding Restricted Subsidiaries as additional borrowers, issuers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders, investors or group of investors.

Significant Subsidiary” means (i) any Restricted Subsidiary (other than the U.S. Co-Issuer) that would be a “significant subsidiary” of the Dutch Co-Issuer within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC and (ii) the U.S. Co-Issuer.

 

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Similar Business” means any business engaged or proposed to be engaged in by Atotech on the Issue Date and any business or other activities that are similar, ancillary, complementary, incidental or related to, or an extension, development or expansion of, the businesses in which Atotech is engaged following the Acquisition on the Issue Date.

Specified Change of Control Event” means a Change of Control immediately after the completion of which, and for the 90 days immediately thereafter, the Consolidated Total Net Debt Ratio of the Dutch Co-Issuer is less than 3.50 to 1.00; provided that, for purposes of calculating such Consolidated Total Net Debt Ratio for such 90-day period for purposes of this definition, Consolidated EBITDA shall be the same Consolidated EBITDA as is used to calculate such ratio at the time of completion of such Change of Control.

Specified Consolidated Total Net Debt Ratio” means 5.00 to 1.00.

Specified Sponsor Overfunding Amount” means the amount, if any, not to exceed $100.0 million, identified in the final funds flow memorandum utilized in connection with the consummation of the Acquisition as “overfunding,” as evidenced to exist on the Issue Date and as reduced from time to time when applied in accordance with Section 3.4(b)(vii)(B).

Sponsor” means (1) Carlyle Partners VI Cayman Holdings, L.P., (2) Gamma Holding Company Limited, (3) CEP IV Participations s.ár.l. SICAR and (4) one or more investment funds advised, managed or controlled by the foregoing and, in each case (whether individually or as a group), Affiliates of the foregoing (but excluding any operating portfolio companies of the foregoing).

Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Dutch Co-Issuer or any Subsidiary of the Dutch Co-Issuer which the Dutch Co-Issuer has determined in good faith to be customary in a Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency, unless such contingency has occurred).

Subordinated Indebtedness” means (a) with respect to the Issuers, any Indebtedness of the Issuers which is by its terms expressly subordinated in right of payment to the Notes, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms expressly subordinated in right of payment to its Guarantee.

Subsidiary” means, with respect to any Person (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, (2) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity and (3) any Person that is consolidated in the consolidated financial statements of the specified Person in accordance with IFRS.

 

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Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any obligations or liabilities under any such master agreement.

Temporary Regulation S Global Note” means a temporary Global Note in the form of Exhibit A hereof bearing the Global Note Legend, the Private Placement Legend, and the Temporary Regulation S Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903.

Temporary Regulation S Legend” means the legend set forth in Section 2.1(d).

TIA” means the U.S. Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the Issue Date.

Total” means Total Holdings Europe and its Subsidiaries, after giving effect to the Transactions.

Transactions ” means all the transactions (and the transactions related thereto) as described in the Offering Memorandum under “The transactions”, including all transactions described in the definition of “The Transactions” in the Offering Memorandum.

Treasury Rate” means the yield to maturity as of the date of the relevant redemption notice of the most recently issued United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (or is obtainable from the Federal Reserve System’s Data Download Program as of the date of such H.15) that has become publicly available at least two Business Days prior to such date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the date of such redemption notice to February 1, 2020, in the case of the Initial Notes, or such first optional redemption date as may be specified by the Dutch Co-Issuer in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes; provided, however, that if the period from such date to February 1, 2020, or such first optional redemption date as may be specified by the Dutch Co-Issuer in accordance with the provisions of Section 2.2 hereof, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Trust Officer” means any officer within the corporate trust administration department of the Trustee, with direct responsibility for performing the Trustee’s duties under this Indenture and also means, with respect to a particular corporate trust matter relating to this Indenture, any other officer of the Trustee to whom such matter is referred because of such person’s knowledge of and familiarity with the particular subject.

 

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Trustee” has the meaning set forth in the preamble hereto.

Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

Unrestricted Global Note” means a permanent Global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend.

Unrestricted Subsidiary” means:

(1) any Subsidiary of the Dutch Co-Issuer that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer pursuant to Section 3.14; and

(2) any Subsidiary of an Unrestricted Subsidiary.

U.S. Co-Issuer” has the meaning set forth in the preamble hereto.

U.S. Government Obligations” means securities that are:

(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,

which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.

Voting Stock” of any Person as of any date means the Capital Stock of such Person that is entitled to vote in the election of the Board of Directors of such Person.

Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock or Preferred Stock, as the case may be, at any date, the number of years (and/or portion thereof) obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of such Indebtedness or redemption or similar payment, in respect of such Disqualified Stock or Preferred Stock, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then-outstanding principal amount of such Indebtedness.

 

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Wholly Owned Restricted Subsidiary” means any Wholly Owned Subsidiary that is a Restricted Subsidiary.

Wholly Owned Subsidiary” of any Person means a direct or indirect Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

SECTION 1.2. Other Definitions.

 

Term

   Defined in
Section

“actual knowledge”

   7.2(g)

“accredited investors”

   2.2

“Additional Amounts”

   2.15(b)

“Affiliate Transaction”

   3.8(a)

“Agent Members”

   2.1

“Asset Sale Offer”

   3.7(d)

“Auditor”

   3.2(a)(i)

“Auditor’s Determination”

   10.13(d)

“Authentication Order”

   2.2

“Certain Capital Markets Debt”

   3.11

“Change in Tax Law”

   5.9(b)

“Change of Control Offer”

   3.9(b)

“Change of Control Payment”

   3.9(a)

“Change of Control Payment Date”

   3.9(b)(iii)

“covenant defeasance option”

   8.1(b)

“Covenant Suspension Event”

   3.15(a)

“Defaulted Interest”

   2.12

“DTC”

   2.1(b)

“Election Date”

   3.5(b)

“ERISA”

   2.1(c) and (d)

“Event of Default”

   6.1

“Excess Proceeds”

   3.7(d)

“FATCA”

   2.15(b)(v)

German GmbH Guarantor

   10.13(a)

German GmbH & Co. KG Guarantor

   10.13(a)

“German Guarantee”

   10.13(a)

“German Guarantor”

“Guarantor Obligations”

   10.13(a)

10.1(a)

“IAIs”

   2.2

“Increased Amount”

   3.5(e)

“Indemnified Obligations”

   10.8

 

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Term

   Defined in
Section

“legal defeasance option”

   8.1(b)

“Management Determination”

   10.13(c)

“Korean Guarantor”

“Maximum Fixed Repurchase Price”

   10.14(a)(i)

13.1(b)

“Offer Amount”

   5.8(a)

“Offer Period”

   5.8(a)

“Offer to Repurchase”

   5.8

“Paying Agent”

   2.3

“Payor”

   2.15

“Permitted Debt”

   3.3(b)

“Polish Bankruptcy Law”

   10.9

“Polish Commercial Companies Code”

   10.9

“Polish Guarantor”

   10.9

“Purchase Date”

   5.8(a)

“Qualified Reporting Subsidiary”

   3.2(e)

“Ratio Debt”

   3.3(a)

“Redemption Date”

   5.4

“Refinancing Indebtedness”

   3.3(b)(xiv)

“Refunding Capital Stock”

   3.4(b)(ii)(a)

“Registrar”

   2.3

“Relevant Taxing Jurisdiction”

   2.15

“Required Currency”

   12.4

“Resale Restriction Termination Date”

   2.1(c) and (d)

“Restricted Payments”

   3.4(a)

“Retained Declined Proceeds”

   3.7(f)

“Retired Capital Stock”

   3.4(b)(ii)(a)

“Reversion Date”

   3.15(b)

“Similar Laws”

   2.1(c) and (d)

“Special Interest Payment Date”

   2.12(a)

“Special Record Date”

   2.12(a)

“Successor Company”

   4.1(a)(i)

“Successor Guarantor”

   4.1(b)(i)(A)

“Suspended Covenants”

   3.15(a)

“Suspension Period”

   3.15(b)

“Swedish Companies Act”

   10.8

“Taxes”

   2.15

“Tax Redemption Date”

   5.9

“Total Leverage Excess Proceeds”

   3.7(e)

“Transaction Agreement Date”

   13.1(a)(iv)

“Unpaid Amount”

   3.4(b)(ii)(c)

 

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SECTION 1.3. Rules of Construction. Unless the context otherwise requires:

  (a) a term has the meaning assigned to it;

  (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with IFRS or GAAP, if applicable;

  (c) “or” is not exclusive;

  (d) “including” means including without limitation;

  (e) words in the singular include the plural and words in the plural include the singular;

  (f) (i) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; and (ii) Secured Indebtedness shall not be deemed to be subordinated or junior to any other Secured Indebtedness merely because it has a junior priority with respect to the same collateral;

  (g) references to sections of, or rules under, the Securities Act or Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

  (h) unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

  (i) the words “herein,” “hereof” and “hereunder” and any other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision; and

  (j) “$,” “dollars” and “U.S. dollars” each refer to U.S. dollars, or such other money of the United States of America that at the time of payment is legal tender for payment of public and private debts.

ARTICLE II

The Notes

SECTION 2.1. Form and Dating.

(a) The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part hereof. The Notes may have notations, legends or endorsements approved as to form by the Issuers, and required by law, stock exchange rule, agreements to which the Issuers are subject or usage. Each Note shall be dated the date of its authentication. The Notes shall be issuable only in minimum denominations of $200,000 and integral multiples of $1,000 in excess thereof.

(b) The Notes shall initially be issued in the form of one or more Global Notes and The Depository Trust Company (“DTC”), its nominees, and their respective successors, shall act as the Depositary with respect thereto. Each Global Note (i) shall be registered in the name of the Depositary for such Global Note or the nominee of such Depositary, (ii) shall be delivered by the Trustee to such Depositary or held by the Trustee as custodian for the Depositary pursuant to such Depositary’s instructions, and (iii) shall bear a Global Note Legend in substantially the following form:

 

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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

(c) Except as permitted by Section 2.6(g), any Note not registered under the Securities Act shall bear the following Private Placement Legend on the face thereof:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE)] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A)

 

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TO THE ISSUERS OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF SECURITIES OF $250,000 OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

BY ITS ACQUISITION OF THIS NOTE, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS NOTE CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAW.

 

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(d) The Temporary Regulation S Global Note shall bear a legend in substantially the following form:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S, ONLY (A) TO THE ISSUERS OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF SECURITIES OF $250,000 OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

BY ITS ACQUISITION OF THIS NOTE, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS NOTE CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME

 

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SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAW.

Members of, or Participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian and the Depositary may be treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee as the absolute owner of the Global Note for all purposes whatsoever, including but not limited to notices and payments. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. Notwithstanding anything to the contrary contained herein, any notice to be delivered to the Depositary (including, but not limited to, a notice of redemption) may be delivered electronically by the Trustee or the Issuers in accordance with the applicable procedures of the Depositary.

SECTION 2.2. Form of Execution and Authentication. An Officer shall sign the Notes for each of the Issuers by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid.

A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate (i) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $425,000,000, and (ii) subject to compliance with Section 3.3, one or more series of Additional Notes for original issue after the Issue Date (such Notes to be substantially in the form of Exhibit A hereto) in an unlimited amount, in each case upon written order of each of the Issuers signed by an Officer of each Issuer (an “Authentication Order”), which Authentication Order shall, in the case of any issuance of Additional Notes, certify that such issuance is in compliance with Section 3.3. In addition, each such Authentication Order shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated, whether the securities are to be Initial Notes or Additional Notes and the aggregate principal amount of Notes outstanding on the date of authentication, and shall further specify the amount of such Notes to be issued as Global Notes or Definitive Notes. Such Notes shall initially be in the form of one or more Global Notes, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Notes to be issued, (ii) shall be registered in the name of the Depositary or its nominee and (iii) shall be held by the Trustee as Notes Custodian.

 

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The Issuers shall have the right to designate the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Notes, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Initial Notes. Additional Notes that differ with respect to maturity date, interest rate or optional redemption provisions from the Initial Notes will constitute a different series of Notes from the Initial Notes. Additional Notes that have the same maturity date, interest rate and optional redemption provisions as the Initial Notes will be treated as the same series as the Initial Notes unless otherwise designated by the Issuers. Except as otherwise provided in Section 9.2(a), the Initial Notes and any Additional Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes shall have the right to vote or consent as a separate class on any matter. The Issuers shall also have, subject to the provisions of Section 9.2(a), the right to vary the application of the provisions of this Indenture to any series of Additional Notes.

The Initial Notes and any Additional Notes shall be resold initially only to (A) QIBs and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Notes and Additional Notes may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and institutional “accredited investors” (as defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who are not QIBs (“IAIs”) in accordance with Rule 501 of the Securities Act in accordance with the procedures described herein.

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuers or any Affiliate of the Issuers.

Solely for the purposes of disclosure pursuant to the Interest Act (Canada) and without affecting any calculation of interest required by this Indenture or the Notes, whenever any interest payable under this Indenture or the Notes is calculated using a rate based on a year of 360 days, such rate, when expressed as an annual rate, is equivalent to such rate multiplied by the number of days in the calendar year in which interest is paid divided by 360.

SECTION 2.3. Registrar and Paying Agent. The Issuers shall maintain (i) an office or agency in the United States where Notes may be presented for registration of transfer or for exchange (including any co-registrar, the “Registrar”) and (ii) an office or agency in the United States where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes and of their transfer and exchange and, upon written request from the Issuers, the Registrar shall provide the Issuers with a copy of such register to enable them to maintain a register of the Notes at its registered offices. In the event of a conflict between any register maintained by the Issuers and the register maintained by the Registrar, the register maintained by the Registrar shall prevail. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent. Either Issuer may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder. The Issuers shall notify the Trustee in writing and the Trustee shall notify the Holders of the name and address of any Agent not a party to this Indenture. The Dutch Co-Issuer or any of its Restricted Subsidiaries may act as Paying Agent, Registrar or co-registrar. The Issuers shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions hereof that relate to such Agent. The Issuers shall notify the Trustee in writing of the name and address of any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.6.

 

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The Issuers initially appoint the Trustee as Registrar and Paying Agent and to act as Notes Custodian with respect to the Notes.

SECTION 2.4. Paying Agent to Hold Money in Trust. The Issuers shall require a Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by such Paying Agent for the payment of principal of, premium, if any, and interest on the Notes, and shall notify the Trustee in writing of any Default by the Issuers in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by such Paying Agent to the Trustee. Upon payment over to the Trustee, such Paying Agent (if other than the Issuers or a Restricted Subsidiary) shall have no further liability for the money delivered to the Trustee. If the Dutch Co-Issuer or a Restricted Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or insolvency of the Dutch Co-Issuer, the Trustee shall automatically be the Paying Agent.

SECTION 2.5. Lists of Holders of the Notes. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, including the aggregate principal amount of the Notes held by each thereof, and the Issuers shall otherwise comply with TIA § 312(a).

SECTION 2.6. Transfer and Exchange.

(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred except, as a whole, by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Global Notes shall be exchanged by the Issuers for Definitive Notes, subject to any applicable laws, only (i) if the Issuers deliver to the Trustee written notice from the Depositary that the Depositary is unwilling or unable to continue to act as Depositary for the Global Notes or that is it is no longer a clearing agency registered under the Exchange Act and, in either case, the Issuers fail to appoint a successor Depositary within 120 days after the date of such notice from the Depositary; (ii) if the Issuers in their sole discretion determine that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Temporary Regulation S Global Note be exchanged by the Issuers for Definitive Notes prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or (iii) upon request of Holders of a majority of the aggregate principal amount of outstanding Notes if there shall have occurred and be continuing an Event of Default with respect to the Notes. In any such case, the Issuers shall notify the Trustee in writing that, upon surrender by the Participants and Indirect Participants of their interests in such Global Note, certificated Notes shall be issued to each Person that such Participants, Indirect Participants and the Depositary jointly identify as being the beneficial owner of the related Notes. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or Section 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.6(a). However, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.6(b) or Section 2.6(c) below.

 

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(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions hereof and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth in this Indenture to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with the applicable subparagraphs below.

(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, no transfer of beneficial interests in a Temporary Regulation S Global Note may be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser) unless permitted by applicable law and made in compliance with Sections 2.6(b)(ii) and (iii) below. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.6(b)(i) unless specifically stated above.

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.6(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase, or (B) (1) if Definitive Notes are at such time permitted to be issued pursuant to this Indenture, a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Temporary Regulation S Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.6(i) below.

(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.6(b)(ii) above and the Registrar receives the following:

(A) if the transferee shall take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transferee shall take delivery in the form of a beneficial interest in the Temporary Regulation S Global Note or the Permanent Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

 

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(C) if the transferee shall take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, if applicable.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.6(b)(ii) above, and

(A) the Registrar receives the following:

(y) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(z) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the holder or the Issuers (except in the case the Issuers have so requested) in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to subparagraph (A) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (A) above.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer and Exchange of Beneficial Interests for Definitive Notes.

(i) Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes. Subject to Section 2.6(a), if any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then upon receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

 

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(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3) thereof, if applicable;

(F) if such beneficial interest is being transferred to the Dutch Co-Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof;

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.6(i) below, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate a Restricted Definitive Note in the appropriate principal amount. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Section 2.6(c)(i)(A) and Section 2.6(c)(i)(C) hereof, a beneficial interest in the Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(iii) Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Unrestricted Definitive Notes. Subject to Section 2.6(a), a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

 

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(A) the Registrar receives the following:

(y) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(z) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof,

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the holder or the Issuers (except in the case the Issuers have so requested) in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iv) Transfer and Exchange of Beneficial Interests in Unrestricted Global Notes for Unrestricted Definitive Notes. Subject to Section 2.6(a), if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.6(b)(ii) above, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.6(i) below, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate an Unrestricted Definitive Note in the appropriate principal amount. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Unrestricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(i) Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

 

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(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

(F) if such Restricted Definitive Note is being transferred to the Dutch Co-Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.

(ii) Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

(A) the Registrar receives the following:

(y) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(z) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the Holder or the Issuers (except in the case the Issuers have so requested) in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

 

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Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.6(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Transfer and Exchange of Unrestricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from an Unrestricted Definitive Note or a Restricted Definitive Note, as the case may be, to a beneficial interest is effected pursuant to Sections 2.6(d)(ii)(A) or (d)(iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Unrestricted Definitive Notes or Restricted Definitive Notes, as the case may be, so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.6(e).

(i) Transfer of Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer shall be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transfer shall be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transfer shall be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including, if the Issuers so request, a certification and/or Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act.

 

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(ii) Transfer and Exchange of Restricted Definitive Notes for Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if

(A) the Registrar receives the following:

(y) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(z) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuers so request, an Opinion of Counsel of (or on behalf of) the Holder or the Issuers (except in the case the Issuers so request) in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iii) Transfer of Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) Temporary Regulation S Global Note.

(i) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Temporary Regulation S Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided.

(ii) During the Restricted Period, beneficial ownership interests in Temporary Regulation S Global Notes may only be sold, pledged or transferred (A) to the Issuers, (B) in an offshore transaction in accordance with Rule 904 of Regulation S (other than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global Note) or (C) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States; and beneficial interests in a 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the Trustee a written certificate to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).

(iii) Within a reasonable period after expiration or termination of the Restricted Period, beneficial interests in each Temporary Regulation S Global Note shall be exchanged for beneficial interests in a Permanent Regulation S Global Note upon delivery to the Depositary of the certification of compliance and the transfer of applicable Notes pursuant to the Applicable Procedures. Simultaneously

 

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with the authentication of the corresponding Permanent Regulation S Global Note, the Trustee shall cancel the corresponding Temporary Regulation S Global Note. The aggregate principal amount of a Temporary Regulation S Global Note and a Permanent Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(iv) Notwithstanding anything to the contrary in this Section 2.6, a beneficial interest in the Temporary Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(g) Private Placement Legend.

(i) Except as permitted by subparagraph (ii) below, each Restricted Global Note and each Restricted Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the Private Placement Legend.

(ii) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.6 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(h) Global Note Legend. Each Global Note shall bear the Global Note Legend.

(i) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(j) General Provisions Relating to Transfers and Exchanges.

(i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.2 or at the Registrar’s request.

(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.2, 2.10, 3.7, 3.9, 5.7, 5.8 and 9.4).

(iii) [Reserved].

 

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(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits hereof, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(v) Neither the Registrar nor either Issuer shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business on a Business Day 15 days before the delivery of a notice of redemption of Notes and ending at the close of business on the day of such delivery, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2.

(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile or electronically.

(ix) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or Indirect Participants) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(x) Neither the Trustee, the Issuers nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.

(xi) Affiliates of the Issuers, including investment funds affiliated with the Sponsor, may acquire, hold and dispose of the Notes and exercise voting, consent and other similar rights with respect to such Notes (subject to the express restrictions contained in this Indenture).

SECTION 2.7. Replacement Notes. If any mutilated Note is surrendered to the Trustee, or the Issuers and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements for replacements of Notes are met. The Holder must supply indemnity or security sufficient in the judgment of the Trustee (with respect to the Trustee) and the Issuers (with respect to the Issuers) to protect the Issuers, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced. The Issuers and the Trustee may charge for their fees and expenses in replacing a Note including amounts to cover any tax, assessment, fee or other governmental charge that may be imposed in relation thereto.

 

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Every replacement Note is an obligation of the Issuers.

SECTION 2.8. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding.

If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

If the principal amount of any Note is considered paid under Section 3.1 hereof, it shall cease to be outstanding and interest on it shall cease to accrue.

Subject to Section 2.9, a Note does not cease to be outstanding because an Issuer or any Affiliate of an Issuer holds the Note.

SECTION 2.9. Treasury Notes. In determining whether the Holders of the requisite majority of outstanding Notes have concurred in any request, demand, authorization, direction, notice, waiver or consent (other than in respect of any action pursuant to Section 9.2(a), which requires the consent of each Holder of an affected Note), Notes owned by an Issuer or any Affiliate of an Issuer shall be disregarded and considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, waiver or consent, only Notes which a Trust Officer actually knows to be owned by an Issuer or any Affiliate of an Issuer shall be considered as not outstanding. Upon request of the Trustee, each Issuer shall promptly furnish to the Trustee an Officer’s Certificate listing and identifying all Notes, if any, known by such Issuer to be owned or held by or for the account of any of the above-described persons, and the Trustee shall be entitled to accept such Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.

SECTION 2.10. Temporary Notes. Until Definitive Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate Definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as Definitive Notes.

SECTION 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of all canceled Notes in its customary manner (subject to the record retention requirements of the Exchange Act and the Trustee), and upon the written request of the Issuers, the Trustee shall deliver copies of such canceled Notes to the Issuers. The Issuers may not issue new Notes to replace Notes that they have redeemed or paid or that have been delivered to the Trustee for cancellation.

SECTION 2.12. Payment of Interest; Defaulted Interest. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the regular Record Date for such interest at the office or agency of the Issuers maintained for such purpose pursuant to Section 2.3.

 

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Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Issuers, at their election in each case, as provided in clause (a) or (b) below:

(a) The Issuers may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Issuers shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (the “Special Interest Payment Date”), and at the same time the Issuers shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Issuers shall fix a record date (the “Special Record Date”) for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than ten days prior to the Special Interest Payment Date and not less than ten days after the receipt by the Trustee of the notice of the proposed payment. The Issuers shall promptly notify the Trustee of such Special Record Date and shall, or at the written request and in the name and expense of the Issuers, the Trustee shall, cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 12.1, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

(b) The Issuers may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Issuers to the Trustee of the proposed payment pursuant to this clause (b), such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13. CUSIP and ISIN Numbers. The Issuers in issuing the Notes may use “CUSIP” and/or “ISIN” numbers (if then generally in use). The Trustee shall not be responsible for the use of CUSIP or ISIN numbers, and the Trustee makes no representation as to their correctness as printed on any Note or notice to Holders. The Issuers shall promptly notify the Trustee in writing of any change in the CUSIP or ISIN numbers. A separate CUSIP or ISIN number will be issued for any Additional Notes, unless the Initial Notes and such Additional Notes are treated as “fungible” for U.S. federal income tax purposes.

 

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SECTION 2.14. Record Date. The record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA § 316(c).

SECTION 2.15. Additional Amounts.

All payments made by or on behalf of any Issuer or any Guarantor or any successor in interest to any of the foregoing (each, a “Payor”) on or with respect to the Notes or any Guarantee will be made without withholding or deduction for, or on account of, any present or future tax, duty, levy, impost, assessment or other similar governmental charge (collectively, “Taxes”) unless such withholding or deduction is required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of:

(a) any jurisdiction (other than the United States or any political subdivision or governmental authority thereof or therein having power to tax) from or through which payment on the Notes or any Guarantee is made by such Payor, or any political subdivision or governmental authority thereof or therein having the power to tax; or

(b) any other jurisdiction (other than the United States or any political subdivision or governmental authority thereof or therein having the power to tax) in which a Payor that actually makes a payment on the Notes or its Guarantee is incorporated or organized, engaged in business for tax purposes, or otherwise considered to be a resident for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax,

(each of clauses (a) and (b), a “Relevant Taxing Jurisdiction”) will at any time be required from any payments made with respect to the Notes or any Guarantee, including payments of principal, redemption price, interest or premium, if any, the Payor will pay (together with such payments) such additional amounts (the “Additional Amounts”) as may be necessary in order that the net amounts received in respect of such payments by the Holders or the Trustee, as the case may be, after such withholding or deduction (including any such deduction or withholding from such Additional Amounts), will not be less than the amounts that would have been received in respect of such payments on the Notes or the Guarantees in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable for or on account of:

(i) any Taxes that would not have been so imposed or levied but for the existence of any present or former connection between the relevant Holder (or between a fiduciary, settlor, beneficiary, partner, member or shareholder of, or possessor of power over, the relevant Holder, if such Holder is an estate, nominee, trust, partnership, limited liability company or corporation) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) but excluding, in each case, any connection arising solely from the acquisition, ownership or holding of such Notes or the receipt of any payment or exercise of any right in respect thereof;

(ii) any Taxes that would not have been so imposed or levied if the Holder of the Note had, to the extent legally entitled to do so, complied with a reasonable request in writing of the Payor (such request being made at a time that would enable such holder acting reasonably to comply with that request) to make a declaration of nonresidence or any other claim or filing or satisfy any certification, identification, information or reporting requirement for exemption from, or reduction in the rate of, withholding to which it is entitled (provided that such declaration of nonresidence or other claim, filing or requirement is required by the applicable law, treaty, regulation or official administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold all or a part of any such Taxes);

 

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(iii) any Taxes that are payable otherwise than by deduction or withholding from a payment on the Notes or any Guarantee;

(iv) any estate, inheritance, gift, sales, excise, transfer, personal property or similar Taxes;

(v) any Taxes payable under Sections 1471 through 1474 of the Code, as of the date of the Offering Memorandum (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 agreements entered into pursuant thereto, and any intergovernmental agreements implementing the foregoing (including any legislation or other official guidance relating to such intergovernmental agreements) (“FATCA”); or

(vi) any combination of the above.

Such Additional Amounts will also not be payable (x) if the payment could have been made without such deduction or withholding if the beneficiary of the payment had presented the Note for payment (where presentation is required) within 30 days after the relevant payment was first made available for payment to the Holder (provided that notice of such payment is given to the Holders) or (y) where, had the beneficial owner of the Note been the Holder of the Note, such beneficial owner would not have been entitled to payment of Additional Amounts by reason of any of clauses (i) through (vi) inclusive above.

The Payor will (1) make any required withholding or deduction and (2) remit the full amount deducted or withheld to the relevant taxing authority of the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each relevant taxing authority of each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee. If, notwithstanding the efforts of such Payor to obtain such receipts, the same are not obtainable, such Payor will provide the Trustee with other evidence reasonably acceptable to the Trustee. Such receipts or other evidence will be made available by the Trustee to Holders on written request.

If any Payor will be obligated to pay Additional Amounts under or with respect to any payment made on the Notes, at least 30 days prior to the date of such payment, the Payor will deliver to the Trustee and the Paying Agent an Officer’s Certificate stating the fact that Additional Amounts will be payable and the amount so payable and such other information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant payment date (unless such obligation to pay Additional Amounts arises less than 45 days prior to the relevant payment date, in which case the Payor shall deliver such Officer’s Certificate and such other information as promptly as practicable after the date that is 30 days prior to the payment date, but no less than five Business Days prior thereto, and otherwise in accordance with the requirements of the Depositary).

Wherever in this Indenture, the Notes or any Guarantee there is mention of, in any context:

(1) the payment of principal,

(2) redemption prices or purchase prices in connection with a redemption or purchase of Notes,

 

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(3) interest, or

(4) any other amount payable on or with respect to any of the Notes or any Guarantee,

such reference shall be deemed to include payment of Additional Amounts as described in this Section 2.15 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

The Payor will pay any present or future stamp, court or documentary Taxes, or any other excise, property or similar Taxes that arise in any Relevant Taxing Jurisdiction from the execution, delivery, issuance, initial resale, registration or enforcement of any Notes, this Indenture or any other document or instrument in relation thereto (other than a transfer of the Notes), payable due to a registration, submission or filing by a party of any Notes, this Indenture or any other document or instrument in relation thereto where such registration, submission or filing is or was not required to maintain or preserve the rights of the party under such documents. The foregoing obligations will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to a Payor is incorporated or organized, engaged in business for tax purposes, or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein.

SECTION 2.16. Agreed Tax Treatment. The portion of the proceeds of the Notes offering that will be borrowed by the U.S. Co-Issuer on the Issue Date and the portion of the proceeds of the Notes offering that will be borrowed by the Dutch Co-Issuer on the Issue Date shall be posted after the consummation of the Acquisition on the website of either of the Issuers, a direct or indirect parent of the Issuers or on a non-public, password-protected website maintained by either of the Issuers, a direct or indirect parent of such Issuers or a third party, in the manner provided for in Section 3.2, in a notice setting forth such amounts. Any subsequent changes to such allocation shall promptly be posted in one of the same manners. Each Issuer intends to repay the interest and principal associated with the portion, if any, it will borrow on the Issue Date. Although the Notes are co-issued by the U.S. Co-Issuer and the Dutch Co-Issuer and, therefore, each Issuer is liable for repayment of the Notes in their entirety, for tax purposes the Issuers agree, and by acquiring an interest in the Notes each beneficial owner of a Note agrees, to treat for U.S. federal income tax purposes the U.S. Co-Issuer and the Dutch Co-Issuer, respectively, as the issuer of only the portion, if any, of the debt borrowed by each such Issuer on the Issue Date. Notwithstanding the foregoing, any Issuer or any other Payor may withhold from any interest payment made on any Note to or for the benefit of any person who is not a “United States person,” as such term is defined for U.S. federal income tax purposes, U.S. federal withholding tax (including any withholding imposed under FATCA), and pay such withheld amounts to the Internal Revenue Service, unless such person provides documentation to such Issuer or other Payor such that an exemption from U.S. federal withholding tax (including any withholding imposed under FATCA) would apply to such payment if interest on such Note were treated entirely as income from sources within the United States for U.S. federal income tax purposes.

ARTICLE III

Covenants

SECTION 3.1. Payment of Notes. The Issuers, jointly and severally, shall promptly pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if by 10:00 a.m. (New York City time) on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium, if any, and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

 

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The Issuers shall pay interest on overdue principal at the rate specified therefor in the Notes.

SECTION 3.2. Reports and Other Information.

(a) So long as any Notes are outstanding, the Dutch Co-Issuer shall provide to the Trustee and, upon request, to Holders, a copy of all of the information and reports referred to below:

(i) within 90 days (or, for the fiscal year ended December 31, 2016, not later than May 31, 2017) after the end of each fiscal year (or such longer period as may be permitted by the SEC if the Dutch Co-Issuer were then subject to SEC reporting requirements as a non-accelerated filer), annual audited financial statements for such fiscal year including a “Management’s discussion and analysis of financial condition and results of operations” with respect to the periods presented and a report on the annual financial statements by the Dutch Co-Issuer’s independent registered public accounting firm or the foreign analog thereof (the “Auditor”) (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the Offering Memorandum),

(ii) within 45 days (or 105 days for the first fiscal quarter ended on or after the Issue Date and 90 days for the next two fiscal quarters ended after the Issue Date (other than any fourth fiscal quarter which is governed by clause (i) above)) after the end of each of the first three fiscal quarters of each fiscal year (or such longer period as may be permitted by the SEC if the Dutch Co-Issuer were then subject to SEC reporting requirements as a non-accelerated filer), unaudited financial statements for the interim period as of, and for the period ending on, the end of such fiscal quarter including a “Management’s discussion and analysis of financial condition and results of operations” (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the Offering Memorandum), and

(iii) within the time period specified for filing current reports on Form 8-K by the SEC, current reports that would be required to be filed with the SEC on Form 8-K if the Dutch Co-Issuer were required to file such reports for any of the following events: (a) significant acquisitions (other than the Transactions) or dispositions, (b) the bankruptcy of the Dutch Co-Issuer or a Significant Subsidiary, (c) the acceleration of any Indebtedness of the Dutch Co-Issuer or any Restricted Subsidiary having a principal amount in excess of $50.0 million, (d) a change in the Dutch Co-Issuer’s certifying independent auditor (or foreign analog), (e) the appointment or departure of the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Chief Operating Officer or President (or persons fulfilling similar duties) of any Holdings Entity or the Dutch Co-Issuer, (f) resignation of a director of any Holdings Entity or the Dutch Co-Issuer on disagreeable terms, (g) change in fiscal year, (h) non-reliance on previously issued financial statements, (i) change of control transactions (other than the Transactions), (j) entry into material agreements, (k) entry into material direct financial obligations and (l) historical financial statements of an acquired business (relating to transactions required to be reported pursuant to Item 2.01 of Form 8-K to the extent and in the form available to the Dutch Co-Issuer (as determined by the Dutch Co-Issuer in good faith) if the Dutch Co-Issuer were a domestic reporting company under the Exchange Act); provided that no such current report will be required to be furnished if the Dutch Co-Issuer determines in its good faith judgment that such event is not material to Holders or to the business, assets,

 

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operations, financial position or prospects of the Dutch Co-Issuer and its Restricted Subsidiaries, taken as a whole, or if the Dutch Co-Issuer determines in its good faith judgment that such disclosure would otherwise cause material competitive harm to the business, assets, operations, financial position or prospects of the Dutch Co-Issuer and its Restricted Subsidiaries, taken as a whole; provided, further, that such non-disclosure shall be limited only to those specific provisions that would cause material competitive harm and not the occurrence of the event itself;

provided, further, however, that in addition to providing such information to the Trustee and upon request, to Holders, the Issuers shall, to the extent the requirements set forth in Section 3.2(h) are satisfied, make available to the Holders, beneficial owners of Notes, bona fide prospective investors in the Notes, bona fide market makers in the Notes affiliated with any Initial Purchaser and bona fide securities analysts (to the extent providing analysis of investment in the Notes) such information by (i) posting to the website of the Dutch Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or on a non-public, password-protected website maintained by the Dutch Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or a third party, in each case, within 15 days after the time the Dutch Co-Issuer would be required to provide such information pursuant to clause (i), (ii) or (iii) above, as applicable, or (ii) otherwise providing substantially comparable availability of such reports (as determined by the Dutch Co-Issuer in good faith) (it being understood that, without limitation, making such reports available on Bloomberg or another comparable private electronic information service shall constitute substantially comparable availability).

(b) Notwithstanding the foregoing and for the avoidance of doubt, (i) the Dutch Co-Issuer shall not be required to furnish any information, certificates or reports required by (A) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K or (B) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (ii) the information and reports referred to in Section 3.2(a) will not be required to contain the separate financial statements or other information contemplated by Rule 3-05, Rule 3-09, Rule 3-10 or Rule 3-16 of Regulation S-X, (iii) to the extent pro forma financial information is required to be provided by the Dutch Co-Issuer (including with respect to the Transactions), the Dutch Co-Issuer may provide only pro forma revenues, net income and the cumulative effect of accounting changes, EBITDA (as such term is defined in the Offering Memorandum), Adjusted EBITDA (as such term is defined in the Offering Memorandum), Pro Forma Adjusted EBITDA (if applicable, and as such term is defined in the Offering Memorandum), senior secured debt, total debt and capital expenditures (or equivalent financial information) in lieu thereof, (iv) the information and reports referred to in Section 3.2(a) shall not be required to present compensation or beneficial ownership information and (v) the information and reports referred to in Section 3.2(a) shall not be required to include any exhibits required by Item 15 of Form 10-K, Item 6 of Form 10-Q or Item 9.01 of Form 8-K.

(c) For so long as the Dutch Co-Issuer has designated certain of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by Section 3.2(a) will include a reasonably detailed presentation (which need not be audited or reviewed by the Auditors), either on the face of the financial statements or in the footnotes thereto, or in the “Management’s discussion and analysis of financial condition and results of operations” or other comparable section, of the financial condition and results of operations of the Dutch Co-Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Dutch Co-Issuer.

(d) In addition, to the extent not satisfied by the foregoing, the Dutch Co-Issuer agrees that, for so long as any Notes are outstanding, the Dutch Co-Issuer shall furnish to Holders, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision).

 

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(e) Notwithstanding the foregoing, the financial statements, information, auditors’ reports and other documents required to be provided as described above, may be, rather than those of the Dutch Co-Issuer, those of (i) any predecessor or successor of the Dutch Co-Issuer or any entity meeting the requirements of clause (ii) or (iii) of this Section 3.2(e), (ii) any Wholly Owned Subsidiary of the Dutch Co-Issuer that, together with its consolidated Subsidiaries, constitutes substantially all of the assets and liabilities of the Dutch Co-Issuer and its consolidated Subsidiaries (“Qualified Reporting Subsidiary”) or (iii) any direct or indirect parent of the Dutch Co-Issuer; provided that, if the financial information so furnished relates to such Qualified Reporting Subsidiary of the Dutch Co-Issuer or such direct or indirect parent of the Dutch Co-Issuer, the same is accompanied by consolidating information, which may be posted to the website of the Dutch Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or on a non-public, password-protected website maintained by the Dutch Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or a third party, that explains in reasonable detail the differences between the information relating to such Qualified Reporting Subsidiary or such parent entity (as the case may be), on the one hand, and the information relating to the Dutch Co-Issuer and its Restricted Subsidiaries on a standalone basis, on the other hand. For the avoidance of doubt, the consolidating information referred to in the proviso in the preceding sentence need not be audited or reviewed by the Auditors.

(f) The Dutch Co-Issuer will be deemed to have satisfied the information and reporting requirements of Section 3.2(a) if (i) the Dutch Co-Issuer or any Qualified Reporting Subsidiary of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer has filed reports or registration statements containing such information (including the information required pursuant to the first sentence of Section 3.2(e) which, for the avoidance of doubt, need not be filed with the SEC via EDGAR to the extent it is otherwise provided to Holders pursuant to this Section 3.2) with the SEC via the EDGAR (or successor) filing system within the applicable time periods after giving effect to any extensions permitted by the SEC and that are publicly available or (ii) with respect to the Holders only, the Dutch Co-Issuer or such Qualified Reporting Subsidiary or such parent entity has made such reports available electronically (including by posting to a non-public, password-protected website as provided above) pursuant to this Section 3.2.

(g) So long as Notes are outstanding, the Dutch Co-Issuer shall also:

(i) promptly after furnishing to the Trustee the annual and quarterly reports required by Sections 3.2(a)(i) and (ii), hold a conference call to discuss such reports and the results of operations for the relevant reporting period; and

(ii) announce by press release or post to the website of the Dutch Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or on a non-public, password-protected website maintained by the Dutch Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or a third party, which will require a confidentiality acknowledgment (but not restrict the recipients of such information from trading securities of the Issuers or their respective affiliates), prior to the date of the conference call required to be held in accordance with Section 3.2(g)(i), the time and date of such conference call and either all information necessary to access the call or informing Holders, beneficial owners of Notes, bona fide prospective investors in the Notes, bona fide market makers in the Notes affiliated with any Initial Purchaser and bona fide securities analysts (to the extent providing analysis of an investment in the Notes) how they can obtain such information, including, without limitation, the applicable password or other login information;

 

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provided, however, that the Dutch Co-Issuer will be deemed to have satisfied the requirements of clause (i) of this Section 3.2(g) if any direct or indirect parent of the Dutch Co-Issuer holds a conference call to discuss such reports and the results of operations for the relevant reporting period.

(h) Any person who requests or accesses such financial information or seeks to participate in any conference calls required by this Section 3.2 may be required to provide its email address, employer name and other information reasonably requested by the Issuers and represent to the Issuers (to the Issuers’ reasonable good faith satisfaction) that:

(i) it is a Holder, a beneficial owner of the Notes, a bona fide prospective investor in the Notes, a bona fide market maker in the Notes affiliated with any Initial Purchaser or a bona fide securities analyst providing an analysis of investment in the Notes;

(ii) it will not use the information in violation of applicable securities laws or regulations;

(iii) it will keep such provided information confidential and will not communicate the information to any Person; and

(iv) it (a) will not use such information in any manner intended to compete with the business of the Dutch Co-Issuer and its Subsidiaries and (b) is not a Person (which includes such Person’s Affiliates) that (i) is principally engaged in a Similar Business or (ii) derives a significant portion of its revenues from operating or owning a Similar Business.

(i) Delivery of reports, information and documents (including without limitation reports contemplated under this Section 3.2) to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuers’ compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates). The Trustee shall have no duty to determine whether any filings have been made.

SECTION 3.3. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

(a) (1) The Dutch Co-Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock, and (2) the Dutch Co-Issuer will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that the Dutch Co-Issuer and any Restricted Subsidiary may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio for the Dutch Co-Issuer, as of the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued, would have been 2.00 to 1.00 or greater (“Ratio Debt”); provided, further, that the aggregate amount of Indebtedness (including Acquired Indebtedness) Incurred and Disqualified Stock or Preferred Stock issued pursuant to the foregoing by Non-Guarantor Subsidiaries shall not exceed the greater of (x) $150.0 million and (y) 13.50% of Consolidated Net Tangible Assets, at any one time outstanding.

(b) The foregoing limitations will not apply to (collectively, “Permitted Debt”):

 

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(i) the Incurrence or issuance by the Dutch Co-Issuer or its Restricted Subsidiaries of Indebtedness or Disqualified Stock or the issuance by its Restricted Subsidiaries of Preferred Stock under any Credit Agreement, the guarantees thereof and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate outstanding principal amount or liquidation preference, if applicable, not to exceed (x) the sum of (1) $1,400.0 million at any one time outstanding plus the Cash Capped Grower Amount (with any amounts Incurred pursuant to subclause (y) hereof reducing the amount permitted to be Incurred under this subclause (x)(1), with the exception of the Cash Capped Grower Amount) and (2) $250.0 million at any one time outstanding or (y) an unlimited amount so long as the Consolidated Senior Secured Net Debt Ratio does not exceed 4.50 to 1.00 (with any Indebtedness up to the Cash Capped Grower Amount Incurred under subclause (x) hereof on the date of determination (in the same transaction or series of transactions) of the Consolidated Senior Secured Net Debt Ratio not being included in the calculation of the Consolidated Senior Secured Net Debt Ratio under this subclause (y) on such date but not, for the avoidance of doubt, excluded from any such calculation made on any such subsequent date); provided that solely for the purpose of calculating the Consolidated Senior Secured Net Debt Ratio under this clause (i) (other than as set forth in the parenthetical in subclause (y) of this clause (i)) any outstanding Indebtedness, Disqualified Stock and Preferred Stock Incurred under this clause (i), shall, in each case, be deemed to be Consolidated Secured Indebtedness irrespective of whether such Indebtedness, Disqualified Stock or Preferred Stock actually constitutes Consolidated Secured Indebtedness;

(ii) the Incurrence by the Issuers and the Guarantors of Indebtedness represented by the Notes (not including any Additional Notes) and the Guarantees thereof, as applicable;

(iii) Indebtedness and Disqualified Stock of the Dutch Co-Issuer and its Restricted Subsidiaries and Preferred Stock of its Restricted Subsidiaries existing on the Issue Date (excluding Indebtedness described in clause (i) or (ii) above that is Incurred or existing (or deemed to be Incurred or existing) on the Issue Date, but, for the avoidance of doubt, including all Capitalized Lease Obligations (after giving effect to IFRS 16) existing on the Issue Date);

(iv) Indebtedness (including, without limitation, Capitalized Lease Obligations and mortgage financings as purchase money obligations) Incurred by the Dutch Co-Issuer or any of its Restricted Subsidiaries, Disqualified Stock issued by the Dutch Co-Issuer or any of its Restricted Subsidiaries and Preferred Stock issued by any of its Restricted Subsidiaries to finance all or any part of the purchase, lease, construction, installation, repair or improvement of property (real or personal), plant or equipment or other fixed or capital assets (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) and Indebtedness, Disqualified Stock or Preferred Stock arising from the conversion of the obligations of the Dutch Co-Issuer or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of the Dutch Co-Issuer or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference, including all Indebtedness Incurred and Disqualified Stock or Preferred Stock issued to renew, refund, refinance, replace, defease or discharge any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (iv), not to exceed the greater of (x) $75.0 million and (y) 6.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (iv) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness, Disqualified Stock or Preferred Stock Incurred pursuant to this clause (iv) shall cease to be deemed Incurred or outstanding pursuant to this clause (iv) but shall be deemed Incurred and

 

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outstanding as Ratio Debt from and after the first date on which the Dutch Co-Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Dutch Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(v) Indebtedness Incurred or Disqualified Stock issued by the Dutch Co-Issuer or any of its Restricted Subsidiaries and Preferred Stock issued by any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments issued in the ordinary course of business, including, without limitation, (x) letters of credit or performance or surety bonds in respect of workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance and (y) guarantees of Indebtedness Incurred by customers in connection with the purchase or other acquisition of equipment or supplies in the ordinary course of business;

(vi) the Incurrence of Indebtedness, Disqualified Stock or Preferred Stock arising from agreements of the Dutch Co-Issuer or its Restricted Subsidiaries providing for indemnification, earn-outs, adjustment of purchase or acquisition price or similar obligations, in each case, Incurred in connection with the Transactions or with the acquisition or disposition of any business, assets or a Subsidiary of the Dutch Co-Issuer in accordance with the terms of this Indenture, other than guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

(vii) Indebtedness or Disqualified Stock of the Dutch Co-Issuer to a Restricted Subsidiary; provided that (x) such Indebtedness or Disqualified Stock owing to a Non-Guarantor Subsidiary shall be subordinated in right of payment to the Issuers’ Obligations with respect to this Indenture or the Guarantee of the Guarantors with respect to the Obligations under this Indenture and (y) any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to the Dutch Co-Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness or an issuance of such Disqualified Stock not permitted by this clause (vii);

(viii) shares of Preferred Stock of a Restricted Subsidiary issued to the Dutch Co-Issuer or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Dutch Co-Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock not permitted by this clause (viii);

(ix) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary owing to the Dutch Co-Issuer or another Restricted Subsidiary; provided that (x) if the U.S. Co-Issuer or a Guarantor Incurs such Indebtedness, Disqualified Stock or Preferred Stock owing to a Non-Guarantor Subsidiary, such Indebtedness, Disqualified Stock or Preferred Stock is subordinated in right of payment to the Issuers’ Obligations with respect to this

 

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Indenture or the Guarantee of such Guarantor, as applicable, and (y) any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary lending such Indebtedness, Disqualified Stock or Preferred Stock ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness, Disqualified Stock or Preferred Stock (except to the Dutch Co-Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock not permitted by this clause (ix);

(x) Swap Contracts or Cash Management Services not Incurred for speculative purposes;

(xi) obligations (including reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments) in respect of customs, self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by the Dutch Co-Issuer or any Restricted Subsidiary;

(xii) Indebtedness or Disqualified Stock of the Dutch Co-Issuer or any of its Restricted Subsidiaries and Preferred Stock of any of its Restricted Subsidiaries in an aggregate principal amount or liquidation preference that, when aggregated with the principal amount or liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and Incurred pursuant to this clause (xii), does not exceed the greater of (x) $175.0 million and (y) 15.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xii) or any portion thereof, the aggregate amount of accrued and unpaid interest, original issue discount, premiums (including tender premiums), underwriting discounts, defeasance costs and fees and expenses in connection therewith, incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xii) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xii) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Dutch Co-Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Dutch Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xiii) any guarantee by the Dutch Co-Issuer or a Restricted Subsidiary of Indebtedness, Disqualified Stock, Preferred Stock or other obligations of the Dutch Co-Issuer or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness, Disqualified Stock, Preferred Stock or other obligations by the Dutch Co-Issuer or such Restricted Subsidiary is permitted under the terms of this Indenture;

(xiv) the Incurrence by the Dutch Co-Issuer or any of its Restricted Subsidiaries of Indebtedness or Disqualified Stock or the issuance of Preferred Stock of a Restricted Subsidiary that serves to refund, refinance, replace, redeem, repurchase, retire or defease, and is in an aggregate principal amount (or, if issued with original issue discount, an aggregate issue price) that is equal to or less than, Indebtedness Incurred or Disqualified Stock or Preferred Stock issued as Ratio Debt or permitted under clause (ii), clause (iii), this clause (xiv), clause (xv) or clause (xviii) of this Section 3.3(b) or subclause (y) of each of clauses (iv), (xii), (xx), (xxix) or (xxx) of this Section 3.3(b) (provided that any amounts Incurred under this clause (xiv) as Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to subclause (y) of any of these clauses shall reduce the amount available under such subclause

 

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(y) of such clause so long as such Refinancing Indebtedness remains outstanding) or any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to so refund, replace, refinance, redeem, repurchase, retire or defease such Indebtedness, Disqualified Stock or Preferred Stock, plus any additional Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to pay accrued and unpaid interest and the aggregate amount of original issue discount, premiums (including tender premiums), underwriting discounts, defeasance costs and fees and expenses in connection therewith (subject to the following proviso, “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness:

(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred that is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded, refinanced, replaced, redeemed, repurchased or retired;

(2) in the case of any revolving Indebtedness, has a Stated Maturity that is no earlier than the Stated Maturity of the Indebtedness being refunded, refinanced, replaced, redeemed, repurchased or retired;

(3) to the extent that such Refinancing Indebtedness refinances (i) Subordinated Indebtedness, such Refinancing Indebtedness is Subordinated Indebtedness or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness is Disqualified Stock or Preferred Stock, respectively; and

(4) shall not include (x) Indebtedness, Disqualified Stock or Preferred Stock of a Non-Guarantor Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Issuer or a Guarantor, or (y) Indebtedness or Disqualified Stock of the Dutch Co-Issuer or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;

provided that subclauses (1) and (2) will not apply to any refunding or refinancing of any Secured Indebtedness;

(xv) (i) Indebtedness, Disqualified Stock or Preferred Stock (x) of the Dutch Co-Issuer or any of its Restricted Subsidiaries Incurred or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person and (y) of any Person that is acquired by the Dutch Co-Issuer or any of its Restricted Subsidiaries or merged into or consolidated or amalgamated with the Dutch Co-Issuer or a Restricted Subsidiary in accordance with the terms of this Indenture and (ii) Indebtedness Incurred or Disqualified Stock or Preferred Stock issued or, in each case, assumed in anticipation of, or in connection with, an acquisition of any assets, business or Person; provided, however, that after giving effect to such acquisition, merger, consolidation or amalgamation and the Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock, either:

(1) the Dutch Co-Issuer would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt; or

 

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(2) the Fixed Charge Coverage Ratio of the Dutch Co-Issuer is equal to or greater than such ratio immediately prior to such acquisition, merger, consolidation or amalgamation;

(xvi) Indebtedness, Disqualified Stock or Preferred Stock arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;

(xvii) Indebtedness, Disqualified Stock or Preferred Stock of the Dutch Co-Issuer or any Restricted Subsidiary supported by a letter of credit or bank guarantee issued pursuant to any credit facility permitted hereunder, so long as such letter of credit has not been terminated and is in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee;

(xviii) Contribution Indebtedness;

(xix) Indebtedness, Disqualified Stock or Preferred Stock of the Dutch Co-Issuer or any Restricted Subsidiary consisting of (x) the financing of insurance premiums or (y) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

(xx) Indebtedness, Disqualified Stock or Preferred Stock of Non-Guarantor Subsidiaries in an aggregate principal amount or liquidation preference, as applicable, not to exceed the greater of (x) $120.0 million and (y) 10.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xx) or any portion thereof, the aggregate amount of accrued and unpaid interest, original issue discount, premiums (including tender premiums), and underwriting discounts, defeasance costs and fees and expenses Incurred in connection with such refinancing, outstanding at any one time (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xx) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xx) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which such Non-Guarantor Subsidiary could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent such Non-Guarantor Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxi) Indebtedness, Disqualified Stock or Preferred Stock of a joint venture to the Dutch Co-Issuer or a Restricted Subsidiary and to the other holders of Equity Interests or participants of such joint venture, so long as the percentage of the aggregate amount of such Indebtedness, Disqualified Stock or Preferred Stock of such joint venture owed to such holders of its Equity Interests or participants of such joint venture does not exceed the percentage of the aggregate outstanding amount of the Equity Interests of such joint venture held by such holders or such participant’s participation in such joint venture;

(xxii) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse to the Dutch Co-Issuer or any Restricted Subsidiary other than a Receivables Subsidiary (except for Standard Securitization Undertakings);

 

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(xxiii) Indebtedness owed or Disqualified Stock or Preferred Stock issued on a short-term basis to banks and other financial institutions in the ordinary course of business of the Dutch Co-Issuer and the Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements, including cash management, cash pooling arrangements and related activities to manage cash balances of the Dutch Co-Issuer and its Subsidiaries and joint ventures including treasury, depository, overdraft, credit, purchasing or debit card, electronic funds transfer and other cash management arrangements and Indebtedness in respect of netting services, overdraft protection, credit card programs, automatic clearinghouse arrangements and similar arrangements;

(xxiv) Indebtedness, Disqualified Stock or Preferred Stock consisting of Indebtedness, Disqualified Stock or Preferred Stock issued by the Dutch Co-Issuer or any Restricted Subsidiary to future, current or former officers, directors, managers, employees, consultants and independent contractors thereof or any direct or indirect parent thereof, their respective estates, heirs, family members, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer to the extent permitted by Section 3.4;

(xxv) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business;

(xxvi) Indebtedness Incurred or Disqualified Stock issued by the Dutch Co-Issuer or any Restricted Subsidiary or Preferred Stock issued by any of the Dutch Co-Issuer’s Restricted Subsidiaries in connection with bankers’ acceptances, discounted bills of exchange, warehouse receipts or similar facilities or the discounting or factoring of receivables for credit management purposes, in each case Incurred or undertaken in the ordinary course of business;

(xxvii) Indebtedness Incurred or Disqualified Stock issued by the Dutch Co-Issuer or any Restricted Subsidiary or Preferred Stock issued by any of the Dutch Co-Issuer’s Restricted Subsidiaries to the extent that the net proceeds thereof are promptly deposited with the Trustee to satisfy and discharge the Notes in accordance with this Indenture;

(xxviii) (i) guarantees Incurred in the ordinary course of business in respect of obligations to suppliers, customers, franchisees, lessors, licensees, sub-licensees and distribution partners and (ii) Indebtedness Incurred by the Dutch Co-Issuer or a Restricted Subsidiary as a result of leases entered into by the Dutch Co-Issuer or such Restricted Subsidiary or any direct or indirect parent of the Dutch Co-Issuer in the ordinary course of business;

(xxix) the incurrence by the Dutch Co-Issuer or any Restricted Subsidiary of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued on behalf, or representing guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by, joint ventures; provided that the aggregate principal amount or liquidation preference, as applicable, of Indebtedness Incurred or guaranteed or Disqualified Stock or Preferred Stock issued or guaranteed pursuant to this clause (xxix) does not exceed the greater of (x) $30.0 million and (y) 2.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xxix) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xxix) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xxix) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first

 

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date on which the Dutch Co-Issuer or such Restricted Subsidiary could have Incurred or guaranteed such Indebtedness or issued or guaranteed such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Dutch Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxx) Indebtedness, Disqualified Stock or Preferred Stock of the Dutch Co-Issuer or a Restricted Subsidiary Incurred to finance or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person in an aggregate principal amount or liquidation preference that does not exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets, at any one time outstanding plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xxx) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xxx) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xxx) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Dutch Co-Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Dutch Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxxi) Indebtedness, Disqualified Stock or Preferred Stock consisting of obligations of the Dutch Co-Issuer or any Restricted Subsidiary under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions or any Permitted Investment;

(xxxii) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent that they are permitted to remain unfunded under applicable law;

(xxxiii) Indebtedness, Disqualified Stock or Preferred Stock arising as a result of (the establishment of) a Dutch law fiscal unity for corporate income tax or turnover tax purposes (fiscale eenheid) of which any Restricted Subsidiary is a member; and

(xxxiv) Indebtedness, Disqualified Stock or Preferred Stock pursuant to a declaration of the Dutch Co-Issuer of joint and several liability used for the purpose of Section 2:403 of the Dutch Civil Code (and any residual liability under such declaration arising pursuant to section 2:404(2) of the Dutch Civil Code).

(c) For purposes of determining compliance with this Section 3.3, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt or is entitled to be Incurred or issued as Ratio Debt, the Issuers shall, in their sole discretion, at the time of Incurrence or issuance, divide, classify or reclassify, or at any later time divide, classify or reclassify, such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) in any manner that complies with this Section 3.3; provided that (x) all Indebtedness under the Senior Credit Agreement Incurred on or prior to the Issue Date shall be deemed to have been Incurred pursuant to Section 3.3(b)(i)(x) and the Dutch Co-Issuer shall not be permitted to reclassify all or any portion of Indebtedness Incurred on or prior to the Issue Date pursuant to Section 3.3(b)(i)(x) and (y) the entire committed amount of the revolving portion of the Senior Credit Agreement on the Issue Date shall be deemed to have been Incurred on the Issue Date pursuant to Section 3.3(b)(i)(x)(2) as if such entire committed amount were outstanding funded Indebtedness in the amount of

 

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such commitment on the Issue Date and such entire committed amount of the revolving portion of the Senior Credit Agreement shall be deemed to constitute outstanding funded Indebtedness in the amount of such commitment from and after the Issue Date under Section 3.3(b)(i)(x)(2) irrespective of the actual funded borrowings thereunder, it being understood that (1) actual revolving borrowings in respect of (and not in excess of) such entire committed amount deemed to be outstanding may be drawn and redrawn on any subsequent date without further testing under this Section 3.3 and (2) any subsequent permanent reductions in such committed amount shall be deemed to correspondingly reduce the amount of Indebtedness Incurred and outstanding under Section 3.3(b)(i)(x)(2) in respect of such committed amount. Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest or dividends in the form of additional Indebtedness with the same terms, the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of Disqualified Stock or Preferred Stock of the same class, the accretion of liquidation preference and increases in the amount of Indebtedness, Disqualified Stock or Preferred Stock outstanding solely as a result of fluctuations in the exchange rate of currencies will not be deemed to be an Incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for purposes of this Section 3.3. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this Section 3.3.

Additionally, for purposes of complying with this Section 3.3, any obligation, including any lease, concession or license of property (or guarantee thereof), that would not constitute a Capitalized Lease Obligation under IFRS as in effect as of the Issue Date (which, for the avoidance of doubt, would not give effect to the application of IFRS 16) will be “Permitted Debt”.

For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness or the issuance of Disqualified Stock or Preferred Stock, the U.S. dollar-equivalent principal amount or liquidation preference, as applicable, of Indebtedness, Disqualified Stock or Preferred Stock denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term debt, or first committed or first Incurred (whichever yields the lower U.S. dollar-equivalent), in the case of revolving credit debt, or first issued in the case of Disqualified Stock or Preferred Stock; provided that if such Indebtedness, Disqualified Stock or Preferred Stock is Incurred to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount or liquidation preference, as applicable, of such Refinancing Indebtedness does not exceed the principal amount or liquidation preference, as applicable, of such Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, being refinanced (plus unpaid accrued interest and the aggregate amount of premiums (including tender premiums) and underwriting discounts, defeasance costs and fees, discounts and expenses in connection therewith).

The principal amount or liquidation preference, as applicable, of any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, if Incurred or issued in a different currency from the Indebtedness, Disqualified Stock or Preferred Stock being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness, Disqualified Stock or Preferred Stock is denominated that is in effect on the date of such refinancing.

 

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SECTION 3.4. Limitation on Restricted Payments.

(a) The Dutch Co-Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any payment or distribution on account of the Dutch Co-Issuer’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment made in connection with any merger, amalgamation or consolidation involving the Dutch Co-Issuer (other than (A) dividends or distributions by the Dutch Co-Issuer payable solely in Equity Interests (other than Disqualified Stock) of the Dutch Co-Issuer; or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Dutch Co-Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities);

(ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, including in connection with any merger, amalgamation or consolidation;

(iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness of either of the Issuers or any Guarantor (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness of either of the Issuers or any Guarantor in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under clause (vii) or (ix) of Section 3.3(b); or

(iv) make any Restricted Investment;

(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(B) immediately after giving effect to such transaction on a Pro Forma Basis, the Dutch Co-Issuer could Incur $1.00 of additional Indebtedness as Ratio Debt; and

(C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Dutch Co-Issuer and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clause (i) of Section 3.4(b), but excluding all other Restricted Payments permitted by Section 3.4(b)), is less than the sum of, without duplication:

(1) (x) $75.0 million plus (y) 50.0% of the Consolidated Net Income of the Dutch Co-Issuer for the period (taken as one accounting period) beginning on January 1, 2017 to the end of the Dutch Co-Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case that such Consolidated Net Income for such period is a deficit, minus 100% of such deficit, plus

 

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(2) 100% of the aggregate net proceeds, including cash and the Fair Market Value of assets (other than cash), received by the Dutch Co-Issuer after the Issue Date from the issue or sale of Equity Interests of the Dutch Co-Issuer (other than Excluded Equity), including such Equity Interests issued upon exercise of warrants or options, plus

(3) 100% of the aggregate amount of contributions to the capital of the Dutch Co-Issuer received in cash and the Fair Market Value of assets (other than cash) after the Issue Date (other than Excluded Equity), plus

(4) the principal amount of any Indebtedness, or the liquidation preference or Maximum Fixed Repurchase Price, as the case may be, of any Disqualified Stock, in each case, of the Dutch Co-Issuer or any Restricted Subsidiary thereof issued after the Issue Date (other than Indebtedness or Disqualified Stock issued to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Dutch Co-Issuer or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Dutch Co-Issuer or any Restricted Subsidiary)) that, in each case, has been converted into or exchanged for Equity Interests in the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer (other than Excluded Equity), plus

(5) 100% of the aggregate amount received by the Dutch Co-Issuer or any Restricted Subsidiary in cash and the Fair Market Value of assets (other than cash) received by the Dutch Co-Issuer or any Restricted Subsidiary from:

(A) the sale or other disposition (other than to the Dutch Co-Issuer or a Restricted Subsidiary of the Dutch Co-Issuer) of Restricted Investments made by the Dutch Co-Issuer and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Dutch Co-Issuer and its Restricted Subsidiaries by any Person (other than the Dutch Co-Issuer or any of its Restricted Subsidiaries) and from repayments of loans or advances that constituted Restricted Investments,

(B) the sale (other than to the Dutch Co-Issuer or a Restricted Subsidiary or an employee stock ownership plan or trust established by the Dutch Co-Issuer or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Dutch Co-Issuer or any Restricted Subsidiary)) of the Capital Stock of an Unrestricted Subsidiary, and

(C) any distribution or dividend from an Unrestricted Subsidiary, plus

(6) in the event any Unrestricted Subsidiary has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Dutch Co-Issuer or a Restricted Subsidiary, in each case after the Issue Date, the Fair Market Value of the Investment of the Dutch Co-Issuer in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to Section 3.4(b)(xix) or constituted a Permitted Investment, plus

 

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(7) the aggregate amount of Retained Declined Proceeds since the Issue Date (to the extent Holders were provided notice in connection with the Asset Sale Offer related thereto that any Excess Proceeds not accepted by the Holders shall constitute Retained Declined Proceeds and such Retained Declined Proceeds will increase the amount available for Restricted Payments under this Section 3.4(a)(C) to the extent not otherwise applied in accordance with Section 3.4(b)(xi)).

(b) The provisions of Section 3.4(a) will not prohibit:

(i) the payment of any dividend or distribution or consummation of any redemption within 60 days after the date of declaration thereof or the giving of a redemption notice related thereto, if at the date of declaration or notice such payment would have complied with the provisions of this Indenture;

(ii) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, or Subordinated Indebtedness of an Issuer or any Guarantor, in exchange for, or out of the proceeds of the issuance or sale of, Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or contributions to the equity capital of the Dutch Co-Issuer (other than Excluded Equity) (collectively, including any such contributions, “Refunding Capital Stock”);

(b) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the issuance or sale (other than to a Restricted Subsidiary of the Dutch Co-Issuer or to an employee stock ownership plan or any trust established by the Dutch Co-Issuer or any of its Restricted Subsidiaries) of Refunding Capital Stock; and

(c) if immediately prior to the retirement of the Retired Capital Stock, the declaration and payment of dividends thereon was permitted pursuant to this Section 3.4 and has not been made as of such time (the “Unpaid Amount”), the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer) in an aggregate amount no greater than the Unpaid Amount;

(iii) the prepayment, redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness of an Issuer or any Guarantor made by exchange for, or out of the proceeds of the Incurrence of, Refinancing Indebtedness thereof;

(iv) the purchase, retirement, redemption or other acquisition (or Restricted Payments to the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer to finance any such purchase, retirement, redemption or other acquisition) for value of Equity Interests (including related stock appreciation rights or similar securities) of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer held directly or indirectly by any future, present or former employee, officer, director, manager, consultant or independent contractor of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or any Subsidiary of the Dutch Co-Issuer or their estates, heirs, family members, spouses or former spouses or permitted transferees (including for all purposes of this clause (iv), Equity Interests held by any entity whose Equity Interests are held by any such future, present or former employee, officer, director, manager, consultant or independent contractor or their estates, heirs, family members, spouses or former spouses or permitted transferees) pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement or any stock subscription or shareholder or similar agreement; provided, however, that the aggregate amounts

 

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paid under this clause (iv) shall not exceed (x) $20.0 million in any calendar year or (y) subsequent to the consummation of any public Equity Offering of common Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, $30.0 million in any calendar year (in each case, with unused amounts in any calendar year being permitted to be carried over for the next two succeeding calendar years); provided, further, however, that such amount in any calendar year may be increased by an amount not to exceed:

(a) the cash proceeds received by the Dutch Co-Issuer from the issuance or sale of Equity Interests (other than Disqualified Stock) of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer (to the extent contributed to the Dutch Co-Issuer), in each case, to any future, present or former employees, officers, directors, managers, consultants or independent contractors of the Dutch Co-Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Dutch Co-Issuer that occurs on or after the Issue Date, other than in connection with, or pursuant to the Equity Contribution; provided that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend will not increase the amount available for Restricted Payments under Section 3.4(a)(C); plus

(b) the cash proceeds of key man life insurance policies received by the Dutch Co-Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Dutch Co-Issuer (to the extent contributed to the Dutch Co-Issuer) after the Issue Date; plus

(c) the amount of any cash bonuses otherwise payable to employees, officers, directors, managers, consultants or independent contractors of the Dutch Co-Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Dutch Co-Issuer that are foregone in return for the receipt of Equity Interests; less

(d) the amount of cash proceeds described in subclause (a), (b) or (c) of this clause (iv) previously used to make Restricted Payments pursuant to this clause (iv); provided that the Issuers may elect to apply all or any portion of the aggregate increase contemplated by subclause (a), (b) and (c) above in any calendar year;

provided, further, that cancellation of Indebtedness owing to the Dutch Co-Issuer or any Restricted Subsidiary from any future, current or former officer, director, employee, manager, consultant or independent contractor (or any permitted transferees thereof) of the Dutch Co-Issuer or any of its Restricted Subsidiaries or any direct or indirect parent of the Dutch Co-Issuer, in connection with a repurchase of Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer from such Persons will not be deemed to constitute a Restricted Payment for purposes of this Section 3.4 or any other provisions of this Indenture;

(v) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Dutch Co-Issuer or any of its Restricted Subsidiaries and any class or series of Preferred Stock of any Restricted Subsidiaries issued or Incurred in accordance with Section 3.3;

(vi) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) and the declaration and payment of dividends to the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer issued after the Issue Date; provided, however, that (A) for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated

 

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Preferred Stock, the Fixed Charge Coverage Ratio of the Dutch Co-Issuer is 2.00 to 1.00 or greater and (B) the aggregate amount of dividends declared and paid pursuant to this clause (vi) does not exceed the net cash proceeds actually received by the Dutch Co-Issuer from the sale (or the contribution of the net cash proceeds from the sale) of Designated Preferred Stock;

(vii) (A) Restricted Payments made in connection with the consummation of the Transactions as contemplated by the Acquisition Agreement, including any dividends, payments or loans made to the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer to enable it to make any such payments and (B) on or after the date that is six months after the Issue Date, any Restricted Payments in an aggregate amount not to exceed, in the case of this clause (vii)(B), the Specified Sponsor Overfunding Amount;

(viii) the declaration and payment of dividends on the Dutch Co-Issuer’s common stock (or the payment of dividends to any direct or indirect parent of the Dutch Co-Issuer to fund the payment by any direct or indirect parent of the Dutch Co-Issuer of dividends on such entity’s common Equity Interests) of up to 6.0% per annum of the cash proceeds, net of any underwriting spread, received by the Dutch Co-Issuer from any public offering of common Equity Interests or contributed to the Dutch Co-Issuer by any direct or indirect parent of the Dutch Co-Issuer from any public offering of common Equity Interests, other than public offerings with respect to the Dutch Co-Issuer’s common Equity Interests registered on Form S-4 or S-8 or successor form thereto and other than any public sale constituting Excluded Contributions;

(ix) Restricted Payments that are made with Excluded Contributions;

(x) Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (x) not to exceed the greater of (x) $125.0 million and (y) 11.25% of Consolidated Net Tangible Assets;

(xi) the payment, purchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Dutch Co-Issuer and its Restricted Subsidiaries pursuant to provisions similar to those described under Sections 3.7 and 3.9; provided that, prior to such payment, purchase, redemption, defeasance or other acquisition or retirement for value, the Issuers (or a third party to the extent permitted by this Indenture) have made any Change of Control Offer or Asset Sale Offer, as the case may be, with respect to the Notes, and have repurchased, redeemed, defeased, acquired or retired all Notes validly tendered and not validly withdrawn in connection with such Change of Control Offer or Asset Sale Offer, as the case may be;

(xii) for so long as the Dutch Co-Issuer or any of its Subsidiaries are members of a group filing a consolidated, combined, affiliated or unitary income (or franchise in lieu of income) tax return with any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer, Restricted Payments to any Holdings Entity or such other direct or indirect parent of the Dutch Co-Issuer in amounts required for such Holdings Entity or such other parent entity to pay federal, national, foreign, state and local income taxes (and franchise taxes) imposed on such entity to the extent such income taxes (and franchise taxes) are attributable to the income of the Dutch Co-Issuer and its Subsidiaries; provided, however, that the amount of such payments in respect of any tax year does not, in the aggregate, exceed the amount that the Dutch Co-Issuer and its Subsidiaries that are members of such consolidated, combined, affiliated or unitary group would have been required to pay in respect of federal, national, foreign, state and local income and/or franchise taxes (as the case may be) in respect of such year if the Dutch Co-Issuer and its Subsidiaries paid such income (and franchise) taxes directly on a separate company basis or as a stand-alone consolidated, combined, affiliated or unitary income (or franchise in lieu of income) tax group (reduced by any such taxes paid directly by the Dutch Co-Issuer or any Subsidiary);

 

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(xiii) the declaration and payment of dividends, other distributions or other amounts to, or the making of loans to any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer, in the amount required for such entity to, if applicable:

(a) pay amounts equal to the amounts required for any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer to pay fees and expenses (including Related Taxes), customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, employees, directors, managers, consultants or independent contractors of any such Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer, if applicable, and general corporate operating (including, without limitation, expenses related to auditing and other accounting matters) and overhead costs and expenses of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, if applicable, in each case to the extent such fees, expenses, salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of the Dutch Co-Issuer and its Subsidiaries;

(b) pay, if applicable, amounts equal to amounts required for any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer to pay interest and/or principal on Indebtedness the proceeds of which have been contributed to the Dutch Co-Issuer (other than as Excluded Equity) and that has been guaranteed by, and is otherwise considered Indebtedness of, the Dutch Co-Issuer or any Restricted Subsidiary Incurred in accordance with Section 3.3 (except to the extent any such payments have otherwise been made by any such guarantor);

(c) pay fees and expenses incurred by any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer related to (i) the maintenance of such parent entity of its corporate or other entity existence and performance of its obligations under this Indenture and similar obligations under any Credit Agreement, (ii) any unsuccessful equity or debt offering of such parent entity (or any debt or equity offering from which such parent does not receive any proceeds) and (iii) any equity or debt issuance, incurrence or offering, any disposition or acquisition or any investment transaction by the Dutch Co-Issuer or any of its Restricted Subsidiaries (or any acquisition of or investment in any business, assets or property that will be contributed to the Dutch Co-Issuer or any of its Restricted Subsidiaries as part of the same or a related transaction) permitted by this Indenture;

(d) make payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial, advisory, financing, underwriting or placement services or in respect of other investment banking activities including, without limitation, in connection with acquisitions or divestitures, including in connection with the consummation of the Transactions, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) approved in respect of such activities by a majority of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer in good faith;

(e) pay franchise and excise taxes and other fees, taxes (including Related Taxes) and expenses in connection with any ownership of the Dutch Co-Issuer or any of its Subsidiaries or required to maintain their organizational existences;

(f) make payments for the benefit of the Dutch Co-Issuer or any of its Restricted Subsidiaries to the extent such payments could have been made by the Dutch Co-Issuer or any of its Restricted Subsidiaries because such payments (x) would not otherwise be Restricted Payments and (y) would be permitted by Section 3.8; and

 

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(g) make Restricted Payments to any direct or indirect parent of the Dutch Co-Issuer to finance, or to any direct or indirect parent of the Dutch Co-Issuer for the purpose of paying to any other direct or indirect parent of the Dutch Co-Issuer to finance, any Investment that, if consummated by the Dutch Co-Issuer or any Restricted Subsidiary, would be a Permitted Investment; provided that (i) such Restricted Payment is made substantially concurrently with the closing of such Investment and (ii) promptly following the closing thereof, such direct or indirect parent of the Dutch Co-Issuer causes (x) all property acquired (whether assets or Equity Interests) to be contributed to the Dutch Co-Issuer or any Restricted Subsidiary or (y) the merger, consolidation or amalgamation (to the extent permitted by Section 4.1) of the Person formed or acquired into the Dutch Co-Issuer or any Restricted Subsidiary in order to consummate such acquisition or Investment, in each case, in accordance with the requirements of Section 3.11;

(xiv) (i) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants, (ii) payments made or expected to be made by the Dutch Co-Issuer or any Restricted Subsidiary in respect of withholding or similar taxes payable or expected to be payable by any future, present or former director, officer, employee, manager, consultant or independent contractor of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or any Subsidiary of the Dutch Co-Issuer (or their respective Affiliates, estates or immediate family members) in connection with the exercise of stock options or the grant, vesting or delivery of Equity Interests and (iii) loans or advances to officers, directors, employees, managers, consultants and independent contractors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer or any Subsidiary of the Dutch Co-Issuer in connection with such Person’s purchase of Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer; provided that no cash is actually advanced pursuant to this subclause (iii) other than to pay taxes due in connection with such purchase, unless immediately repaid;

(xv) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing and the payment or distribution of Receivables Fees;

(xvi) payments or distributions to satisfy dissenters’ rights, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of assets that complies with the provisions of this Indenture;

(xvii) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Dutch Co-Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Cash Equivalents);

(xviii) the payment of cash in lieu of the issuance of fractional shares of Equity Interests in connection with any merger, consolidation, amalgamation or other business combination, or in connection with any dividend, distribution or split of or upon exercise, conversion or exchange of Equity Interests, warrants, options or other securities exercisable or convertible into, Equity Interests of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer;

(xix) Investments in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (xix) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, Cash Equivalents or marketable securities, not to exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

 

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(xx) the making of payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, including in connection with the consummation of the Transactions, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) are approved in respect of such activities by a majority of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer in good faith;

(xxi) any Restricted Payment so long as immediately after giving effect to the making of such Restricted Payment, the Dutch Co-Issuer’s Consolidated Total Net Debt Ratio does not exceed 4.50 to 1.00;

(xxii) payments, dividends or distributions with any Total Leverage Excess Proceeds; and

(xxiii) any payment that is intended to prevent any Indebtedness from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (vii)(B), (x), (xxi) and (xxii) of this Section 3.4(b), no Event of Default shall have occurred and be continuing or would occur as a consequence thereof. For purposes of clauses (xii) and (xiii) of this Section 3.4(b), taxes and Related Taxes shall include all interest and penalties with respect thereto and all additions thereto.

As of the Issue Date, all of the Dutch Co-Issuer’s Subsidiaries are Restricted Subsidiaries. The Dutch Co-Issuer will not permit any Restricted Subsidiary to become an Unrestricted Subsidiary, or any Unrestricted Subsidiary to become a Restricted Subsidiary, except pursuant Section 3.14 and the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Dutch Co-Issuer and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments or Permitted Investments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation will only be permitted if a Restricted Payment or Permitted Investment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture.

For purposes of this Section 3.4, if any Investment or Restricted Payment (or a portion thereof) would be permitted pursuant to one or more provisions described above and/or one or more of the exceptions contained in the definition of “Permitted Investments,” the Dutch Co-Issuer may divide and classify such Investment or Restricted Payment (or a portion thereof) in any manner that complies with this Section 3.4 and may later divide and reclassify any such Investment or Restricted Payment so long as the Investment or Restricted Payment (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception as of the date of such reclassification; provided that any Restricted Payment made in reliance on Section 3.4(b)(vii)(B) shall not be permitted to be reclassified as made pursuant to any other provision described above and shall be deemed at all times to have been made in reliance on Section 3.4(b)(vii)(B).

 

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SECTION 3.5. Liens.

(a) Prior to a Covenant Suspension Event, following any Reversion Date and during any Suspension Period when there is no election by the Issuers pursuant to Section 3.5(b), the Issuers will not, and will not permit any Guarantor to, directly or indirectly, create or Incur any Lien securing Indebtedness (other than Permitted Liens) on any asset or property of either of the Issuers or any Guarantor, unless (1) in the case of Liens securing Subordinated Indebtedness, the Notes and any applicable Guarantee are secured by a Lien on such property or assets and the proceeds thereof that is senior in priority to such Liens; or (2) in all other cases, the Notes and the applicable Guarantee are secured by a Lien on such property or assets and the proceeds thereof equally and ratably with or prior to such Liens.

(b) Following a Covenant Suspension Event, the Issuers may elect by written notice to the Trustee to be subject to this Section 3.5(b) with respect to the limitation on Liens in lieu of Section 3.5(a) (the date such notice is delivered, the “Election Date”). From and after an Election Date and until a Reversion Date, the Issuers will not, and will not permit any of the Dutch Co-Issuer’s Principal Property Subsidiaries to, directly or indirectly, create, Incur any Lien of any kind upon any (1) Restricted Property or (2) shares of Capital Stock or evidence of Indebtedness for borrowed money issued by any Principal Property Subsidiary, whether owned at the Issue Date or thereafter acquired, without making effective provision, and the Issuers in such case will make or cause to be made effective provision, whereby the Notes and the applicable Guarantees shall be secured by such Lien equally and ratably with any and all other Indebtedness or obligations thereby secured, so long as such Indebtedness or obligations shall be so secured; provided, however, that the foregoing shall not apply to any of the following:

(1) Liens that exist on the date of the Covenant Suspension Event;

(2) Liens on property, shares of Capital Stock or evidence of Indebtedness of any corporation existing at the time such corporation becomes a Guarantor;

(3) Liens in favor of an Issuer or any Guarantor;

(4) Liens in favor of governmental bodies to secure progress, advance or other payments pursuant to contract or statute or Indebtedness incurred to finance all or a part of construction of or improvements to property subject to such Liens;

(5) Liens (i) on property, shares of Capital Stock or evidences of Indebtedness for borrowed money existing at the time of acquisition thereof (including acquisition through merger, amalgamation or consolidation), and construction and improvement Liens that are entered into within one year from the date of such construction or improvement; provided that in the case of construction or improvement the Lien shall not apply to any property theretofore owned by an Issuer or any Guarantor except substantially unimproved real property on which the property so constructed or the improvement is located and (ii) for the acquisition of any real property, which Liens are created within 180 days after the completion of such acquisition to secure or provide for the payment of the purchase price of the real property acquired; provided that with respect to clauses (i) and (ii), any such Liens do not extend to any other property of the Issuers or any of the Guarantors (whether such property is then owned or thereafter acquired);

(6) mechanics’, landlords’ and similar Liens arising in the ordinary course of business in respect of obligations not due or being contested in good faith;

(7) Liens for taxes, assessments, or governmental charges or levies that are not delinquent or are being contested in good faith;

 

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(8) Liens arising from any legal proceedings that are being contested in good faith;

(9) any Liens that (i) are incidental to the ordinary conduct of its business or the ownership of its properties and assets, including Liens incurred in connection with workmen’s compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts, (ii) were not incurred in connection with the borrowing of money or the obtaining of advances or credit and (iii) do not in the aggregate materially detract from the value of the property of the Issuers or any Guarantor or materially impair the use thereof in the operation of its business; and

(10) Liens for the sole purpose of extending, renewing or replacing in whole or in part any of the foregoing.

(c) Notwithstanding the provisions of Section 3.5(b), during any Suspension Period, if the Election Date has occurred, the Dutch Co-Issuer or any Subsidiary may, without equally and ratably securing the Notes and the Guarantees, create or assume Liens that would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 10.0% of Consolidated Total Assets.

(d) Any Lien that is granted to secure the Notes or the applicable Guarantee pursuant to clause (a) or (b) of this Section 3.5 shall be automatically and unconditionally released and discharged at the same time as the release of the Lien that gave rise to the obligation to secure the Notes or the Guarantee under clause (a) or (b) of this Section 3.5 (other than a release as a result of the enforcement of remedies in respect of such Lien or the Obligations secured by such Lien).

(e) With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the Incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The “Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms, accretion of original issue discount or liquidation preference, any fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection therewith and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness.

SECTION 3.6. Dividend and Other Payment Restrictions Affecting Subsidiaries.

(a) The Dutch Co-Issuer will not, and will not permit any of its Restricted Subsidiaries (other than the U.S. Co-Issuer or the Guarantors) to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary (other than the U.S. Co-Issuer or the Guarantors) to:

(A) (x) pay dividends or make any other distributions to the Dutch Co-Issuer or any of its Restricted Subsidiaries on its Capital Stock; or (y) pay any Indebtedness owed to the Dutch Co-Issuer or any of its Restricted Subsidiaries;

(B) make loans or advances to the Dutch Co-Issuer or any of its Restricted Subsidiaries; or

 

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(C) sell, lease or transfer any of its properties or assets to the Dutch Co-Issuer or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(i) contractual encumbrances or restrictions of the Dutch Co-Issuer or any of its Restricted Subsidiaries in effect on the Issue Date, including pursuant to the Senior Credit Agreement and the other documents relating to the Senior Credit Agreement, related Swap Contracts and Indebtedness permitted pursuant to clause (iii) of Section 3.3(b);

(ii) this Indenture, the Notes, the Guarantees and other documents relating to this Indenture and the Notes;

(iii) applicable law or any applicable rule, regulation or order;

(iv) any agreement or other instrument of a Person acquired by or merged, amalgamated or consolidated with or into the Dutch Co-Issuer or any Restricted Subsidiary or an Unrestricted Subsidiary that is designated a Restricted Subsidiary that was in existence at the time of such acquisition (or at the time it merges with or into the Dutch Co-Issuer or any Restricted Subsidiary or assumed in connection with the acquisition of assets from such Person (but, in each case, not created in contemplation thereof)), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired or designated; provided that in connection with a merger, amalgamation or consolidation under this clause (iv), if a Person other than the Dutch Co-Issuer or such Restricted Subsidiary is the successor company with respect to such merger, amalgamation or consolidation, any agreement or instrument of such Person or any Subsidiary of such Person, shall be deemed acquired or assumed, as the case may be, by the Dutch Co-Issuer or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;

(v) customary encumbrances or restrictions contained in contracts or agreements for the sale of assets applicable to such assets pending consummation of such sale, including customary restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Restricted Subsidiary;

(vi) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(vii) customary provisions in operating or other similar agreements, asset sale agreements and stock sale agreements entered into in connection with the entering into of such transaction, which limitation is applicable only to the assets that are the subject of those agreements;

(viii) purchase money obligations for property acquired and Capitalized Lease Obligations, to the extent such obligations impose restrictions of the nature discussed in clause (C) of this Section 3.6(a) on the property so acquired;

(ix) customary provisions contained in leases, sub-leases, licenses, sublicenses, contracts and other similar agreements entered into in the ordinary course of business to the extent such obligations impose restrictions of the type described in clause (C) of this Section 3.6(a) on the property subject to such lease;

 

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(x) any encumbrance or restriction effected in connection with a Qualified Receivables Financing that, in the good faith determination of the Issuers, is necessary or advisable to effect such Qualified Receivables Financing;

(xi) any encumbrance or restriction contained in other Indebtedness, Disqualified Stock or Preferred Stock of the Dutch Co-Issuer or any Restricted Subsidiary that is Incurred subsequent to the Issue Date pursuant to Section 3.3; provided that (i) such encumbrances and restrictions contained in any agreement or instrument will not materially affect the Issuers’ ability to make anticipated principal or interest payments on the Notes (as determined by the Dutch Co-Issuer or a direct or indirect parent of the Dutch Co-Issuer in good faith) or (ii) such encumbrances and restrictions contained in any agreement or instrument taken as a whole, are not materially less favorable to the Holders than the encumbrances and restrictions contained in this Indenture or the Senior Credit Agreement (as determined by the Dutch Co-Issuer in good faith);

(xii) any encumbrance or restriction contained in Secured Indebtedness otherwise permitted to be Incurred pursuant to Sections 3.3 and 3.5 to the extent limiting the right of the debtor to dispose of the assets securing such Indebtedness;

(xiii) any encumbrance or restriction arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, (x) detract from the value of the property or assets of the Dutch Co-Issuer or any Restricted Subsidiary in any manner material to the Dutch Co-Issuer or any Restricted Subsidiary or (y) materially affect the Issuers’ ability to make future principal or interest payments on the Notes, in each case, as determined by the Dutch Co-Issuer in good faith;

(xiv) customary provisions in joint venture agreements or arrangements and other similar agreements or arrangements relating solely to the applicable joint venture; and

(xv) any encumbrances or restrictions of the type referred to in clauses (A), (B) and (C) of this Section 3.6(a) imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in the immediately preceding clauses (i) through (xiv) of this second paragraph of this Section 3.6(a); provided that such encumbrances and restrictions contained in any such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing are, in the good faith judgment of the Dutch Co-Issuer, not materially more restrictive, taken as a whole, than the encumbrances and restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

(b) For purposes of determining compliance with this Section 3.6, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Dutch Co-Issuer or a Restricted Subsidiary to other Indebtedness Incurred by the Dutch Co-Issuer or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

 

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SECTION 3.7. Asset Sales.

(a) The Dutch Co-Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale, unless:

(i) the Dutch Co-Issuer or any of its Restricted Subsidiaries, as the case may be, receives consideration (including by way of relief from, or by any other person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Sale at least equal to the Fair Market Value (as determined at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of; and

(ii) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Dutch Co-Issuer or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents or Replacement Assets; provided that the amount of:

(1) any liabilities (as shown on the Dutch Co-Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto for which internal financial statements are available immediately preceding such date or, if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Dutch Co-Issuer’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet in the good faith determination of the Dutch Co-Issuer) of the Dutch Co-Issuer or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are extinguished in connection with the transactions relating to such Asset Sale, or that are assumed by the transferee of any such assets or Equity Interests, in each case, pursuant to an agreement that releases or indemnifies the Dutch Co-Issuer or such Restricted Subsidiary, as the case may be, from further liability;

(2) any notes or other obligations or other securities or assets received by the Dutch Co-Issuer or such Restricted Subsidiary from such transferee that are converted by the Dutch Co-Issuer or such Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within 180 days of the receipt thereof; and

(3) any Designated Non-cash Consideration received by the Dutch Co-Issuer or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this subclause (3) that is at that time outstanding, not to exceed the greater of (x) $125.0 million and (y) 11.25% of Consolidated Net Tangible Assets, calculated at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value);

shall each be deemed to be Cash Equivalents for the purposes of this clause (ii).

(b) Within 455 days after the Dutch Co-Issuer’s or any Restricted Subsidiary’s receipt of the Net Cash Proceeds of any Asset Sale, the Dutch Co-Issuer or such Restricted Subsidiary may apply an amount equal to the Net Cash Proceeds from such Asset Sale, at its option:

(i) to reduce Obligations under the Senior Credit Agreement and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto;

 

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(ii) to reduce Obligations under Indebtedness (other than Subordinated Indebtedness) that is secured by a Lien, which Lien is permitted by this Indenture and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto;

(iii) to reduce Obligations under (x) Pari Passu Indebtedness of the Issuers or the Guarantors (provided that if the Issuers or any Guarantor shall so reduce such Obligations under Pari Passu Indebtedness other than the Notes, the Issuers shall (A) equally and ratably reduce Obligations under the Notes as provided in Section 5.1 or through open-market purchases (to the extent such purchases are at or above 100.0% of the principal amount thereof) or (B) make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase at a purchase price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest, if any, the principal amount of Notes that would otherwise be redeemed under subclause (A) above), or (y) Indebtedness of a Non-Guarantor Subsidiary, in each case, other than Indebtedness owed to the Dutch Co-Issuer or another Restricted Subsidiary (and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto);

(iv) to make an investment in any one or more businesses, assets (other than working capital assets), or property or capital expenditures, in each case used or useful in a Similar Business;

(v) to make an investment in any one or more businesses, properties (other than working capital assets) or assets (other than working capital assets) that replace the businesses, properties and/or assets that are the subject of such Asset Sale; or

(vi) any combination of the foregoing;

provided that the Dutch Co-Issuer and its Restricted Subsidiaries will be deemed to have complied with the provisions described in clause (iv) or (v) of this Section 3.7(b) if and to the extent that, within 455 days after the Asset Sale that generated the Net Cash Proceeds, the Dutch Co-Issuer or such Restricted Subsidiary, as applicable, has entered into and not abandoned or rejected a binding agreement to make an investment in compliance with the provision described in clauses (iv) or (v) of this Section 3.7(b), and that investment is thereafter completed within 180 days after the end of such 455-day period.

(c) Notwithstanding the foregoing, to the extent that repatriation to the United States and to the Netherlands of any or all of the Net Cash Proceeds of any Asset Sales by a Foreign Subsidiary (x) is prohibited or delayed by applicable local law or (y) would have a material adverse tax consequence (taking into account any foreign tax credit or other net benefit actually realized in connection with such repatriation that would not otherwise be realized), as determined by the Dutch Co-Issuer in its sole discretion, the portion of such Net Cash Proceeds so affected will not be required to be applied in compliance with this Section 3.7, and such amounts may be retained by the applicable Foreign Subsidiary; provided that subclause (x) of this clause (c) shall apply to such amounts so long, but only so long, as the applicable local law will not permit repatriation to the Netherlands and to the United States (the Issuers hereby agreeing to use commercially reasonable efforts to cause the applicable Foreign Subsidiary to take all actions reasonably required by the applicable local law, applicable organizational impediments or other impediment to permit such repatriation to the Netherlands or to the United States), and if such repatriation of any of such affected Net Cash Proceeds is permitted under the applicable local law and is not subject to subclause (y) of this clause (c), then such repatriation will be promptly effected and such repatriated Net Cash Proceeds will be applied (net of additional taxes payable or reserved against as a result thereof) in compliance with this Section 3.7. The time periods set forth in this Section 3.7 shall not start until such time as the Net Cash Proceeds may be repatriated to the Netherlands or to the United States (whether or not such repatriation actually occurs).

 

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(d) Pending the final application of any such amount of Net Cash Proceeds, the Dutch Co-Issuer or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest or utilize such Net Cash Proceeds in any manner not prohibited by this Indenture. Any amount of Net Cash Proceeds from any Asset Sale that is not invested or applied as provided and within the time period set forth in Section 3.7(b) shall be deemed to constitute “Excess Proceeds”; provided that any amount of proceeds offered to Holders pursuant to Section 3.7(b)(iii)(x) or pursuant to an Asset Sale Offer made at any time after the Asset Sale shall be deemed to have been applied as required and shall not be deemed to be Excess Proceeds without regard to the extent to which such offer is accepted by the Holders. When the aggregate amount of Excess Proceeds less Total Leverage Excess Proceeds, if any, exceeds $30.0 million, the Issuers shall make an offer (an “Asset Sale Offer”) to all Holders and, if required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness, to purchase the maximum principal amount of such Notes and Pari Passu Indebtedness, as appropriate, on a pro rata basis, that may be purchased out of the Excess Proceeds less Total Leverage Excess Proceeds, if any, at an offer price, in the case of the Notes, in cash in an amount equal to 100.0% of the principal amount thereof (or in the event such other Indebtedness was issued with original issue discount, 100.0% of the accreted value thereof), plus accrued and unpaid interest, if any (or such lesser price with respect to Pari Passu Indebtedness, if any, as may be provided by the terms of such other Indebtedness), to (but not including) the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture and the agreement governing such Pari Passu Indebtedness.

(e) Notwithstanding the foregoing, the Issuers shall only be required to make an Asset Sale Offer with 50% of the Excess Proceeds if the Consolidated Total Net Debt Ratio for the Dutch Co-Issuer is less than or equal to the Specified Consolidated Total Net Debt Ratio after giving effect to any application of any Net Cash Proceeds as set forth herein, including completion of any prior offer to repurchase a portion of the Notes (any Excess Proceeds not required to be offered in an Asset Sale Offer in reliance on this sentence (i.e., such 50%) shall constitute “Total Leverage Excess Proceeds”). The Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that such Excess Proceeds less any Total Leverage Excess Proceeds exceed $30.0 million by transmitting electronically or by mailing to the Holders the notice required pursuant to the terms of this Indenture, with a copy to the Trustee or otherwise in accordance with the procedures of the Depositary. The Issuers may satisfy the foregoing obligations with respect to such Net Cash Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Cash Proceeds at any time prior to the expiration of the application period or by electing to make an Asset Sale Offer with respect to such Net Cash Proceeds before the aggregate amount of Excess Proceeds less any Total Leverage Excess Proceeds exceeds $30.0 million.

(f) To the extent that the aggregate amount of Notes and any other Pari Passu Indebtedness tendered or otherwise surrendered in connection with an Asset Sale Offer made with Excess Proceeds less any Total Leverage Excess Proceeds is less than the amount offered in an Asset Sale Offer, the Issuers may use any remaining Excess Proceeds less any Total Leverage Excess Proceeds (any such amount, “Retained Declined Proceeds”) for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and Pari Passu Indebtedness tendered or otherwise surrendered by holders thereof exceeds the amount offered in an Asset Sale Offer, the Trustee shall select the applicable Notes (and the Issuers or their agents shall select such Pari Passu Indebtedness) to be purchased in the manner described below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. To the extent the Excess Proceeds less any Total Leverage Excess Proceeds exceed the outstanding aggregate principal amount of the Notes (and, if required by the terms thereof, all Pari Passu Indebtedness), the Issuers need only make an Asset Sale Offer up to the outstanding aggregate principal amount of Notes (and any such Pari Passu Indebtedness), and any additional Excess Proceeds less any Total Leverage Excess Proceeds shall not be subject to this Section and shall be permitted to be used for any purpose in the Issuers’ discretion.

 

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(g) The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws or regulations are applicable in connection with the purchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 3.7 by virtue of such compliance.

(h) If more Notes are tendered pursuant to an Asset Sale Offer than the Issuers are required to purchase, selection of such Notes for purchase will be made in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed (so long as the Trustee knows of such listing) or if such Notes are not listed, on a pro rata basis based on the total amount of Notes and Pari Passu Indebtedness tendered in connection with an Asset Sale Offer (with adjustments so that only Notes in denominations of the minimum denomination of $200,000 or integral multiples of $1,000 in excess thereof shall be purchased), by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements and, in the case of Global Notes, the procedures of the Depositary); provided that the selection of Notes for purchase shall not result in a Holder with a principal amount of Notes less than the minimum denomination of $200,000. No Note will be repurchased in part if less than the minimum denomination of such Note would be left outstanding.

(i) Notices of an Asset Sale Offer shall be sent by first class mail, postage prepaid, or sent electronically, at least ten days but not more than 60 days before the purchase date to each Holder at such Holder’s registered address or otherwise in accordance with the Depositary’s procedures. If any Note is to be purchased in part only, any notice of purchase that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased.

(j) A new Note in principal amount equal to the unpurchased portion of any Note (other than a global note) purchased in part will be issued in the name of the Holder thereof upon cancellation of the Note. On and after the purchase date, unless the Issuers default in payment of the purchase price, interest shall cease to accrue on Notes or portions thereof purchased.

(k) In the event of an Asset Sale in accordance with all of the provisions of this Indenture in which the U.S. Co-Issuer is no longer a Restricted Subsidiary of the Dutch Co-Issuer, upon completion of such Asset Sale, an entity that is organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia shall become a co-issuer of the Notes.

SECTION 3.8. Transactions with Affiliates.

(a) The Dutch Co-Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Dutch Co-Issuer involving aggregate consideration in excess of $30.0 million (each of the foregoing, an “Affiliate Transaction”), unless:

 

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(i) such Affiliate Transaction is on terms that are not materially less favorable to the Dutch Co-Issuer or the relevant Restricted Subsidiary than those that could have been obtained in a comparable transaction by the Dutch Co-Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis (as determined in good faith by the senior management or the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer); and

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $40.0 million, either of the Issuers delivers to the Trustee a resolution adopted in good faith by the majority of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer, approving such Affiliate Transaction, together with an Officer’s Certificate certifying that the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer determined or resolved that such Affiliate Transaction complies with clause (i) above.

(b) The provisions of Section 3.8(a) shall not apply to the following:

(i) (a) transactions between or among the Dutch Co-Issuer and/or any of its Restricted Subsidiaries (or an entity that becomes a Restricted Subsidiary as a result of such transaction) and (b) any merger, amalgamation or consolidation of the Dutch Co-Issuer and any Holdings Entity or any other direct or indirect parent of the Dutch Co-Issuer; provided that such Holdings Entity or such parent entity shall have no material liabilities and no material assets (other than cash, Cash Equivalents and the Capital Stock of the Dutch Co-Issuer) and such merger, amalgamation or consolidation is otherwise in compliance with the terms of this Indenture and effected for a bona fide business purpose;

(ii) (a) Restricted Payments permitted by this Indenture and (b) Permitted Investments;

(iii) transactions in which the Dutch Co-Issuer or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Dutch Co-Issuer or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 3.8(a)(i);

(iv) payments, loans, advances or guarantees (or cancellation of loans, advances or guarantees) to employees, officers, directors, managers, consultants or independent contractors for bona fide business purposes or in the ordinary course of business;

(v) any agreement or arrangement as in effect as of the Issue Date or as thereafter amended, supplemented or replaced (so long as such amendment, supplement or replacement agreement or arrangement is not materially disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer) to the Holders when taken as a whole as compared to the original agreement or arrangement as in effect on the Issue Date) or any transaction or payments contemplated thereby;

(vi) the Management Agreements or any transaction or payments (including reimbursement of out-of-pocket expenses or payments under any indemnity obligations) contemplated thereby;

 

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(vii) the existence of, or the performance by the Dutch Co-Issuer or any of its Restricted Subsidiaries of its obligations under the terms of, the Acquisition Agreement, any stockholders or similar agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party entered into in connection with the Transactions or similar transactions, arrangements or agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Dutch Co-Issuer or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing transaction, arrangement or agreement or under any similar transaction, arrangement or agreement entered into after the Issue Date shall only be permitted by this clause (vii) to the extent that the terms of any such existing transaction, arrangement or agreement, together with all amendments thereto, taken as a whole, or new transaction, arrangement or agreement, are not otherwise disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer) to the Holders in any material respect when taken as a whole as compared with the original transaction, arrangement or agreement entered into in connection with the Transactions;

(viii) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case, in the ordinary course of business and otherwise in compliance with the terms of this Indenture, which are fair to the Dutch Co-Issuer and its Restricted Subsidiaries or are on terms at least as favorable (as determined in good faith by the senior management or the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer) as might reasonably have been obtained at such time from an unaffiliated party;

(ix) any transaction effected as part of a Qualified Receivables Financing;

(x) the sale, issuance or transfer of Equity Interests (other than Disqualified Stock) of the Dutch Co-Issuer;

(xi) payments by the Dutch Co-Issuer or any of its Restricted Subsidiaries to or on behalf of the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are (x) made pursuant to agreements with the Sponsor or (y) approved by a majority of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer in good faith or a majority of the disinterested members of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer in good faith;

(xii) any contribution to the capital of the Dutch Co-Issuer (other than Disqualified Stock) or any investments by the Sponsor or a direct or indirect parent of the Dutch Co-Issuer in Equity Interests (other than Disqualified Stock of the Dutch Co-Issuer) of the Dutch Co-Issuer (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of the Dutch Co-Issuer in connection therewith);

(xiii) any transaction with a Person (other than an Unrestricted Subsidiary) that would constitute an Affiliate solely because the Dutch Co-Issuer or a Restricted Subsidiary owns an Equity Interest in or otherwise controls such Person; provided that no Affiliate of the Dutch Co-Issuer or any of its Subsidiaries (other than the Dutch Co-Issuer or a Restricted Subsidiary) shall have a beneficial interest or otherwise participate in such Person;

 

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(xiv) transactions between the Dutch Co-Issuer or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate solely because such Person is a director or such Person has a director which is also a director of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer; provided, however, that such director abstains from voting as a director of the Dutch Co-Issuer or such direct or indirect parent of the Dutch Co-Issuer, as the case may be, on any matter involving such other Person;

(xv) the entering into of any tax sharing agreement or arrangement and any payments permitted by Section 3.4(b)(xii), (b)(xiii)(a) or (b)(xiii)(e);

(xvi) transactions to effect the Transactions and the payment of all transaction, underwriting, commitment and other fees and expenses related to the Transactions (including the Transactions costs);

(xvii) pledges of Equity Interests of Unrestricted Subsidiaries;

(xviii) the issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer in good faith;

(xix) (1) any employment, consulting, service or termination agreement, or customary indemnification arrangements, entered into by the Dutch Co-Issuer or any of its Restricted Subsidiaries with current, former or future officers, directors, employees, managers, consultants and independent contractors of the Dutch Co-Issuer or any of its Restricted Subsidiaries (or of any direct or indirect parent of the Dutch Co-Issuer to the extent such agreements or arrangements are in respect of services performed for the Dutch Co-Issuer or any of the Restricted Subsidiaries), (2) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with current, former or future officers, directors, employees, managers, consultants and independent contractors of the Dutch Co-Issuer or any of its Restricted Subsidiaries or of any direct or indirect parent of the Dutch Co-Issuer and (3) any payment of compensation or other employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers officers, directors, employees, managers, consultants and independent contractors of the Dutch Co-Issuer or any of its Restricted Subsidiaries or any direct or indirect parent of the Dutch Co-Issuer (including amounts paid pursuant to any management equity plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, stock option or similar plans and any successor plan thereto and any supplemental executive retirement benefit plans or arrangements), in each case in the ordinary course of business or as otherwise approved in good faith by the Board of Directors of either of the Issuers or of a Restricted Subsidiary or any direct or indirect parent of the Dutch Co-Issuer;

(xx) investments by Affiliates in Indebtedness or preferred Equity Interests of the Dutch Co-Issuer or any of its Subsidiaries, so long as non-Affiliates were also offered the opportunity to invest in such Indebtedness or preferred Equity Interests, and transactions with Affiliates solely in their capacity as holders of Indebtedness or preferred Equity Interests of the Dutch Co-Issuer or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally;

 

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(xxi) the existence of, or the performance by the Dutch Co-Issuer or any of its Restricted Subsidiaries of their obligations under the terms of, any registration rights agreement to which they are a party or become a party in the future;

(xxii) investments by the Sponsor or a direct or indirect parent of the Dutch Co-Issuer in securities of the Dutch Co-Issuer or debt securities or Preferred Stock of any Restricted Subsidiary (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of the Dutch Co-Issuer in connection therewith);

(xxiii) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business;

(xxiv) any lease entered into between the Dutch Co-Issuer or any Restricted Subsidiary, as lessee, and any Affiliate of the Dutch Co-Issuer, as lessor, in the ordinary course of business;

(xxv) (i) intellectual property licenses in the ordinary course of business and (ii) intercompany intellectual property licenses and research and development agreements;

(xxvi) transactions pursuant to, and complying with, (i) Section 3.3 to the extent such transaction complies with Section 3.8(a)(i) or (ii) the second paragraph of Section 4.1(a) or Section 4.1(c); and

(xxvii) intercompany transactions undertaken in good faith for the purpose of improving the consolidated tax efficiency of the Dutch Co-Issuer and its Restricted Subsidiaries and not for the purpose of circumventing any covenant set forth in this Indenture.

SECTION 3.9. Change of Control.

(a) Upon the occurrence of a Change of Control after the Issue Date, each Holder shall have the right to require the Issuers to purchase all or any part of such Holder’s Notes at a purchase price in cash (the “Change of Control Payment”) equal to 101.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the purchase date), except to the extent the Issuers have previously elected to redeem all of the Notes pursuant to Section 5.1.

(b) Prior to or within 30 days following any Change of Control, except to the extent that the Issuers have exercised their right to redeem all the Notes as described under Section 5.1, the Issuers shall deliver a notice (a “Change of Control Offer”) to each Holder with a copy to the Trustee and the paying agent, or otherwise in accordance with the procedures of the Depositary, describing:

(i) that a Change of Control has occurred or, if the Change of Control Offer is being made in advance of a Change of Control, that a Change of Control is expected to occur, and that such Holder has, or upon such occurrence will have, the right to require the Issuers to purchase such Holder’s Notes at a purchase price in cash equal to 101.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on a Record Date to receive interest on the relevant Interest Payment Date falling prior to or on the purchase date);

 

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(ii) the transaction or transactions that constitute, or are expected to constitute, such Change of Control;

(iii) the purchase date (which shall be no earlier than ten days nor later than 60 days (unless delivered in advance of the occurrence of such Change of Control) from the date such notice is delivered) (the “Change of Control Payment Date”);

(iv) that any Note not properly tendered will remain outstanding and continue to accrue interest;

(v) that unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(vi) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(vii) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes; provided that the Paying Agent receives, not later than the expiration time of the Change of Control Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

(viii) that if a Holder (other than a Holder of a Global Note) is tendering for purchase less than all of its Notes, the Issuers will issue new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered and the unpurchased portion of the Notes must be equal to $200,000 or an integral multiple of $1,000 in excess thereof;

(ix) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and

(x) the other instructions determined by the Issuers, consistent with this Section 3.9, that a Holder must follow in order to have its Notes purchased.

While the Notes are in global form and the Issuers make an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes to be made through the facilities of the Depositary in accordance with the rules and regulations thereof.

(c) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Paying Agent at the address specified in the notice at least three Business Days prior to the Change of Control Payment Date. Holders shall be entitled to withdraw their election if the Paying Agent receives not later than prior to the expiration time of the Change of Control Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount at maturity of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing its tendered Note and its election to have such Note purchased.

 

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(d) On the Change of Control Payment Date, all Notes purchased by the Issuers under this Section 3.9 shall be delivered by the Issuers to the Trustee for cancellation, and the Issuers shall pay through the Paying Agent the purchase price plus accrued and unpaid interest, if any, to, but not including the Change of Control Payment Date, to the Holders entitled thereto. With respect to any Note purchased in part (other than a Global Note), the Issuers shall issue a new Note in a principal amount equal at maturity to the unpurchased portion of the original Note in the name of the Holder upon cancellation of the original Note.

(e) Notwithstanding the provisions of this Section 3.9, the Issuers shall not be required to make a Change of Control Offer (i) upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not validly withdrawn under such Change of Control Offer or (ii) if the Issuers have previously issued a notice of a full redemption pursuant to the provisions of Section 5.1.

(f) Prior to any Change of Control Offer, the Issuers shall deliver to the Trustee an Officer’s Certificate stating that all conditions precedent contained herein to the right of the Issuers to make such offer have been complied with.

(g) The Issuers shall comply, to the extent applicable, with the requirements of Rule 14e-1 of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 3.9. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 3.9, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 3.9 by virtue of such compliance.

(h) A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon such Change of Control.

(i) On the Change of Control Payment Date, the Issuers shall, to the extent permitted by law,

(i) accept for payment all Notes issued by the Issuers or portions thereof validly tendered and not withdrawn pursuant to the Change of Control Offer;

(ii) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered; and

(iii) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuers.

SECTION 3.10. Maintenance of Insurance. The Issuers and the Guarantors shall maintain with financially sound and reputable insurance companies not Affiliates of the Issuers, insurance with respect to their properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

 

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SECTION 3.11. Future Guarantors. If, on or after the Issue Date, (a) any Restricted Subsidiary of the Dutch Co-Issuer (including any newly formed, newly acquired or newly redesignated Restricted Subsidiary, but excluding any Receivables Subsidiary, any Designated Non-Guarantor Subsidiary, any CFC, any CFC Holdco and the U.S. Co-Issuer) that is not then an Issuer or a Guarantor guarantees or Incurs any Indebtedness under the Senior Credit Agreement or guarantees any capital markets Indebtedness with an aggregate principal amount in excess of $200.0 million (“Certain Capital Markets Debt”) of the Dutch Co-Issuer or any of its Restricted Subsidiaries or Incurs Certain Capital Markets Debt or (b) either of the Issuers otherwise elects to have any Restricted Subsidiary of the Dutch Co-Issuer (other than the U.S. Co-Issuer) become a Guarantor, then, in each such case, the Dutch Co-Issuer shall cause such Restricted Subsidiary to execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit E hereto pursuant to which such Restricted Subsidiary shall become a Guarantor under this Indenture providing for a Guarantee by such Restricted Subsidiary on the same terms and conditions as those set forth in this Indenture and applicable to the other Guarantors; provided that, in the case of clause (a), such supplemental indenture shall be executed and delivered to the Trustee within 20 Business Days of the date that such Indebtedness under the Senior Credit Agreement or such Certain Capital Markets Debt has been guaranteed or Incurred by such Restricted Subsidiary.

In the event that any Restricted Subsidiary of the Dutch Co-Issuer has not provided a Guarantee in respect of the Notes because such Restricted Subsidiary is a Receivables Subsidiary, a Designated Non-Guarantor Subsidiary, a CFC or a CFC Holdco, and on any subsequent date such Restricted Subsidiary no longer constitutes a Receivables Subsidiary, a Designated Non-Guarantor Subsidiary, a CFC or a CFC Holdco but is an obligor or guarantor with respect to the Senior Credit Agreement or Certain Capital Markets Debt, then the Dutch Co-Issuer shall cause such Restricted Subsidiary to execute and deliver to the Trustee within 20 Business Days of such subsequent date a supplemental indenture substantially in the form of Exhibit E hereto pursuant to which such Restricted Subsidiary shall become a Guarantor under this Indenture providing for a Guarantee by such Restricted Subsidiary on the same terms and conditions as those set forth in this Indenture and applicable to other Guarantors.

Each Guarantee shall be released in accordance with Section 10.2(b).

SECTION 3.12. Compliance Certificate; Statement by Officers as to Default. The Issuers shall deliver to the Trustee, within 120 days (or 145 days for the fiscal year ended December 31, 2016) after the end of each fiscal year of the Dutch Co-Issuer ending after the Issue Date, an Officer’s Certificate, to the effect that to the best knowledge of the signer thereof on behalf of each of the Issuers, the Issuers are or are not in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Issuers (through their own actions or omissions or through the action or omission of any Guarantor, as applicable) shall be in default, specifying all such defaults and the nature and status thereof of which such signer may have knowledge. The individual signing any certificate given by any Person pursuant to this Section 3.12 shall be the principal executive, financial or accounting officer of such Person or the direct or indirect parent of such Person.

So long as any of the Notes are outstanding, upon any Officer of either of the Issuers becoming aware of any Default or Event of Default, the Issuers shall deliver to the Trustee, within 30 days of such Officer becoming aware of such Default or Event of Default (unless such Default or Event of Default has been cured or waived within such 30-day time period), an Officer’s Certificate specifying such Default or Event of Default and what action the Issuers are taking or propose to take with respect thereto.

SECTION 3.13. [Reserved].

SECTION 3.14. Designation of Restricted and Unrestricted Subsidiaries.

 

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(a) The Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer may designate any Subsidiary of the Dutch Co-Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary of the Dutch Co-Issuer but excluding the U.S. Co-Issuer) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns or holds any Lien on any property of, the Dutch Co-Issuer or any other Subsidiary of the Dutch Co-Issuer that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either:

(i) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or

(ii) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 3.4.

(b) The Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

(x) (1) the Dutch Co-Issuer could Incur $1.00 of additional Indebtedness as Ratio Debt or (2) the Fixed Charge Coverage Ratio for the Dutch Co-Issuer and its Restricted Subsidiaries would be equal to or greater than such ratio for the Dutch Co-Issuer and its Restricted Subsidiaries immediately prior to such designation, in each case on a Pro Forma Basis taking into account such designation; and

(y) no Event of Default shall have occurred and be continuing as a result of such designation.

(c) Any such designation by the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer pursuant to this Section 3.14 shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Dutch Co-Issuer or any direct or indirect parent of the Dutch Co-Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with this Section 3.14.

SECTION 3.15. Covenant Suspension.

(a) If on any date following the Issue Date (i) the Notes have Investment Grade Ratings from both Rating Agencies and (ii) no Default has occurred and is continuing under this Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), the Guarantees will be automatically and unconditionally released and discharged and Sections 3.3, 3.4, 3.5(a) (to the extent the Dutch Co-Issuer makes an election pursuant to Section 3.5(b)), 3.6, 3.7, 3.8, 3.9, 3.11 and 4.1(a)(iv) (collectively, the “Suspended Covenants”) shall no longer be applicable to the Notes.

(b) In the event that the Dutch Co-Issuer and its Restricted Subsidiaries are not subject to the Suspended Covenants under this Indenture for any period of time pursuant to Section 3.15(a), and on any subsequent date (the “Reversion Date”) one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the Notes below an Investment Grade Rating, then the Dutch Co-Issuer and its Restricted Subsidiaries shall thereafter again be subject to the Suspended Covenants under this Indenture with respect to future events. The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to as the “Suspension Period.”

 

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(c) Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Net Cash Proceeds shall be reset at zero.

(d) With respect to Restricted Payments made after the Reversion Date, the amount of Restricted Payments made shall be calculated as though Section 3.4 had been in effect prior to, but not during, the Suspension Period. No Subsidiary may be designated as an Unrestricted Subsidiary during the Suspension Period, unless such designation would have complied with Section 3.4 as if Section 3.4 were in effect during such period. In addition, all Indebtedness Incurred, or Disqualified Stock or Preferred Stock issued, during the Suspension Period shall be classified to have been Incurred or issued pursuant to Section 3.3(b)(iii). In addition, for purposes of Section 3.8, all agreements and arrangements entered into by the Dutch Co-Issuer and any Restricted Subsidiary with an Affiliate of the Dutch Co-Issuer during the Suspension Period prior to such Reversion Date shall be deemed to have been entered pursuant to Section 3.8(b)(v), and for purposes of Section 3.6, all contracts entered into during the Suspension Period prior to such Reversion Date that contain any of the restrictions contemplated by Section 3.6 shall be deemed to have been entered into pursuant to Section 3.6(a)(i). In addition, any Change of Control during such Suspension Period shall not require a Change of Control Offer during or after the Suspension Period; provided that if the public notice of an arrangement that could result in a Change of Control occurs during a Suspension Period and the Notes are rated below Investment Grade by either of the Rating Agencies during the period commencing 90 days prior to such notice until the end of the 90-day period following such notice (which 90-day period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies) then the Issuers shall be required to make a Change of Control Offer upon the Reversion Date.

(e) During the Suspension Period, any reference in Section 3.14, the definition of “Unrestricted Subsidiary” or “Permitted Liens” to Section 3.3 or any provision thereof shall be construed as if Section 3.3 had remained in effect since the Issue Date and during the Suspension Period.

(f) In addition, during the Suspension Period, the Guarantees will be automatically released and the obligation to grant further Guarantees will be suspended. Upon the Reversion Date, the obligation to grant Guarantees pursuant to Section 3.11 will be reinstated (and the Reversion Date will be deemed to be the date on which any Indebtedness under the Senior Credit Agreement or Certain Capital Markets Debt was Incurred or guaranteed, as applicable, for purposes of Section 3.11).

(g) Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of any failure to comply with the Suspended Covenants during any Suspension Period and the Dutch Co-Issuer and any Subsidiary of the Dutch Co-Issuer will be permitted, without causing a Default or Event of Default or breach of any of the Suspended Covenants (notwithstanding the reinstatement thereof) under this Indenture, to honor, comply with or otherwise perform any contractual commitments or obligations entered into during a Suspension Period following a Reversion Date and to consummate the transactions contemplated thereby; provided that, to the extent any such commitment or obligation results in the making of a Restricted Payment, such Restricted Payment shall be made under Section 3.4(a)(C) or Section 3.4(b) and, if not permitted by Section 3.4(a)(C) or Section 3.4(b), such Restricted Payment shall be deemed permitted by Section 3.4(a)(C) and shall be deducted for purposes of calculating the amount pursuant to Section 3.4(a)(C) (so that the amount available under Section 3.4(a)(C) immediately following such Restricted Payment shall be negative).

The Issuers shall provide an Officer’s Certificate to the Trustee indicating the occurrence of any Covenant Suspension Event or Reversion Date. The Trustee shall have no obligation to (i) independently determine or verify if such events have occurred, (ii) make any determination regarding the impact of actions taken during the Suspension Period on the Dutch Co-Issuer and its Restricted Subsidiaries’ future compliance with their covenants or (iii) notify the Holders of any Covenant Suspension Event or Reversion Date.

 

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SECTION 3.16. Stay, Extension and Usury Laws. The Issuers and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuers and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

ARTICLE IV

Merger, Consolidation, Amalgamation or Sale of Assets

SECTION 4.1. When the Issuers and Guarantors May Merge, Amalgamate or Otherwise Dispose of Assets.

(a) Neither Issuer may consolidate, merge or amalgamate with or into or wind up into (whether or not such Issuer is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person (other than in connection with the Transactions and other than the merger, amalgamation or consolidation of one Issuer into the other Issuer; provided that to the extent the U.S. Co-Issuer merges into the Dutch Co-Issuer, after such merger, any entity that is organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia shall become a co-issuer of the Notes) unless:

(i) such Issuer is the surviving Person or the Person formed by or surviving any such consolidation, merger, amalgamation or winding up (if other than such Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is (or is the foreign analog of) a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Issue Date) (such Issuer or such Person, as the case may be, being herein called the “Successor Company”) and, if such entity is not organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia, a co-issuer of the Notes is organized or existing under such laws;

(ii) the Successor Company (if other than such Issuer) expressly assumes all the obligations of such Issuer under this Indenture and the Notes pursuant to supplemental indentures or other documents or instruments;

(iii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

 

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(iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, either:

(1) the Dutch Co-Issuer (or a Successor Company to the Dutch Co-Issuer, if applicable) would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt; or

(2) the Fixed Charge Coverage Ratio for the Dutch Co-Issuer (or a Successor Company to the Dutch Co-Issuer, if applicable) and its Restricted Subsidiaries would be equal to or greater than such ratio for the Dutch Co-Issuer and its Restricted Subsidiaries immediately prior to such transaction;

(v) each Guarantor, unless it is the other party to the transactions described above, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s Obligations under this Indenture and the Notes; and

(vi) the Dutch Co-Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indentures (if any) comply with this Indenture.

The Successor Company (if other than an Issuer) shall succeed to, and be substituted for, such Issuer under this Indenture and the Notes, and such Issuer shall automatically be released and discharged from its obligations under this Indenture and the Notes. Notwithstanding the foregoing clauses (iii) and (iv), (A) either of the Issuers may consolidate or amalgamate with, merge into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to the other Issuer or any Guarantor, (B) either of the Issuers may merge, consolidate or amalgamate with an Affiliate of such Issuer solely for the purpose of reincorporating or reorganizing such Issuer in another state of the United States, any state or territory thereof or the District of Columbia or in any member country of the European Union (as it is constituted on the Issue Date) so long as the principal amount of Indebtedness of the Dutch Co-Issuer and its Restricted Subsidiaries is not increased thereby (unless such increase is permitted by this Indenture), (C) an Issuer may convert into a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Issuer or the laws of the United States, any state or territory thereof or the District of Columbia; provided that, in the case of each of clauses (A), (B) and (C), if the resulting entity is not organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia, a co-issuer of the Notes remains in existence or is organized or existing under such laws, (D) either Issuer or any Guarantor may change its name and (E) any Restricted Subsidiary (other than the U.S. Co-Issuer) may merge, amalgamate or consolidate with either Issuer; provided that such Issuer is the Successor Company in such merger, amalgamation or consolidation.

(b) Subject to Section 10.2, each Guarantor shall not, and the Dutch Co-Issuer shall not permit any Guarantor to, consolidate, merge or amalgamate with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person (other than in connection with the Transactions) unless:

(i) (A) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, merger, amalgamation or winding up (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, partnership, limited partnership, limited liability

 

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company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Issue Date) or the laws of any other jurisdiction so long as a Guarantee provided by such surviving Person under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of the predecessor Guarantor (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”);

(B) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s Guarantee pursuant to a supplemental indenture or other documents or instruments;

(C) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Guarantor or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Guarantor or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and

(D) the Successor Guarantor (if other than such Guarantor) shall have delivered or caused to be delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indenture (if any) comply with this Indenture; or

(ii) such sale or disposition or consolidation, amalgamation or merger is made in compliance with Section 3.7.

(c) Subject to Article X, the Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee, and such Guarantor shall automatically be released and discharged from its obligations under this Indenture and such Guarantor’s Guarantee. Notwithstanding the foregoing, (1) a Guarantor may merge, consolidate or amalgamate with an Affiliate of the Dutch Co-Issuer incorporated or organized solely for the purpose of reincorporating or reorganizing such Guarantor in the United States, any state or territory thereof or the District of Columbia or in any member country of the European Union (as it is constituted on the Issue Date), so long as the principal amount of Indebtedness of the Dutch Co-Issuer and the Restricted Subsidiaries is not increased thereby (unless such increase is permitted by this Indenture), (2) a Guarantor may (a) consolidate, merge or amalgamate with or into or wind up into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets to, either Issuer or a Guarantor or (b) dissolve if such Guarantor sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its properties and assets to another Person in compliance with Section 3.7 and, after giving effect to such sale, assignment, transfer, lease, conveyance or disposition and prior to such dissolution, has no or a de minimis amount of assets, (3) a Guarantor may convert into a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Issue Date) or the laws of any other jurisdiction so long as a Guarantee provided under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of such Guarantor prior to such conversion, (4) a Guarantor may change its name and (5) any Restricted Subsidiary (other than the U.S. Co-Issuer) may merge, amalgamate or consolidate into any Guarantor; provided, in the case of this clause (5), that the surviving Person (i) is a corporation, partnership, limited partnership or limited liability

 

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company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Issue Date) or the laws of any other jurisdiction so long as a Guarantee provided by such surviving Person under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of the predecessor Guarantor or the laws of the jurisdiction of organization of such Restricted Subsidiary or Guarantor and (ii) is or becomes a Guarantor upon consummation of such merger, amalgamation or consolidation.

(d) For purposes of this Section 4.1, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Dutch Co-Issuer, which properties and assets, if held by the Dutch Co-Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Dutch Co-Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Dutch Co-Issuer.

ARTICLE V

Redemption of Notes

SECTION 5.1. Optional Redemption.

(a) The Notes may be redeemed, in whole at any time, or in part from time to time, subject to the conditions and at the redemption prices set forth in Paragraph 6 of the form of Note set forth in Exhibit A hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the redemption date.

(b) Any redemption of the Notes may, at the Issuers’ discretion, be subject to one or more conditions precedent. The redemption date of any redemption that is subject to satisfaction of one or more conditions precedent may, in the Issuers’ discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or such redemption may not occur and any notice with respect to such redemption may be modified or rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuers in their sole discretion) by the redemption date, or by the redemption date so delayed (which may exceed 60 days from the date of the redemption notice in such case). In addition, such notice of redemption may be extended if such conditions precedent have not been satisfied or waived by the Issuers, by providing notice to the Holders.

(c) The Issuers or their Affiliates may at any time and from time to time purchase Notes. Any such purchases may be made through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as the Issuers or any such Affiliates may determine.

SECTION 5.2. Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions. If the Issuers elect to redeem Notes pursuant to Section 5.1, the Issuers shall furnish to the Trustee, at least two Business Days for Global Notes and ten calendar days for Definitive Notes before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to Section 5.4, an Officer’s Certificate setting forth (a) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (b) the Redemption Date, (c) the principal amount of the Notes to be redeemed and (d) the redemption price. The Issuers may also include a request in such Officer’s Certificate that the Trustee give the notice of redemption in the Issuers’ name and at its expense and setting forth the information to be stated in such notice as provided in Section 5.4. The Issuers shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 5.3.

 

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SECTION 5.3. Selection by Trustee of Notes to Be Redeemed. If less than all of the Notes are to be redeemed at any time, the Trustee shall select Notes for redemption in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed (so long as the Trustee knows of such listing), or if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements and, in the case of the Global Notes, the procedures of the Depositary) in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof; provided that the selection of Notes for redemption shall not result in a Holder with a principal amount of Notes less than the minimum denomination of $200,000. If any Note is to be purchased or redeemed in part only, the notice of purchase or redemption relating to such Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note in accordance with Section 5.7. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption so long as the Issuers have deposited with the Trustee funds sufficient to pay the principal of and premium, if any, plus accrued and unpaid interest, if any, on the Notes to be redeemed.

The Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

SECTION 5.4. Notice of Redemption. The Issuers shall deliver to each Holder’s registered address or otherwise in accordance with the procedures of the Depositary, a notice of redemption to each Holder whose Notes are to be redeemed not less than ten nor more than 60 days prior to a date fixed for redemption (a “Redemption Date”); provided, however, that redemption notices may be delivered more than 60 days prior to a Redemption Date if (a) the notice is issued pursuant to Article VIII or (b) in the case of a redemption that is subject to one or more conditions precedent, the date of redemption is extended as permitted by this Indenture. At the Issuers’ written request, the Trustee may give notice of redemption in the Issuers’ names and at the Issuers’ expense.

All notices of redemption shall be prepared by the Issuers and shall state:

(a) the Redemption Date,

(b) the redemption price and the amount of accrued interest to, but excluding, the Redemption Date payable as provided in Section 5.6, if any,

(c) if less than all outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption,

(d) in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder shall receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,

 

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(e) that on the Redemption Date the redemption price (and accrued interest to, but excluding, the Redemption Date payable as provided in Section 5.6, if any) shall become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Issuers defaults in making the redemption payment, that interest on Notes called for redemption (or the portion thereof) shall cease to accrue on and after said date,

(f) the place or places where such Notes are to be surrendered for payment of the redemption price and accrued interest, if any,

(g) the name and address of the Paying Agent,

(h) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price,

(i) the CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes,

(j) the Section of this Indenture pursuant to which the Notes are to be redeemed, and

(k) any applicable conditions precedent.

At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ names and at their expense; provided, however, that the Issuers shall have delivered to the Trustee, at least two Business Days prior to when the notice of the redemption is to be given, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Such Officer’s Certificate shall state that all conditions precedent to the delivery of such notice have been complied with.

SECTION 5.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time, on any Redemption Date, the Issuers shall deposit with the Trustee or with a Paying Agent (or, if either Issuer is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the redemption price of, and accrued interest on, all the Notes which are to be redeemed on that date.

SECTION 5.6. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to, but excluding, the Redemption Date), and from and after such date (unless the Issuers shall default in the payment of the redemption price and accrued interest, if any, to, but excluding, the Redemption Date) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Issuers at the redemption price, together with accrued interest, if any, to, but excluding, the Redemption Date (subject to the rights of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date).

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.

 

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If a Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, shall be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no further interest shall be payable to Holders whose Notes shall be subject to redemption by the Issuers.

SECTION 5.7. Notes Redeemed in Part. Any Note which is to be redeemed only in part (pursuant to the provisions of this Article V) shall be surrendered at the office or agency of the Issuers maintained for such purpose pursuant to Section 2.3 (with, if the Issuers so require, due endorsement by, or a written instrument of transfer in form satisfactory to the Issuers duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Issuers shall execute, and the Trustee upon receipt of an Authentication Order shall authenticate and make available for delivery to the Holder of such Note at the expense of the Issuers, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered; provided that each such new Note shall be in a minimum principal amount of $200,000 and integral multiples of $1,000 in excess thereof.

SECTION 5.8. Offer to Repurchase. In the event that, pursuant to Section 3.7, the Issuers are required to commence an offer to all Holders to purchase the Notes (an “Offer to Repurchase”), they shall follow the procedures specified below:

(a) The Offer to Repurchase shall remain open for a period of at least ten days following its commencement and not more than 60 days, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than five Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuers shall apply all Excess Proceeds less any Total Leverage Excess Proceeds (the “Offer Amount”) to the purchase of Notes and such Pari Passu Indebtedness, if any (in each instance, on a pro rata basis, if applicable), or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Offer to Repurchase. Payment for any Notes so purchased shall be made pursuant to Section 3.1.

(b) If the Purchase Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Offer to Repurchase.

(c) Upon the commencement of an Offer to Repurchase, the Issuers shall send, by first class mail (or electronically for Global Notes), a notice to the Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Repurchase. The notice, which shall govern the terms of the Offer to Repurchase, shall state:

(i) that the Offer to Repurchase is being made pursuant to this Section 5.8 and Section 3.7, and the length of time the Offer to Repurchase shall remain open;

(ii) the Offer Amount, the purchase price and the Purchase Date;

(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;

(iv) that, unless the Issuers default in making such payment, any Note accepted for payment pursuant to the Offer to Repurchase shall cease to accrue interest after the Purchase Date;

 

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(v) that Holders electing to have a Note purchased pursuant to an Offer to Repurchase may elect to have Notes purchased in a minimum amount of $200,000 or an integral multiple of $1,000 in excess thereof only;

(vi) that Holders electing to have Notes purchased pursuant to any Offer to Repurchase shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to either Issuer, a Depositary, if appointed by either Issuer, or a Paying Agent at the address specified in the notice at least three Business Days before the Purchase Date;

(vii) that Holders shall be entitled to withdraw their election if either Issuer, the Depositary or the Paying Agent, as the case may be, receives, not later than on the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased;

(viii) that, if the aggregate principal amount of Notes and, if applicable, Pari Passu Indebtedness, if any, surrendered by Holders thereof exceeds the Offer Amount, the Trustee shall select the Notes and, if applicable, either Issuer shall select such Pari Passu Indebtedness to be purchased or prepaid, on a pro rata basis based on the principal amount of Notes and Pari Passu Indebtedness, if any, surrendered (with such adjustments as may be deemed appropriate by such Issuer so that only Notes in minimum denominations of $200,000, or integral multiples of $1,000 in excess thereof, shall be purchased); and

(ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

(d) On or before the Purchase Date, the Issuers shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Offer to Repurchase, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating that such Notes or portions thereof were accepted for payment by the Issuers in accordance with the terms of this Section 5.8. Either Issuer, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note, and the Trustee, upon written request from the Issuers, shall authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers shall publicly announce the results of the Offer to Repurchase on the Purchase Date.

 

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SECTION 5.9. Redemption for Taxation Reasons. The Issuers may redeem the Notes, at their option, in whole, but not in part, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to (but not including) the date fixed for redemption (a “Tax Redemption Date”) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date) and all Additional Amounts, if any, then due or that will become due on the Tax Redemption Date as a result of the redemption or otherwise if the Issuers determine in good faith that, as a result of:

(a) any change in, or amendment to, the law or treaties (or any regulations, protocols or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affecting taxation; or

(b) any change in official position regarding the application, administration or interpretation of such laws, treaties, regulations, protocols or rulings (including a holding, judgment or order by a government agency or court of competent jurisdiction) (each of the foregoing in clauses (a) and (b), a “Change in Tax Law”),

any Payor with respect to the Notes or a Guarantee is, or on the next date on which any amount would be payable in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to such Payor (including the appointment of a new Paying Agent or, where such action would be reasonable, payment through another Payor); provided that no Payor shall be required to take any measures that in the Issuers’ good-faith determination would result in the imposition on such Person of any material legal or regulatory burden or the incurrence by such Person of additional material costs, or would otherwise result in any material adverse consequences to such Person.

In the case of any Payor, the Change in Tax Law with respect to a given Relevant Taxing Jurisdiction, must become effective on or after the later of (i) the date of the Offering Memorandum or (ii) the date a jurisdiction becomes a Relevant Taxing Jurisdiction. Notwithstanding the foregoing, no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Payor would be obligated to make such payment of Additional Amounts. Prior to the publication, mailing or delivery of any notice of redemption of the Notes pursuant to the foregoing, the Issuers shall deliver to the Trustee (1) an Officer’s Certificate stating that they are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to their right so to redeem have been satisfied (including that the obligation to pay such Additional Amounts cannot be avoided by the Payor taking reasonable measures available to it) and (2) an opinion of an independent tax counsel of recognized standing to the effect that the Payor would be obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee shall accept such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it shall be conclusive and binding on the Holders.

The provisions of this Section 5.9 shall apply mutatis mutandis to the laws and official positions of any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. The provisions of this Section 5.9 shall survive any termination, defeasance or discharge of this Indenture.

 

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ARTICLE VI

Defaults and Remedies

SECTION 6.1. Events of Default. Each of the following is an “Event of Default”:

(i) a default in any payment of interest on any Note when due, continued for 30 days;

(ii) a default in the payment of principal or premium, if any, of any Note when due at its Stated Maturity, upon optional redemption, upon required purchase, upon acceleration or otherwise;

(iii) the failure by the Dutch Co-Issuer or any Restricted Subsidiary (including the U.S. Co-Issuer) to comply for 60 days after receipt of written notice referred to below with any of its obligations, covenants or agreements (other than a default pursuant to Sections 6.1(i) or 6.1(ii)) contained in the Notes or this Indenture; provided that in the case of a failure to comply with Section 3.2, such period of continuance of such default or breach shall be 120 days after written notice described in this clause (iii) has been given;

(iv) (x) the failure by the Dutch Co-Issuer or any Restricted Subsidiary (including the U.S. Co-Issuer) to pay the principal amount of any Indebtedness for borrowed money (other than Indebtedness for borrowed money owing to the Dutch Co-Issuer or a Restricted Subsidiary (including the U.S. Co-Issuer)) within any applicable grace period after final maturity or (y) the acceleration of any Indebtedness for borrowed money (other than Indebtedness for borrowed money owing to the Dutch Co-Issuer or a Restricted Subsidiary (including the U.S. Co-Issuer)) by the holders thereof because of a default, in each case of clauses (x) and (y), if the total amount of such Indebtedness unpaid at final maturity or accelerated exceeds $50.0 million or its foreign currency equivalent;

(v) the Dutch Co-Issuer or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(1) commences a voluntary case;

(2) consents to the entry of an order for relief against it in any voluntary case;

(3) consents to the appointment of a Custodian of it or for any substantial part of its property;

(4) makes a general assignment for the benefit of its creditors; or

(5) takes any action that is comparable to any of the actions described in clauses (1) through (4) of this clause (v);

(vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(1) is for relief against the Dutch Co-Issuer or any Significant Subsidiary in an involuntary case;

(2) appoints a Custodian of the Dutch Co-Issuer or any Significant Subsidiary or for any substantial part of its property; or

(3) orders the winding up or liquidation of the Dutch Co-Issuer or any Significant Subsidiary;

 

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or any similar relief is granted under any foreign laws (including any foreign Bankruptcy Law) and the order or decree remains unstayed and in effect for 60 days;

(vii) failure by the Dutch Co-Issuer or any Significant Subsidiary to pay final and non-appealable judgment or judgments aggregating in excess of $50.0 million or its foreign currency equivalent (net of any amounts which are covered by enforceable insurance policies issued by solvent insurance companies), which judgment or judgments are not discharged, waived or stayed for a period of 60 days after such judgment or judgments become final and, in the event such judgment or judgments are covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or judgments or decree which is not promptly stayed; or

(viii) the Guarantee of a Significant Subsidiary (other than the U.S. Co-Issuer) ceases to be in full force and effect (except as contemplated by the terms thereof or of this Indenture), or any Guarantor that is a Significant Subsidiary denies in writing that it has any further liability under its Guarantee or gives written notice to such effect, other than by reason of the termination or discharge of this Indenture or the release of any such Guarantee in accordance with this Indenture and such Default continues for ten days.

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

However, a default under Section 6.1(iii) shall not constitute an Event of Default until the Trustee or the Holders of at least 30% in principal amount of outstanding Notes notify in writing the Issuers of the default and such default is not cured within the time specified in Section 6.1(iii) after receipt of such notice.

SECTION 6.2. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(v) or (vi) above with respect to either Issuer) occurs and is continuing, the Trustee or the Holders of at least 30% in principal amount of outstanding Notes by written notice to the Issuers (and to the Trustee, if given by the Holders) may declare the principal of, premium, if any, and accrued but unpaid interest on, all the Notes to be due and payable. Upon such a declaration, such principal, premium, if any, and interest shall be due and payable immediately. If an Event of Default specified in Section 6.1(v) or (vi) occurs with respect to either Issuer, the principal of, premium, if any, and interest on all the Notes shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture (including sums owed to the Trustee and its agents and counsel) and the Guarantees.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

 

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SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the then-outstanding Notes by written notice to the Trustee and the Issuers may, on behalf of the Holders of all of the Notes, waive, rescind or cancel any declaration of an existing or past Default or Event of Default and its consequences under this Indenture if such waiver, rescission or cancellation would not conflict with any judgment or decree, except a continuing Default or Event of Default in the payment of interest or premium on, or the principal of, the Notes (other than such nonpayment of principal or interest that has become due as a result of such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

In the event of any Event of Default specified in Section 6.1(iv), such Event of Default and all consequences thereof shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if prior to 20 days after such Event of Default arose, the Issuers deliver an Officer’s Certificate to the Trustee stating that (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged or (y) the requisite amount of Holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has otherwise been cured.

SECTION 6.5. Control by Majority. The Holders of a majority in principal amount of the then-outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability unless such Holders have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. Prior to taking any action under this Indenture, the Trustee shall be entitled to security or indemnification satisfactory to it in its sole discretion against all losses, liabilities and expenses that may be caused by taking or not taking such action.

SECTION 6.6. Limitation on Suits. In case an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

(i) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(ii) Holders of at least 30% of the aggregate principal amount of the outstanding Notes have requested in writing the Trustee to pursue the remedy;

(iii) such Holders have offered the Trustee security or indemnity reasonably satisfactory to it in respect of any loss, liability or expense;

(iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a written direction inconsistent with such request within such 60-day period.

 

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SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium, if any, or interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.8. Collection Suit by Trustee. If an Event of Default specified in Sections 6.1(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.6.

SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Dutch Co-Issuer, its Subsidiaries (including the U.S. Co-Issuer) or their respective creditors or properties and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders (pursuant to the written direction of Holders of a majority in principal amount of the then-outstanding Notes) in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in such proceeding.

SECTION 6.10. Priorities. The Trustee shall pay out any money or property received by it in the following order:

First: to the Trustee for amounts due under Section 7.6;

Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

Third: to the Issuers or, to the extent the Trustee receives any amount for any Guarantor, to such Guarantor as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. At least 15 days before such record date, the Issuers (or the Trustee) shall deliver to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.

 

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ARTICLE VII

Trustee

SECTION 7.1. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall, in the exercise of its rights and powers under this Indenture, use the same degree of care and skill in its exercise of such rights and powers as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs, subject to the provisions of clause (h) below.

(b) Except during the continuance of an Event of Default of which a Trust Officer has actual knowledge, the Trustee:

(i) and the Agents undertake to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Agents; and

(ii) in the absence of gross negligence or bad faith on its part, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee under this Indenture, the Notes and the Guarantees, as applicable. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Notes and the Guarantees as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i) this Section 7.1(c) does not limit the effect of Section 7.1(b);

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer or Trust Officers unless it is proved in a final non-appealable decision of a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.

(d) The Trustee and the Agents shall not be liable for interest on any money received by it except as the Trustee and the Agents may agree in writing with the Issuers.

(e) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(f) No provision of this Indenture, the Notes or the Guarantees shall require the Trustee or an Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

 

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(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1.

(h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee, security and indemnity satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction.

SECTION 7.2. Rights of Trustee.

(a) The Trustee and the Agents may conclusively rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or any other paper or document believed by it to be genuine and to have been signed or presented by the proper Person or Persons. The Trustee and the Agents need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting it may require an Officer’s Certificate or an Opinion of Counsel or both, except that (x) no Officer’s Certificate or Opinion of Counsel will be required in connection with the original issuance of the Initial Notes on the date hereof and (y) no Opinion of Counsel will be required in connection with the execution of any amendment or supplement adding a new Guarantor under this Indenture or the release of a Guarantor pursuant to Section 10.2(b) hereof. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate or Opinion of Counsel.

(c) The Trustee may act through its attorneys, custodians, nominees and agents and shall not be responsible for the misconduct or negligence of or for the supervision of any agent, custodians, nominees or attorney appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct or negligence as determined in a final non-appealable decision of a court of competent jurisdiction.

(e) The Trustee may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Notes and the Guarantees shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder or under the Notes and the Guarantees in good faith and in accordance with the advice or opinion of such counsel.

(f) The Trustee and the Agents shall not be bound to make any investigation into any statement, warranty or representation, or the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or other paper or document made or in connection with this Indenture; moreover, the Trustee and the Agents shall not be bound to make any investigation into (i) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (ii) the occurrence of any default, or the validity, enforceability, effectiveness or genuineness of this Indenture or any other agreement, instrument or document or (iii) the

 

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facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other evidence of indebtedness or other paper or document, but the Trustee or an Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee or an Agent, as applicable, shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuers, personally or by agent or attorney and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(g) The Trustee shall not be deemed to have knowledge of any Default or Event of Default except any Default or Event of Default of which a Trust Officer shall have (x) received written notification from the Issuers or a Holder at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture or (y) obtained “actual knowledge.” “Actual knowledge” shall mean the actual fact or statement of knowing by a Trust Officer without independent investigation with respect thereto.

(h) In no event shall the Trustee or an Agent be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee or Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent (including the Agents), custodian and other Person employed to act hereunder.

(j) The Trustee may request that the Issuers deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(k) The Trustee shall not have any duty (A) to see to any recording, filing, or depositing of this Indenture or any agreement referred to herein, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, re-filing or redepositing of any thereof or (B) to see to any insurance.

(l) The right of the Trustee or an Agent to perform any discretionary act enumerated in this Indenture shall not be construed as a duty.

SECTION 7.3. Individual Rights of Trustee. Subject to the TIA, the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuers, the Guarantors or their Affiliates with the same rights it would have if it were not the Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Section 7.9. In addition, the Trustee shall be permitted to engage in transactions with the Issuers; provided, however, that if the Trustee acquires any conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the SEC for permission to continue acting as Trustee or (iii) resign.

SECTION 7.4. Disclaimer. Neither the Trustee nor any Agent shall be responsible for and none of them makes any representation as to the validity or adequacy of this Indenture, the Notes or the Guarantees, neither of them shall be accountable for the Issuers’ use of the Notes or the proceeds from the Notes, and neither of them shall be responsible for any statement of the Issuers in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication or for the use or application of any funds received by any Paying Agent other than the Trustee.

 

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SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing and is actually known to the Trustee, the Trustee shall deliver to each Holder notice of the Default within 90 days after it is known to the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders.

SECTION 7.6. Compensation and Indemnity. The Issuers shall pay to the Trustee and the Agents from time to time such compensation for their services as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee and the Agents upon request for all reasonable out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Holders and reasonable costs of counsel, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Issuers shall indemnify the Trustee or any predecessor Trustee in each of its capacities hereunder (including as Paying Agent and Registrar), and each of their officers, directors, employees, counsel and agents, against any and all loss, liability or expense (including, but not limited to, reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of their duties hereunder and under the Notes and the Guarantees, including the costs and expenses of enforcing this Indenture (including this Section 7.6), the Notes and the Guarantees and of defending itself against any claims (whether asserted by any Holder, the Issuers or otherwise). The Trustee and the Agents shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee or an Agent to so notify the Issuers shall not relieve the Issuers of their obligations hereunder. The Issuers shall defend the claim and the Trustee and the Agents may have separate counsel and the Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee or an Agent as a result of its own willful misconduct, negligence or bad faith.

To secure the Issuers’ payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes. The right of the Trustee to receive payment of any amounts due under this Section 7.6 shall not be subordinate to any other liability or indebtedness of the Issuers.

The Issuers’ obligations pursuant to this Section and any lien arising hereunder shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee or an Agent. When the Trustee or an Agent incurs expenses after the occurrence of a Default specified in Sections 6.1(v) or (vi) with respect to the Issuers, the expenses are intended to constitute expenses of administration under any Bankruptcy Law.

Pursuant to Section 10.1, the obligations of the Issuers hereunder are jointly and severally guaranteed by the Guarantors.

SECTION 7.7. Replacement of Trustee. The Trustee may resign at any time by so notifying the Issuers. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Issuers and the Trustee in writing and may appoint a successor Trustee. The Issuers shall remove the Trustee if:

(i) the Trustee fails to comply with Section 7.9;

 

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(ii) the Trustee is adjudged bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Trustee or its property; or

(iv) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed by the Issuers or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Issuers shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.6. All costs reasonably incurred in connection with any resignation or removal hereunder shall be borne by the Issuers.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Notes may petition, at the Issuers’ expense, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.9, unless the Trustee’s duty to resign is stayed, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.7, the Issuers’ obligations under Section 7.6 shall continue for the benefit of the retiring Trustee.

SECTION 7.8. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture; provided that the certificate of the Trustee shall have.

SECTION 7.9. Eligibility; Disqualification. The Trustee shall have a combined capital and surplus of at least $50.0 million as set forth in its most recent filed annual report of condition.

 

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This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

SECTION 7.10. Limitation on Duty of Trustee. The Trustee shall not have any duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture, the Notes and the Guarantees by the Issuers, the Guarantors or any other Person.

SECTION 7.11. Preferential Collection of Claims Against the Issuer. The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

SECTION 7.12. Reports by Trustee to Holders of the Notes. Within 60 days after each February 1, beginning with February 1, 2018, the Trustee shall send to the Holders a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA § 313(b). The Trustee shall also transmit all reports as required by TIA § 313(c).

The Issuers shall promptly notify the Trustee in writing when any Notes are listed on any stock exchange and of any delisting thereof.

ARTICLE VIII

Discharge of Indenture; Defeasance

SECTION 8.1. Discharge of Liability on Notes; Defeasance.

(a) This Indenture shall be discharged and shall cease to be of further effect and any collateral then securing the Notes shall be released (except as to surviving rights of registration of transfer or exchange of Notes, as expressly provided for in this Indenture) as to all outstanding Notes when:

(1) either (i) all the Notes theretofore authenticated and delivered (other than Notes pursuant to Section 2.7 which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from such trust) have been delivered to the Trustee for cancellation or (ii) all of the Notes not previously delivered to the Trustee for cancellation (a) have become due and payable, (b) will become due and payable at their Stated Maturity within one year or (c) have been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of a full redemption by the Trustee in the name, and at the expense, of the Issuers, and the Issuers or any Guarantor have deposited or caused to be deposited with the Trustee or the Paying Agent in a manner that is not revocable by the Dutch Co-Issuer or any of its Affiliates cash in U.S. dollars or U.S. Government Obligations or a combination thereof in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of maturity or redemption, as the case may be, together with irrevocable instructions from the Issuers directing the Trustee or the Paying Agent to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(2) the Issuers and/or the Guarantors have paid all other sums then due and payable under this Indenture; and

 

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(3) the Issuers have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

(b) Subject to Sections 8.1(c) and 8.2, the Issuers at any time may terminate (i) all their obligations under the Notes and this Indenture (with respect to such Notes) and have each Guarantor’s obligation discharged with respect to its Guarantee (“legal defeasance option”) and cure all then-existing Events of Default or (ii) its obligations under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.14 and the operation of Section 4.1 (other than Sections 4.1(a)(i), (ii) and (vi) and Section 4.1(b)(i)(D)) and Sections 6.1(iii) (with respect to any Default under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.14), 6.1(iv), 6.1(v) (with respect to Significant Subsidiaries (other than the U.S. Co-Issuer) of the Dutch Co-Issuer only), 6.1(vi) (with respect to Significant Subsidiaries (other than the U.S. Co-Issuer) of the Dutch Co-Issuer only), 6.1(vii) (with respect to Significant Subsidiaries (other than the U.S. Co-Issuer) of the Dutch Co-Issuer only) and 6.1(viii) (“covenant defeasance option”). The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of their covenant defeasance option. In the event that the Issuers exercise their legal defeasance option or their covenant defeasance option with respect to the Notes, the obligations of each Guarantor under its Guarantee of such Notes shall be terminated simultaneously with the termination of the applicable obligations of the Issuers being terminated.

If the Issuers exercise their legal defeasance option, payment of the Notes so defeased may not be accelerated because of an Event of Default with respect thereto. If the Issuers exercise their covenant defeasance option, payment of the Notes so defeased may not be accelerated because of an Event of Default specified in Section 6.1(iii) (with respect to any Default under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.14), 6.1(iv), 6.1(v) (with respect to Significant Subsidiaries (other than the U.S. Co-Issuer) of the Dutch Co-Issuer only), 6.1(vi) (with respect to Significant Subsidiaries (other than the U.S. Co-Issuer) of the Dutch Co-Issuer only), 6.1(vii) (with respect to Significant Subsidiaries (other than the U.S. Co-Issuer) of the Dutch Co-Issuer only) or 6.1(viii).

Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuers terminate.

(c) Notwithstanding clauses (a) and (b) above, the Issuers’ obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.6, and 7.7 and in this Article VIII shall survive until the Notes have been paid in full. Thereafter, the Issuers’ obligations in Sections 7.6, 8.5 and 8.6 shall survive such satisfaction and discharge.

SECTION 8.2. Conditions to Defeasance.

(a) The Issuers may exercise their legal defeasance option or their covenant defeasance option only if:

(i) the Issuers irrevocably deposit or cause to be deposited with the Trustee or Paying Agent cash in U.S. dollars or U.S. Government Obligations or a combination thereof in an amount that, in the opinion of a nationally recognized certified public accounting firm, is sufficient to pay the principal, premium (if any) and interest on the Notes to redemption or maturity, as the case may be; provided that if such redemption is made pursuant to Paragraph 6(b) of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note), then (x) the amount of money or U.S. Government Obligations that the Issuers must irrevocably deposit or cause to be deposited will be determined using an assumed Applicable Premium calculated as of the date of such deposit, as calculated by the Issuers in good faith, and (y) the Issuers must irrevocably deposit or cause to be deposited additional money in trust on the redemption date as necessary to pay the Applicable Premium as determined on such date;

 

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(ii) the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment shall provide cash at such times and in such amounts as shall be sufficient to pay principal, premium, if any, and interest when due on all the Notes to maturity or redemption, as the case may be;

(iii) 91 days pass after the deposit is made and during the 91-day period no Default specified in Sections 6.1(v) or (vi) with respect to the Issuers occurs which is continuing at the end of the period;

(iv) the deposit does not constitute a default under any other agreement binding on the Issuers;

(v) the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment advisor under the Investment Advisors Act of 1940;

(vi) the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the Holders shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of the legal defeasance option only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or change in applicable U.S. federal income tax law after the Issue Date); and

(vii) the Issuers deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes to be so defeased and discharged as contemplated by this Article VIII have been complied with.

Before or after a deposit, the Issuers may make arrangements satisfactory to the Trustee for the redemption of such Notes at a future date in accordance with Article V.

SECTION 8.3. Application of Trust Money. The Trustee or Paying Agent, as applicable, shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.

SECTION 8.4. Repayment to Issuers. Anything herein to the contrary notwithstanding, the Trustee or the Paying Agent, as applicable, shall deliver or pay to the Issuers from time to time upon Company Order any money or U.S. Government Obligations held by it as provided in this Article VIII which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee or Paying Agent, as applicable, are in excess of the amount thereof which would then be required to be deposited to effect legal defeasance option or covenant defeasance option, as applicable; provided that neither the Trustee nor the Paying Agent shall be required to liquidate any U.S. Government Obligations in order to comply with the provisions of this Section 8.4.

 

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Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuers upon written request any money held by them for the payment of principal of or interest on the Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Issuers for payment as general creditors.

SECTION 8.5. Indemnity for U.S. Government Obligations. The Issuers shall pay and shall indemnify the Trustee and the Paying Agent against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

SECTION 8.6. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Issuers and each Guarantor under this Indenture, the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or the Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if either of the Issuers or any of the Guarantors has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Issuers or any Guarantor, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or the Paying Agent.

ARTICLE IX

Amendments

SECTION 9.1. Without Consent of Holders. Notwithstanding Section 9.2 hereof, this Indenture, the Notes and Guarantees may be amended or supplemented by the Issuers, any Guarantor (with respect to this Indenture or a Guarantee to which it is a party) and the Trustee without notice to or consent of any Holder:

(i) to cure any ambiguity, omission, mistake, defect or inconsistency identified in an Officer’s Certificate delivered to the Trustee;

(ii) to conform the text of this Indenture (including any supplemental indenture or other instrument pursuant to which Additional Notes are issued), the Guarantees or the Notes to the “Description of notes” in the Offering Memorandum or, with respect to any Additional Notes and any supplemental indenture or other instrument pursuant to which such Additional Notes are issued, to the “Description of notes” relating to the issuance of such Additional Notes solely to the extent that such “Description of notes” provides for terms of such Additional Notes that differ from the terms of the Initial Notes, as contemplated by Section 2.2;

(iii) to comply with Section 4.1;

(iv) to provide for the assumption by a successor Person of the obligations of an Issuer or any Guarantor under this Indenture and the Notes or Guarantee, as the case may be;

 

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(v) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code;

(vi) (A) to add or release Guarantees in accordance with the terms of this Indenture with respect to the Notes or (B) to add additional co-issuers of the Notes to the extent it does not result in adverse tax consequences to the Holders;

(vii) to secure the Notes;

(viii) to add to the covenants of the Issuers for the benefit of the Holders or to surrender any right or power herein conferred upon the Issuers or any Guarantor;

(ix) to make any change that does not adversely affect the rights of any Holder in any material respect upon delivery to the Trustee of an Officer’s Certificate certifying the absence of such adverse effect;

(x) to comply with any requirement of the SEC in connection with any qualification of this Indenture under the TIA;

(xi) to make any amendment to the provisions of this Indenture relating to the transfer and legending of the Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;

(xii) to evidence and provide for the acceptance of appointment by a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture; or

(xiii) to provide for or confirm the issuance of Additional Notes in accordance with this Indenture.

SECTION 9.2. With Consent of Holders.

(a) This Indenture, the Notes and the Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes) and any existing or past Default or compliance with any provisions of such documents may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes); provided that (x) if any such amendment or waiver will only affect one series of Notes (or less than all series of Notes) then outstanding under this Indenture, then only the consent of the holders of at least a majority in principal amount of the Notes of such series then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such series of the Notes) shall be required and (y) if any such amendment or waiver by its terms will affect a series of Notes in a manner that is different from and materially adverse relative to the manner in which such amendment or waiver affects other series of Notes, then the consent of the holders of at least a majority in principal amount of the Notes of such series then outstanding (including, without limitation, consents obtained in connection with a purchase of, or

 

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tender offer or exchange offer for, such series of the Notes) shall be required. However, without the consent of each Holder of a Note affected (including, for the avoidance of doubt, any Notes held by Affiliates), no amendment, supplement or waiver may (with respect to any Notes held by a non-consenting Holder):

(i) reduce the percentage of the aggregate principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(ii) reduce the rate of or extend the time for payment of interest or Additional Amounts, if any, on any Note;

(iii) reduce the principal of or change the Stated Maturity of any Note;

(iv) waive a Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes with respect to a nonpayment default by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration;

(v) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under Section 5.1 or Paragraph 6 of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note) (other than, in each case, any change to the notice periods with respect to such redemption) or Section 5.9 or Paragraph 7 of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note);

(vi) make any Note payable in money other than that stated in such Note;

(vii) impair the right of any Holder to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

(viii) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes;

(ix) make the Notes or any Guarantee subordinated in right of payment to any other obligations; or

(x) make any change in the amendment or waiver provisions of this Indenture that require each Holder’s consent as described in clauses (i) through (ix) above.

(b) The consent of the Holders shall not be necessary under this Section 9.2 to approve the particular form of any proposed amendment. It shall be sufficient if such consent approves the substance of the proposed amendment. For the avoidance of doubt, no amendment to, or deletion of, any of the covenants contained in Article III of this Indenture (other than Section 3.1) shall be deemed to impair or affect any rights of Holders of the Notes to receive payment of principal of, or premium, if any, or interest in respect of the Notes.

(c) Promptly after an amendment under this Section 9.2 becomes effective, the Issuers shall (or shall cause the Trustee, at the expense of and at the written request of the Issuers, to) mail or electronically deliver to the Holders of Notes affected thereby a notice briefly describing such amendment. The failure of the Issuers to deliver such notice, or any defect therein, shall not in any way impair or affect the validity of an amendment under this Section 9.2.

 

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SECTION 9.3. Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. After an amendment or waiver becomes effective, it shall bind every Holder unless it makes a change described in clauses (i) through (x) of Section 9.2(a), in which case the amendment or waiver or other action shall bind each Holder who has consented to it and every subsequent Holder of a Note that evidences the same debt as the consenting Holder’s Notes. Any amendment, other than an amendment that in the sole determination of the Trustee adversely affects the rights, duties, liabilities or immunities of the Trustee or a waiver, in each case, made pursuant to Section 9.2 shall become effective upon receipt by the Trustee of the requisite number of written consents.

The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to take any such action, whether or not such Persons continue to be Holders after such record date.

SECTION 9.4. Notation on or Exchange of Notes. If an amendment changes the terms of a Note, the Trustee, at the request of the Issuers, may require the Holder to deliver it to the Trustee. The Trustee, at the request of the Issuers, may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if either Issuer so determines, such Issuer in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

SECTION 9.5. Trustee To Sign Amendments. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not, in the sole determination of the Trustee, adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing any amendment, supplement or waiver pursuant to this Article IX, the Trustee shall be entitled to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by or complies with this Indenture and that all conditions precedent to such amendment required by this Indenture have been complied with and, in the case of the Opinion of Counsel, that such amendment, supplement or waiver is the legally valid and binding obligation of the Issuers, enforceable against the Issuers in accordance with its terms, subject to customary exceptions. Notwithstanding the foregoing, no Opinion of Counsel will be required for the Trustee to execute any amendment or supplement adding a new Guarantor under this Indenture or releasing a Guarantee by a Guarantor pursuant to Section 10.2(b).

 

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ARTICLE X

Guarantees

SECTION 10.1. Guarantees.

(a) Subject to the provisions of this Article X, each Guarantor hereby jointly and severally, irrevocably, fully and unconditionally guarantees, as guarantor and not as a surety, with each other Guarantor, to each Holder, to the extent lawful, and the Trustee, the full and punctual payment and performance when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Notes and all other Obligations of the Issuers under this Indenture and the Notes (including, without limitation, interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Issuers or any Guarantor (or that would have accrued but for the filing of such petition or the commencement of such proceeding) whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and the obligations under Section 7.6) (all the foregoing being hereinafter collectively called the “Guarantor Obligations”). Each Guarantor agrees (to the extent lawful) that the Guarantor Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it shall remain bound under this Article X notwithstanding any extension or renewal of any Guarantor Obligation.

(b) Each Guarantor waives (to the extent lawful) presentation to, demand of, payment from and protest to the Issuers of any of the Guarantor Obligations and also waives (to the extent lawful) notice of protest for nonpayment. Each Guarantor waives (to the extent lawful) notice of any default under the Notes or the Guarantor Obligations.

(c) Each Guarantor further agrees that its Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guarantor Obligations.

(d) Except as set forth in Section 10.2 and Article VIII, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guarantor Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not (to the extent lawful) be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantor Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not (to the extent lawful) be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Issuers or any other Person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security held by any Holder for the Guarantor Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Guarantor; (f) any change in the ownership of the Issuers or of any other Guarantor; (g) any default, failure or delay, willful or otherwise, in the performance of the Guarantor Obligations; or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

(e) Each Guarantor agrees that its Guarantee herein shall remain in full force and effect until payment in full of all the Guarantor Obligations or such Guarantor is released from its Guarantee in compliance with Section 4.1, Section 10.2 and Article VIII. Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium, if any, or interest on any of the Guarantor Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Issuers or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuers to pay any of the Guarantor Obligations when and as the same shall become due, whether at maturity, by acceleration,

 

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by redemption or otherwise, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid amount of such Guarantor Obligations then due and owing and (ii) accrued and unpaid interest on such Guarantor Obligations then due and owing (but only to the extent not prohibited by law) (including interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Issuers or any Guarantor (or that would have accrued but for the filing of such petitition or the commencement of such proceeding) whether or not a claim for post-filing or post-petition interest is allowed in such proceeding).

(g) Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guarantor Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guarantor Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guarantor Obligations, such Guarantor Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Guarantee.

(h) Each Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Section.

(i) Each Guarantor acknowledges and agrees that the Guarantee of such Guarantor will be a general senior obligation of such Guarantor and will rank senior in right of payment to all future obligations of such Guarantor that are, by their terms, expressly subordinated in right of payment to such Guarantee and equal in right of payment with all existing and future obligations of such Guarantor that are not so subordinated.

(j) Neither the Issuers nor the Guarantors shall be required to make a notation on the Notes to reflect any Guarantee or any release, termination or discharge thereof and any such notation shall not be a condition to the validity of any Guarantee.

SECTION 10.2. Limitation on Liability; Termination, Release and Discharge.

(a) Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Guarantor hereunder (other than any Guarantor incorporated or formed in Canada) shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law or the laws of the jurisdiction of organization of such Guarantor and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally. Other than with respect to fraudulent transfer or conveyance and voidable preference, this Section 10.2(a) shall not apply to any Guarantor that is organized in a jurisdiction that is specifically addressed in Sections 10.7 through 10.14 below.

 

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(b) A Guarantee by a Guarantor shall be automatically and unconditionally released and discharged, and each Guarantor and its obligations under the Guarantee and this Indenture shall be released and discharged upon:

(1) the sale, exchange, disposition or other transfer (including through merger, consolidation or dissolution) of (x) the Capital Stock of such Guarantor, if after such transaction the Guarantor is no longer a Restricted Subsidiary, or (y) all or substantially all the assets of such Guarantor if such sale, exchange, disposition or other transfer (including through merger, consolidation or dissolution) is made in compliance with this Indenture so long as such Guarantor is also released from its guarantee of the Senior Credit Agreement and Certain Capital Markets Debt (if applicable);

(2) the Dutch Co-Issuer designating such Guarantor to be an Unrestricted Subsidiary in accordance with the provisions set forth in Section 3.4, Section 3.14 and the definition of “Unrestricted Subsidiary”;

(3) in the case of any Restricted Subsidiary that after the Issue Date is required to guarantee the Notes pursuant to Section 3.11, the release or discharge of the guarantee by such Restricted Subsidiary of Indebtedness of the Dutch Co-Issuer or any Restricted Subsidiary of the Dutch Co-Issuer or the repayment of the Indebtedness or Disqualified Stock, in each case, that resulted in the obligation to guarantee the Notes (and the release, discharge or repayment of any other Indebtedness and Disqualified Stock that would require such Restricted Subsidiary to guarantee the Notes pursuant to Section 3.11), except if a release, discharge or repayment is by or as a result of payment in connection with the enforcement of remedies under such other guarantee of Indebtedness;

(4) the Issuers’ exercise of their legal defeasance option or covenant defeasance option as described under Article VIII or if this Indenture is discharged (including through redemption or repurchase of all the Notes as a result of satisfaction and discharge or otherwise) in accordance with the terms of this Indenture;

(5) the release or discharge of the guarantee by, or direct obligation of, such Guarantor of the Obligations under the Senior Credit Agreement, except a discharge or release by or as a result of payment in connection with the enforcement of remedies under such guarantee or direct obligation; or

(6) upon the occurrence of a Covenant Suspension Event pursuant to Section 3.15.

A Guarantee also will be automatically released upon the applicable Subsidiary ceasing to be a Subsidiary as a result of any foreclosure of any pledge or security interest securing the Senior Credit Agreement or other exercise of remedies in respect thereof.

(c) If any Guarantor is released from its Guarantee, any of its Subsidiaries that are Guarantors shall be released from their Guarantees, if any.

(d) In the case of Section 10.2(b), to the extent the Issuers request evidence of the release of a Guarantor through a supplemental indenture or amendment to this Indenture or other documentation, the Issuers shall deliver to the Trustee an Officer’s Certificate stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.

(e) The release of a Guarantor from its Guarantee and its obligations under this Indenture in accordance with the provisions of this Section 10.2 shall not preclude the future applications of Section 3.11 to such Person.

 

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SECTION 10.3. Right of Contribution. Each Guarantor hereby agrees that to the extent that any such Guarantor shall have paid more than its proportionate share of any payment made on the obligations under its Guarantee, such Guarantor shall be entitled to seek and receive contribution from and against the Issuers or any other Guarantor that has not paid its proportionate share of such payment. The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee and the Holders and each Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Guarantor hereunder.

SECTION 10.4. No Subrogation. Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Issuers or any other Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guarantor Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Issuers or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Issuers on account of the Guarantor Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Guarantor Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Guarantor Obligations.

SECTION 10.5. [Reserved].

SECTION 10.6. Execution and Delivery.

(a) To evidence its Guarantee set forth in Section 10.1, each Guarantor hereby agrees that this Indenture shall be executed on behalf of such Guarantor by an Officer or person holding an equivalent title.

(b) Each Guarantor hereby agrees that its Guarantee set forth in Section 10.1 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

(c) If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Guarantees shall be valid nevertheless.

(d) The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

(e) If required by Section 3.11, the Issuers shall cause any newly created or acquired Restricted Subsidiary to comply with the provisions of Section 3.11 and this Article X, to the extent applicable.

SECTION 10.7. Guarantors Incorporated or Organized in The Netherlands. No Guarantee of any Guarantor organized in the Netherlands shall apply to any liability to the extent that it would result in such Guarantee constituting unlawful financial assistance within the meaning of section 2:98c of the Dutch Civil Code (Burgerlijk Wetbock).

 

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SECTION 10.8. Guarantors Incorporated or Organized in Sweden. Notwithstanding the other provisions of this Indenture, the obligations and liabilities (including obligations to indemnify and/or any obligation to pay any costs or expenses of the Issuers or their subsidiaries (other than a Wholly Owned Subsidiary of any Guarantor incorporated under laws of Sweden) (together the “Indemnified Obligations”)) of each Guarantor incorporated under the laws of Sweden incurred under this Indenture shall be limited if required by the provisions of the Swedish Companies Act (Sw. Aktiebolagslagen (2005:551)) (the “Swedish Companies Act”) regulating unlawful distribution of assets within the meaning of Chapter 17, Sections 1-4 (or its equivalent from time to time) of the Swedish Companies Act, and it is understood that the obligations and/or liabilities of each Guarantor incorporated under the laws of Sweden to discharge any Indemnified Obligations only applies to the extent permitted by the Swedish Companies Act.

SECTION 10.9. Guarantors Incorporated or Organized in Poland. Notwithstanding anything to the contrary contained in this Indenture or other documents relating to this Indenture and the Notes, the obligations and liabilities of any Guarantor incorporated in Poland (each a “Polish Guarantor”) under this Article X shall, in all circumstances, not include any liability to the extent it would result in its insolvency within the meaning of article 11 section 2 of the Polish Bankruptcy Law of 28 February 2003 (Journal of Laws of 2015, item 233, as amended) (“Polish Bankruptcy Law”). The limitations stipulated in this Section 10.9 shall, however, not apply, if at least one of the following circumstances occurs:

(i) following an Event of Default, the Trustee or the Holders of at least 30% in principal amount of outstanding Notes deliver a notice to the Issuers (and to the Trustee, if given by the Holders) under Section 6.2 (Acceleration), irrespective of whether it occurred before or after the Polish Guarantor has become insolvent within the meaning of article 11 section 2 of the Polish Bankruptcy Law;

(ii) liabilities of the Polish Guarantor (other than those under this Indenture) result in its insolvency within the meaning of article 11 section 2 of the Polish Bankruptcy Law or the Polish Guarantor becomes insolvent within the meaning of article 11 section 1 of the Polish Bankruptcy Law.

In addition, (i) the obligations and liabilities of any Polish Guarantor incorporated as a limited liability company (spółka z ograniczoną odpowiedzialnością) under this Article X shall be limited to the extent required to ensure that any payment under this Article X shall not result in the breach of article 189 of the Polish Commercial Companies Code (Journal of Laws of 2013, item 1030, as amended) (the “Polish Commercial Companies Code”) and (ii) the obligations and liabilities of any Polish Guarantor incorporated as a joint-stock company (spółka akcyjna) under this Article X shall be limited to the extent required to ensure that any payment under this Article X shall not result in the breach of article 344 section 1 nor article 345 of the Polish Commercial Companies Code.

SECTION 10.10. Guarantors Incorporated or Organized in Lithuania. The obligations and liabilities of and the Guarantee issued by a Guarantor incorporated in Lithuania shall be limited at, any time, if required and to the extent that this Guarantee would otherwise be illegal or constitute unlawful financial assistance within the meaning of Article 452 Paragraph 1 of the Law on Companies of the Republic of Lithuania or prejudice any limitations required under applicable mandatory provisions of Lithuanian law.

SECTION 10.11. Guarantors Incorporated or Organized in Mexico.

(a) Each Guarantor incorporated and organized under the laws of Mexico (each a “Mexican Guarantor”) hereby waives (1) any requirement to exhaust any right or take any action against any other Person or any collateral, (2) any right of excussion, right to the benefit of discussion, and (3) right to the benefit of partition, or any other any right to require that an action be brought against any other Person, Issuer or Guarantor.

 

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(b) Notwithstanding any provisions to the contrary contained in this Article X, the Guarantee obligations and liabilities hereunder of a Mexican Guarantor shall be limited by the following provisions and laws:

(i) Enforcement of the Guarantee of a Mexican Guarantor provided under this Indenture may be limited by bankruptcy, concurso mercantil, insolvency, liquidation, reorganization, moratorium, labor, tax and other laws of general application relating to or affecting the rights of creditors. In accordance with the Mexican Bankruptcy Law (Ley de Concursos Mercantiles), any provision in an agreement which makes the obligations of a party more onerous due to the fact of a filing for insolvency or bankruptcy may be considered void.

(ii) In the event that proceedings are brought in Mexico seeking performance of payment obligations denominated in a currency other than Mexican Pesos, pursuant to Article 8 of the Ley Monetaria de los Estados Unidos Mexicanos (Mexican Monetary Law), a Mexican Guarantor may discharge its obligations by paying any sum due in Mexican Pesos at the rate of exchange prevailing in Mexico on the date when payment is made.

(iii) Any judgment obtained in any competent court outside of Mexico, arising out of or in connection with this Indenture or the Notes, would be enforceable in Mexico against a Mexican Guarantor pursuant to Article 1347A of the Commerce Code of Mexico, which provides, inter alia, that any judgment rendered outside Mexico may be enforced by Mexican courts, provided that:

 

  a)

such judgment is obtained in compliance with the legal requirements of the jurisdiction of the court rendering such judgment, including such court having jurisdiction and in compliance with all legal requirements of this Indenture and/or the Notes, as the case may be;

 

  b)

such judgment is rendered in an in personam action (acción personal) (as opposed to an in rem action (acción real));

 

  c)

process in the action has been served personally to the defendant;

 

  d)

such judgment does not contravene public policy of Mexico, international treaties or agreements binding upon Mexico or generally accepted principles of international law;

 

  e)

the applicable procedure under the laws of Mexico with respect to the enforcement of foreign judgments (including issuance of a letter rogatory by the competent authority of such jurisdiction requesting enforcement of such judgment and the certification of such judgment as authentic by the corresponding authorities of such jurisdiction in accordance with the laws thereof) is complied with;

 

  f)

the action in respect of which such judgment is rendered is not the subject matter of a lawsuit among the same parties pending before a Mexican court;

 

  g)

the courts of such jurisdiction recognize the principles of reciprocity in connection with the enforcement of Mexican judgments in such jurisdiction;

 

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  h)

the judgment shall comply with all requirements to be deemed authentic and the judge or court rendering the judgment was competent to hear and issue a judgment on the subject matter of the case in accordance with accepted principles of international law that are compatible with Mexican law; and such judgment is final in the jurisdiction where obtained.

SECTION 10.12. Brazilian Law Waiver. In case Brazilian law is deemed applicable to this Indenture, the Notes or any other document related to this Indenture or the Notes by any court for any reason whatsoever, each of the Issuers and each Guarantor waives any benefits to which it may be entitled as set forth in Articles 333, sole paragraph, 827, 834, 835, 837, 838 and 839 of the Brazilian Civil Code and Article 794 of the Brazilian Code of Civil Procedure.

SECTION 10.13. Guarantors Incorporated or Organized in Germany

(a) Notwithstanding anything to the contrary in this Indenture, the Trustee (acting for the Holders) agrees not to enforce the Guarantee of a Guarantor incorporated in Germany as a limited liability company (GmbH) (a “German GmbH Guarantor”), or as a limited partnership (Kommanditgesellschaft) with a limited liability company as sole general partner (GmbH & Co. KG) (the “German GmbH & Co. KG Guarantor”, together with any German GmbH Guarantor hereinafter referred to as a “German Guarantor” and the Guarantee of a German Guarantor is herein referred to as a “German Guarantee”) against such German Guarantor to the extent that such German Guarantee is in respect of liabilities of an affiliated company (verbundenes Unternehmen) within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) of that German Guarantor (other than the German Guarantor’s (direct or indirect) Subsidiaries) if and to the extent that a payment under such German Guarantee would have the effect of reducing the German GmbH Guarantor’s, or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s, net assets (Nettovermögen) to an amount which is zero or less than zero.

(b) Net assets (Nettovermögen) means the total assets (Aktivvermögen) of a German Guarantor (or, in the case of a GmbH & Co. KG, its general partner) (taking into account any items set out in section 266 para. 2, A, B, C, D and E of the German Commercial Code (Handelsgesetzbuch)) less the aggregate of (A) the total liabilities of such German Guarantor (or, in the case of a GmbH & Co. KG, its general partner) (taking into account any items set out in section 266 para. 3, B, C, D and E of the German Commercial Code (Handelsgesetzbuch), but excluding any provisions made in respect of the applicable German Guarantee), (B) such part of such German Guarantor’s (or, in the case of a GmbH & Co. KG, its general partner) profits which pursuant to section 268 para. 8 of the German Commercial Code (Handelsgesetzbuch) is not distributable and (C) the amount of the stated share capital (Stammkapital) of such German Guarantor (or, in the case of a GmbH & Co. KG, its general partner), provided that the following items shall not be taken into account in such calculation:

(i) the amount of any increase of the stated share capital (Stammkapital) of such German Guarantor (or, in the case of a GmbH & Co. KG, its general partner) if and to the extent it has been effected without the prior written consent of the Trustee (acting on the instructions of the Holders);

(ii) financial and other indebtedness incurred by such German Guarantor (or, in the case of a GmbH & Co. KG, its general partner) in violation of the provisions of this Indenture; and

 

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(iii) loans provided to such German Guarantor by (A) any of its direct or indirect holding companies or (B) Holdings Entities or any Subsidiary of the Holdings Entities (other than any direct or indirect Subsidiaries of such German Guarantor) which by contractual provision or law are subordinated to the Notes and/or other Obligations of the Issuers under this Indenture and the Notes or are considered subordinated in insolvency proceedings, unless the waiver or contribution of such loan claim would give rise to a breach of section 30 of the German Limited Liability Companies Act (GmbHG) or any other similar provision of mandatory law.

(c) Following a demand by the Trustee (acting for the Holders) to the relevant German Guarantor under the applicable German Guarantee such German Guarantor shall notify the Trustee in writing and attaching appropriate evidence within 15 business days after such notification of the amount of such German Guarantee which to the best knowledge (nach bestem Wissen) of its managing directors cannot be enforced pursuant to paragraphs (a) and (b) above at the time of enforcement of such German Guarantee (“Management Determination”).

(d) If the Trustee (acting for the Holders) disagrees with the Management Determination provided pursuant to paragraph (c) above, the applicable German Guarantor shall provide the Trustee within 30 business days following the Trustee’s notice thereof to such German Guarantor with a determination by auditors acceptable to the Trustee of the net assets (Nettovermögen) of such German Guarantor (or, in the case of a GmbH & Co. KG, its general partner) (“Auditor’s Determination”). If such German Guarantor has not appointed an auditor within 5 business days of request of the Trustee (acting for the Holders) of the auditor’s determination, the Trustee (acting for the Holders) may appoint an auditor at the cost of such German Guarantor. Except in case of manifest error, the Auditor’s Determination shall be binding on the parties regarding the amount of the applicable German Guarantee that may be enforced.

(e) If the applicable German Guarantee was enforced because the Auditor’s Determination was not delivered, but an Auditor’s Determination is subsequently delivered:

(i) as per such Auditor’s Determination only a lower amount of the applicable German Guarantee would have been permitted to be enforced, the Trustee (acting for the Holders) shall repay to the relevant German Guarantor such amount which it was not permitted to enforce under the applicable German Guarantee; or

(ii) as per such Auditor’s Determination a higher amount of the applicable German Guarantee would have been permitted to be enforced, the Trustee (acting for the Holders) shall be permitted to further enforce the applicable German Guarantee.

(f) If in accordance with paragraphs (a) to (e) above the applicable German Guarantee can be enforced only in a limited amount, the relevant German Guarantor shall realize within 3 months of request of the Trustee (acting for the Holders) any and all of its assets that are shown in its balance sheet with a book value (Buchwert) that is significantly lower than their market value and are not necessary for its business (betriebsnotwendig). The relevant German Guarantor shall promptly notify the Trustee of the book value (Buchwert) and market value of the assets so realized. Following such realization, the applicable German Guarantee may be enforced in an additional amount equal to the difference of the aggregate amount of the disposal proceeds received by the applicable German Guarantor from such realization and the book value (Buchwert) of all such assets if and to the extent that as a result of such realization the net assets (Nettovermögen) of such German Guarantor (or, in the case of a GmbH & Co. KG, its general partner) (as determined pursuant to paragraph (b) above) exceed zero.

 

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(g) The limitation set out in paragraph (a) above does not apply:

(i) to the extent that the enforcement of a German Guarantee relates to any funds or guarantees which have been on-lent to, otherwise passed on to or issued for, the benefit of the applicable German Guarantor or any of its Subsidiaries (and/or, where the applicable German Guarantor is a GmbH & Co. KG, its general partner and the general partner’s Subsidiaries) and such amounts on-lent or otherwise passed on or such guarantees have not been repaid or returned prior to the Trustee’s (acting for the Holders) demand under the applicable German Guarantee;

(ii) to the extent the applicable German Guarantor (and/or, in the case of a GmbH & Co. KG, its general partner) has a valuable consideration or recourse claim (vollwertiger Gegenleistungs- oder Rückgewähranspruch) against such entity with respect to whose obligations and liabilities the demand under the applicable German Guarantee is made;

(iii) if the applicable German Guarantor is subject to a domination and/or profit and loss pooling agreement (Beherrschungs- und/oder Gewinnabführungsvertrag) as a dominated company unless the existence of such domination and/or profit and loss pooling agreement (Beherrschungs- und/oder Gewinnabführungsvertrag) does not lead to the inapplicability of section 30 para. 1 sentence 1 of the German Limited Liability Companies Act (GmbHG);

(iv) if at the time of the enforcement of the applicable German Guarantee such limitation pursuant to law or final, non-appealable judgment of the German Federal Court (Bundesgerichtshof) or Higher Regional Court (Oberlandesgericht) is not required to prevent the managing directors of the applicable German Guarantor (or in case of a German GmbH & Co. KG Guarantor of the general partner) from personal liability;

(v) (A) if the German Guarantor has not fully and timely complied with its obligations pursuant to paragraphs (c) or (d) above or (B) if it has not complied with its obligations pursuant to paragraph (f) above if such realization had resulted in additional amounts having been able to be enforced.

SECTION 10.14. Guarantors Incorporated or Organized in Korea.

(a) Notwithstanding anything to the contrary contained in this Indenture or the Notes:

(i) Under Korean law, if there is no corporate benefit justifiable for the Guarantee by a Guarantor organized under the laws of Korea (a “Korean Guarantor”), such Guarantee by a Korean Guarantor can raise a breach of fiduciary duty issue for the directors of such Korean Guarantor under corporate law (Article 399 of the Korean Commercial Codes) as well as criminal law (Article 355 of the Korean Criminal Codes and Article 3 of Act on the Aggravated Punishment, etc. of Specific Economic Crimes). Any Guarantee provided by a Korean Guarantor in breach of fiduciary duty may be deemed to be null and void under Korean law.

(ii) Under Korean law, the obligations and liabilities of a Korean Guarantor under its Guarantee shall be limited, at all times, to the payment obligations of the Issuers under this Indenture and the Notes from time to time up to the aggregate amount of proceeds under such documents on-lent by the Issuers to such Korean Guarantor and outstanding from time to time (Article 429(1) of the Korean Civil Codes).

 

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(b) Each Korean Guarantor irrevocably and unconditionally undertakes to pay to the Trustee an amount equal to the aggregate amount of its Korean Corresponding Liabilities (as these may exist from time to time). The Trustee, each Holder and each Korean Guarantor agree that: (i) each Korean Guarantor’s Korean Parallel Liability is due and payable at the same time, in the same amount and in the same currency as its Korean Corresponding Liabilities; (ii) each Korean Guarantor’s Korean Parallel Liability is decreased to the extent that its Korean Corresponding Liabilities have been irrevocably paid or discharged and its Korean Corresponding Liabilities are decreased to the extent that its Korean Parallel Liability has been irrevocably paid or discharged; (iii) each Korean Guarantor’s Korean Parallel Liability is independent and separate from, and without prejudice to, its Korean Corresponding Liabilities, and constitutes a single obligation of a Korean Guarantor to the Trustee (even though such Korean Guarantor may owe more than one Korean Corresponding Liability to the Holders) and an independent and separate claim of the Trustee to receive payment of that Korean Parallel Liability (in its capacity as the independent and separate creditor of that Korean Parallel Liability and not as a co-creditor in respect of the Korean Corresponding Liabilities); and (iv) for purposes under this Section 10.14(b), the Trustee acts in its own name and not as agent, representative or trustee of the Holders and accordingly does not hold its claim resulting from a Korean Parallel Liability on trust.

ARTICLE XI

INTENTIONALLY OMITTED

ARTICLE XII

Miscellaneous

SECTION 12.1. Notices. Notices given by publication shall be deemed given on the first date on which publication is made, and notices given by first-class mail, postage prepaid, shall be deemed given five calendar days after mailing. Notices personally delivered will be deemed given at the time delivered by hand. Notices given by facsimile or email will be deemed given when receipt is acknowledged. Notices given by overnight air courier guaranteeing next day delivery will be deemed given the next Business Day after timely delivery to the courier and notices given to the Depositary shall be sufficiently given if given according to the applicable procedures of such Depositary. Any notice or communication shall be in writing and delivered in person, by facsimile or email or mailed by first-class mail addressed as follows:

if to the Issuers or any Guarantor:

Alpha 3 B.V.

Attn: the Directors

Hoofdweg 52A

3067 GH Rotterdam

The Netherlands

Alpha US Bidco, Inc.

Attn: Greg Nikodem; Tanaka Maswoswe

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington, DC 20004-2505

P: (202) 729-5112

F: (202) 347-1818

E: Tanaka.Maswoswe@carlyle.com

 

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With copies to:

Latham & Watkins LLP

Attn: Jason Licht

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004-1304

P: (202) 637-2258

F: (202) 637-2201

E: jason.licht@lw.com

if to the Trustee:

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

P: (203) 453-4130

F: (203) 453-1183

Attention: Alpha Bidco Administrator

The Issuers or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

If a notice or communication is mailed to a Holder, such notice or communication shall be mailed to the Holder at the Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to send a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is sent in the manner provided above, it is duly given, whether or not the addressee receives it.

The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods. If the party elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption or purchase) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Note (or its designee) pursuant to the standing instructions from such Depositary.

SECTION 12.2. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuers to the Trustee to take or refrain from taking any action under this Indenture, the Issuers shall furnish to the Trustee the following (except that (x) no Officer’s Certificate or Opinion of Counsel will be required in connection with the original issuance of the Initial Notes on the date hereof and (y) no Opinion of Counsel will be required in connection with the execution of any amendment or supplement adding a new Guarantor under this Indenture or the release of a Guarantor pursuant to Section 10.2(b) hereof):

(i) an Officer’s Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

 

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(ii) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 12.3. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and also shall include:

(i) a statement that the individual making such certificate or opinion has read such covenant or condition;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officer’s Certificate or on certificates of public officials.

SECTION 12.4. Currency Indemnity. The U.S. Dollar is the sole currency (the “Required Currency”) of account and payment for all sums payable by the Issuers or any Guarantor under or in connection with the Notes, this Indenture and the Guarantees, including damages. Any amount with respect to the Notes, this Indenture or the Guarantees received or recovered in a currency other than the Required Currency, whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuers or any Guarantor or otherwise by any Holder or by the Trustee or Paying Agent, in respect of any sum expressed to be due to it from the Issuers or any Guarantor will only constitute a discharge to the Issuers or any Guarantor to the extent of the Required Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).

If that Required Currency amount is less than the Required Currency amount expressed to be due to the recipient or the Trustee or Paying Agent under the Notes, the Issuers and each Guarantor will indemnify such recipient and/or the Trustee or Paying Agent against any loss sustained by it as a result. In any event, the Issuers and each Guarantor will indemnify the recipient against the cost of making any such purchase. For the purposes of this currency indemnity provision, it will be prima facie evidence of the matter stated therein, for the Holder of a Note or the Trustee or Paying Agent to certify in a manner satisfactory to the Issuers (indicating the sources of information used) the loss it incurred in making any such purchase. These indemnities constitute a separate and independent obligation from the Issuers’ and

 

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each Guarantor’s other obligations, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any Holder of a Note or the Trustee or Paying Agent (other than a waiver of the indemnities set out herein) and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or to the Trustee. For the purposes of determining the amount in a currency other than the Required Currency, such amount shall be determined using the Exchange Rate then in effect.

SECTION 12.5. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or a meeting of, Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 12.6. Days Other than Business Days. If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period. If a regular Record Date is not a Business Day, the Record Date shall not be affected.

SECTION 12.7. Governing Law. This Indenture, the Notes and the Guarantees shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 12.8. Jurisdiction and Service. In relation to any legal action or proceedings arising out of or in connection with this Indenture, the Notes and the Guarantees, the Dutch Co-Issuer and each Guarantor that is organized under laws other than the United States or a state thereof hereby (i) irrevocably submit to the jurisdiction of the federal and state courts in the Borough of Manhattan in the City, County and State of New York, United States (ii) consent that any such action or proceeding may be brought in such courts and waive, to the fullest extent permitted by law, any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agree not to plead or claim the same, (iii) designate and appoint the U.S. Co-Issuer as their authorized agent upon which process may be served in any such action or proceeding that may be instituted in any such court, and (iv) agree that service of any process, summons, notice or document by U.S. registered mail addressed to the U.S. Co-Issuer, with written notice of said service to such Person at the address of the U.S. Co-Issuer set forth in Section 12.1, shall be effective service of process for any such legal action or proceeding brought in any such court.

SECTION 12.9. Waiver of Jury Trial. EACH OF THE ISSUERS, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 12.10. No Recourse Against Others. No manager, managing director, director, officer, employee, incorporator or holder of equity interests in either of the Issuers, any Subsidiary or any direct or indirect parent of the Dutch Co-Issuer, as such, shall have any liability for any obligations of the Issuers or any Guarantor under the Notes or this Indenture or any Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

SECTION 12.11. Successors. All agreements of the Issuers and any Guarantor in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee and the Agents in this Indenture shall bind their respective successors.

 

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SECTION 12.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Delivery of an executed counterpart of a signature page to this Indenture by telecopier, facsimile or other electronic transmission (i.e., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof. One signed copy is enough to prove this Indenture.

SECTION 12.13. Variable Provisions. The Issuers initially appoint the Trustee as Paying Agent and Registrar and Notes Custodian with respect to any Global Notes.

SECTION 12.14. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 12.15. Force Majeure. In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

SECTION 12.16. USA Patriot Act. The parties hereto acknowledge that, in accordance with Section 326 of the USA Patriot Act, the Trustee and the Trust Officers, like all financial institutions and in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account. The parties to this Indenture agree that they shall provide the Trustee and the Trust Officers with such information as they may request in order to satisfy the requirements of the USA Patriot Act.

SECTION 12.17. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA § 312(b) with other Holders of Notes with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

SECTION 12.18. TIA § 314(d) Not Applicable. For the avoidance of doubt, the Issuers and the Guarantors shall not be subject to TIA § 314(d).

ARTICLE XIII

Measuring Compliance

SECTION 13.1. Compliance in Connection with Certain Investments and Repayments.

(a) With respect to any (x) Investment or acquisition, in each case the consummation of which is not conditioned on the availability of, or on obtaining, third-party financing and (y) repayment, repurchase or refinancing of Indebtedness with respect to which a notice of repayment (or similar notice), which may be conditional, has been delivered, in each case for purposes of determining:

(i) whether any Indebtedness (including Acquired Indebtedness) that is being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is permitted to be incurred in compliance with Section 3.3;

 

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(ii) whether any Lien being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness or to secure any such Indebtedness is permitted to be incurred in accordance with Section 3.5 or the definition of “Permitted Liens”;

(iii) whether any other transaction undertaken or proposed to be undertaken in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness complies with the covenants or agreements contained in this Indenture or the Notes; and

(iv) any calculation of the ratios or financial metrics, including Fixed Charge Coverage Ratio, Consolidated Total Net Debt Ratio, Consolidated Senior Secured Net Debt Ratio, Specified Consolidated Total Net Debt Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets, Consolidated Total Assets and/or Pro Forma Cost Savings and, whether a Default or Event of Default exists in connection with the foregoing,

at the option of the Dutch Co-Issuer, the date that the definitive agreement for such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is entered into or the date of such notice, which may be conditional, of such repayment, repurchase or refinancing of Indebtedness is given to the holders of such Indebtedness (the “Transaction Agreement Date”), may be used as the applicable date of determination, as the case may be, in each case with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Pro Forma Basis” or “Consolidated EBITDA.” For the avoidance of doubt, if the Dutch Co-Issuer elects to use the Transaction Agreement Date as the applicable date of determination in accordance with the foregoing, (a) any fluctuation or change in the Fixed Charge Coverage Ratio, Consolidated Total Net Debt Ratio, Consolidated Senior Secured Net Debt Ratio, Specified Consolidated Total Net Debt Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets, Consolidated Total Assets and/or Pro Forma Cost Savings of the Dutch Co-Issuer from the Transaction Agreement Date to the date of consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, will not be taken into account for purposes of determining whether any Indebtedness or Lien that is being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, or in connection with compliance by the Dutch Co-Issuer or any of the Restricted Subsidiaries with any other provision of this Indenture or the Notes or any other transaction undertaken in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, is permitted to be Incurred and (b) until such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is consummated or such definitive agreements are terminated, such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness and all transactions proposed to be undertaken in connection therewith (including the incurrence of Indebtedness and Liens) will be given pro forma effect when determining compliance of other transactions (including the incurrence of Indebtedness and Liens unrelated to such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness) that are consummated after the Transaction Agreement Date and on or prior to the date of consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, and any such transactions (including any incurrence of Indebtedness and the use of proceeds thereof) will be deemed to have occurred on the date the definitive agreements are entered into and deemed to be outstanding thereafter for purposes of calculating any baskets or ratios under this Indenture after the date of such agreement and before the date of consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness. Compliance with any requirement relating to the absence of a Default or Event of Default may be determined as of the Transaction Agreement Date and not as of any later date as would otherwise be required under this Indenture.

 

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(b) For purposes hereof, the “Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Dutch Co-Issuer.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.

 

ALPHA 3 B.V., as Issuer
By:  

/s/ Richard van Dijk

  Name: Richard van Dijk
  Title:   Director
By:  

/s/ Andrew Howlett-Bolton

  Name: Andrew Howlett-Bolton
  Title:   Director
ALPHA US BIDCO, INC., as Issuer
By:  

/s/ Gregory Nikodem

  Name: Gregory Nikodem
  Title:   Chief Executive Officer and President
ATOTECH DO BRASIL GALVANOTÉCNICA LTDA.
By:  

/s/ Dr. Roland Hagemeister

  Name: Dr. Roland Hagemeister
  Title:   Authorized Signatory
By:  

/s/ Stephan Lösch

  Name: Stephan Lösch
  Title:   Authorized Signatory

Witnesses:

 

1.  

/s/ Simone Proske

                                                         2.   

/s/ Magali Le-Rhun

Name:   Simone Proske      Name:    Magali Le-Rhun
Passport No.:      Passport No.:

 

ATOTECH CANADA LTD.
By:  

/s/ Dr. Gregor Frank

  Name: Dr. Gregor Frank
  Title:   Authorized Signatory

[Signature Page to the Indenture]


ALPHA GERMANY BIDCO GMBH
By:  

/s/ Michael Schuster

  Name: Michael Schuster
  Title:   Managing Director
ATOTECH BETEILIGUNGS GMBH & CO. KG
By APHA GERMANY BIDCO GMBH, its general partner
By:  

/s/ Michael Schuster

  Name: Michael Schuster
  Title:   Managing Director
ATOTECH DEUTSCHLAND GMBH
By:  

/s/ Stephan Lösch

  Name: Stephan Lösch
  Title:   Authorized Signatory
ATOTECH ASIA PACIFIC LIMITED
By:  

/s/ George Yang

  Name: George Yang
  Title:   Director
UAB “ATOTECH-CHEMETA”
By:  

/s/ Dr. Gregor Frank

  Name: Dr. Gregor Frank
  Title:   Authorized Signatory
ALPHA 4 B.V..
By:  

/s/ Richard van Dijk

  Name: Richard van Dijk
  Title:   Director

[Signature Page to the Indenture]


ATOTECH POLAND SP Z O.O.
By:  

/s/ Dr. Gregor Frank

  Name: Dr. Gregor Frank
  Title:   Authorized Signatory
ATOTECH S.E.A. PTE LTD
By:  

/s/ Dr. Roland Hagemeister

  Name: Dr. Roland Hagemeister
  Title:   Authorized Signatory
ATOTECH UK LIMITED
By:  

/s/ Ingo Steinbeck

  Name: Ingo Steinbeck
  Title:   Director
By:  

/s/ Romeo Taddei

  Name: Romeo Taddei
  Title:   Director
ATOTECH USA INC.
By:  

/s/ Dr. Roland Hagemeister

  Name: Dr. Roland Hagemeister
  Title:   Authorized Signatory
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee, Registrar and Paying Agent
By:  

/s/ Joseph P. O’Donnell

  Name: Joseph P. O’Donnell
  Title:   Vice President

[Signature Page to the Indenture]


EXHIBIT A

[FORM OF FACE OF NOTE]

Global Note Legend, if applicable

Private Placement Legend, if applicable

Temporary Regulation S Legend,

if applicable

 

A-1


No. [    ]   

Principal Amount $[                            ],

as revised by the Schedule of Increases

or Decreases in the Global Note attached

hereto1

   CUSIP NO.                                 2

ALPHA 3 B.V.

and

Alpha US Bidco, Inc.

6.250% Senior Notes due 2025

Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66940532 and Alpha US Bidco, Inc., a Delaware corporation, jointly and severally, promise to pay to Cede & Co., or registered assigns, the initial principal amount set forth on the Schedule of Increases or Decreases in the Global Note attached hereto, as revised by the Schedule of Increases or Decreases in the Global Note attached hereto, on February 1, 2025.

Interest Payment Dates: February 1 and August 1.

Record Dates: January 15 and July 15.

Additional provisions of this Note are set forth on the other side of this Note.

 

 

1 

Insert Global Notes only

2

144A – 02079U AA3

Reg S – N02887 AA0

IAI – 02079U AB1

 

A-2


ALPHA 3 B.V., as Issuer
By:  

 

  Name:
  Title:
ALPHA US BIDCO, INC., as Issuer
By:  

 

  Name:
  Title:

 

A-3


TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

WILMINGTON TRUST, NATIONAL ASSOCIATION

as Trustee, certifies that this is one of the

Notes referred to in the Indenture.

 

By:   

 

     
   Authorized Signatory       Date:

 

A-4


[FORM OF REVERSE SIDE OF NOTE]

6.250% Senior Note due 2025

1. Interest

Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66940532 (the “Dutch Co-Issuer”) and Alpha US Bidco, Inc., a Delaware corporation (the “U.S. Co-Issuer” and, together with the Dutch Co-Issuer, the “Issuers”), jointly and severally, promise to pay interest on the principal amount of this Note at the rate per annum shown above.

The Issuers shall pay interest semiannually on February 1 and August 1 of each year, with the first interest payment to be made on August 1, 2017.3 Interest on the Notes shall accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from January 31, 2017.4 The Issuers shall pay interest on overdue principal or premium, if any (plus interest on such interest to the extent lawful), at the rate borne by the Notes to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at 2% per annum in excess of the above rate and shall pay interest on overdue installments of interest at such higher rate to the extent lawful.

Solely for the purposes of disclosure pursuant to the Interest Act (Canada) and without affecting any calculation of interest required by the Notes, whenever any interest payable under the Notes is calculated using a rate based on a year of 360 days, such rate, when expressed as an annual rate, is equivalent to such rate multiplied by the number of days in the calendar year in which interest is paid divided by 360.

2. Method of Payment

By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Note is due and payable, the Issuers shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Issuers shall pay interest (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the January 15 and July 15 next preceding the Interest Payment Date unless Notes are cancelled, repurchased or redeemed after the Record Date and before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) shall be made by the Paying Agent by the transfer of immediately available funds to the accounts specified by the Depositary. The Issuers shall make all payments in respect of a Definitive Note (including principal, premium, if any, and interest) through the Paying Agent by (i) mailing a check to the registered address of each Holder thereof, or (ii) if a Holder has given wire instructions to the Issuers or the Paying Agent, by transfer of immediately available funds to the account(s) specified by such Holder.

 

 

 

3 

With respect to the Initial Notes.

4 

With respect to the Initial Notes.

 

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3. Paying Agent and Registrar

Initially, Wilmington Trust, National Association, duly organized and existing under the laws of the United States of America and having a corporate trust office at 246 Goose Lane, Suite 105, Guilford, CT 06437 (“Trustee”), shall act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Issuers or any of their Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4. Indenture

The Issuers issued the Notes under an Indenture dated as of January 31, 2017 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), among the Issuers, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Securities Act for a statement of those terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

The Notes are joint and several senior unsecured obligations of the Issuers. This Note is one of the 6.250% Senior Notes due 2025 referred to in the Indenture. The Notes include (i) $425,000,000 aggregate principal amount of the Issuers’ 6.250% Senior Notes due 2025 issued under the Indenture on January 31, 2017 (herein called “Initial Notes”) and (ii) if and when issued, additional Notes of the Issuers that may be issued from time to time under the Indenture subsequent to January 31, 2017 (herein called “Additional Notes”).

5. Guarantee

To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Notes and all other amounts payable by the Issuers under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Guarantors have unconditionally Guaranteed (and future guarantors shall unconditionally Guarantee), jointly and severally, such obligations, subject to the limitations described in Article X of the Indenture.

6. Optional Redemption

(a) On and after February 1, 20205, the Issuers may redeem the Notes, at their option, in whole at any time or in part from time to time, upon notice as described in Section 5.4 of the Indenture, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to (but not including) the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date), if redeemed during the 12-month period commencing on February 16 of the years set forth below:

 

Period    Redemption price  

2020

     103.125

2021

     101.563

2022 and thereafter

     100.000

 

 

 

5 

With respect to the Initial Notes.

6 

With respect to the Initial Notes.

 

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(b) At any time prior to February 1, 20207, the Issuers may redeem the Notes at their option, in whole at any time or in part from time to time, upon notice as described in Section 5.4 of the Indenture, at a redemption price equal to 100.0% of the principal amount of the Notes redeemed plus the Applicable Premium as of the date of the redemption notice, and accrued and unpaid interest, if any, to (but not including) the applicable Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date).

(c) At any time and from time to time prior to February 1, 20208, upon notice as described in Section 5.4 of the Indenture, the Issuers may redeem in the aggregate up to 40% of the aggregate principal amount of the Notes (calculated after giving effect to any issuance of Additional Notes) with an amount equal to the cash proceeds, less underwriting fees paid in cash, of one or more Equity Offerings, to the extent (in the case of an Equity Offering by a direct or indirect parent of the Dutch Co-Issuer) that such cash proceeds are contributed to the common equity capital of the Dutch Co-Issuer or used to purchase Capital Stock (other than Disqualified Stock) of the Dutch Co-Issuer through an issuance of Capital Stock by the Dutch Co-Issuer, at a redemption price (expressed as a percentage of the principal amount thereof) equal to 106.25%, plus accrued and unpaid interest, if any, to (but not including) the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date); provided, however, that at least 50% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of Additional Notes) must remain outstanding after each such redemption; provided, further, that for purposes of calculating the principal amount of the Notes able to be redeemed with such cash proceeds of such Equity Offering or Equity Offerings, such amount shall include only the principal amount of the Notes to be redeemed plus the premium on such Notes to be redeemed; provided, further, that such redemption shall occur within 120 days after the date on which any such Equity Offering is consummated.

(d) At any time, the Issuers or a third party will have the right to redeem the Notes of any series at 101.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the purchase date) following the consummation of a Change of Control if at least 90% of the Notes of such series outstanding prior to such date of purchase are purchased pursuant to a Change of Control Offer with respect to such Change of Control.

(f) Any redemption of the Notes may, at the Issuers’ discretion, be subject to one or more conditions precedent. The Redemption Date of any redemption that is subject to satisfaction of one or more conditions precedent may, in the Issuers’ discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or such redemption may not occur and any notice with respect to such redemption may be modified or rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuers in their sole discretion) by the Redemption Date, or by the Redemption Date so delayed (which may exceed 60 days from the date of the redemption notice in such case). In addition, such notice of redemption may be extended, if such conditions precedent have not been satisfied or waived by the Issuers, by providing notice to the Holders.

(g) Unless the Issuers default in the payment of the redemption price, interest shall cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

 

 

 

7 

With respect to the Initial Notes.

8 

With respect to the Initial Notes.

 

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(h) Any redemption pursuant to this Paragraph 6 shall be made pursuant to the provisions of Article V of the Indenture.

7. Redemption for Taxation Reasons

The Issuers may redeem the Notes, at their option, in whole, but not in part, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to (but not including) the Tax Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date) and all Additional Amounts, if any, then due or that will become due on the Tax Redemption Date as a result of the redemption or otherwise if the Issuers determine in good faith that, as a result of a Change in Tax Law, any Payor with respect to the Notes or a Guarantee is, or on the next date on which any amount would be payable in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to such Payor (including the appointment of a new Paying Agent or, where such action would be reasonable, payment through another Payor); provided that no Payor shall be required to take any measures that in the Issuers’ good-faith determination would result in the imposition on such Person of any material legal or regulatory burden or the incurrence by such Person of additional material costs, or would otherwise result in any material adverse consequences to such Person.

In the case of any Payor, the Change in Tax Law with respect to a given Relevant Taxing Jurisdiction must become effective on or after the later of the date of the Offering Memorandum or the date a jurisdiction becomes a Relevant Taxing Jurisdiction. Notwithstanding the foregoing, no such notice of redemption will be given earlier than 90 days prior to the earliest date on which the Payor would be obligated to make such payment of Additional Amounts. Prior to the publication, mailing or delivery of any notice of redemption of the Notes pursuant to the foregoing, the Issuers will deliver to the Trustee (1) an Officer’s Certificate stating that they are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to their right so to redeem have been satisfied (including that the obligation to pay such Additional Amounts cannot be avoided by the Payor taking reasonable measures available to it) and (2) an opinion of an independent tax counsel of recognized standing to the effect that the Payor would be obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee will accept such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it will be conclusive and binding on the Holders.

The foregoing provisions will apply mutatis mutandis to the laws and official positions of any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. The foregoing provisions will survive any termination, defeasance or discharge of the Indenture.

8. Change of Control; Asset Sales

(a) Upon the occurrence of a Change of Control, the Issuers will be required to make a Change of Control Offer in accordance with Section 3.9 of the Indenture.

(b) The Issuers will be required to make an Asset Sale Offer in accordance with Section 3.7 of the Indenture.

 

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9. Denominations; Transfer; Exchange

The Notes are in registered form without coupons in minimum denominations of principal amount of $200,000 and whole multiples of $1,000 in excess thereof. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes for a period beginning 15 Business Days before an Interest Payment Date and ending on such Interest Payment Date.

10. Persons Deemed Owners

The registered Holder of this Note may be treated as the owner of it for all purposes.

11. Unclaimed Money

If money for the payment of the principal of or premium, if any, or interest remains unclaimed for two years, the Trustee or the Paying Agent shall pay the money back to the Issuers at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

12. Discharge and Defeasance

Subject to certain conditions set forth in the Indenture, the Issuers at any time may terminate some or all of its obligations under the Notes and the Indenture if the Issuers irrevocably deposit in trust with the Trustee or Paying Agent money or U.S. Government Obligations (sufficient, without reinvestment, in the opinion of a nationally recognized certified public accounting firm) for the payment of principal, premium (if any) and interest on the Notes to redemption or maturity, as the case may be.

13. Amendment, Waiver

The Indenture and the Notes may be amended or waived as set forth in Article IX of the Indenture.

14. Defaults and Remedies

Events of Default shall be as set forth in Article VI of the Indenture.

15. Trustee Dealings with the Issuer

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not the Trustee.

16. No Recourse Against Others

No manager, managing director, director, officer, employee, incorporator or holder of any equity interests in either of the Issuers, any Subsidiary or any direct or indirect parent of the Dutch Co-Issuer, as such, shall have any liability for any obligations of the Issuers or any Guarantor under the Notes, the Indenture or any Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. The waiver and release shall be part of the consideration for the issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

 

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17. Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

18. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

19. CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures the Dutch Co-Issuer has caused CUSIP numbers to be printed on the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers placed thereon.

20. Successor Entity

When a successor entity assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, and immediately before and thereafter no Default or Event of Default exists and all other conditions of the Indenture are satisfied, the predecessor entity shall be released from those obligations.

21. Governing Law

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

 

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                          agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

 

Date:                             

  

Your Signature:                                 

Signature Guarantee:                                                          

  

                                   (Signature must be guaranteed)

  

 

 

Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

 

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[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial principal amount of the Note shall be $[                ]. The following increases or decreases in this Global Note have been made:

 

Date of

Exchange

  

Amount of decrease in

Principal Amount of this

Global Note

  

Amount in increase

in Principal amount

of this Global Note

  

Principal amount of

this Global Note

following such

decrease or

increase

  

Signature of authorized

signatory of Trustee or

Notes Custodian

 

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Issuers pursuant to Section 3.7 or 3.9 of the Indenture, check the box:

 

3.7

  

            ☐

            3.9

If you want to elect to have only part of this Note purchased by the Issuers pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in principal amount (must be in denominations of $200,000 or integral multiples of $1,000 in excess thereof): $

 

Date:                                                                                         Your Signature:   

 

         (Sign exactly as your name appears on the other side of the Note)

 

Signature Guarantee:   

 

  
   (Signature must be guaranteed)   

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

 

A-13


EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Alpha 3 B.V.

Attn: the Directors

Hoofdweg 52A

3067 GH Rotterdam

The Netherlands

Alpha US Bidco, Inc.

Attn: Greg Nikodem; Tanaka Maswoswe

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington, DC 20004-2505

P: (202) 729-5112

F: (202) 347-1818

E: Tanaka.Maswoswe@carlyle.com

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Alpha 3 B.V. Administrator

Email: jodonnell@wilmingtontrust.com

Re: 6.250% Senior Notes due 2025

Reference is hereby made to the Indenture, dated as of January 31, 2017 (the “Indenture”), among Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66940532 and Alpha US Bidco, Inc., a Delaware corporation, the Guarantors and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

                                          (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $           in such Note[s] or interests (the “Transfer”), to                      (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

 

1.       Check if Transferee shall take delivery of a beneficial interest in the 144A Global Note or a Definitive Note pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account

 

B-1


      is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
2.       Check if Transferee shall take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
3.       Check and complete if Transferee shall take delivery of a beneficial interest in the IAI Global Note or an Unrestricted Global Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
      (a)       such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
      (b)       such Transfer is being effected to the Issuers or a subsidiary thereof;
or
      (c)       such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
or

 

B-2


      (d)       such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.
4.       Check if Transferee shall take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
     

(a)

      Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
      (b)       Check if Transfer is pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

B-3


      (c)       Check if Transfer is pursuant to other exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
           

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.

 

 

 

[Insert Name of Transferor]

By:

 

 

 

Name:

 

Title:

Dated:                             

 

B-4


ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

 

   (a)       a beneficial interest in the:
      (i)       144A Global Note (CUSIP [                ]), or
      (ii)       Regulation S Global Note (CUSIP [                 ]), or
      (iii)       IAI Global Note (CUSIP [                ]), or
   (b)       a Restricted Definitive Note.
2.    After the Transfer the Transferee shall hold:
[CHECK ONE]
   (a)       a beneficial interest in the:
      (i)       144A Global Note (CUSIP [                ]), or
      (ii)       Regulation S Global Note (CUSIP [ ]), or
      (iii)       Unrestricted Global Note (CUSIP [                ]), or
      (iv)       IAI Global Note (CUSIP [                ]), or
   (b)       a Restricted Definitive Note; or
   (c)       an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.

 

B-5


EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Alpha 3 B.V.

Attn: the Directors

Hoofdweg 52A

3067 GH Rotterdam

The Netherlands

Alpha US Bidco, Inc.

Attn: Greg Nikodem; Tanaka Maswoswe

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington, DC 20004-2505

P: (202) 729-5112

F: (202) 347-1818

E: Tanaka.Maswoswe@carlyle.com

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Alpha 3 B.V. Administrator

Email: jodonnell@wilmingtontrust.com

Re: 6.250% Senior Notes due 2025

(CUSIP [                ])

Reference is hereby made to the Indenture, dated as of January 31, 2017 (the “Indenture”), among Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66940532 (the “Dutch Co-Issuer”) and Alpha US Bidco, Inc., a Delaware corporation (the “U.S. Co-Issuer” and, together with the Dutch Co-Issuer, the “Issuers”), the Guarantors and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

                                  (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the

 

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Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) ☐ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued shall continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

 

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(b) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] _ 144A Global Note, _ Regulation S Global Note, _ IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

 

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This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.

 

 

  [Insert Name of Transferor]
By:  

 

  Name:
  Title:

Dated:                             

 

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EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Alpha 3 B.V.

Attn: the Directors

Hoofdweg 52A

3067 GH Rotterdam

The Netherlands

Alpha US Bidco, Inc.

Attn: Greg Nikodem; Tanaka Maswoswe

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington, DC 20004-2505

P: (202) 729-5112

F: (202) 347-1818

E: Tanaka.Maswoswe@carlyle.com

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Alpha 3 B.V. Administrator

Email: jodonnell@wilmingtontrust.com

Re: 6.250% Senior Notes due 2025

Reference is hereby made to the Indenture, dated as of January 31, 2017 (the “Indenture”), among Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66940532 (the “Dutch Co-Issuer”) and Alpha US Bidco, Inc., a Delaware corporation (the “U.S. Co-Issuer” and, together with the Dutch Co-Issuer, the “Issuers”), the Guarantors and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

In connection with our proposed purchase of $                     aggregate principal amount of:

(a) ☐ a beneficial interest in a Global Note, or

(b) ☐ a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

 

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2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we shall do so only (A) to the Issuers or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuers a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we shall be required to furnish to you and the Issuers such certifications, legal opinions and other information as you and the Issuers may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us shall bear a legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

 

 

  [Insert Name of Accredited Investor]
By:  

 

  Name:
  Title:

Dated:                        

 

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EXHIBIT E

FORM OF SUPPLEMENTAL INDENTURE

THIS [•] SUPPLEMENTAL INDENTURE, dated as of [•], 20[•] (this “Supplemental Indenture”), is by and among Alpha 3 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 66940532 (the “Dutch Co-Issuer”) and Alpha US Bidco, Inc., a Delaware corporation (the “U.S. Co-Issuer” and, together with the Dutch Co-Issuer, the “Issuers”), each of the parties identified as a New Guarantor on the signature pages hereto (each, a “New Guarantor” and collectively, the “New Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuers, the Guarantors and the Trustee are parties to an indenture dated as of January 31, 2017 (as amended and supplemented, the “Indenture”), providing for the issuance of the Issuers’ 6.250% Senior Notes due 2025 (the “Notes”);

WHEREAS, Section 3.11 – Future Guarantors of the Indenture provides that under certain circumstances the New Guarantors shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantors shall unconditionally guarantee all of the Issuers’ obligations under the Notes and the Indenture on the terms and conditions set forth herein; and

WHEREAS, pursuant to Section 9.1 – Amendments Without Consent of Holders of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. Agreements to Become Guarantors. Each of the New Guarantors hereby (x) becomes a party to the Indenture as a Guarantor, (y) unconditionally guarantees the Issuers’ obligations for the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance and observance of each other obligation and covenant set forth in the Indenture to be performed or observed on the part of the Issuers, on the terms and subject to the conditions set forth in Article X – Guarantees of the Indenture and (z) agrees to be bound by all other provisions of the Indenture and the Notes applicable to a Guarantor therein.

3. Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

 

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4. No Recourse Against Others. No manager, managing director, director, officer, employee, incorporator or holder of any Equity Interests in either of the Issuers, any Subsidiary or any direct or indirect parent of the Dutch Co-Issuer, as such, shall have any liability for any obligations of the Issuers or the New Guarantors under the Notes, the Indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes, by accepting a Note, waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

5. Notices. For purposes of Section 12.1 – Notices of the Indenture, the address for notices to the Issuers and the Guarantors shall be:

Alpha 3 B.V.

Attn: the Directors

Hoofdweg 52A

3067 GH Rotterdam

The Netherlands

Alpha US Bidco, Inc.

Attn: Greg Nikodem; Tanaka Maswoswe

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington, DC 20004-2505

P: (202) 729-5112

E: Tanaka.Maswoswe@carlyle.com

With copies to:

Latham & Watkins LLP

Attn: Jason Licht

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004-1304

P: (202) 637-2258

F: (202) 637-2201

E: jason.licht@lw.com

6. Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

7. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement. Delivery of an executed counterpart of a signature page to this Supplemental Indenture by telecopier, facsimile or other electronic transmission (e.g. a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.

8. Effect of Headings. The section headings herein are for convenience only and shall not affect the construction hereof.

9. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuers and the New Guarantors.

 

 

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[remainder of page intentionally blank]

 

E-3


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

ALPHA 3 B.V., as Dutch Co-Issuer
By:  

 

  Name: [                                             ]
  Title:   [                                             ]
ALPHA US BIDCO, INC., as Issuer
By:  

 

  Name:
  Title:
[•], as a New Guarantor
By:  

 

  Name: [                                             ]
  Title:   [                                             ]

 

E-4


WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
By:  

 

  Name: [                                             ]
  Title:   [                                             ]

 

E-5

EX-4.3

Exhibit 4.3

Execution Version

 

 

 

ALPHA 2 B.V.

as Issuer

8.750% / 9.500% Senior PIK Toggle Notes due 2023

INDENTURE

Dated as of May 30, 2018

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

 

 

 

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1.

  Definitions      1  

SECTION 1.2.

  Other Definitions      45  

SECTION 1.3.

  Rules of Construction      47  

ARTICLE II

 

THE NOTES

 

SECTION 2.1.

  Form and Dating; Terms      48  

SECTION 2.2.

  Form of Execution and Authentication      51  

SECTION 2.3.

  Registrar and Paying Agent      52  

SECTION 2.4.

  Paying Agent to Hold Money in Trust      53  

SECTION 2.5.

  Lists of Holders of the Notes      53  

SECTION 2.6.

  Transfer and Exchange      53  

SECTION 2.7.

  Replacement Notes      63  

SECTION 2.8.

  Outstanding Notes      63  

SECTION 2.9.

  Treasury Notes      63  

SECTION 2.10.

  Temporary Notes      63  

SECTION 2.11.

  Cancellation      64  

SECTION 2.12.

  Payment of Interest; Defaulted Interest      64  

SECTION 2.13.

  CUSIP and ISIN Numbers      65  

SECTION 2.14.

  Record Date      65  

SECTION 2.15.

  Additional Amounts      65  

SECTION 2.16.

  [Reserved]      67  

ARTICLE III

 

COVENANTS

 

SECTION 3.1.

  Payment of Notes      67  

SECTION 3.2.

  Reports and Other Information      68  

SECTION 3.3.

  Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock      71  

SECTION 3.4.

  Limitation on Restricted Payments      80  

SECTION 3.5.

  Liens      88  

SECTION 3.6.

  Dividend and Other Payment Restrictions Affecting Subsidiaries      90  

SECTION 3.7.

  Asset Sales      92  

SECTION 3.8.

  Transactions with Affiliates      96  

SECTION 3.9.

  Change of Control      99  

SECTION 3.10.

  Maintenance of Insurance      102  

SECTION 3.11.

  Future Guarantors      102  

SECTION 3.12.

  Compliance Certificate; Statement by Officers as to Default      102  

SECTION 3.13.

  [Reserved]      102  

 

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         Page  

SECTION 3.14.

  Designation of Restricted and Unrestricted Subsidiaries      103  

SECTION 3.15.

  Covenant Suspension      103  

SECTION 3.16.

  Stay, Extension and Usury Laws      105  

ARTICLE IV

 

MERGER, CONSOLIDATION, AMALGAMATION OR SALE OF ASSETS

 

SECTION 4.1.

  When the Issuer and Guarantors May Merge, Amalgamate or Otherwise Dispose of Assets      105  

ARTICLE V

 

REDEMPTION OF NOTES

 

SECTION 5.1.

  Optional Redemption      108  

SECTION 5.2.

  Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions      108  

SECTION 5.3.

  Selection by Trustee of Notes to Be Redeemed      108  

SECTION 5.4.

  Notice of Redemption      109  

SECTION 5.5.

  Deposit of Redemption Price      110  

SECTION 5.6.

  Notes Payable on Redemption Date      110  

SECTION 5.7.

  Notes Redeemed in Part      110  

SECTION 5.8.

  Offer to Repurchase      111  

SECTION 5.9.

  Redemption for Taxation Reasons      112  

ARTICLE VI

 

DEFAULTS AND REMEDIES

 

SECTION 6.1.

  Events of Default      113  

SECTION 6.2.

  Acceleration      115  

SECTION 6.3.

  Other Remedies      115  

SECTION 6.4.

  Waiver of Past Defaults      115  

SECTION 6.5.

  Control by Majority      116  

SECTION 6.6.

  Limitation on Suits      116  

SECTION 6.7.

  Rights of Holders to Receive Payment      116  

SECTION 6.8.

  Collection Suit by Trustee      116  

SECTION 6.9.

  Trustee May File Proofs of Claim      117  

SECTION 6.10.

  Priorities      117  

SECTION 6.11.

  Undertaking for Costs      117  

ARTICLE VII

 

TRUSTEE

 

SECTION 7.1.

  Duties of Trustee      117  

SECTION 7.2.

  Rights of Trustee      119  

SECTION 7.3.

  Individual Rights of Trustee      120  

SECTION 7.4.

  Disclaimer      120  

SECTION 7.5.

  Notice of Defaults      120  

SECTION 7.6.

  Compensation and Indemnity      120  

 

-ii-


         Page  

SECTION 7.7.

  Replacement of Trustee      121  

SECTION 7.8.

  Successor Trustee by Merger      122  

SECTION 7.9.

  Eligibility; Disqualification      122  

SECTION 7.10.

  Limitation on Duty of Trustee      122  

SECTION 7.11.

  Preferential Collection of Claims Against the Issuer      122  

SECTION 7.12.

  Reports by Trustee to Holders of the Notes      123  

ARTICLE VIII

 

DISCHARGE OF INDENTURE; DEFEASANCE

 

SECTION 8.1.

  Discharge of Liability on Notes; Defeasance      123  

SECTION 8.2.

  Conditions to Defeasance      124  

SECTION 8.3.

  Application of Trust Money      125  

SECTION 8.4.

  Repayment to Issuer      125  

SECTION 8.5.

  Indemnity for U.S. Government Obligations      125  

SECTION 8.6.

  Reinstatement      126  

ARTICLE IX

 

AMENDMENTS

 

SECTION 9.1.

  Without Consent of Holders      126  

SECTION 9.2.

  With Consent of Holders      127  

SECTION 9.3.

  Effect of Consents and Waivers      129  

SECTION 9.4.

  Notation on or Exchange of Notes      129  

SECTION 9.5.

  Trustee To Sign Amendments      129  

ARTICLE X

 

GUARANTEES

 

SECTION 10.1.

  Guarantees      130  

SECTION 10.2.

  Limitation on Liability; Termination, Release and Discharge      131  

SECTION 10.3.

  Right of Contribution      133  

SECTION 10.4.

  No Subrogation      133  

SECTION 10.5.

  [Reserved]      133  

SECTION 10.6.

  Execution and Delivery      133  

ARTICLE XI

 

INTENTIONALLY OMITTED

 

ARTICLE XII

 

MISCELLANEOUS

 

SECTION 12.1.

  Notices      134  

SECTION 12.2.

  Certificate and Opinion as to Conditions Precedent      135  

SECTION 12.3.

  Statements Required in Certificate or Opinion      135  

SECTION 12.4.

  Currency Indemnity      136  

SECTION 12.5.

  Rules by Trustee, Paying Agent and Registrar      136  

 

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         Page  

SECTION 12.6.

  Days Other than Business Days      136  

SECTION 12.7.

  Governing Law      136  

SECTION 12.8.

  Jurisdiction and Service      137  

SECTION 12.9.

  Waiver of Jury Trial      137  

SECTION 12.10.

  No Recourse Against Others      137  

SECTION 12.11.

  Successors      137  

SECTION 12.12.

  Multiple Originals      137  

SECTION 12.13.

  Variable Provisions      137  

SECTION 12.14.

  Table of Contents; Headings      137  

SECTION 12.15.

  Force Majeure      138  

SECTION 12.16.

  USA Patriot Act      138  

SECTION 12.17.

  Communication by Holders with Other Holders      138  

SECTION 12.18.

  TIA § 314(d) Not Applicable      138  

ARTICLE XIII

 

MEASURING COMPLIANCE

 

SECTION 13.1.

  Compliance in Connection with Certain Investments and Repayments      138  

 

EXHIBITS   
EXHIBIT A    Form of Note
EXHIBIT B    Form of Certificate of Transfer
EXHIBIT C    Form of Certificate of Exchange
EXHIBIT D    Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited Investors
EXHIBIT E    Form of Supplemental Indenture to Be Delivered by Subsequent Guarantors

 

-iv-


INDENTURE, dated as of May 30, 2018, as amended or supplemented from time to time (this “Indenture”), between Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch Chamber of Commerce under number 66937442 (the “Issuer”), and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (in such capacity, the “Trustee”).

Recitals

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined herein) of the Notes (as defined herein):

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.1. Definitions.

144A Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that shall be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

Acquired Indebtedness” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged, amalgamated or consolidated with or into or becomes a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is Incurred in connection with, or in contemplation of, such other Person merging, amalgamating or consolidating with or into, or becoming a Restricted Subsidiary of, such specified Person, and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Acquisition” means the acquisition of the entities and assets comprising Atotech pursuant to the Acquisition Agreement.

Acquisition Agreement” means that certain Share Purchase Agreement, dated as of October 6, 2016, among Total Holdings Europe, Total Gestion USA, the Issuer and the other parties party thereto, together with all exhibits and schedules thereto and as amended through the Issue Date.

Acquisition Transactions” means the Acquisition and related transactions.

Additional Opco Notes” means any additional Opco Notes issued pursuant to the Opco Notes Indenture (excluding, for the avoidance of doubt, the Existing Opco Notes).

Additional Notes” means one or more series of additional Notes (other than the Initial Notes, any increases thereof as a result of a PIK Payment with respect to the Initial Notes and any PIK Notes issued in a PIK Payment with respect to the Initial Notes) issued under this Indenture in accordance with Sections 2.1, 2.2 and 3.3, whether or not they bear the same CUSIP number as the Initial Notes.

 

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Adjusted Cash” means the amount of unrestricted cash after giving effect to unrealized gains and losses under (and as determined by) any Swap Contracts in place at the time of determination (but only with respect to the then-elapsed portion of the current monthly or quarterly (as applicable under the relevant Swap Contract) calculation period thereunder).

Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

Agent” means any Registrar, Paying Agent, co-registrar or additional paying agent.

Applicable Premium” means, with respect to any Note on any applicable Redemption Date, as calculated by the Issuer, the greater of:

(1) 1% of the then-outstanding principal amount of the Note; and

(2) the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of the Note at June 1, 2019, in the case of the Initial Notes, or at such first optional redemption date as may be specified by the Issuer in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes, in each case, as set forth in Section 5.1(a), plus (ii) all required interest payments due on the Note through June 1, 2019, in the case of the Initial Notes, or through such first optional redemption date as may be specified by the Issuer in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes (excluding accrued but unpaid interest to (but not including) the Redemption Date), in the case of each of clauses (i) and (ii) above, computed using a discount rate equal to the Treasury Rate plus 50 basis points; over (b) the then-outstanding principal amount of the Note.

The Trustee shall have no duty to calculate or verify the Issuer’s calculation of the Applicable Premium.

Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and/or Clearstream that apply to such transfer or exchange.

Asset Sale” means:

(1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) of the Issuer or any Restricted Subsidiary, or

(2) the issuance or sale of Equity Interests (other than preferred stock of Restricted Subsidiaries issued in compliance with Section 3.3 and directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary of the Issuer (other than to the Issuer or another Restricted Subsidiary) (whether in a single transaction or a series of related transactions),

 

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(each of the foregoing referred to in this definition as a “disposition”). Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(a) a sale, exchange or other disposition of cash, Cash Equivalents or Investment Grade Securities, or of obsolete, damaged, unnecessary, unsuitable or worn out equipment or other assets in the ordinary course of business, or dispositions of property no longer used, useful or economically practicable to maintain in the conduct of the business of the Issuer and its Restricted Subsidiaries (including allowing any registrations or any applications for registration of any intellectual property or other intellectual property rights to lapse or become abandoned);

(b) the sale, conveyance, lease or other disposition of all or substantially all of the assets of the Issuer in compliance with Section 4.1 or any disposition that constitutes a Change of Control;

(c) any Restricted Payment that is permitted to be made, and is made, under Section 3.4 or any Permitted Investment;

(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary, in a single transaction or series of related transactions, with an aggregate Fair Market Value of less than or equal to $20.0 million;

(e) any transfer or disposition of property or assets or issuance or sale of Equity Interests by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another Restricted Subsidiary;

(f) the creation of any Lien permitted under this Indenture;

(g) any issuance, sale, pledge or other disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(h) the sale, lease, assignment, license or sublease of inventory, equipment, accounts receivable, notes receivable or other current assets held for sale in the ordinary course of business or the conversion of accounts receivable to notes receivable or dispositions of accounts receivable in connection with the collection or compromise thereof;

(i) the lease, assignment, license, sublicense or sublease of any real or personal property in the ordinary course of business;

(j) a sale or transfer of accounts receivable, or participations therein, and related assets of the type specified in the definition of “Receivables Financing” to a Receivables Subsidiary in a Qualified Receivables Financing or in factoring or similar transactions;

(k) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;

(l) any exchange of assets for Related Business Assets (including a combination of Related Business Assets and a de minimis amount of cash or Cash Equivalents) of comparable or greater market value than the assets exchanged, as determined in good faith by the Issuer;

 

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(m) (i) non-exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles and (ii) exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles in the ordinary course of business of the Issuer and the Restricted Subsidiaries of the Issuer;

(n) any Sale/Leaseback Transaction with respect to property acquired or built after the Opco Issue Date by the Issuer or any of its Restricted Subsidiaries; provided that such sale is for at least Fair Market Value;

(o) the surrender or waiver of obligations of trade creditors or customers or other contract rights that were incurred in the ordinary course of business of the Issuer or any Restricted Subsidiary of the Issuer, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or compromise, settlement, release or surrender of a contract, tort or other litigation claim, arbitration or other disputes;

(p) dispositions arising from foreclosures, condemnations, eminent domain, seizure, nationalization or any similar action with respect to assets, dispositions of property subject to casualty events and (except for purposes of calculating Net Cash Proceeds of any Asset Sale under Sections 3.7(b), (c), (d), (e) and (f)) dispositions necessary or advisable (as determined by the Issuer in good faith) in order to consummate any acquisition of any Person, business or assets;

(q) dispositions of Investments (including Equity Interests) in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements or rights of first refusal between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(r) to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(s) the issuance of directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law;

(t) dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is purchased within 90 days of such disposition or (ii) the proceeds of such Asset Sale are applied within 90 days of such disposition to the purchase price of such replacement property (which replacement property is purchased within 90 days of such disposition);

(u) a sale or transfer of equipment receivables, or participations therein, and related assets; and

(v) any dispositions in connection with the Transactions.

For the avoidance of doubt, the unwinding of Swap Contracts shall not be deemed to constitute an Asset Sale.

Atotech” means Atotech B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in Amsterdam and registered with the Dutch chamber of commerce under number 30128915.

Bankruptcy Law” means, any bankruptcy, insolvency, liquidation, conservatorship, assignment for the benefit of creditors, moratorium, rearrangement, receivership, judicial management, reorganization or other similar law, statute, rule, regulation or provision of any applicable jurisdiction (including any applicable foreign jurisdiction), including Title 11, United States Code and any similar Federal, state or foreign law for the relief of debtors and also including the Dutch Tax Collection Act (Invorderingswet 1990).

 

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beneficial owner” has the meaning given to that term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will not be deemed to have beneficial ownership of any securities that such “person” has the right to acquire or vote only upon the happening of any future event or contingency (including the passage of time) that has not yet occurred. The terms “beneficial ownership,” “beneficially owns” and “beneficially owned” have a corresponding meaning.

Board of Directors” means as to any Person, the board of directors, board of managers, sole member or managing member or other governing body of such Person, or if such Person is owned or managed by a single entity or has a general partner, the board of directors, board of managers, sole member or managing member or other governing body of such entity or general partner, or in each case, any duly authorized committee thereof, and the term “directors” means members of the Board of Directors.

Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law or regulation to close in the State of New York or, with respect to any payments to be made under this Indenture, the place of payment.

Capital Stock” means:

(1) in the case of a corporation or a company, corporate stock or share capital;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person (it being understood and agreed, for the avoidance of doubt, that “cash-settled phantom appreciation programs” in connection with employee benefits that do not require a dividend or distribution shall not constitute Capital Stock).

Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease or operating lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with IFRS.

Cash Capped Grower Amount” means the greater of (x) $295.0 million and (y) 100% of Consolidated EBITDA of the Issuer for the most recently ended four full fiscal quarter period for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis.

Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of the Issuer or any Guarantor and designated as a “Cash Contribution Amount” as described in the definition of “Contribution Indebtedness.”

 

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Cash Equivalents” means:

(1) U.S. dollars, Canadian dollars, Japanese yen, pounds sterling, RMB, euros or the national currency of any participating member state of the European Union (as it is constituted on the Opco Issue Date) and other currencies held by a Holdings Entity or Subsidiaries in the ordinary course of business;

(2) securities issued or directly guaranteed or insured by the government of the United States or any country that is a member of the European Union (as it is constituted on the Issue Date) or any agency or instrumentality thereof in each case with maturities not exceeding two years from the date of acquisition;

(3) money market deposits, certificates of deposit, time deposits and eurodollar time deposits with maturities of two years or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding two years, and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250.0 million in the case of domestic banks or $100.0 million (or the dollar equivalent thereof) in the case of foreign banks;

(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above and clause (6) below entered into with any financial institution or securities dealers of recognized national standing meeting the qualifications specified in clause (3) above;

(5) commercial paper or variable or fixed rate notes issued by a corporation or other Person (other than an Affiliate of the Issuer) rated at least “A-2” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized rating agency) and in each case maturing within two years after the date of acquisition;

(6) readily marketable direct obligations issued by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized rating agency) in each case with maturities not exceeding two years from the date of acquisition;

(7) Indebtedness issued by Persons (other than the Sponsor) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition, and marketable short-term money market and similar securities having a rating of at least “A-2” or “P-2” from either S&P or Moody’s (or reasonably equivalent ratings of another internationally recognized rating agency);

(8) investment funds investing at least 95% of their assets in investments of the types described in clauses (1) through (7) above and (9) and (10) below;

(9) Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or reasonably equivalent ratings of another internationally recognized rating agency); and

(10) in the case of investments by any Foreign Subsidiary or investments made in a country outside the United States of America, other investments of comparable tenor and credit quality to those described in the foregoing clauses (1) through (9) customarily utilized in the countries where such Foreign Subsidiary is located or in which such investment is made.

 

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Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (1) above; provided that such amounts are converted into any currency listed in clause (1) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

Cash Management Services” means any of the following to the extent not constituting a line of credit (other than an overnight draft facility that is not in default): automated clearing house transactions, treasury and/or cash management services, including, without limitation, treasury, depository, overdraft, credit, purchasing or debit card, non-card e-payables services, electronic funds transfer, treasury management services (including controlled disbursement services, overdraft automatic clearing house fund transfer services, return items and interstate depository network services), other demand deposit or operating account relationships, foreign exchange facilities and merchant services.

Change of Control” means the occurrence of any of the following events:

(i) any person or “group” (within the meaning of Rule 13d-5 under the Exchange Act, but excluding any employee benefit plan and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders, acquires beneficial ownership of more than 50% of the Voting Stock (measured by reference to voting power) of the Issuer (determined on a fully diluted basis);

(ii) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Issuer and its Subsidiaries, taken as a whole, to any Person other than one or more Permitted Holders; or

(iii) at any time, the Issuer beneficially owns, directly or indirectly, less than 100% of the issued and outstanding Voting Stock of Alpha 3 B.V. or any successor thereto (except to the extent Alpha 3 B.V. or such successor is merged with or into the Issuer in accordance with the terms of this Indenture),

provided that, in no case shall a Change of Control that has occurred as a result of clauses (1) or (2) above be deemed to have occurred if such Change of Control is also a Specified Change of Control Event.

Clearstream” means Clearstream Banking, société anonyme, or any successor securities clearing agency.

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

Company Order” means a written request or order signed in the name of the Issuer by any Officer of the Issuer.

Consolidated EBITDA” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of such Person for such period:

(1) increased, in each case (other than with respect to clauses (k), (l) and (n) below) to the extent deducted and not added back in calculating such Consolidated Net Income (and without duplication), by:

 

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(a) provision for taxes based on income, profits or capital, including federal, state, franchise, excise, property and similar taxes and foreign withholding taxes paid or accrued, including giving effect to any penalties and interest with respect thereto, and state taxes in lieu of business fees (including business license fees) and payroll tax credits, income tax credits and similar credits and including an amount equal to the amount of tax distributions actually made to the holders of Equity Interests of such Person or its Restricted Subsidiaries or any direct or indirect parent of such Person or its Restricted Subsidiaries in respect of such period (in each case, to the extent attributable to the operations of such Person and its Subsidiaries), which shall be included as though such amounts had been paid as income taxes directly by such Person or its Restricted Subsidiaries; plus

(b) Consolidated Interest Expense; plus

(c) all depreciation and amortization charges and expenses, including amortization or expense recorded for upfront payments related to any contract signing and signing bonus and incentive payments; plus

(d) the amount of any interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any Restricted Subsidiary of such Person that is not a Wholly Owned Restricted Subsidiary of such Person; plus

(e) the amount of management, monitoring, consulting, transaction and advisory fees (including termination fees) and related indemnities, charges and expenses paid or accrued to or on behalf of any direct or indirect parent of the Issuer or any of the Permitted Holders, in each case, to the extent permitted under Section 3.8; plus

(f) earn-out obligations incurred in connection with any acquisition or other Investment and paid or accrued during the applicable period; plus

(g) all charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of equity interests held by management and all losses, charges and expenses related to payments made to holders of options or other derivative equity interests in the common equity of such Person or any direct or indirect parent of the Issuer in connection with, or as a result of, any distribution being made to equityholders of such Person or any of its direct or indirect parents, which payments are being made to compensate such optionholders as though they were equityholders at the time of, and entitled to share in, such distribution; plus

(h) all non-cash losses, charges and expenses, including any write-offs or write-downs; provided that if any such non-cash charge represents an accrual or reserve for potential cash items in any future four-fiscal quarter period, (i) such Person may determine not to add back such non-cash charge in the period for which Consolidated EBITDA is being calculated and (ii) to the extent such Person does decide to add back such non-cash charge, the cash payment in respect thereof in such future four-fiscal quarter period will be subtracted from Consolidated EBITDA for such future four-fiscal quarter period; plus

(i) all costs and expenses in connection with pre-opening and opening and closure and/or consolidation of facilities that were not already excluded in calculating such Consolidated Net Income; plus

(j) restructuring charges; accruals or reserves and business optimization expense, including any restructuring costs and integration costs incurred in connection with the Acquisition Transactions and any other acquisitions; start-up costs (including entry into new market/channels and new service offerings); costs related to the closure, relocation,

 

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reconfiguration and/or consolidation of facilities and costs to relocate employees; integration and transaction costs; retention charges; severance; contract termination costs; recruiting and signing bonuses and expenses; future lease commitments; systems establishment costs; systems, facilities or equipment conversion costs; excess pension charges and consulting fees; expenses attributable to the implementation of costs savings initiatives; costs associated with tax projects/audits and costs consisting of professional consulting or other fees relating to any of the foregoing; plus

(k) Pro Forma Cost Savings; plus

(l) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” and “Pro Forma Adjusted EBITDA” (or similar pro forma non-IFRS measures) as set forth in footnote (3) in the section entitled “Summary—Summary historical consolidated and unaudited pro forma condensed consolidated financial information and other data” in the Opco Offering Memorandum to the extent adjustments of such nature continue to be applicable during the period in which Consolidated EBITDA is being calculated; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Basis”; plus

(m) the amount of loss or discount on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Financing; plus

(n) with respect to any joint venture that is not a Restricted Subsidiary, an amount equal to the proportion of those items described in clauses (a), (b) and (c) above relating to such joint venture corresponding to such Person’s and the Restricted Subsidiaries’ proportionate share of such joint venture’s Consolidated Net Income (determined as if such joint venture were a Restricted Subsidiary) solely to the extent Consolidated Net Income was reduced thereby;

(2) decreased (without duplication and to the extent increasing such Consolidated Net Income for such period) by (i) non-cash gains or income, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that were deducted (and not added back) in the calculation of Consolidated EBITDA for any prior period ending after the Issue Date and (ii) the amount of any minority interest income consisting of a Subsidiary loss attributable to minority equity interest of third parties in any non-Wholly Owned Subsidiary (to the extent not deducted from Consolidated Net Income for such period);

(3) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any net cash or realized gains and losses relating to (i) amounts denominated in foreign currencies resulting from the application of IAS 21 (including net realized gains and losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains or losses from related Swap Contracts (entered into in the ordinary course of business or consistent with past practice)) or (ii) any other amounts denominated in or otherwise trued-up to provide similar accounting as if they were denominated in foreign currencies; and

(4) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any gain or loss relating to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice);

provided that the Issuer may, in its sole discretion, elect to not make any adjustment for any item pursuant to the foregoing clauses (1) through (4) above if any such item individually is less than $2.0 million in any fiscal quarter.

 

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Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(a) the aggregate interest expense of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with IFRS, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including pay in kind interest payments, amortization of original issue discount, the interest component of Capitalized Lease Obligations and net payments and receipts (if any) pursuant to interest rate Swap Contracts (other than in connection with the early termination thereof) but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, discounts, fees and expenses and expensing of any bridge, commitment or other financing fees, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities, and all discounts, commissions, fees and other charges associated with any Receivables Financing); plus

(b) consolidated capitalized interest of the referent Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

(c) interest income of the referent Person and its Restricted Subsidiaries for such period;

provided that in the case of any Person that became a Restricted Subsidiary of such Person after the commencement of such four-quarter period, the interest expense of such Person paid in cash prior to the date on which it became a Restricted Subsidiary of such Person will be disregarded. For purposes of this definition, interest on Capitalized Lease Obligations will be deemed to accrue at the interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligations in accordance with IFRS.

Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with IFRS and before any reduction in respect of Preferred Stock dividends; provided that (without duplication):

(a) all net after-tax extraordinary, nonrecurring, exceptional or unusual gains, losses, income, expenses and charges, in each case as determined in good faith by such Person, and in any event including, without limitation, all restructuring, severance, relocation, retention and completion payments, consolidation, integration or other similar charges and expenses, contract termination costs, system establishment charges, conversion costs, start-up or closure or transition costs, expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to curtailments, settlements or modifications to pension and post-retirement employee benefit plans in connection with the Acquisition Transactions or any acquisition or Permitted Investment, expenses associated with strategic initiatives, facilities shutdown and opening costs, and any fees, expenses, charges or change in control payments related to the Acquisition Transactions or any acquisition or Permitted Investment (including any transition-related expenses (including retention or transaction-related bonuses or payments) incurred before, on or after the Opco Issue Date), will be excluded;

 

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(b) all (i) charges and expenses relating to the Acquisition Transactions, (ii) transaction fees, costs and expenses incurred in connection with the consummation of any equity issuances, investments, acquisitions, dispositions, recapitalizations, mergers, amalgamations, option buyouts and the Incurrence, modification or repayment of Indebtedness permitted to be Incurred hereunder (including any Refinancing Indebtedness in respect thereof) or any amendments, waivers or other modifications under the agreements relating to such Indebtedness or similar transactions and (iii) without duplication of any of the foregoing, non-operating or non-recurring professional fees, costs and expenses for such period will be excluded;

(c) all net after-tax income, loss, expense or charge from abandoned, closed or discontinued operations and any net after-tax gain or loss on the disposal of abandoned, closed or discontinued operations (and all related expenses) other than in the ordinary course of business (as determined in good faith by such Person) will be excluded;

(d) all net after-tax gain, loss, expense or charge attributable to business dispositions and asset dispositions, including the sale or other disposition of any Equity Interests of any Person, other than in the ordinary course of business (as determined in good faith by such Person), will be excluded;

(e) all net after-tax income, loss, expense or charge attributable to the early extinguishment or cancellation of Indebtedness, Swap Contracts or other derivative instruments (including deferred financing costs written off and premiums paid) will be excluded;

(f) all non-cash gains, losses, expenses or charges attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments will be excluded;

(g) any non-cash or unrealized foreign currency translation or foreign currency transaction gains and losses related to changes in currency exchange rates (including remeasurements of Indebtedness and any net loss or gain resulting from Swap Contracts for currency exchange risk) will be excluded;

(h) (i) the net income for such period of any Person that is not a Restricted Subsidiary of the referent Person or that is accounted for by the equity method of accounting, will be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or converted into cash) with respect to such equity ownership to the referent Person or a Restricted Subsidiary thereof in respect of such period and (ii) the net income for such period will include any ordinary course dividends or distributions or other payments paid in cash (or converted into cash) with respect to such equity ownership received from any such Person during such period in excess of the amounts included in subclause (i) above;

(i) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies will be excluded;

(j) the effects of purchase accounting, fair value accounting or recapitalization accounting adjustments (including the effects of such adjustments pushed down to the referent Person and its Restricted Subsidiaries) resulting from the application of purchase accounting, fair value accounting or recapitalization accounting in relation to the Acquisition Transactions or any acquisition consummated before or after the Opco Issue Date, and the amortization, write-down or write-off of any amounts thereof, net of taxes, will be excluded;

 

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(k) all non-cash impairment charges and asset write-ups, write-downs and write-offs, in each case pursuant to IFRS, and the amortization of intangibles arising from the application of IFRS will be excluded;

(l) all non-cash expenses realized in connection with or resulting from equity or equity-linked compensation plans, employee benefit plans or agreements or post-employment benefit plans or agreements, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other similar rights will be excluded;

(m) any costs or expenses incurred in connection with the payment of dividend equivalent rights to option holders pursuant to any management equity plan, stock option plan or any other management or employee benefit plan or agreement or post-employment benefit plan or agreement will be excluded;

(n) accruals and reserves for liabilities or expenses that are established or adjusted as a result of the Acquisition Transactions within 24 months after the Opco Issue Date will be excluded;

(o) all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, fees and expenses, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities, and expensing of any bridge, commitment or other financing fees (including in connection with a transaction undertaken but not completed), will be excluded;

(p) all discounts, commissions, fees and other charges (including interest expense) associated with any Receivables Financing will be excluded;

(q) (i) the non-cash portion of “straight-line” rent expense will be excluded and (ii) the cash portion of “straight-line” rent expense that exceeds the amount expensed in respect of such rent expense will be included;

(r) expenses and lost profits with respect to liability or casualty events or business interruption will be disregarded to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer, but only to the extent that such amount (i) has not been denied by the applicable carrier in writing and (ii) is in fact reimbursed within 365 days of the date on which such liability was discovered or such casualty event or business interruption occurred (with a deduction for any amounts so added back that are not reimbursed within such 365-day period); provided that any proceeds of such reimbursement when received will be excluded from the calculation of Consolidated Net Income to the extent the expense or lost profit reimbursed was previously disregarded pursuant to this clause (r);

(s) losses, charges and expenses that are covered by indemnification or other reimbursement provisions in connection with any asset disposition will be excluded to the extent actually reimbursed, or, so long as such Person has made a determination that a reasonable basis exists for indemnification or reimbursement, but only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days);

 

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(t) non-cash charges or income relating to adjustments to deferred tax asset valuation allowances will be excluded;

(u) cash dividends or returns of capital from Investments (such return of capital not reducing the ownership interest in the underlying Investment), in each case received during such period, to the extent not otherwise included in Consolidated Net Income for that period or any prior period subsequent to the Opco Issue Date will be included;

(v) solely for the purpose of determining the amount available for Restricted Payments under Section 3.4(a)(C) and without duplication of provisions under Section 3.4(a)(C) with respect to cash dividends or returns on Investments, the net income (or loss) for such period of any Restricted Subsidiary (other than a Guarantor) will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to such Person or any of its Restricted Subsidiaries in respect of such period, to the extent not already included therein (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause (v));

(w) any Initial Public Company Costs will be excluded; and

(x) any non-cash interest expense and non-cash interest income, in each case to the extent there is no associated cash disbursement or receipt, as the case may be, before the earlier of the maturity date of the Notes and the date on which all the Notes cease to be outstanding, shall be excluded;

provided that the Issuer may, in its sole discretion, elect to not make any adjustment for any item pursuant to clauses (a) through (x) above if any such item individually is less than $2.0 million in any fiscal quarter.

For the purpose of Section 3.4 only, there shall be excluded from Consolidated Net Income any income arising from the sale or other disposition of Restricted Investments, from repurchases or redemptions of Restricted Investments, from repayments of loans or advances which constituted Restricted Investments or from any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries, in each case to the extent such amounts increase the amount of Restricted Payments permitted under Section 3.4(a)(C)(5) or 3.4(a)(C)(6).

Consolidated Net Tangible Assets” means the aggregate amount of assets (including deferred tax assets (without reducing such deferred tax assets by deferred tax liabilities), and less applicable reserves and other properly deductible items) after deducting therefrom all goodwill, indemnification assets in connection with the Acquisition Transactions, trade names, trademarks, patents, unamortized debt discount and expense, investments, and other like intangibles, all as set forth in the most recent consolidated balance sheet of the Issuer and its Restricted Subsidiaries and computed in accordance with IFRS, determined on a Pro Forma Basis.

 

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Consolidated Secured Indebtedness” means Consolidated Total Indebtedness of the Issuer that is not subordinated in right of payment to the Notes and that is (i) secured by a Lien on the Collateral (as defined in the Senior Credit Agreement) or (ii) in an amount in excess of $100.0 million (in the aggregate for all such Indebtedness) and secured by a Lien on any asset or property of the Issuer or any Restricted Subsidiary.

Consolidated Senior Secured Net Debt Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Secured Indebtedness as of such date minus (y) the amount of Adjusted Cash and Cash Equivalents of the Issuer and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Issuer for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis; provided that, in the event that the Issuer shall classify Indebtedness Incurred on the date of determination as secured in part pursuant to clause (24) of the definition of “Permitted Liens” and in part pursuant to one or more other clauses of such definition (other than Liens Incurred under clause (6) thereof in respect of Indebtedness Incurred under clause (b)(i)(y) of Section 3.3) as provided in the final paragraph of such definition any calculation of Consolidated Secured Indebtedness for purposes of clause (x) above on such date (but not in respect of any future calculation following such date) shall not include any such Indebtedness (and shall not give effect to any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness from the proceeds thereof) to the extent secured pursuant to any such other clause of such definition. For purposes of calculating the Consolidated Senior Secured Net Debt Ratio with respect to any revolving Indebtedness Incurred under the Consolidated Senior Secured Net Debt Ratio, the Issuer may elect, at any time (which election may not be changed with respect to such revolving Indebtedness), to either (x) give pro forma effect to the Incurrence of the entire committed amount of such Indebtedness, in which case such committed amount may thereafter be borrowed or reborrowed, in whole or in part, from time to time, without further compliance with the Consolidated Senior Secured Net Debt Ratio component of any provision hereunder, or (y) give pro forma effect to the Incurrence of the actual amount drawn under such revolving Indebtedness, in which case, the ability to Incur the amounts committed to under such Indebtedness will be subject to the Consolidated Senior Secured Net Debt Ratio (to the extent being Incurred pursuant to such ratio) at the time of each such Incurrence. The Issuer hereby elects that on the Issue Date, the entire committed amount of the revolving portion of the Senior Credit Agreement on the Issue Date shall be deemed to have been Incurred under clause (b)(i)(x)(2) of Section 3.3 and not under the Consolidated Senior Secured Net Debt Ratio.

Consolidated Total Assets” means the total consolidated assets of the Issuer and its Restricted Subsidiaries, as shown on the most recent consolidated balance sheet of the Issuer and its Restricted Subsidiaries, determined on a Pro Forma Basis.

Consolidated Total Indebtedness” means all Indebtedness of the type described in clauses (1)(a), (1)(b) (but excluding surety bonds, performance bonds or other similar instruments), (1)(d) (but solely in respect of the amount of outstanding Indebtedness of the type described in (1)(d) that is in excess of $5.0 million) and (2) (in respect of Indebtedness of the type described in clauses (1)(a), (1)(b) (but excluding Indebtedness constituting surety bonds, performance bonds or other similar instruments) and (1)(d) (but solely in respect of the amount of Indebtedness of the type described in (1)(d) that is in excess of $5.0 million)) of the definition of “Indebtedness”, of a Person and its Restricted Subsidiaries on a consolidated basis, in an amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with IFRS (but (x) excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any acquisition and (y) any Indebtedness that is issued at a discount to its initial principal amount shall be calculated based on the entire stated principal amount thereof, without giving effect to any discounts or upfront payments), excluding obligations in respect of letters of credit, except to the extent of unreimbursed amounts thereunder. For the avoidance of doubt, it is understood that obligations (i) under Swap Contracts, Cash Management Services and any Receivables Financing and (ii) owed by Unrestricted Subsidiaries, do not constitute Consolidated Total Indebtedness.

 

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Consolidated Total Net Debt Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Total Indebtedness of the Issuer as of such date minus (y) the amount of Adjusted Cash and Cash Equivalents of the Issuer and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Issuer for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis.

Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds:

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.

Contribution Indebtedness” means Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate principal amount not greater than the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Issuer or any Restricted Subsidiary (other than, in the case of such Restricted Subsidiary, contributions by the Issuer or any other Restricted Subsidiary to its capital) after the Opco Issue Date and designated as a Cash Contribution Amount; provided that such Contribution Indebtedness (a) is Incurred within 210 days after the making of such cash contributions and (b) is so designated as Contribution Indebtedness pursuant to an Officer’s Certificate on the Incurrence date thereof.

Corporate Trust Office” shall be at the address of the Trustee specified in Section 12.1 or such other address as to which the Trustee may give notice to the Issuer or Holders pursuant to the procedures set forth in Section 12.1.

Credit Agreement” means (i) the Senior Credit Agreement and (ii) whether or not the Senior Credit Agreement remains outstanding, if designated by the Issuer to be included in this definition of “Credit Agreement,” one or more (A) debt facilities, indentures or commercial paper facilities providing for revolving credit loans, term loans, notes, debentures, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, notes, mortgages, guarantees, collateral documents,

 

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indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances) or (C) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrower(s) or issuer(s) and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, increased (provided that such increase in borrowings is permitted under this Indenture), replaced or refunded in whole or in part from time to time and whether by the same or any other agent, lender or investor or group of lenders or investors.

Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

Data Download Program” means the interactive electronic interface made available by the Board of Governors of the Federal Reserve System or any successor information system.

Default” means any event which is, or after notice or the passage of time or both would be, an Event of Default.

Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.6 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Increases or Decreases in Global Note” or the “Schedule of Increases or Decreases in Temporary Regulation S Global Note” (as applicable) attached thereto.

Depositary” means DTC, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Issuer.

Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Issuer or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-cash Consideration.

Designated Non-Guarantor Subsidiary” means any Restricted Subsidiary of the Issuer (x) that is prohibited by applicable law from providing a Guarantee, (y) that would require any consent, approval, license or authorization from any governmental authority to provide a Guarantee unless such consent, approval, license or authorization has been received or (z) that would be required to make any payment that is excessive (in the good faith determination of the Issuer) to any governmental authority to provide a Guarantee, unless such payment has been made. It is understood and agreed that the Issuer’s Restricted Subsidiaries organized under the laws of China are, as of the Issue Date, Designated Non-Guarantor Subsidiaries (and the only Designated Non-Guarantor Subsidiaries).

Designated Preferred Stock” means Preferred Stock of the Issuer or any direct or indirect parent of the Issuer, as applicable (other than Excluded Equity), that is issued after the Opco Issue Date for cash and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate, on the issuance date thereof, the cash proceeds of which are contributed to the capital of the Issuer (if issued by any Holdings Entity or any other direct or indirect parent of the Issuer) and excluded from the calculation set forth in Section 3.4(a)(C).

Disqualified Stock” means, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is puttable, redeemable or exchangeable), in each case, at the option of the holder thereof or upon the happening of any event:

 

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(1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Equity Interests than the asset sale and change of control provisions applicable to the Notes and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the Notes (including the purchase of any Notes tendered pursuant thereto)),

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock, or

(3) is redeemable at the option of the holder thereof, in whole or in part,

in each case, prior to the date that is 91 days after the earlier of the maturity date of the Notes and the date the Notes are no longer outstanding; provided that only the portion of Equity Interests that so mature or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Issuer or its Subsidiaries or a direct or indirect parent of the Issuer or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or its Subsidiaries or a direct or indirect parent of the Issuer in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided, further, that any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

Equity Contribution” means the equity contributions to the Issuer made, either directly or indirectly, by the Sponsor in order to provide the Issuer with capital, when taken together with the proceeds of the Initial Notes, and the borrowings under the Senior Credit Agreement.

Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any Capital Stock that arises only by reason of the happening of a contingency or any debt security that is convertible into, or exchangeable for, Capital Stock).

Equity Offering” means any public or private sale on or after the Issue Date of Capital Stock or Preferred Stock of the Issuer or any direct or indirect parent of the Issuer, as applicable (other than Disqualified Stock), other than:

(1) public offerings with respect to the Issuer’s or such direct or indirect parent’s common stock registered on Form S-4 or Form S-8 or a successor form thereto;

(2) issuances to any Subsidiary of the Issuer; and

(3) any such public or private sale that constitutes an Excluded Contribution or Refunding Capital Stock.

Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency.

 

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Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

Exchange Rate” means, on any day, the rate at which the currency other than the Required Currency may be exchanged into the Required Currency at approximately 11:00 a.m., New York City time, on such date on the Bloomberg Key Cross Currency Rates Page for the relevant currency. To the extent that such rate does not appear on any Bloomberg Key Cross Currency Rate Page, the Exchange Rate shall be determined by the Issuer in good faith.

Excluded Contributions” means the Net Cash Proceeds and Cash Equivalents, or the Fair Market Value of other assets, received by the Issuer after the Opco Issue Date from:

(1) contributions to its common equity capital, and

(2) the sale of Capital Stock (other than Excluded Equity) of the Issuer,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate, or that are utilized to make a Restricted Payment pursuant to Section 3.4(b)(ii). Excluded Contributions will be excluded from the calculation set forth in Section 3.4(a)(C).

Excluded Equity” means (i) Disqualified Stock, (ii) any Equity Interests issued or sold to a Restricted Subsidiary or any employee stock ownership plan or trust established by the Issuer or any of its Subsidiaries or a direct or indirect parent of the Issuer (to the extent such employee stock ownership plan or trust has been funded by the Issuer or any Subsidiary or a direct or indirect parent of the Issuer), (iii) any Equity Interest that has already been used or designated (x) as (or the proceeds of which have been used or designated as) a Cash Contribution Amount, Designated Preferred Stock, an Excluded Contribution or Refunding Capital Stock, or (y) to increase the amount available under Section 3.4(b)(iv)(a) or clause (14) of the definition of “Permitted Investments” or is proceeds of Indebtedness referred to in Section 3.4(b)(xiii)(b) and (iv) the Equity Contribution.

Exempted Indebtedness” means, as of any particular time, all then-outstanding Indebtedness of the Issuer and Principal Property Subsidiaries incurred after the Opco Issue Date and secured by any mortgage, security interest, pledge or lien other than those permitted by Section 3.5(b).

Existing Opco Notes” means the $425,000,000 in aggregate principal amount of Opco Notes issued on the Opco Issue Date.

Fair Market Value” means, with respect to any asset or property, the price that could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction (as determined in good faith by the senior management or the Board of Directors of the Issuer or any direct or indirect parent of the Issuer, whose determination will be conclusive for all purposes under this Indenture and the Notes).

Fixed Charge Coverage Ratio means, with respect to any Person as of any date, the ratio of (1) Consolidated EBITDA of such Person for the most recent period of four consecutive fiscal quarters for which internal financial statements are available immediately preceding the date on which such calculation of the Fixed Charge Coverage Ratio is made, calculated on a Pro Forma Basis for such period to (2) the Fixed Charges of such Person for such period calculated on a Pro Forma Basis. In the event that the Issuer or any of its Restricted Subsidiaries Incurs or redeems or repays any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables

 

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Financing, unless the related commitments have been terminated and such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Preferred Stock or Disqualified Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to, substantially simultaneously with, or in connection with, the event for which the calculation of the Fixed Charge Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated on a Pro Forma Basis; provided that, in the event that the Issuer shall classify Indebtedness Incurred on the date of determination as Incurred in part as Ratio Debt and in part pursuant to one or more clauses of Section 3.3(b) (other than in respect of clause (xv) of Section 3.3(b)) as provided in Section 3.3(c), any calculation of Fixed Charges pursuant to this definition on such date (but not in respect of any future calculation following such date) shall not include any such Indebtedness (and shall not give effect to any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness from the proceeds thereof) to the extent Incurred pursuant to any such other clause of such definition.

Fixed Charges” means, with respect to any Person for any period, the sum of:

(1) Consolidated Interest Expense of such Person for such period, and

(2) the product of (a) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries for such period and (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person and its Restricted Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and in accordance with IFRS.

Fixed IFRS Date” means the Opco Issue Date after giving effect to the application of IFRS 16 as such standard is constituted as of the Opco Issue Date (notwithstanding that IFRS 16 is not mandatorily applicable as of the Opco Issue Date); provided that at any time and from time to time after the Opco Issue Date, the Issuer may by written notice to the Trustee elect to change the Fixed IFRS Date to be the date specified in such notice, and upon such notice, the Fixed IFRS Date shall be such date for all periods beginning on and after the date specified in such notice.

Fixed IFRS Terms” means (a) the definitions of the terms “Capitalized Lease Obligation,” “Consolidated Interest Expense,” “Consolidated Net Income,” “Consolidated Net Tangible Assets,” “Consolidated Total Assets,” “Consolidated Secured Indebtedness,” “Consolidated Senior Secured Net Debt Ratio,” “Consolidated Total Net Debt Ratio,” “Consolidated Total Indebtedness,” “Consolidated EBITDA” and “Indebtedness,” (b) all defined terms in this Indenture to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions, and (c) any other term or provision of this Indenture or the Notes that, at the Issuer’s election, may be specified by the Issuer by written notice to the Trustee from time to time; provided that the Issuer may elect to remove any term from constituting a Fixed IFRS Term; provided further that for all purposes under this Indenture, the Issuer hereby elects that “Fixed IFRS Terms” shall give effect to the application of IFRS 16 as such standard is constituted as of the Opco Issue Date (notwithstanding that IFRS 16 is not mandatorily applicable as of the Opco Issue Date).

Foreign Subsidiary” means a Restricted Subsidiary not organized or existing under the laws of the United States of America, any state thereof or the District of Columbia and any direct or indirect Subsidiary of such Restricted Subsidiary.

 

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GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession (but excluding the policies, rules and regulations of the SEC applicable only to public companies).

Global Note Legend” means the legend set forth in Section 2.1(c) hereof, which is required to be placed on all Global Notes issued under this Indenture.

Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Section 2.1 or 2.6 hereof.

guarantee” means, as to any Person, a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

Guarantee” means any guarantee of the Obligations of the Issuer under this Indenture and the Notes in accordance with the provisions of this Indenture.

Guarantors” means, collectively, each Restricted Subsidiary of the Issuer that Incurs a Guarantee of the Notes; provided that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person automatically ceases to be a Guarantor.

Holdco Credit Agreement” means any credit agreement under which the Issuer is a borrower or co-borrower, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, supplemented, waived, renewed or otherwise modified from time to time, and as replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture or commercial paper facilities with banks or other institutional lenders or investors extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder permitted under Section 3.3 or altering the maturity thereof or adding Restricted Subsidiaries as additional borrowers, issuers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders, investors or group of investors.

Holder” means the Person in whose name a Note is registered on the registrar’s books.

Holdings Entity” means Atotech UK Topco Limited, a private limited company incorporated in England and Wales, so long as the Issuer is a Wholly Owned Subsidiary of Atotech UK Topco Limited, or any other entity of which the Issuer is a Wholly Owned Subsidiary.

IAI Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that shall be issued in a denomination equal to the outstanding principal amount of the Notes resold to IAIs.

IFRS” means the International Financial Reporting Standards as issued by the International Accounting Standards Board as in effect on the Fixed IFRS Date (for purposes of Fixed IFRS Terms) and as in effect from time to time (for all other purposes of this Indenture); provided that at any date after the

 

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Opco Issue Date, the Issuer may make an irrevocable election to establish that IFRS shall mean IFRS as in effect on a date that is on or prior to the date of such election, provided further that the Issuer may at any time elect by written notice to the Trustee to use GAAP in lieu of IFRS for financial reporting purposes and, upon any such notice, references herein to IFRS shall thereafter be construed to mean (a) for periods beginning on and after the date specified in such notice, GAAP as in effect on the date specified in such notice (for purposes of the Fixed IFRS Terms) and as in effect from time to time (for all other purposes of this Indenture) and (b) for prior periods, IFRS as defined in the first sentence of this definition prior to the provisos. All ratios and computations based on IFRS contained in this Indenture shall be computed in conformity with IFRS.

Incremental Term Loans” means the incremental term loans in an aggregate principal amount of $200,000,000 borrowed under the Senior Credit Agreement on the Issue Date.

Incur” means, with respect to any Indebtedness, Capital Stock or Lien, to issue, assume, guarantee, incur or otherwise become liable for such Indebtedness, Capital Stock or Lien, as applicable; provided that any Indebtedness, Capital Stock or Lien of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

Indebtedness” means, with respect to any Person, without duplication:

(1) the principal of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, (d) in respect of Capitalized Lease Obligations or (e) representing any Swap Contracts, in each case, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Swap Contracts) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with IFRS;

(2) to the extent not otherwise included, any guarantee by such Person of the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and

(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness shall be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person.

The term “Indebtedness” (x) shall include any lease, concession or license of property (or guarantee thereof) that would be considered an operating lease under IFRS as in effect on the Opco Issue Date in accordance with the Fixed IFRS Terms and (y) shall not include any prepayments of deposits received from clients or customers in the ordinary course of business or consistent with past practices, or obligations under any license, permit or other approval (or guarantees given in respect of such obligations) Incurred prior to the Issue Date or in the ordinary course of business or consistent with past practices.

 

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Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

(i) Contingent Obligations Incurred in the ordinary course of business or consistent with past practices;

(ii) obligations under or in respect of Receivables Financings;

(iii) any balance that constitutes a trade payable, accrued expense or similar obligation to a trade creditor, in each case Incurred in the ordinary course of business;

(iv) intercompany liabilities that would be eliminated on the consolidated balance sheet of the Issuer and its consolidated Subsidiaries;

(v) prepaid or deferred revenue arising in the ordinary course of business;

(vi) Cash Management Services;

(vii) in connection with the purchase by the Issuer or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid in a timely manner;

(viii) obligations, to the extent such obligations would otherwise constitute Indebtedness, under any agreement that has been defeased or satisfied and discharged pursuant to the terms of such agreement;

(ix) for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or termination obligations, deferred compensatory or employee or director equity plans pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes; or

(x) Capital Stock (other than Disqualified Stock and Preferred Stock).

Indenture” has the meaning set forth in the preamble hereto.

Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing that is, in the good faith determination of the Issuer, qualified to perform the task for which it has been engaged.

Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

Initial Notes” means the $300,000,000 in aggregate principal amount of 8.750% / 9.500% Senior PIK Toggle Notes due 2023 of the Issuer issued under this Indenture on the Issue Date.

Initial Public Company Costs” means, as to any Person, costs relating to compliance with the provisions of the Securities Act and the Exchange Act (or similar regulations applicable in other listing jurisdictions), as applicable to companies with equity securities held by the public, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 (or similar non-U.S. regulations) and the rules and regulations promulgated in connection therewith (or similar regulations applicable in other listing jurisdictions), the rules of national securities exchange companies with listed equity, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees, in each case to the extent arising

 

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solely by virtue of the initial listing of such Person’s equity securities on a national securities exchange (or similar non-U.S. exchange); provided that any such costs arising from the costs described above in respect of the ongoing operation of such Person as a listed equity or its listed debt securities following the initial listing of such Person’s equity securities or debt securities, respectively, on a national securities exchange (or similar non-U.S. exchange) shall not constitute Initial Public Company Costs.

Initial Purchasers” means J.P. Morgan Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, HSBC Bank plc and Nomura Securities International, Inc., with respect to the offer and sale of the Initial Notes, and such other initial purchasers party to future purchase agreements entered into in connection with an offer and sale of any Additional Notes.

Interest Payment Date” means, in the case of the Initial Notes, June 1 and December 1 of each year, commencing on December 1, 2018 and, in the case of any Additional Notes, such interest payment dates as may be designated by the Issuer in accordance with the provisions of Section 2.2 hereof and, in each case, ending at the Stated Maturity of the Notes.

Interest Period” means the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date, with the exception that the first Interest Period shall commence on and include the Issue Date and end on and include the day immediately preceding the first scheduled Interest Payment Date.

Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

Investment Grade Securities” means:

(1) securities issued or directly guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),

(2) securities that have an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Issuer and its Subsidiaries,

(3) investments in any fund that invests at least 95% of its assets in investments of the type described in clauses (1) and (2) above and clause (4) below which fund may also hold immaterial amounts of cash pending investment and/or distribution, and

(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

Investments” means, with respect to any Person, (i) all investments by such Person in other Persons (including Affiliates) in the form of (a) loans (including guarantees of Indebtedness), (b) advances or capital contributions (excluding accounts receivable, trade credit and advances or other payments made to customers, dealers, suppliers and distributors and payroll, commission, travel and similar advances to officers, directors, managers, employees, consultants and independent contractors made in the ordinary course of business), and (c) purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any such other Person and (ii) investments that are required by IFRS to be classified on the balance sheet of the Issuer in the same manner as the other investments included in clause (i) of this definition to the extent such transactions involve the transfer of cash or other property; provided that Investments shall not include, in the case of the Issuer and the Restricted Subsidiaries, intercompany loans, advances, or Indebtedness having a term not exceeding 364

 

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days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business. If the Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuer shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. In no event shall a guarantee of an operating lease of the Issuer or any Restricted Subsidiary be deemed an Investment. For purposes of the definition of “Unrestricted Subsidiary,” Section 3.4 and Section 3.14:

(1) “Investments” shall include the portion (proportionate to the Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Issuer shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Issuer’s “Investment” in such Subsidiary at the time of such redesignation less

(b) the portion (proportionate to the Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

The amount of any Investment outstanding at any time (including for purposes of calculating the amount of any Investment outstanding at any time under any provision of Section 3.4 and otherwise determining compliance with Section 3.4) shall be the original cost of such Investment (determined, in the case of any Investment made with assets of the Issuer or any Restricted Subsidiary, based on the Fair Market Value of the assets invested and without taking into account subsequent increases or decreases in value), reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Issuer or a Restricted Subsidiary in respect of such Investment, and shall be net of any Investment by such Person in the Issuer or any Restricted Subsidiary.

Issue Date” means May 30, 2018.

Issuer” has the meaning set forth in the preamble hereto.

joint venture” means any joint venture or similar arrangement (in each case, regardless of legal formation), including but not limited to collaboration arrangements, profit sharing arrangements or other contractual arrangements.

JV Distributions” means, at any time, 50% of the aggregate amount of all cash dividends or distributions received by the Issuer or any of its Restricted Subsidiaries as a return on an Investment in a Permitted Joint Venture during the period from the Opco Issue Date through the end of the fiscal quarter most recently ended immediately prior to such date for which financial statements are internally available; provided that the Issuer or any of its Restricted Subsidiaries are not required to reinvest such dividends or distributions in the Permitted Joint Venture.

 

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Lien” means, with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

Management Agreements” means those certain services agreements or monitoring agreements between the Issuer or any of its Affiliates, on the one hand, and the Sponsor, on the other hand entered into in connection with the Acquisition, as the same may be amended, restated, modified or replaced, from time to time, to the extent such amendment, modification or replacement is not more disadvantageous to the Holders in any material respect than the applicable services agreement or monitoring agreement entered into in connection with the Acquisition.

Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

Net Cash Proceeds” means the aggregate cash proceeds (using the Fair Market Value of any Cash Equivalents) received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, and including any proceeds received as a result of unwinding any related Swap Contracts in connection with such transaction but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct cash costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to Section 3.7(b)) to be paid as a result of such transaction, any costs associated with unwinding any related Swap Contracts in connection with such transaction and any deduction of appropriate amounts to be provided by the Issuer or any of its Restricted Subsidiaries as a reserve in accordance with IFRS against any liabilities associated with the asset disposed of in such transaction and retained by the Issuer or any of its Restricted Subsidiaries after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

Non-Guarantor Subsidiary” means any Restricted Subsidiary of the Issuer that is not a Guarantor.

Non-U.S. Person” means a Person who is not a U.S. Person.

Notes” means the Initial Notes (including any increases in principal amount thereof as a result of a PIK Payment), any Additional Notes and any PIK Notes issued in a PIK Payment, treated as a single class of securities except as otherwise provided in Section 2.2 and Section 9.2(a). Unless the context requires otherwise, references to the “principal” or “principal amount” of Notes or of the Notes of any series for all purposes of this Indenture include any increase in the principal amount of outstanding Notes (including PIK Notes) as a result of a PIK Payment or outstanding Notes of such series (including PIK Notes) as a result of a PIK Payment with respect to the Notes of such series, as applicable.

 

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Notes Custodian” means the custodian with respect to the Global Note (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee.

Obligations” means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness.

Offering Memorandum” means the Offering Memorandum related to the offering of the Initial Notes, dated May 24, 2018.

Officer” means, with respect to any Person, the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, Director, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary (or any person serving the equivalent function of any of the foregoing) of such Person (or of any direct or indirect parent, general partner, managing member or sole member of such Person) or any individual designated as an “Officer” for purposes of this Indenture by the Board of Directors of such Person (or the Board of Directors of any direct or indirect parent or the general partner, managing member or sole member of such Person).

Officer’s Certificate” means a certificate signed on behalf of the Issuer or any direct or indirect parent of the Issuer by an Officer of the Issuer or such parent entity that meets the requirements set forth in this Indenture.

Opco Issue Date” means January 31, 2017.

Opco Notes” means the 6.250% Senior Notes due 2025 issued by Alpha 3 B.V. and Alpha US Bidco, Inc.

Opco Notes Indenture” means the indenture, dated January 31, 2017, pursuant to which the Existing Opco Notes were issued, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, increased (provided that such increase in borrowings is permitted), replaced or refunded in whole or in part from time to time.

Opco Offering Memorandum” means the offering memorandum related to the Existing Opco Notes.

Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer.

Pari Passu Indebtedness” means:

(1) with respect to the Issuer, the Notes and any Indebtedness that ranks pari passu in right of payment to the Notes; and

(2) with respect to any Guarantor, its Guarantee and any Indebtedness that ranks pari passu in right of payment to such Guarantor’s Guarantee.

 

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Participant” means, with respect to the Depositary, Euroclear or Clearstream a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear or Clearstream).

Permanent Regulation S Global Note” means a permanent Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Temporary Regulation S Global Note upon expiration of the Restricted Period.

Permitted Asset Swap” means the purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the Issuer or any of its Restricted Subsidiaries and another Person; provided that (1) such purchase and sale or exchange must occur within 90 days of each other and (2) any cash or Cash Equivalents received must be applied in accordance with Section 3.7.

Permitted Holders” means each of (a) the Sponsor, (b) managers and members of management of the Issuer (or any Permitted Parent (other than clause (c) of the definition thereof)) or its Subsidiaries that have ownership interests in the Issuer (or such Permitted Parent (other than clause (c) of the definition thereof)), (c) any other beneficial owner in the common equity of the Issuer (or such Permitted Parent (other than clause (c) of the definition thereof)) as of the Issue Date, (d) any group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of which any of the Persons described in clauses (a), (b) or (c) above are members; provided that, without giving effect to the existence of such group or any other group, any of the Persons described in clauses (a), (b) and (c), collectively, beneficially own Voting Stock representing 50% or more of the total voting power of the Voting Stock of the Issuer (or any Permitted Parent (other than clause (c) of the definition thereof)) then held by such group, and (e) any Permitted Parent. Any Person or group, together with its Affiliates, whose acquisition of beneficial ownership constitutes (1) a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture or (2) a Specified Change of Control Event, will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

Permitted Investments” means:

(1) any Investment in cash and Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;

(2) any Investment in the Issuer (including the Notes) or any Restricted Subsidiary;

(3) any Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries;

(4) any Investment by the Issuer or any Restricted Subsidiary in a Person that is primarily engaged in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary (and any Investment held by such Person that was not acquired by such Person in contemplation of so becoming a Restricted Subsidiary or in contemplation of such merger, consolidation, amalgamation, transfer, conveyance or liquidation);

 

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(5) any Investment in securities or other assets received in connection with an Asset Sale made pursuant to Section 3.7 or any other disposition of assets not constituting an Asset Sale;

(6) any Investment (x) existing on the Issue Date, (y) made pursuant to binding commitments in effect on the Issue Date or (z) that replaces, refinances, refunds, renews or extends any Investment described under either of the immediately preceding clauses (x) or (y); provided that any such Investment is in an amount that does not exceed the amount replaced, refinanced, refunded, renewed or extended, except as contemplated pursuant to the terms of such Investment in existence on the Issue Date or as otherwise permitted under this definition or under Section 3.4;

(7) loans and advances to, or guarantees of Indebtedness of, employees, directors, officers, managers, consultants or independent contractors in an aggregate amount, taken together with all other Investments made pursuant to this clause (7) that are at the time outstanding, not in excess of $10.0 million outstanding at any one time in the aggregate;

(8) loans and advances to officers, directors, employees, managers, consultants and independent contractors for business-related travel and entertainment expenses, moving and relocation expenses and other similar expenses, in each case in the ordinary course of business;

(9) any Investment (x) acquired by the Issuer or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization by the Issuer or any such Restricted Subsidiary of such other Investment or accounts receivable, or (b) as a result of a foreclosure or other remedial action by the Issuer or any of its Restricted Subsidiaries with respect to any Investment or other transfer of title with respect to any Investment in default and (y) received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Issuer or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (B) litigation, arbitration or other disputes;

(10) Swap Contracts and Cash Management Services permitted under Section 3.3(b)(x);

(11) any Investment by the Issuer or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) in an aggregate amount, taken together with all other Investments made pursuant to this clause (11) that are at the time outstanding, not to exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (11) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (11) for so long as such Person continues to be a Restricted Subsidiary;

(12) additional Investments by the Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (12) that are at the time outstanding, not to exceed the greater of (x) $150.0 million and (y) 13.50% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that is not a Restricted Subsidiary at the date of the making of

 

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such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (12) for so long as such Person continues to be a Restricted Subsidiary;

(13) any transaction to the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 3.8(b) (except transactions described in clause (ii), (iii), (iv), (viii), (ix), (xiii) or (xiv) of Section 3.8(b));

(14) Investments the payment for which consists of Equity Interests (other than Excluded Equity) of the Issuer or any direct or indirect parent of the Issuer, as applicable; provided, however, that such Equity Interests shall not increase the amount available for Restricted Payments under Section 3.4(a)(C);

(15) Investments consisting of the leasing, licensing, sublicensing or contribution of intellectual property in the ordinary course of business or pursuant to joint marketing arrangements with other Persons;

(16) Investments consisting of purchases or acquisitions of inventory, supplies, materials and equipment or purchases, acquisitions, licenses, sublicenses or leases or subleases of intellectual property, or other rights or assets, in each case, in the ordinary course of business;

(17) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness;

(18) Investments of a Restricted Subsidiary acquired after the Issue Date or of an entity merged or amalgamated into or consolidated with a Restricted Subsidiary in a transaction that is not prohibited by Section 4.1 after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(19) repurchases of the Notes;

(20) guarantees of Indebtedness permitted to be Incurred under Section 3.3, and Obligations relating to such Indebtedness and guarantees (other than guarantees of Indebtedness) in the ordinary course of business;

(21) advances, loans or extensions of trade credit in the ordinary course of business by the Issuer or any of its Restricted Subsidiaries;

(22) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business;

(23) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers;

 

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(24) intercompany current liabilities owed to Unrestricted Subsidiaries or joint ventures Incurred in the ordinary course of business in connection with the cash management operations of the Issuer and its Subsidiaries;

(25) Investments in joint ventures of the Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (25) that are at the time outstanding, not to exceed the greater of (x) $75.0 million and (y) 6.75% of Consolidated Net Tangible Assets; provided that the Investments permitted pursuant to this clause (25) may be increased by the amount of JV Distributions, without duplication of dividends or distributions increasing amounts available pursuant to Section 3.4(a)(C);

(26) the Acquisition Transactions (including payment of the purchase consideration under the Acquisition Agreement);

(27) accounts receivable, security deposits and prepayments and other credits granted or made in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and others, including in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, such account debtors and others, in each case, in the ordinary course of business;

(28) Investments acquired as a result of a foreclosure by the Issuer or any Restricted Subsidiary with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;

(29) Investments resulting from pledges and deposits that are Permitted Liens;

(30) acquisitions of obligations of one or more officers or other employees of any direct or indirect parent of the Issuer, the Issuer or any Subsidiary of the Issuer in connection with such officer’s or employee’s acquisition of Equity Interests of any direct or indirect parent of the Issuer, so long as no cash is actually advanced by the Issuer or any Restricted Subsidiary to such officers or employees in connection with the acquisition of any such obligations;

(31) guarantees of operating leases (for the avoidance of doubt, excluding Capitalized Lease Obligations as determined without giving effect to the application of IFRS 16) or of other obligations that do not constitute Indebtedness, in each case, entered into by the Issuer or any Restricted Subsidiary in the ordinary course of business;

(32) Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted by Section 3.4;

(33) non-cash Investments made in connection with tax planning and reorganization activities;

(34) Investments made pursuant to obligations entered into when the Investment would have been permitted hereunder so long as such Investment when made reduces the amount available under the clause under which the Investment would have been permitted; and

(35) Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client and customer contracts and loans or advances made to, and guarantees with respect to obligations of, distributors, suppliers, licensors and licensees in the ordinary course of business.

 

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Permitted Joint Venture” means, with respect to any specified Person, a joint venture in any other Person engaged in a Similar Business in respect of which the Issuer or a Restricted Subsidiary beneficially owns at least 35% of the shares of Equity Interests of such Person.

Permitted Liens” means, with respect to any Person:

(1) Liens Incurred in connection with workers’ compensation laws, unemployment insurance laws or similar legislation, or in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or to secure public or statutory obligations of such Person or to secure surety, stay, customs or appeal bonds to which such Person is a party, or as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2) Liens imposed by law, such as carriers’, warehousemen’s, landlords’, materialmen’s, repairman’s, construction contractors’, mechanics’ or other like Liens, in each case for sums not yet overdue by more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review (or which, if due and payable, are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained, to the extent required by IFRS) or with respect to which the failure to make payment could not reasonably be expected to have a material adverse effect as determined in good faith by management of the Issuer or a direct or indirect parent of the Issuer;

(3) Liens for taxes, assessments or other governmental charges or levies (i) which are not yet due or payable, (ii) which are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained to the extent required by IFRS, or for property taxes on property such Person or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge, levy or claim is to such property, or (iii) with respect to which the failure to make payment could not reasonably be expected to have a material adverse effect as determined in good faith by management of the Issuer or a direct or indirect parent of the Issuer;

(4) Liens in favor of the issuers of performance and surety bonds, bid, indemnity, warranty, release, appeal or similar bonds or with respect to regulatory requirements or letters of credit or bankers’ acceptances issued and completion of guarantees provided for, in each case, pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely interfere with the ordinary conduct of the business of such Person;

(6) Liens Incurred to secure Obligations in respect of Indebtedness permitted to be Incurred pursuant to clause (i) or (iv) of Section 3.3(b) and obligations secured ratably thereunder; provided that, in the case of Section 3.3(b)(iv), such Lien extends only to the assets

 

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and/or Capital Stock, the acquisition, lease, construction, repair, replacement or improvement of which is financed thereby and any replacements, additions and accessions thereto and any income or profits thereof; provided, further, that individual financings provided by a lender may be cross-collateralized to other financings provided by such lender or its affiliates;

(7) Liens of the Issuer or any of the Guarantors existing on the Issue Date (other than Liens Incurred to secure Obligations under the Senior Credit Agreement);

(8) Liens on assets of, or Equity Interests in, a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (8), if a Person becomes a Subsidiary, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Issuer, and any assets of such Person or any Subsidiary of such Person shall be deemed acquired by the Issuer at the time of such merger, amalgamation or consolidation;

(9) Liens on assets at the time the Issuer or any Restricted Subsidiary acquired the assets, including any acquisition by means of a merger, amalgamation or consolidation with or into the Issuer or such Restricted Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (9), if, in connection with an acquisition by means of a merger, amalgamation or consolidation with or into the Issuer or any Restricted Subsidiary, a Person other than the Issuer or a Restricted Subsidiary is the successor company with respect thereto, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Issuer or any Restricted Subsidiary, and any assets of such Person or any such Subsidiary of such Person shall be deemed acquired by the Issuer or any Restricted Subsidiary, at the time of such merger, amalgamation or consolidation;

(10) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Issuer or a Restricted Subsidiary permitted to be Incurred in accordance with Section 3.3;

(11) Liens securing Swap Contracts Incurred in compliance with Section 3.3;

(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit entered into in the ordinary course of business issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(13) leases, subleases, licenses, sublicenses, occupancy agreements or assignments of or in respect of real or personal property;

(14) Liens arising from, or from Uniform Commercial Code financing statement filings regarding, operating leases or consignments entered into by the Issuer and the Guarantors in the ordinary course of business;

 

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(15) Liens in favor of the Issuer or any of its Restricted Subsidiaries;

(16) (i) Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing and (ii) Liens securing Indebtedness or other obligations of any Receivables Subsidiary;

(17) deposits made or other security provided in the ordinary course of business to secure liability to insurance carriers or under self-insurance arrangements in respect of such obligations;

(18) Liens on the Equity Interests of Unrestricted Subsidiaries;

(19) grants of intellectual property, software and other technology licenses;

(20) judgment and attachment Liens not giving rise to an Event of Default pursuant to clause (iv), (v), (vi) or (vii) of Section 6.1 and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

(21) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(22) Liens Incurred to secure Cash Management Services and other “bank products” (including those described in clauses (x) and (xxiii) of Section 3.3(b));

(23) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in clauses (7), (8), (9), (11), (24) or (25) of this definition; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured (or, under the written arrangements under which the original Lien arose, could secure) the original Lien (plus any replacements, additions, accessions and improvements on such property), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (7), (8), (9), (11), (24) or (25) of this definition at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including unpaid accrued interest and the aggregate amount of premiums (including tender premiums), and underwriting discounts, defeasance costs and fees and expenses in connection therewith, related to such refinancing, refunding, extension, renewal or replacement, and (z) any amounts incurred under this clause (23) as refinancing indebtedness of clause (25) of this definition shall reduce the amount available under such clause (25);

(24) Liens securing Pari Passu Indebtedness permitted to be Incurred pursuant to Section 3.3; if, at the time of any Incurrence of such Pari Passu Indebtedness and after giving pro forma effect thereto, the Consolidated Senior Secured Net Debt Ratio would not exceed 4.50 to 1.00;

(25) other Liens securing obligations the principal amount of which does not exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets, at any one time outstanding;

 

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(26) Liens on the Equity Interests or assets of a joint venture to secure Indebtedness of such joint venture Incurred pursuant to clause (xxi) of Section 3.3(b);

(27) Liens on equipment of the Issuer or any Guarantor granted in the ordinary course of business to the Issuer’s or such Guarantor’s client at which such equipment is located;

(28) Liens created for the benefit of (or to secure) all of the Notes or the related Guarantees;

(29) Liens on property or assets used to redeem, repay, defease or to satisfy and discharge Indebtedness; provided that such redemption, repayment, defeasance or satisfaction and discharge is not prohibited by this Indenture;

(30) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation and exportation of goods in the ordinary course of business;

(31) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection; (ii) attaching to pooling, commodity trading accounts or other commodity brokerage accounts Incurred in the ordinary course of business; and (iii) in favor of banking or other financial institutions or entities, or electronic payment service providers, arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking or finance industry;

(32) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other Persons not given in connection with the issuance of Indebtedness; (ii) relating to pooled deposit or sweep accounts of the Issuer or any Guarantor to permit satisfaction of overdraft or similar obligations Incurred in the ordinary course of business of the Issuer and the Guarantors; or (iii) relating to purchase orders and other agreements entered into with customers of the Issuer or any Guarantor in the ordinary course of business;

(33) any encumbrance or restriction (including put and call arrangements) with respect to Equity Interests of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(34) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(35) Liens on vehicles or equipment of the Issuer or any of the Guarantors granted in the ordinary course of business;

(36) Liens on assets of Non-Guarantor Subsidiaries securing Indebtedness Incurred in accordance with clause (xx) of Section 3.3(b);

(37) Liens disclosed by the title insurance policies delivered on or subsequent to the Opco Issue Date and any replacement, extension or renewal of any such Liens (so long as the Indebtedness and other obligations secured by such replacement, extension or renewal Liens are permitted by this Indenture); provided that such replacement, extension or renewal Liens do not cover any property other than the property that was subject to such Liens prior to such replacement, extension or renewal;

 

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(38) Liens arising solely by virtue of any statutory or common law provision or customary business provision relating to banker’s liens, rights of set-off or similar rights, including any security interest or right of set off in favor of Dutch banks arising from their general banking conditions (algemene bankvoorwaarden);

(39) (a) Liens solely on any cash earnest money deposits made by the Issuer or any Restricted Subsidiary in connection with any letter of intent or other agreement in respect of any Permitted Investment and (b) Liens on advances of cash or Cash Equivalents in favor of the seller of any property to be acquired in a Permitted Investment to be applied against the purchase price for such Investment;

(40) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

(41) Liens on securities that are the subject of repurchase agreements constituting Cash Equivalents under clause (4) of the definition thereof;

(42) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

(43) rights reserved or vested in any Person by the terms of any lease, license, franchise, grant or permit held by the Issuer or any of its Restricted Subsidiaries or by a statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or periodic payments as a condition to the continuance thereof;

(44) restrictive covenants affecting the use to which real property may be put; provided that the covenants are complied with;

(45) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;

(46) zoning by-laws and other land use restrictions, including, without limitation, site plan agreements, development agreements and contract zoning agreements;

(47) Liens created pursuant to the general conditions of a bank operating in the Netherlands based on the general conditions drawn up by the Netherlands Bankers’ Association (Nederlandse Vereniging van Banken) and the Consumers Union (Consumentenbond) or pursuant to any other general conditions of, or any contractual arrangement with, any such bank to substantially the same effect;

(48) Liens on cash proceeds of Indebtedness (and on the related escrow accounts) in connection with the issuance of such Indebtedness into (and pending the release from) a customary escrow arrangement to the extent such Indebtedness is Incurred in compliance with Section 3.3; and

(49) for purposes of cash management arrangements among the Issuer and its Restricted Subsidiaries, Liens Incurred to secure back-to-back reimbursement obligations for working capital enhancement or other similar arrangements, the aggregate principal amount of which obligations or arrangements do not exceed $100.0 million at any one time outstanding.

For purposes of determining compliance with this definition, (x) a Lien need not be Incurred solely by reference to one category of Permitted Liens described in this definition but may be Incurred under any combination of such categories (including in part under one such category and in part under any other such category), (y) in the event that a Lien (or any portion thereof) meets the criteria of one or

 

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more of such categories of Permitted Liens, the Issuer shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition, and (z) in the event that a portion of Indebtedness secured by a Lien could be classified as secured in part pursuant to clause (6) or (24) above (giving effect to the Incurrence of such portion of such Indebtedness), the Issuer, in its sole discretion, may classify such portion of such Indebtedness (and any Obligations in respect thereof) as having been secured pursuant to clause (6) or (24) above and thereafter the remainder of the Indebtedness as having been secured pursuant to one or more of the other clauses of this definition.

Permitted Parent” means (a) any direct or indirect parent of the Issuer so long as a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof holds 50% or more of the Voting Stock of such direct or indirect parent of the Issuer, (b) any Holdings Entity, so long as such entity constitutes a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof, and (c) any Public Company (or Wholly Owned Subsidiary of such Public Company) to the extent and until such time as any Person or group (other than a Permitted Holder under clause (a), (b), (c) or (d) of the definition thereof) is deemed to be or become a beneficial owner of Voting Stock of such Public Company representing more than 50% of the total voting power of the Voting Stock of such Public Company.

Person” means any individual, corporation, company, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, government (or any agency or political subdivision thereof) or any other entity.

PRC” means the People’s Republic of China.

Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

Principal Property Subsidiary” means any Subsidiary that owns, operates or leases one or more Restricted Properties.

Private Placement Legend” means the legend set forth in Section 2.1(d) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions hereof.

Pro Forma Basis” means, with respect to the calculation of any test, financial ratio, basket or covenant under this Indenture, including the Consolidated Senior Secured Net Debt Ratio, the Consolidated Total Net Debt Ratio and the Fixed Charge Coverage Ratio and the calculation of Consolidated Net Tangible Assets and Consolidated Total Assets, of any Person and its Restricted Subsidiaries as of any date, that pro forma effect will be given to the Transactions, any acquisition, merger, amalgamation, consolidation, Investment, any issuance, Incurrence, assumption or repayment or redemption of Indebtedness (including Indebtedness issued, Incurred or assumed or repaid or redeemed as a result of, or to finance, any relevant transaction and for which any such test, financial ratio, basket or covenant is being calculated), any issuance or redemption of Preferred Stock or Disqualified Stock, all sales, transfers and other dispositions or discontinuance of any Subsidiary, line of business, division, segment or operating unit, any operational change (including the entry into any material contract or arrangement) or any designation of a Restricted Subsidiary to an Unrestricted Subsidiary or of an Unrestricted Subsidiary to a Restricted Subsidiary, in each case that have occurred during the four consecutive fiscal quarter period of such Person being used to calculate such test, financial ratio, basket or covenant (the “Reference Period”), or subsequent to the end of the Reference Period but prior to such date or prior to or substantially simultaneously with the event for which a determination under this definition is made (including any such event occurring at a Person who became a Restricted Subsidiary of the subject Person or was merged, amalgamated or consolidated with or into the subject Person or any other

 

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Restricted Subsidiary of the subject Person after the commencement of the Reference Period), as if each such event occurred on the first day of the Reference Period; provided that (x) pro forma effect will be given to reasonably identifiable and quantifiable pro forma cost savings or expense reductions related to operational efficiencies (including the entry into any material contract or arrangement), strategic initiatives or purchasing improvements and other cost savings, improvements or synergies, in each case, that have been realized, or are reasonably expected to be realized, by such Person and its Restricted Subsidiaries based upon actions to be taken within 24 months after the consummation of the action as if such cost savings, expense reductions, improvements and synergies occurred on the first day of the Reference Period and (y) no amount shall be added back pursuant to this definition to the extent duplicative of amounts that are otherwise included in computing Consolidated EBITDA for such Reference Period.

For purposes of making any computation referred to above:

(1) if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date for which a determination under this definition is made had been the applicable rate for the entire period (taking into account any Swap Contracts applicable to such Indebtedness if such Swap Contracts has a remaining term in excess of 12 months);

(2) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of the Issuer or a direct or indirect parent of the Issuer to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with IFRS;

(3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer may designate;

(4) interest on any Indebtedness under a revolving credit facility or a Qualified Receivables Financing computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period; and

(5) to the extent not already covered above, any such calculation may include adjustments calculated in accordance with Regulation S-X under the Securities Act.

Any pro forma calculation may include, without limitation, (1) adjustments calculated in accordance with Regulation S-X under the Securities Act, (2) adjustments calculated to give effect to any Pro Forma Cost Savings and (3) all adjustments of the type used in connection with the calculation of “Adjusted EBITDA” and “Pro Forma Adjusted EBITDA” as set forth in footnote (2) (in the case of the Offering Memorandum or (3) (in the case of the Opco Offering Memorandum) in the section entitled “Summary—Summary historical and pro forma financial information and other data” in the Offering Memorandum or Opco Offering Memorandum to the extent such adjustments, without duplication, continue to be applicable to the Reference Period; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Cost Savings.”

Pro Forma Cost Savings” means, without duplication of any amounts referenced in the definition of “Pro Forma Basis,” an amount equal to the amount of cost savings, operating expense reductions, operating improvements (including the entry into any material contract or arrangement) and acquisition synergies, in each case, projected in good faith to be realized (calculated on a pro forma basis as though such items had been realized on the first day of such period) as a result of actions taken or to be taken by

 

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the Issuer (or any successor thereto) or any Restricted Subsidiary, net of the amount of actual benefits realized or expected to be realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions; provided that such cost savings, operating expense reductions, operating improvements and synergies are reasonably identifiable (as determined in good faith by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of the Issuer (or any successor thereto) or of any direct or indirect parent of the Issuer) and are reasonably anticipated to be realized within 24 months after the consummation of any change that is expected to result in such cost savings, expense reductions, operating improvements or synergies; provided that no cost savings, operating expense reductions, operating improvements and synergies shall be added pursuant to this definition to the extent duplicative of any expenses or charges otherwise added to Consolidated Net Income or Consolidated EBITDA, whether through a pro forma adjustment, add-back, exclusion or otherwise, for such period.

Public Company” means any Person with a class or series of Voting Stock that is traded on a stock exchange or in the over-the-counter market.

QIB” means any “qualified institutional buyer” (as defined in Rule 144A).

Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:

(1) the Board of Directors of the Issuer or any direct or indirect parent of the Issuer shall have determined in good faith that such Receivables Financing (including financing terms, covenants, termination events and other provisions) is, in the aggregate, economically fair and reasonable to the Issuer and its Restricted Subsidiaries,

(2) all sales of accounts receivable and related assets by the Issuer or any Restricted Subsidiary to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Issuer), and

(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms at the time the Receivables Financing is first introduced (as determined in good faith by the Issuer) and may include Standard Securitization Undertakings.

The grant of a security interest in any accounts receivable of the Issuer or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure any Credit Agreement shall not be deemed a Qualified Receivables Financing.

Rating Agency” means (1) each of Moody’s and S&P and (2) if Moody’s or S&P ceases to rate the Notes for reasons outside of the Issuer’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3 under the Exchange Act selected by the Issuer or any direct or indirect parent of the Issuer as a replacement agency for Moody’s or S&P, as the case may be.

Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.

Receivables Financing” means any transaction or series of transactions that may be entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries may sell, contribute, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Issuer or any of its Subsidiaries), and (b) any other Person (in the case of a transfer by a Receivables

 

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Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Swap Contracts entered into by the Issuer or any such Subsidiary in connection with such accounts receivable.

Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

Receivables Subsidiary” means a Restricted Subsidiary of the Issuer (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Issuer in which the Issuer or any Subsidiary of the Issuer or a direct or indirect parent of the Issuer makes an Investment and to which the Issuer or any Subsidiary of the Issuer or a direct or indirect parent of the Issuer transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Issuer and its Subsidiaries or a direct or indirect parent of the Issuer and all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Issuer or any direct or indirect parent of the Issuer (as provided below) as a Receivables Subsidiary and:

(1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any other Subsidiary of the Issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Issuer or any other Subsidiary of the Issuer in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Issuer or any other Subsidiary of the Issuer, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

(2) with which neither the Issuer nor any other Subsidiary of the Issuer has any material contract, agreement, arrangement or understanding other than on terms which the Issuer reasonably believes to be no less favorable to the Issuer or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Issuer, and

(3) to which neither the Issuer nor any other Subsidiary of the Issuer has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

Any such designation by the Board of Directors of the Issuer or any direct or indirect parent of the Issuer shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing conditions.

 

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Record Date” for the interest payable on any applicable Interest Payment Date means, in the case of the Initial Notes, May 15 and November 15 (whether or not a Business Day) and, in the case of any Additional Notes, such record date (whether or not a Business Day) as may be designated by the Issuer in accordance with the provisions of Section 2.2, in each case, next preceding such Interest Payment Date.

Regulation S” means Regulation S promulgated under the Securities Act.

Regulation S Global Note” means a Temporary Regulation S Global Note or Permanent Regulation S Global Note, as applicable, in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903.

Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided that any assets received by the Issuer or a Restricted Subsidiary in exchange for assets transferred by the Issuer or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless such Person is, or upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.

Related Taxes” means any taxes, charges or assessments, including, but not limited to, sales, use, transfer, rental, ad valorem, value-added, stamp, property, consumption, franchise, license, capital, net worth, gross receipts, excise, occupancy, intangibles or similar taxes, charges or assessments (other than income taxes), required to be paid by a Holdings Entity or any other direct or indirect parent of the Issuer by virtue of its being incorporated or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Issuer, any of its Subsidiaries or any other direct or indirect parent of the Issuer), or being a holding company parent of the Issuer, any of its Subsidiaries or any other direct or indirect parent of the Issuer or receiving dividends from or other distributions in respect of the Capital Stock of the Issuer, any of its Subsidiaries or any other direct or indirect parent of the Issuer, or having guaranteed any obligations of the Issuer or any Subsidiary thereof, or having made any payment in respect of any of the items for which the Issuer or any of its Subsidiaries is permitted to make payments to any parent entity pursuant to Section 3.4, or acquiring, developing, maintaining, owning, prosecuting, protecting or defending its intellectual property and associated rights (including but not limited to receiving or paying royalties for the use thereof) relating to the business or businesses of the Issuer or any Subsidiary thereof.

Replacement Assets” means (1) substantially all the assets of a Person primarily engaged in a Similar Business or (2) a majority of the Voting Stock of any Person primarily engaged in a Similar Business that will become, on the date of acquisition thereof, a Restricted Subsidiary.

Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

Restricted Global Note” means a Global Note bearing the Private Placement Legend.

Restricted Investment” means an Investment other than a Permitted Investment.

Restricted Period” means, in relation to the Initial Notes, the 40 consecutive days beginning on and including the later of (A) the day on which the Initial Notes are offered to Persons other than distributors (as defined in Regulation S under the Securities Act) and (B) the Issue Date; and, in relation to any Additional Notes that bear the Private Placement Legend, the comparable period of 40 consecutive days.

 

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Restricted Property” means (a) any manufacturing facility, or portion thereof, owned or leased by the Issuer or any of its Subsidiaries and located within the continental United States, which, in the opinion of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer, is of material importance to the business of the Issuer and its Subsidiaries taken as a whole, but no such manufacturing facility, or portion thereof, shall be deemed of material importance if its gross book value (before deducting accumulated depreciation) is less than 5.0% of Consolidated Net Tangible Assets, or (b) any shares of capital stock of any Subsidiary owning any such manufacturing facility. As used in this definition, “manufacturing facility” means property, plant and equipment used for actual manufacturing such as quality assurance, engineering, maintenance, staging area for work in process materials, employees’ eating and comfort facilities and manufacturing administration, and it excludes sales offices, research facilities and facilities used only for warehousing or general administration.

Restricted Subsidiary” means any Subsidiary of a Person other than an Unrestricted Subsidiary of such Person. Unless otherwise indicated in this Indenture, all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Issuer.

RMB” means the currency of the PRC.

Rule 144” means Rule 144 promulgated under the Securities Act.

Rule 144A” means Rule 144A promulgated under the Securities Act.

Rule 903” means Rule 903 promulgated under the Securities Act.

Rule 904” means Rule 904 promulgated under the Securities Act.

S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor to the rating agency business thereof.

Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Issuer or a Restricted Subsidiary whereby the Issuer or a Restricted Subsidiary transfers such property to a Person and the Issuer or such Restricted Subsidiary leases it from such Person, other than leases between the Issuer and a Restricted Subsidiary or between Restricted Subsidiaries.

SEC” means the U.S. Securities and Exchange Commission.

Secured Indebtedness” means any Indebtedness secured by a Lien other than Indebtedness with respect to Cash Management Services.

Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

Senior Credit Agreement” means the credit agreement entered into on January 31, 2017 among the Issuer, Alpha 3 B.V., Alpha US Bidco, Inc., the guarantors from time to time party thereto, the financial institutions named therein and Barclays Bank PLC, as Administrative Agent, as described under “Description of other indebtedness—Senior secured credit facilities” in the Offering Memorandum, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, supplemented, waived, renewed or otherwise modified from time to time, and as replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture or commercial paper facilities with banks or other institutional

 

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lenders or investors extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder permitted under Section 3.3 or altering the maturity thereof or adding Restricted Subsidiaries as additional borrowers, issuers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders, investors or group of investors.

Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” of the Issuer within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

Similar Business” means any business engaged or proposed to be engaged in by Atotech on the Issue Date and any business or other activities that are similar, ancillary, complementary, incidental or related to, or an extension, development or expansion of, the businesses in which Atotech is engaged following the Acquisition on the Issue Date.

Specified Change of Control Event” means a Change of Control pursuant to clause (1) or (2) of the definition of “Change of Control” immediately after the completion of which, and for the 90 days immediately thereafter, the Consolidated Total Net Debt Ratio of the Issuer is less than 3.50 to 1.00; provided that, for purposes of calculating such Consolidated Total Net Debt Ratio for such 90-day period for purposes of this definition, Consolidated EBITDA shall be the same Consolidated EBITDA as is used to calculate such ratio at the time of completion of such Change of Control.

Specified Consolidated Total Net Debt Ratio” means 5.00 to 1.00.

Specified Sponsor Overfunding Amount” means $100.0 million as reduced from time to time when applied in accordance with Section 3.4(b)(vii)(B).

Sponsor” means (1) Carlyle Partners VI Cayman Holdings, L.P., (2) Gamma Holding Company Limited, (3) CEP IV Participations s.á r.l. SICAR and (4) one or more investment funds advised, managed or controlled by the foregoing and, in each case (whether individually or as a group), Affiliates of the foregoing (but excluding any operating portfolio companies of the foregoing).

Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Issuer or any Subsidiary of the Issuer which the Issuer has determined in good faith to be customary in a Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency, unless such contingency has occurred).

Subordinated Indebtedness” means (a) with respect to the Issuer, any Indebtedness of the Issuer which is by its terms expressly subordinated in right of payment to the Notes, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms expressly subordinated in right of payment to its Guarantee.

 

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Subsidiary” means, with respect to any Person (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, (2) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity and (3) any Person that is consolidated in the consolidated financial statements of the specified Person in accordance with IFRS.

Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any obligations or liabilities under any such master agreement.

Temporary Regulation S Global Note” means a temporary Global Note in the form of Exhibit A hereof bearing the Global Note Legend, the Private Placement Legend, and the Temporary Regulation S Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903.

Temporary Regulation S Legend” means the legend set forth in Section 2.1(e).

TIA” means the U.S. Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the Issue Date.

Total” means Total Holdings Europe and its Subsidiaries, after giving effect to the Acquisition Transactions.

Transactions” means the offering of the Initial Notes, the entry into and the borrowings under the Incremental Term Loans and the use of proceeds therefrom and from the offering of the Initial Notes as described in the Offering Memorandum and related transactions.

Treasury Rate” means the yield to maturity as of the date of the relevant redemption notice of the most recently issued United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (or is obtainable from the Federal Reserve System’s Data Download Program as of the date of such H.15) that has become publicly available at least two Business Days prior to such date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the date of such redemption notice to June 1, 2019, in the case of the Initial Notes, or such first optional

 

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redemption date as may be specified by the Issuer in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes; provided, however, that if the period from such date June 1, 2019, or such first optional redemption date as may be specified by the Issuer in accordance with the provisions of Section 2.2 hereof, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Trust Officer” means any officer within the corporate trust administration department of the Trustee, with direct responsibility for performing the Trustee’s duties under this Indenture and also means, with respect to a particular corporate trust matter relating to this Indenture, any other officer of the Trustee to whom such matter is referred because of such person’s knowledge of and familiarity with the particular subject.

Trustee” has the meaning set forth in the preamble hereto.

Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

Unrestricted Global Note” means a permanent Global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the “Schedule of Increases or Decreases in Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend.

Unrestricted Subsidiary” means:

(1) any Subsidiary of the Issuer that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Issuer or any direct or indirect parent of the Issuer pursuant to Section 3.14; and

(2) any Subsidiary of an Unrestricted Subsidiary.

U.S. Government Obligations” means securities that are:

(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,

which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.

Voting Stock” of any Person as of any date means the Capital Stock of such Person that is entitled to vote in the election of the Board of Directors of such Person.

 

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Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock or Preferred Stock, as the case may be, at any date, the number of years (and/or portion thereof) obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of such Indebtedness or redemption or similar payment, in respect of such Disqualified Stock or Preferred Stock, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then-outstanding principal amount of such Indebtedness.

Wholly Owned Restricted Subsidiary” means any Wholly Owned Subsidiary that is a Restricted Subsidiary.

Wholly Owned Subsidiary” of any Person means a direct or indirect Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

SECTION 1.2. Other Definitions.

 

Term

  

Defined in

Section

“actual knowledge”

   7.2(g)

“accredited investors”

   2.2

“Additional Amounts”

   2.15

“Affiliate Transaction”

   3.8(a)

“Agent Members”

   2.1(e)

“Applicable Amount”

   Exhibit A

“Asset Sale Offer”

   3.7(d)

“Auditor”

   3.2(a)(i)

“Authentication Order”

   2.2

“Average Liquidity Amount”

   Exhibit A

“Cash Interest”

   Exhibit A

“Cash Interest Amount”

   Exhibit A

“Cash Interest Percentage”

   Exhibit A

“Certain Capital Markets Debt”

   3.11

“Change in Tax Law”

   5.9(b)

“Change of Control Offer”

   3.9(b)

“Change of Control Payment”

   3.9(a)

“Change of Control Payment Date”

   3.9(b)(iii)

“covenant defeasance option”

   8.1(b)

“Covenant Suspension Event”

   3.15(a)

“Determination Date”

   Exhibit A

“Defaulted Interest”

   2.12

“DTC”

   2.1(c)

“Election Date”

   3.5(b)

“ERISA”

   2.1(c) and (d)

“Event of Default”

   6.1

 

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Term

  

Defined in

Section

“Excess Proceeds”

   3.7(d)

“FATCA”

   2.15(v)

“Final Maturity Date”

   Exhibit A

“Foreign Disposition”

   3.7(c)

“Guarantor Obligations”

   10.1(a)

“IAIs”

   2.2

“Increased Amount”

   3.5(e)

“Initial Interest Determination”

   Exhibit A

“Initial Interest Determination Notice”

   Exhibit A

“legal defeasance option”

   8.1(b)

“Liquidity Amount”

   Exhibit A

“Minimum Liquidity Provision”

   Exhibit A

“Minimum Liquidity Threshold”

   Exhibit A

“Maximum Fixed Repurchase Price”

   13.1(b)

“Offer Amount”

   5.8(a)

“Offer Period”

   5.8(a)

“Offer to Repurchase”

   5.8

“Paying Agent”

   2.3

“Payor”

   2.15

“Permitted Debt”

   3.3(b)

“PIK Notes”

   2.1(b)

“PIK Interest”

   Exhibit A

“PIK Interest Percentage”

   Exhibit A

“PIK Payment”

   2.1(b)

“Pro Forma Liquidity Amount”

   Exhibit A

“Purchase Date”

   5.8(a)

“Qualified Reporting Subsidiary”

   3.2(e)

“Ratio Debt”

   3.3(a)

“Redemption Date”

   5.4

“Refinancing Indebtedness”

   3.3(b)(xiv)

“Refunding Capital Stock”

   3.4(b)(ii)(a)

“Registrar”

   2.3

“Relevant Taxing Jurisdiction”

   2.15

“Required Currency”

   12.4

“Resale Restriction Termination Date”

   2.1(d) and (e)

“Restricted Payments”

   3.4(a)

“Retained Declined Proceeds”

   3.7(f)

“Retired Capital Stock”

   3.4(b)(ii)(a)

“Reversion Date”

   3.15(b)

“Similar Laws”

   2.1(d) and (e)

“Special Interest Payment Date”

   2.12(a)

“Special Record Date”

   2.12(a)

“Subsequent Determination Date”

   Exhibit A

 

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Term

  

Defined in

Section

“Successor Company”

   4.1(a)(i)

“Successor Guarantor”

   4.1(b)(i)(A)

“Suspended Covenants”

   3.15(a)

“Suspension Period”

   3.15(b)

“Taxes”

   2.15

“Tax Redemption Date”

   5.9

“Total Leverage Excess Proceeds”

   3.7(e)

“Transaction Agreement Date”

   13.1(a)

“Unpaid Amount”

   3.4(b)(ii)(c)

SECTION 1.3. Rules of Construction. Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with IFRS or GAAP, if applicable;

(c) “or” is not exclusive;

(d) “including” means including without limitation;

(e) words in the singular include the plural and words in the plural include the singular;

(f) (i) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; and (ii) Secured Indebtedness shall not be deemed to be subordinated or junior to any other Secured Indebtedness merely because it has a junior priority with respect to the same collateral;

(g) references to sections of, or rules under, the Securities Act or Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(h) unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

(i) any references in this Indenture or the Notes to a deemed Initial Interest Determination shall constitute an Initial Interest Determination made by the Issuer;

(j) the words “herein,” “hereof” and “hereunder” and any other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision; and

(k) “$,” “dollars” and “U.S. dollars” each refer to U.S. dollars, or such other money of the United States of America that at the time of payment is legal tender for payment of public and private debts.

 

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ARTICLE II

The Notes

SECTION 2.1. Form and Dating; Terms.

(a) The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are hereby expressly incorporated in and made a part hereof. The Notes may have notations, legends or endorsements approved as to form by the Issuer, and required by law, stock exchange rule, agreements to which the Issuer are subject or usage. Each Note shall be dated the date of its authentication. The Notes shall be issuable only in minimum denominations of $200,000 and integral multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof).

(b) If the Issuer is entitled to pay PIK Interest in respect of the Notes, the Issuer may elect (subject to the restrictions contained in the Notes), without the consent of the Holders of the Notes (and without regard to any restrictions or limitations set forth under Section 3.3), to pay the applicable amount of PIK Interest (in accordance with the requirements contained in the Notes) for such Interest Period in respect of each outstanding Note on the Interest Payment Date in respect of such Interest Period by (i) increasing the outstanding principal amount of Notes by an amount equal to the PIK Interest elected to be paid (rounded up to the nearest whole dollar), and, upon receipt of a Company Order, an adjustment shall be made by the Trustee to reflect such increase, with respect to Global Notes, in the “Schedule of Increases or Decreases in Global Note” or the “Schedule of Increases or Decreases in Temporary Regulation S Global Note” (as applicable), or (ii) issuing additional Notes (the “PIK Notes”) under this Indenture on the same terms and conditions as the Notes with respect to which such PIK Notes are being issued as PIK Interest in an amount equal to the PIK Interest elected to be paid (rounded up to the nearest whole dollar) (in each case of (i) and (ii), a “PIK Payment”). The Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as a PIK Payment with respect thereto) and any Additional Notes of the same series (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as a PIK Payment with respect to such Additional Notes) subsequently issued under this Indenture will be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase. Unless the context requires otherwise, references to the “principal” or “principal amount” of Notes or of the Notes of any series for all purposes of this Indenture includes any increase in the principal amount of outstanding Notes (including PIK Notes) as a result of a PIK Payment or outstanding Notes of such series (including PIK Notes) as a result of a PIK Payment with respect to the Notes of such series, as applicable. Interest for the first Interest Period commencing on the Issue Date, for the last Interest Period concluding on the Stated Maturity of the Notes and in connection with any redemption or repurchase shall be payable entirely in cash. If the Issuer is permitted to pay PIK Interest for any Interest Period and desires to pay PIK Interest for such Interest Period, the Issuer must comply with the procedures and notice requirements contained in the Notes.

(c) The Notes shall initially be issued in the form of one or more Global Notes and The Depository Trust Company (“DTC”), its nominees, and their respective successors, shall act as the Depositary with respect thereto. Each Global Note (i) shall be registered in the name of the Depositary for such Global Note or the nominee of such Depositary, (ii) shall be delivered by the Trustee to such Depositary or held by the Trustee as custodian for the Depositary pursuant to such Depositary’s instructions, and (iii) shall bear a Global Note Legend in substantially the following form:

 

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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

(d) Except as permitted by Section 2.6(g), any Note not registered under the Securities Act shall bear the following Private Placement Legend on the face thereof:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE)] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE

 

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ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF SECURITIES OF $250,000 OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

BY ITS ACQUISITION OF THIS NOTE, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS NOTE CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

 

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(e) The Temporary Regulation S Global Note shall bear a legend in substantially the following form:

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

Members of, or Participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian and the Depositary may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of the Global Note for all purposes whatsoever, including but not limited to notices and payments. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. Notwithstanding anything to the contrary contained herein, any notice to be delivered to the Depositary (including, but not limited to, a notice of redemption) may be delivered electronically by the Trustee or the Issuer in accordance with the applicable procedures of the Depositary.

(f) Each Note shall bear a legend in substantially the following form:

THIS NOTE HAS BEEN ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (WITHIN THE MEANING OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). HOLDERS SHOULD CONTACT OUR CHIEF FINANCIAL OFFICER, VICE PRESIDENT-FINANCE AT ERASMUSSTRASSE 20, 10553 BERLIN, GERMANY FOR INFORMATION REGARDING: (1) THE ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE AND (3) THE YIELD TO MATURITY OF THE NOTE.

SECTION 2.2. Form of Execution and Authentication. An Officer shall sign the Notes for the Issuer by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid.

A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall (a) authenticate (i) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $300,000,000, (ii) PIK Notes as set forth in Section 2.1(b) and (iii) subject to compliance with Section 3.3, one or more series of Additional Notes for original issue after the Issue Date (such Notes to be substantially in the form of Exhibit A hereto) in an unlimited amount, in each case upon written order of the Issuer signed by an Officer of the Issuer (an “Authentication Order”), which Authentication Order shall, in the case of any issuance of Additional Notes, certify that such issuance is in compliance with Section 3.3 and (b) record increases in the principal amount of the Notes to reflect a PIK Payment upon receipt of a Company Order. In addition, each such Authentication Order shall specify the

 

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amount of Notes to be authenticated, the date on which the Notes are to be authenticated, whether the securities are to be Initial Notes (or PIK Notes issued as a PIK Payment in respect thereof) or Additional Notes (or PIK Notes issued as a PIK Payment in respect of such Additional Notes) and the aggregate principal amount of Notes outstanding on the date of authentication, and shall further specify the amount of such Notes to be issued as Global Notes or Definitive Notes. Such Notes shall initially be in the form of one or more Global Notes, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Notes to be issued, (ii) shall be registered in the name of the Depositary or its nominee and (iii) shall be held by the Trustee as Notes Custodian.

The Issuer shall have the right to designate the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Notes, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Initial Notes. Additional Notes that differ with respect to maturity date, interest rate or optional redemption provisions from the Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as the result of a PIK Payment thereon) will constitute a different series of Notes from the Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as the result of a PIK Payment thereon). Additional Notes that have the same maturity date, interest rate and optional redemption provisions as the Initial Notes will be treated as the same series as the Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as the result of a PIK Payment thereon) unless otherwise designated by the Issuer. Except as otherwise provided in Section 9.2(a), the Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as the result of a PIK Payment thereon), if any, and any Additional Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as PIK Interest with respect to such Additional Notes) issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes shall have the right to vote or consent as a separate class on any matter. The Issuer shall also have, subject to the provisions of Section 9.2(a), the right to vary the application of the provisions of this Indenture to any series of Additional Notes.

The Initial Notes and any Additional Notes shall be resold initially only to (A) QIBs and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as the result of a PIK Payment thereon) and Additional Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as PIK Interest with respect to such Additional Notes) may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and institutional “accredited investors” (as defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who are not QIBs (“IAIs”) in accordance with Rule 501 of the Securities Act in accordance with the procedures described herein.

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuer or any Affiliate of the Issuer.

SECTION 2.3. Registrar and Paying Agent. The Issuer shall maintain (i) an office or agency in the United States where Notes may be presented for registration of transfer or for exchange (including any co-registrar, the “Registrar”) and (ii) an office or agency in the United States where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes and of their transfer and exchange and, upon written request from the Issuer, the Registrar shall provide the Issuer with a copy of such register to enable them to maintain a register of the Notes at its registered offices. In the event of a conflict between any register maintained by the Issuer and the register

 

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maintained by the Registrar, the register maintained by the Registrar shall prevail. The Issuer may appoint one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent. The Issuer may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder. The Issuer shall notify the Trustee in writing and the Trustee shall notify the Holders of the name and address of any Agent not a party to this Indenture. The Issuer or any of its Restricted Subsidiaries may act as Paying Agent, Registrar or co-registrar. The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions hereof that relate to such Agent. The Issuer shall notify the Trustee in writing of the name and address of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.6.

The Issuer initially appoint the Trustee as Registrar and Paying Agent and to act as Notes Custodian with respect to the Notes.

SECTION 2.4. Paying Agent to Hold Money in Trust. The Issuer shall require a Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by such Paying Agent for the payment of principal of, premium, if any, and interest on the Notes, and shall notify the Trustee in writing of any Default by the Issuer in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuer at any time may require a Paying Agent to pay all money held by such Paying Agent to the Trustee. Upon payment over to the Trustee, such Paying Agent (if other than the Issuer or a Restricted Subsidiary) shall have no further liability for the money delivered to the Trustee. If the Issuer or a Restricted Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or insolvency of the Issuer, the Trustee shall automatically be the Paying Agent.

SECTION 2.5. Lists of Holders of the Notes. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, including the aggregate principal amount of the Notes held by each thereof, and the Issuer shall otherwise comply with TIA § 312(a).

SECTION 2.6. Transfer and Exchange.

(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred except, as a whole, by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Global Notes shall be exchanged by the Issuer for Definitive Notes, subject to any applicable laws, only (i) if the Issuer delivers to the Trustee written notice from the Depositary that the Depositary is unwilling or unable to continue to act as Depositary for the Global Notes or that is it is no longer a clearing agency registered under the Exchange Act and, in either case, the Issuer fails to appoint a successor Depositary within 120 days after the date of such notice from the Depositary; (ii) if the Issuer in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Temporary Regulation S Global Note be exchanged by the Issuer for Definitive Notes prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or (iii) upon request of Holders of a majority of the aggregate principal amount of outstanding Notes if there shall have

 

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occurred and be continuing an Event of Default with respect to the Notes. In any such case, the Issuer shall notify the Trustee in writing that, upon surrender by the Participants and Indirect Participants of its interests in such Global Note, certificated Notes shall be issued to each Person that such Participants, Indirect Participants and the Depositary jointly identify as being the beneficial owner of the related Notes. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or Section 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.6(a). However, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.6(b) or Section 2.6(c) below.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions hereof and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth in this Indenture to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with the applicable subparagraphs below.

(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, no transfer of beneficial interests in a Temporary Regulation S Global Note may be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser) unless permitted by applicable law and made in compliance with Sections 2.6(b)(ii) and (iii) below. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.6(b)(i) unless specifically stated above.

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.6(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase, or (B) (1) if Definitive Notes are at such time permitted to be issued pursuant to this Indenture, a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Temporary Regulation S Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.6(i) below.

 

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(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.6(b)(ii) above and the Registrar receives the following:

(A) if the transferee shall take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transferee shall take delivery in the form of a beneficial interest in the Temporary Regulation S Global Note or the Permanent Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transferee shall take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, if applicable.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.6(b)(ii) above, and

(A) the Registrar receives the following:

(y) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(z) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuer so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the holder or the Issuer (except in the case the Issuer has so requested) in form reasonably acceptable to the Issuer to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to subparagraph (A) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (A) above.

 

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Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer and Exchange of Beneficial Interests for Definitive Notes.

(i) Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes. Subject to Section 2.6(a), if any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then upon receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3) thereof, if applicable;

(F) if such beneficial interest is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof;

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.6(i) below, and the Issuer shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate a Restricted Definitive Note in the appropriate principal amount. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

 

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(ii) Beneficial Interests in Temporary Regulation S Global Note to Definitive Notes. Notwithstanding Section 2.6(c)(i)(A) and Section 2.6(c)(i)(C) hereof, a beneficial interest in the Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(iii) Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Unrestricted Definitive Notes. Subject to Section 2.6(a), a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

(A) the Registrar receives the following:

(y) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(z) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof,

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuer so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the holder or the Issuer (except in the case the Issuer has so requested) in form reasonably acceptable to the Issuer to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iv) Transfer and Exchange of Beneficial Interests in Unrestricted Global Notes for Unrestricted Definitive Notes. Subject to Section 2.6(a), if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.6(b)(ii) above, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.6(i) below, and the Issuer shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate an Unrestricted Definitive Note in the appropriate principal amount. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Unrestricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall not bear the Private Placement Legend.

 

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(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(i) Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

(F) if such Restricted Definitive Note is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.

(ii) Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

(A) the Registrar receives the following:

 

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(y) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(z) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuer so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the Holder or the Issuer (except in the case the Issuer has so requested) in form reasonably acceptable to the Issuer to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.6(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Transfer and Exchange of Unrestricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from an Unrestricted Definitive Note or a Restricted Definitive Note, as the case may be, to a beneficial interest is effected pursuant to Sections 2.6(d)(ii)(A) or (d)(iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Unrestricted Definitive Notes or Restricted Definitive Notes, as the case may be, so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.6(e).

(i) Transfer of Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer shall be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

 

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(B) if the transfer shall be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transfer shall be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including, if the Issuer so requests, a certification and/or Opinion of Counsel in form reasonably acceptable to the Issuer to the effect that such transfer is in compliance with the Securities Act.

(ii) Transfer and Exchange of Restricted Definitive Notes for Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if

(A) the Registrar receives the following:

(y) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(z) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuer so requests, an Opinion of Counsel of (or on behalf of) the Holder or the Issuer (except in the case the Issuer so requests) in form reasonably acceptable to the Issuer to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iii) Transfer of Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) Temporary Regulation S Global Note.

(i) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Temporary Regulation S Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

(ii) During the Restricted Period, beneficial ownership interests in Temporary Regulation S Global Notes may only be sold, pledged or transferred (A) to the Issuer, (B) in an offshore transaction in accordance with Rule 904 of Regulation S (other than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global Note) or (C) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the

 

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United States; and beneficial interests in a 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the Trustee a written certificate to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).

(iii) Within a reasonable period after expiration or termination of the Restricted Period, beneficial interests in each Temporary Regulation S Global Note shall be exchanged for beneficial interests in a Permanent Regulation S Global Note upon delivery to the Depositary of the certification of compliance and the transfer of applicable Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of the corresponding Permanent Regulation S Global Note, the Trustee shall cancel the corresponding Temporary Regulation S Global Note. The aggregate principal amount of a Temporary Regulation S Global Note and a Permanent Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(iv) Notwithstanding anything to the contrary in this Section 2.6, a beneficial interest in the Temporary Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(g) Private Placement Legend.

(i) Except as permitted by subparagraph (ii) below, each Restricted Global Note and each Restricted Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the Private Placement Legend.

(ii) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.6 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(h) Global Note Legend. Each Global Note shall bear the Global Note Legend.

(i) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

 

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(j) General Provisions Relating to Transfers and Exchanges.

(i) To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.2 or at the Registrar’s request.

(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.2, 2.10, 3.7, 3.9, 5.7, 5.8 and 9.4).

(iii) [Reserved].

(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits hereof, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(v) Neither the Registrar nor the Issuer shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business on a Business Day 15 days before the delivery of a notice of redemption of Notes and ending at the close of business on the day of such delivery, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.

(vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2.

(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile or electronically.

(ix) The Trustee shall have no obligation or duty to monitor, determine or inquire as

to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or Indirect Participants) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(x) Neither the Trustee, the Issuer nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.

 

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(xi) Affiliates of the Issuer, including investment funds affiliated with the Sponsor, may acquire, hold and dispose of the Notes and exercise voting, consent and other similar rights with respect to such Notes (subject to the express restrictions contained in this Indenture).

SECTION 2.7. Replacement Notes. If any mutilated Note is surrendered to the Trustee, or the Issuer and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Issuer shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements for replacements of Notes are met. The Holder must supply indemnity or security sufficient in the judgment of the Trustee (with respect to the Trustee) and the Issuer (with respect to the Issuer) to protect the Issuer, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced. The Issuer and the Trustee may charge for their fees and expenses in replacing a Note including amounts to cover any tax, assessment, fee or other governmental charge that may be imposed in relation thereto.

Every replacement Note is an obligation of the Issuer.

SECTION 2.8. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding.

If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

If the principal amount of any Note is considered paid under Section 3.1 hereof, it shall cease to be outstanding and interest on it shall cease to accrue.

Subject to Section 2.9, a Note does not cease to be outstanding because the Issuer or any Affiliate of the Issuer holds the Note.

SECTION 2.9. Treasury Notes. In determining whether the Holders of the requisite majority of outstanding Notes have concurred in any request, demand, authorization, direction, notice, waiver or consent (other than in respect of any action pursuant to Section 9.2(a), which requires the consent of each Holder of an affected Note), Notes owned by the Issuer or any Affiliate of the Issuer shall be disregarded and considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, waiver or consent, only Notes which a Trust Officer actually knows to be owned by the Issuer or any Affiliate of the Issuer shall be considered as not outstanding. Upon request of the Trustee, the Issuer shall promptly furnish to the Trustee an Officer’s Certificate listing and identifying all Notes, if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons, and the Trustee shall be entitled to accept such Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.

SECTION 2.10. Temporary Notes. Until Definitive Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate Definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as Definitive Notes.

 

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SECTION 2.11. Cancellation. The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of all canceled Notes in its customary manner (subject to the record retention requirements of the Exchange Act and the Trustee), and upon the written request of the Issuer, the Trustee shall deliver copies of such canceled Notes to the Issuer. The Issuer may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation.

SECTION 2.12. Payment of Interest; Defaulted Interest. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the regular Record Date for such interest at the office or agency of the Issuer maintained for such purpose pursuant to Section 2.3.

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Issuer, at its election in each case, as provided in clause (a) or (b) below:

(a) The Issuer may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Issuer shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (the “Special Interest Payment Date”), and at the same time the Issuer shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Issuer shall fix a record date (the “Special Record Date”) for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than ten days prior to the Special Interest Payment Date and not less than ten days after the receipt by the Trustee of the notice of the proposed payment. The Issuer shall promptly notify the Trustee of such Special Record Date and shall, or at the written request and in the name and expense of the Issuer, the Trustee shall, cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 12.1, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

(b) The Issuer may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Issuer to the Trustee of the proposed payment pursuant to this clause (b), such manner of payment shall be deemed practicable by the Trustee.

 

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Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13. CUSIP and ISIN Numbers. The Issuer in issuing the Notes may use “CUSIP” and/or “ISIN” numbers (if then generally in use). The Trustee shall not be responsible for the use of CUSIP or ISIN numbers, and the Trustee makes no representation as to their correctness as printed on any Note or notice to Holders. The Issuer shall promptly notify the Trustee in writing of any change in the CUSIP or ISIN numbers. A separate CUSIP or ISIN number will be issued for any Additional Notes, unless the Initial Notes and such Additional Notes are treated as “fungible” for U.S. federal income tax purposes.

SECTION 2.14. Record Date. The record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided for in TIA § 316(c).

SECTION 2.15. Additional Amounts.

All payments made by or on behalf of the Issuer or any Guarantor (if any) or any successor in interest to any of the foregoing (each, a “Payor”) on or with respect to the Notes or any Guarantee (if any) will be made without withholding or deduction for, or on account of, any present or future tax, duty, levy, impost, assessment or other similar governmental charge (collectively, “Taxes”) unless such withholding or deduction is required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of:

(a) any jurisdiction from or through which payment on the Notes or any Guarantee (if any) is made by or on behalf of such Payor, or any political subdivision or governmental authority thereof or therein having the power to tax; or

(b) any other jurisdiction in which such Payor is incorporated or organized, engaged in business for tax purposes, or otherwise considered to be a resident for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax,

(each of clauses (a) and (b), a “Relevant Taxing Jurisdiction”) will at any time be required from any payments made with respect to the Notes or any Guarantee, including payments of principal, redemption price, interest or premium, if any, the Payor will pay (together with such payments) such additional amounts (the “Additional Amounts”) as may be necessary in order that the net amounts received in respect of such payments by the Holders or the Trustee, as the case may be, after such withholding or deduction (including any such deduction or withholding from such Additional Amounts), will not be less than the amounts that would have been received in respect of such payments on the Notes or the Guarantees in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable for or on account of:

(i) any Taxes that would not have been so imposed or levied but for the existence of any present or former connection between the relevant Holder (or between a fiduciary, settlor, beneficiary, partner, member or shareholder of, or possessor of power over, the relevant Holder, if such Holder is an estate, nominee, trust, partnership, limited liability company or corporation) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) but excluding, in each case, any connection arising solely from the acquisition, ownership or holding of such Notes or the receipt of any payment or exercise of any right in respect thereof;

 

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(ii) any Taxes that would not have been so imposed or levied if the Holder of the Note had, to the extent legally entitled to do so, complied with a reasonable request in writing of the Payor (at least 30 days before any such Tax would be payable to the Relevant Taxing Jurisdiction) to make a declaration of nonresidence or any other claim or filing or satisfy any certification, identification, information or reporting requirement for exemption from, or reduction in the rate of, withholding to which it is entitled (provided that such declaration of nonresidence or other claim, filing or requirement is required by the applicable law, treaty, regulation or official administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold all or a part of any such Taxes);

(iii) any Taxes that are payable otherwise than by deduction or withholding from a payment on the Notes or any Guarantee;

(iv) any estate, inheritance, gift, sales, excise, transfer, personal property or similar Taxes;

(v) any Taxes payable under Sections 1471 through 1474 of the Code, as of the date of the Offering Memorandum (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 agreements entered into pursuant thereto, and any intergovernmental agreements implementing the foregoing (including any legislation or other official guidance relating to such intergovernmental agreements) (“FATCA”);

(vi) any Tax payable by or on behalf of, a holder of a Note who is liable for such Taxes due to it (i) being a (deemed) tax resident of, or otherwise being connected to, a low-tax jurisdiction or a jurisdiction included in the EU list of non-cooperative jurisdictions for purposes of any Dutch tax law codified pursuant to the policy intentions described in item N151 on page 67 of the Dutch Coalition Agreement of the (then) proposed Dutch Government (Regeerakkoord 2017 “Vertrouwen in de toekomst”) 2017-2021 published on October 10, 2017 and as further described on pages 9 and 10 of the letter to the Dutch parliament dated 23 February 2018 (Kamerstukken // 2017-2018, 25 087, nr. 188) or (ii) being otherwise subject to such Tax as described under (i); or

(vii) any combination of the above.

Such Additional Amounts will also not be payable (x) if the payment could have been made without such deduction or withholding if the beneficiary of the payment had presented the Note for payment (where presentation is required) within 30 days after the relevant payment was first made available for payment to the Holder (provided that notice of such payment is given to the Holders) except to the extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30-day period or (y) where, had the beneficial owner of the Note been the Holder of the Note, such beneficial owner would not have been entitled to payment of Additional Amounts by reason of any of clauses (i) through (vii) inclusive above.

The Payor will (1) make any required withholding or deduction and (2) remit the full amount deducted or withheld to the relevant taxing authority of the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts

 

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evidencing the payment of any Taxes so deducted or withheld from each relevant taxing authority of each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee. If, notwithstanding the efforts of such Payor to obtain such receipts, the same are not obtainable, such Payor will provide the Trustee with other evidence reasonably acceptable to the Trustee. Such receipts or other evidence will be made available by the Trustee to Holders on written request.

If any Payor will be obligated to pay Additional Amounts under or with respect to any payment made on the Notes, at least 30 days prior to the date of such payment, the Payor will deliver to the Trustee and the Paying Agent an Officer’s Certificate stating the fact that Additional Amounts will be payable and the amount so payable and such other information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant payment date (unless such obligation to pay Additional Amounts arises less than 45 days prior to the relevant payment date, in which case the Payor shall deliver such Officer’s Certificate and such other information as promptly as practicable after the date that is 30 days prior to the payment date, but no less than five Business Days prior thereto, and otherwise in accordance with the requirements of the Depositary).

Wherever in this Indenture, the Notes or any Guarantee there is mention of, in any context:

(1) the payment of principal,

(2) redemption prices or purchase prices in connection with a redemption or purchase of Notes,

(3) interest, or

(4) any other amount payable on or with respect to any of the Notes or any Guarantee,

such reference shall be deemed to include payment of Additional Amounts as described in this Section 2.15 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

The Payor will pay any present or future stamp, court or documentary Taxes, or any other excise, property or similar Taxes that arise in any Relevant Taxing Jurisdiction (or, in the case of enforcement, any jurisdiction) from the execution, delivery, issuance, initial resale, registration or enforcement of any Notes, this Indenture or any other document or instrument in relation thereto (other than, in each case, on or in connection with a transfer of the Notes after the initial resale thereof). The foregoing obligations will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to a Payor is incorporated or organized, engaged in business for tax purposes, or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein.

SECTION 2.16. [Reserved].

ARTICLE III

Covenants

SECTION 3.1. Payment of Notes. The Issuer shall promptly pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal, premium, if any, and Cash Interest shall be considered paid on the date due if by 10:00 a.m. (New York City time) on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium, if any, and interest then due and the

 

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Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture; provided that if the Issuer elects to pay interest in the form of PIK Interest in the manner provided for herein and in the Notes, then the applicable amount of PIK Interest in respect of such Interest Period shall be considered paid on the date due if, in accordance with the terms hereof and of the Notes, a PIK Payment is made in respect of such amount of PIK Interest, and shall not be considered overdue.

The Issuer shall pay interest on overdue principal at the rate specified therefor in the Notes.

SECTION 3.2. Reports and Other Information.

(a) So long as any Notes are outstanding, the Issuer shall provide to the Trustee and, upon request, to Holders, a copy of all of the information and reports referred to below:

(i) within 90 days after the end of each fiscal year (or such longer period as may be permitted by the SEC if the Issuer were then subject to SEC reporting requirements as a non-accelerated filer), annual audited financial statements for such fiscal year including a “Management’s discussion and analysis of financial condition and results of operations” with respect to the periods presented and a report on the annual financial statements by the Issuer’s independent registered public accounting firm or the foreign analog thereof (the “Auditor”) (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the Offering Memorandum),

(ii) within 45 days (other than any fourth fiscal quarter which is governed by clause (i) above) after the end of each of the first three fiscal quarters of each fiscal year (or such longer period as may be permitted by the SEC if the Issuer were then subject to SEC reporting requirements as a non-accelerated filer), unaudited financial statements for the interim period as of, and for the period ending on, the end of such fiscal quarter including a “Management’s discussion and analysis of financial condition and results of operations” (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the Offering Memorandum), and

(iii) within the time period specified for filing current reports on Form 8-K by the SEC, current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file such reports for any of the following events: (a) significant acquisitions (other than the Acquisition Transactions) or dispositions, (b) the bankruptcy of the Issuer or a Significant Subsidiary, (c) the acceleration of any Indebtedness of the Issuer or any Restricted Subsidiary having a principal amount in excess of $50.0 million, (d) a change in the Issuer’s certifying independent auditor (or foreign analog), (e) the appointment or departure of the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Chief Operating Officer or President (or persons fulfilling similar duties) of Holdings Entity or the Issuer, (f) resignation of a director of Holdings Entity or the Issuer on disagreeable terms, (g) change in fiscal year, (h) non-reliance on previously issued financial statements, (i) change of control transactions (other than the Acquisition Transactions), (j) entry into material agreements, (k) entry into material direct financial obligations and (l) historical financial statements of an acquired business (relating to transactions required to be reported pursuant to Item 2.01 of Form 8-K to the extent and in the form available to the Issuer (as determined by the Issuer in good faith) if the Issuer were a domestic reporting company under the Exchange Act); provided that no such current report will be required to be furnished if the Issuer determines in its good faith judgment that such event is not material to Holders or to the business, assets, operations, financial position or prospects of the Issuer and its Restricted Subsidiaries, taken as

 

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a whole, or if the Issuer determines in its good faith judgment that such disclosure would otherwise cause material competitive harm to the business, assets, operations, financial position or prospects of the Issuer and its Restricted Subsidiaries, taken as a whole; provided, further, that such non-disclosure shall be limited only to those specific provisions that would cause material competitive harm and not the occurrence of the event itself;

provided, further, however, that in addition to providing such information to the Trustee and upon request, to Holders, the Issuer shall, to the extent the requirements set forth in Section 3.2(h) are satisfied, make available to the Holders, beneficial owners of Notes, bona fide prospective investors in the Notes, bona fide market makers in the Notes affiliated with any Initial Purchaser and bona fide securities analysts (to the extent providing analysis of investment in the Notes) such information by (i) posting to the website of the Issuer or any direct or indirect parent of the Issuer or on a non-public, password-protected website maintained by the Issuer or any direct or indirect parent of the Issuer or a third party, in each case, within 15 days after the time the Issuer would be required to provide such information pursuant to clause (i), (ii) or (iii) above, as applicable, or (ii) otherwise providing substantially comparable availability of such reports (as determined by the Issuer in good faith) (it being understood that, without limitation, making such reports available on Bloomberg or another comparable private electronic information service shall constitute substantially comparable availability).

(b) Notwithstanding the foregoing and for the avoidance of doubt, (i) the Issuer shall not be required to furnish any information, certificates or reports required by (A) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K or (B) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (ii) the information and reports referred to in Section 3.2(a) will not be required to contain the separate financial statements or other information contemplated by Rule 3-05, Rule 3-09, Rule 3-10 or Rule 3-16 of Regulation S-X, (iii) to the extent pro forma financial information is required to be provided by the Issuer (including with respect to the Acqusition Transactions), the Issuer may provide only pro forma revenues, net income and the cumulative effect of accounting changes, EBITDA (as such term is defined in the Offering Memorandum), Adjusted EBITDA (as such term is defined in the Offering Memorandum), Pro Forma Adjusted EBITDA (if applicable, and as such term is defined in the Offering Memorandum), senior secured debt, total debt and capital expenditures (or equivalent financial information) in lieu thereof, (iv) the information and reports referred to in Section 3.2(a) shall not be required to present compensation or beneficial ownership information and (v) the information and reports referred to in Section 3.2(a) shall not be required to include any exhibits required by Item 15 of Form 10-K, Item 6 of Form 10-Q or Item 9.01 of Form 8-K.

(c) For so long as the Issuer has designated certain of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by Section 3.2(a) will include a reasonably detailed presentation (which need not be audited or reviewed by the Auditors), either on the face of the financial statements or in the footnotes thereto, or in the “Management’s discussion and analysis of financial condition and results of operations” or other comparable section, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Issuer.

(d) In addition, to the extent not satisfied by the foregoing, the Issuer agrees that, for so long as any Notes are outstanding, the Issuer shall furnish to Holders, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision).

 

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(e) Notwithstanding the foregoing, the financial statements, information, auditors’ reports and other documents required to be provided as described above, may be, rather than those of the Issuer, those of (i) any predecessor or successor of the Issuer or any entity meeting the requirements of clause (ii) or (iii) of this Section 3.2(e), (ii) any Wholly Owned Subsidiary of the Issuer that, together with its consolidated Subsidiaries, constitutes substantially all of the assets and liabilities of the Issuer and its consolidated Subsidiaries (“Qualified Reporting Subsidiary”) or (iii) any direct or indirect parent of the Issuer; provided that, if the financial information so furnished relates to such Qualified Reporting Subsidiary of the Issuer or such direct or indirect parent of the Issuer, the same is accompanied by consolidating information, which may be posted to the website of the Issuer or of any direct or indirect parent or Subsidiary of the Issuer or on a non-public, password-protected website maintained by the Issuer or any direct or indirect parent or Subsidiary of the Issuer or a third party, that explains in reasonable detail the differences between the information relating to such Qualified Reporting Subsidiary or such parent entity (as the case may be), on the one hand, and the information relating to the Issuer and its Restricted Subsidiaries on a standalone basis, on the other hand. For the avoidance of doubt, the consolidating information referred to in the proviso in the preceding sentence need not be audited or reviewed by the Auditors.

(f) The Issuer will be deemed to have satisfied the information and reporting requirements of Section 3.2(a) if (i) the Issuer or any Qualified Reporting Subsidiary of the Issuer or any direct or indirect parent of the Issuer has filed reports or registration statements containing such information (including the information required pursuant to the first sentence of Section 3.2(e) which, for the avoidance of doubt, need not be filed with the SEC via EDGAR to the extent it is otherwise provided to Holders pursuant to this Section 3.2) with the SEC via the EDGAR (or successor) filing system within the applicable time periods after giving effect to any extensions permitted by the SEC and that are publicly available or (ii) with respect to the Holders only, the Issuer or such Qualified Reporting Subsidiary or such parent entity has made such reports available electronically (including by posting to a non-public, password-protected website as provided above) pursuant to this Section 3.2.

(g) So long as Notes are outstanding, the Issuer shall also:

(i) promptly after furnishing to the Trustee the annual and quarterly reports required by Sections 3.2(a)(i) and (ii), hold a conference call to discuss such reports and the results of operations for the relevant reporting period; and

(ii) announce by press release or post to the website of the Issuer or any direct or indirect parent of the Issuer or on a non-public, password-protected website maintained by the Issuer or any direct or indirect parent of the Issuer or a third party, which will require a confidentiality acknowledgment (but not restrict the recipients of such information from trading securities of the Issuer or its affiliates), prior to the date of the conference call required to be held in accordance with Section 3.2(g)(i), the time and date of such conference call and either all information necessary to access the call or informing Holders, beneficial owners of Notes, bona fide prospective investors in the Notes, bona fide market makers in the Notes affiliated with any Initial Purchaser and bona fide securities analysts (to the extent providing analysis of an investment in the Notes) how they can obtain such information, including, without limitation, the applicable password or other login information;

provided, however, that the Issuer will be deemed to have satisfied the requirements of clause (i) of this Section 3.2(g) if any direct or indirect parent of the Issuer holds a conference call to discuss such reports and the results of operations for the relevant reporting period.

 

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(h) Any person who requests or accesses such financial information or seeks to participate in any conference calls required by this Section 3.2 may be required to provide its email address, employer name and other information reasonably requested by the Issuer and represent to the Issuer (to the Issuer’s reasonable good faith satisfaction) that:

(i) it is a Holder, a beneficial owner of the Notes, a bona fide prospective investor in the Notes, a bona fide market maker in the Notes affiliated with any Initial Purchaser or a bona fide securities analyst providing an analysis of investment in the Notes;

(ii) it will not use the information in violation of applicable securities laws or regulations;

(iii) it will keep such provided information confidential and will not communicate the information to any Person; and

(iv) it (a) will not use such information in any manner intended to compete with the business of the Issuer and its Subsidiaries and (b) is not a Person (which includes such Person’s Affiliates) that (i) is principally engaged in a Similar Business or (ii) derives a significant portion of its revenues from operating or owning a Similar Business.

(i) Delivery of reports, information and documents (including without limitation reports contemplated under this Section 3.2) to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates). The Trustee shall have no duty to determine whether any filings have been made.

SECTION 3.3. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

(a) (1) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock, and (2) the Issuer will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that (i) the Issuer and any of the Issuer’s Restricted Subsidiaries (other than Alpha 3 B.V. and its Restricted Subsidiaries) that are Guarantors may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary of the Issuer (other than Alpha 3 B.V. and its Restricted Subsidiaries) may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio for the Issuer, as of the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued, would have been 2.00 to 1.00 or greater and (ii) Alpha 3 B.V. and any of its Restricted Subsidiaries may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary of Alpha 3 B.V. may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio for Alpha 3 B.V., as of the date on which such additional indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued, would have been 2.00 to 1.00 or greater (collectively, “Ratio Debt”).

(b) The foregoing limitations will not apply to (collectively, “Permitted Debt”):

(i) the Incurrence or issuance by the Issuer or its Restricted Subsidiaries of Indebtedness or Disqualified Stock or the issuance by its Restricted Subsidiaries of Preferred Stock under any Credit Agreement, the guarantees thereof and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’

 

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acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate outstanding principal amount or liquidation preference, if applicable, not to exceed (x) the sum of (1) $1,400.0 million at any one time outstanding plus the Cash Capped Grower Amount (with any amounts Incurred pursuant to subclause (y) hereof reducing the amount permitted to be Incurred under this subclause (x)(1), with the exception of the Cash Capped Grower Amount) and (2) $250.0 million at any one time outstanding or (y) an unlimited amount so long as the Consolidated Senior Secured Net Debt Ratio does not exceed 4.50 to 1.00 (with any Indebtedness up to the Cash Capped Grower Amount Incurred under subclause (x) hereof on the date of determination (in the same transaction or series of transactions) of the Consolidated Senior Secured Net Debt Ratio not being included in the calculation of the Consolidated Senior Secured Net Debt Ratio under this subclause (y) on such date but not, for the avoidance of doubt, excluded from any such calculation made on any such subsequent date); provided that solely for the purpose of calculating the Consolidated Senior Secured Net Debt Ratio under this clause (i) (other than as set forth in the parenthetical in subclause (y) of this clause (i)) any outstanding Indebtedness, Disqualified Stock and Preferred Stock Incurred under this clause (i), shall, in each case, be deemed to be Consolidated Secured Indebtedness irrespective of whether such Indebtedness, Disqualified Stock or Preferred Stock actually constitutes Consolidated Secured Indebtedness;

(ii) (1) the Incurrence by the Issuer and the Guarantors of Indebtedness represented by the Initial Notes (including any increases thereof as the result of a PIK Payment and any PIK Notes issued as PIK Interest with respect to the Initial Notes) and the Guarantees thereof, as applicable (but not including any Additional Notes or guarantees thereof), and (2) the Incurrence by the Issuer or its Restricted Subsidiaries of Indebtedness represented by the Existing Opco Notes (including guarantees thereof) (other than any Additional Opco Notes or guarantees thereof);

(iii) Indebtedness and Disqualified Stock of the Issuer and its Restricted Subsidiaries and Preferred Stock of its Restricted Subsidiaries existing on the Issue Date (excluding Indebtedness under the Senior Credit Agreement or in respect of the Existing Opco Notes, but, for the avoidance of doubt, including all Capitalized Lease Obligations (after giving effect to IFRS 16) existing on the Issue Date);

(iv) Indebtedness (including, without limitation, Capitalized Lease Obligations and mortgage financings as purchase money obligations) Incurred by the Issuer or any of its Restricted Subsidiaries, Disqualified Stock issued by the Issuer or any of its Restricted Subsidiaries and Preferred Stock issued by any of its Restricted Subsidiaries to finance all or any part of the purchase, lease, construction, installation, repair or improvement of property (real or personal), plant or equipment or other fixed or capital assets (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) and Indebtedness, Disqualified Stock or Preferred Stock arising from the conversion of the obligations of the Issuer or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of the Issuer or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference, including all Indebtedness Incurred and Disqualified Stock or Preferred Stock issued to renew, refund, refinance, replace, defease or discharge any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (iv), not to exceed the greater of (x) $75.0 million and (y) 6.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (iv) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses

 

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incurred in connection with such refinancing (it being understood that any Indebtedness, Disqualified Stock or Preferred Stock Incurred pursuant to this clause (iv) shall cease to be deemed Incurred or outstanding pursuant to this clause (iv) but shall be deemed Incurred and outstanding as Ratio Debt from and after the first date on which the Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(v) Indebtedness Incurred or Disqualified Stock issued by the Issuer or any of its Restricted Subsidiaries and Preferred Stock issued by any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments issued in the ordinary course of business, including, without limitation, (x) letters of credit or performance or surety bonds in respect of workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance and (y) guarantees of Indebtedness Incurred by customers in connection with the purchase or other acquisition of equipment or supplies in the ordinary course of business;

(vi) the Incurrence of Indebtedness, Disqualified Stock or Preferred Stock arising from agreements of the Issuer or its Restricted Subsidiaries providing for indemnification, earn-outs, adjustment of purchase or acquisition price or similar obligations, in each case, Incurred in connection with the Transactions or with the acquisition or disposition of any business, assets or a Subsidiary of the Issuer in accordance with the terms of this Indenture, other than guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

(vii) Indebtedness or Disqualified Stock of the Issuer to a Restricted Subsidiary; provided that (x) such Indebtedness or Disqualified Stock owing to a Non-Guarantor Subsidiary shall be subordinated in right of payment to the Issuer’s Obligations with respect to this Indenture or the Guarantee of the Guarantors with respect to the Obligations under this Indenture and (y) any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to the Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness or an issuance of such Disqualified Stock not permitted by this clause (vii);

(viii) shares of Preferred Stock of a Restricted Subsidiary issued to the Issuer or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock not permitted by this clause (viii);

(ix) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary; provided that (x) if a Guarantor Incurs such Indebtedness, Disqualified Stock or Preferred Stock owing to a Non-Guarantor Subsidiary, such Indebtedness, Disqualified Stock or Preferred Stock is subordinated in right

 

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of payment to the Issuer’s Obligations with respect to this Indenture or the Guarantee of such Guarantor, as applicable, and (y) any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary lending such Indebtedness, Disqualified Stock or Preferred Stock ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness, Disqualified Stock or Preferred Stock (except to the Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock not permitted by this clause (ix);

(x) Swap Contracts or Cash Management Services not Incurred for speculative purposes;

(xi) obligations (including reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments) in respect of customs, self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by the Issuer or any Restricted Subsidiary;

(xii) Indebtedness or Disqualified Stock of the Issuer or any of its Restricted Subsidiaries and Preferred Stock of any of its Restricted Subsidiaries in an aggregate principal amount or liquidation preference that, when aggregated with the principal amount or liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and Incurred pursuant to this clause (xii), does not exceed the greater of (x) $175.0 million and (y) 15.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xii) or any portion thereof, the aggregate amount of accrued and unpaid interest, original issue discount, premiums (including tender premiums), underwriting discounts, defeasance costs and fees and expenses in connection therewith, incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xii) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xii) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xiii) any guarantee by the Issuer or a Restricted Subsidiary of Indebtedness, Disqualified Stock, Preferred Stock or other obligations of the Issuer or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness, Disqualified Stock, Preferred Stock or other obligations by the Issuer or such Restricted Subsidiary is permitted under the terms of this Indenture;

(xiv) the Incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness or Disqualified Stock or the issuance of Preferred Stock of a Restricted Subsidiary that serves to refund, refinance, replace, redeem, repurchase, retire or defease, and is in an aggregate principal amount (or, if issued with original issue discount, an aggregate issue price) that is equal to or less than, Indebtedness Incurred or Disqualified Stock or Preferred Stock issued as Ratio Debt or permitted under clause (ii), clause (iii), this clause (xiv), clause (xv) or clause (xviii) of this Section 3.3(b) or subclause (y) of each of clauses (iv), (xii), (xx), (xxix) or (xxx) of this Section 3.3(b) (provided that any amounts Incurred under this clause (xiv) as Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to subclause (y) of any of these clauses shall reduce the amount available under such subclause

 

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(y) of such clause so long as such Refinancing Indebtedness remains outstanding) or any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to so refund, replace, refinance, redeem, repurchase, retire or defease such Indebtedness, Disqualified Stock or Preferred Stock, plus any additional Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to pay accrued and unpaid interest and the aggregate amount of original issue discount, premiums (including tender premiums), underwriting discounts, defeasance costs and fees and expenses in connection therewith (subject to the following proviso, “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness:

(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred that is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded, refinanced, replaced, redeemed, repurchased or retired;

(2) in the case of any revolving Indebtedness, has a Stated Maturity that is no earlier than the Stated Maturity of the Indebtedness being refunded, refinanced, replaced, redeemed, repurchased or retired;

(3) to the extent that such Refinancing Indebtedness refinances (i) Subordinated Indebtedness, such Refinancing Indebtedness is Subordinated Indebtedness or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness is Disqualified Stock or Preferred Stock, respectively; and

(4) shall not include (x) Indebtedness, Disqualified Stock or Preferred Stock of a Non-Guarantor Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a Guarantor, or (y) Indebtedness or Disqualified Stock of the Issuer or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;

provided that subclauses (1) and (2) will not apply to any refunding or refinancing of any Secured Indebtedness;

(xv) (i) Indebtedness, Disqualified Stock or Preferred Stock (x) of the Issuer or any of its Restricted Subsidiaries Incurred or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person and (y) of any Person that is acquired by the Issuer or any of its Restricted Subsidiaries or merged into or consolidated or amalgamated with the Issuer or a Restricted Subsidiary in accordance with the terms of this Indenture and (ii) Indebtedness Incurred or Disqualified Stock or Preferred Stock issued or, in each case, assumed in anticipation of, or in connection with, an acquisition of any assets, business or Person; provided, however, that after giving effect to such acquisition, merger, consolidation or amalgamation and the Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock, either:

(1) (A) in the case of Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by the Issuer and any Restricted Subsidiary of the Issuer (other than Alpha 3 B.V. and its Restricted Subsidiaries), the Issuer would be permitted to Incur at least $1.00 of additional Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt and (B) in the case of Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by Alpha 3 B.V. and any Restricted Subsidiary of Alpha 3 B.V., Alpha 3 B.V. would be permitted to incur at least $1.00 of additional Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt; or

 

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(2) the Fixed Charge Coverage Ratio of either the Issuer or Alpha 3 B.V., as applicable, is equal to or greater than such ratio immediately prior to such acquisition, merger, consolidation or amalgamation;

(xvi) Indebtedness, Disqualified Stock or Preferred Stock arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;

(xvii) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary supported by a letter of credit or bank guarantee issued pursuant to any credit facility permitted hereunder, so long as such letter of credit has not been terminated and is in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee;

(xviii) Contribution Indebtedness;

(xix) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary consisting of (x) the financing of insurance premiums or (y) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

(xx) Indebtedness, Disqualified Stock or Preferred Stock of Non-Guarantor Subsidiaries in an aggregate principal amount or liquidation preference, as applicable, not to exceed the greater of (x) $120.0 million and (y) 10.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xx) or any portion thereof, the aggregate amount of accrued and unpaid interest, original issue discount, premiums (including tender premiums), and underwriting discounts, defeasance costs and fees and expenses Incurred in connection with such refinancing, outstanding at any one time (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xx) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xx) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which such Non-Guarantor Subsidiary could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent such Non-Guarantor Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxi) Indebtedness, Disqualified Stock or Preferred Stock of a joint venture to the Issuer or a Restricted Subsidiary and to the other holders of Equity Interests or participants of such joint venture, so long as the percentage of the aggregate amount of such Indebtedness, Disqualified Stock or Preferred Stock of such joint venture owed to such holders of its Equity Interests or participants of such joint venture does not exceed the percentage of the aggregate outstanding amount of the Equity Interests of such joint venture held by such holders or such participant’s participation in such joint venture;

(xxii) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse to the Issuer or any Restricted Subsidiary other than a Receivables Subsidiary (except for Standard Securitization Undertakings);

 

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(xxiii) Indebtedness owed or Disqualified Stock or Preferred Stock issued on a short-term basis to banks and other financial institutions in the ordinary course of business of the Issuer and the Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements, including cash management, cash pooling arrangements and related activities to manage cash balances of the Issuer and its Subsidiaries and joint ventures including treasury, depository, overdraft, credit, purchasing or debit card, electronic funds transfer and other cash management arrangements and Indebtedness in respect of netting services, overdraft protection, credit card programs, automatic clearinghouse arrangements and similar arrangements;

(xxiv) Indebtedness, Disqualified Stock or Preferred Stock consisting of Indebtedness, Disqualified Stock or Preferred Stock issued by the Issuer or any Restricted Subsidiary to future, current or former officers, directors, managers, employees, consultants and independent contractors thereof or any direct or indirect parent thereof, their respective estates, heirs, family members, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Issuer or any direct or indirect parent of the Issuer to the extent permitted by Section 3.4;

(xxv) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business;

(xxvi) Indebtedness Incurred or Disqualified Stock issued by the Issuer or any Restricted Subsidiary or Preferred Stock issued by any of the Issuer’s Restricted Subsidiaries in connection with bankers’ acceptances, discounted bills of exchange, warehouse receipts or similar facilities or the discounting or factoring of receivables for credit management purposes, in each case Incurred or undertaken in the ordinary course of business;

(xxvii) Indebtedness Incurred or Disqualified Stock issued by the Issuer or any Restricted Subsidiary or Preferred Stock issued by any of the Issuer’s Restricted Subsidiaries to the extent that the net proceeds thereof are promptly deposited with the Trustee to satisfy and discharge the Notes in accordance with this Indenture;

(xxviii) (i) guarantees Incurred in the ordinary course of business in respect of obligations to suppliers, customers, franchisees, lessors, licensees, sub-licensees and distribution partners and (ii) Indebtedness Incurred by the Issuer or a Restricted Subsidiary as a result of leases entered into by the Issuer or such Restricted Subsidiary or any direct or indirect parent of the Issuer in the ordinary course of business;

(xxix) the incurrence by the Issuer or any Restricted Subsidiary of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued on behalf, or representing guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by, joint ventures; provided that the aggregate principal amount or liquidation preference, as applicable, of Indebtedness Incurred or guaranteed or Disqualified Stock or Preferred Stock issued or guaranteed pursuant to this clause (xxix) does not exceed the greater of (x) $30.0 million and (y) 2.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xxix) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xxix) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xxix) but shall be deemed Incurred or

 

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issued and outstanding as Ratio Debt from and after the first date on which the Issuer or such Restricted Subsidiary could have Incurred or guaranteed such Indebtedness or issued or guaranteed such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxx) Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or a Restricted Subsidiary Incurred to finance or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person in an aggregate principal amount or liquidation preference that does not exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets, at any one time outstanding plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xxx) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xxx) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xxx) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxxi) Indebtedness, Disqualified Stock or Preferred Stock consisting of obligations of the Issuer or any Restricted Subsidiary under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions or any Permitted Investment;

(xxxii) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent that they are permitted to remain unfunded under applicable law;

(xxxiii) Indebtedness, Disqualified Stock or Preferred Stock arising as a result of (the establishment of) a Dutch law fiscal unity for corporate income tax or turnover tax purposes (fiscale eenheid) of which any Restricted Subsidiary is a member; and

(xxxiv) Indebtedness, Disqualified Stock or Preferred Stock pursuant to a declaration of the Issuer of joint and several liability used for the purpose of Section 2:403 of the Dutch Civil Code (and any residual liability under such declaration arising pursuant to section 2:404(2) of the Dutch Civil Code).

(c) For purposes of determining compliance with this Section 3.3, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt or is entitled to be Incurred or issued as Ratio Debt, the Issuer shall, in its sole discretion, at the time of Incurrence or issuance, divide, classify or reclassify, or at any later time divide, classify or reclassify, such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) in any manner that complies with this Section 3.3; provided that (x) all Indebtedness under the Senior Credit Agreement existing on the Issue Date immediately prior to the consummation of the Transactions shall be deemed to have been Incurred pursuant to Section 3.3(b)(i)(x) and the Issuer shall not be permitted to reclassify all or any portion of such Indebtedness and (y) the entire committed amount of the revolving portion of the Senior Credit Agreement on the Issue Date shall be deemed to have been Incurred on the Issue Date pursuant to Section 3.3(b)(i)(x)(2) as if such entire committed

 

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amount were outstanding funded Indebtedness in the amount of such commitment on the Issue Date and such entire committed amount of the revolving portion of the Senior Credit Agreement shall be deemed to constitute outstanding funded Indebtedness in the amount of such commitment from and after the Issue Date under Section 3.3(b)(i)(x)(2) irrespective of the actual funded borrowings thereunder, it being understood that (1) actual revolving borrowings in respect of (and not in excess of) such entire committed amount deemed to be outstanding may be drawn and redrawn on any subsequent date without further testing under this Section 3.3 and (2) any subsequent permanent reductions in such committed amount shall be deemed to correspondingly reduce the amount of Indebtedness Incurred and outstanding under Section 3.3(b)(i)(x)(2) in respect of such committed amount. Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest or dividends in the form of additional Indebtedness (including any increases thereof as the result of a PIK Payment or the issuance of PIK Notes) with the same terms, the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of Disqualified Stock or Preferred Stock of the same class, the accretion of liquidation preference and increases in the amount of Indebtedness, Disqualified Stock or Preferred Stock outstanding solely as a result of fluctuations in the exchange rate of currencies will not be deemed to be an Incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for purposes of this Section 3.3. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this Section 3.3.

Additionally, for purposes of complying with this Section 3.3, any obligation, including any lease, concession or license of property (or guarantee thereof), that would not constitute a Capitalized Lease Obligation under IFRS as in effect as of the Opco Issue Date (which, for the avoidance of doubt, would not give effect to the application of IFRS 16) will be “Permitted Debt”.

For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness or the issuance of Disqualified Stock or Preferred Stock, the U.S. dollar-equivalent principal amount or liquidation preference, as applicable, of Indebtedness, Disqualified Stock or Preferred Stock denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term debt, or first committed or first Incurred (whichever yields the lower U.S. dollar-equivalent), in the case of revolving credit debt, or first issued in the case of Disqualified Stock or Preferred Stock; provided that if such Indebtedness, Disqualified Stock or Preferred Stock is Incurred to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount or liquidation preference, as applicable, of such Refinancing Indebtedness does not exceed the principal amount or liquidation preference, as applicable, of such Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, being refinanced (plus unpaid accrued interest and the aggregate amount of premiums (including tender premiums) and underwriting discounts, defeasance costs and fees, discounts and expenses in connection therewith).

The principal amount or liquidation preference, as applicable, of any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, if Incurred or issued in a different currency from the Indebtedness, Disqualified Stock or Preferred Stock being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness, Disqualified Stock or Preferred Stock is denominated that is in effect on the date of such refinancing.

 

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SECTION 3.4. Limitation on Restricted Payments.

(a) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment made in connection with any merger, amalgamation or consolidation involving the Issuer (other than (A) dividends or distributions by the Issuer payable solely in Equity Interests (other than Disqualified Stock) of the Issuer; or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities);

(ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Issuer or any direct or indirect parent of the Issuer, including in connection with any merger, amalgamation or consolidation;

(iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness of either of the Issuer or any Guarantor (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness of the Issuer or any Guarantor in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under clause (vii) or (ix) of Section 3.3(b); or

(iv) make any Restricted Investment;

(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(B) immediately after giving effect to such transaction on a Pro Forma Basis, (1) with respect to Restricted Payments by the Issuer and its Subsidiaries (other than Alpha 3 B.V. and its Subsidiaries) the Issuer could incur $1.00 of additional Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt pursuant to subclause (i) of Section 3.3(a) and (2) with respect to Restricted Payments by Alpha 3 B.V. and its Subsidiaries, Alpha 3 B.V. could incur $1.00 of additional Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt pursuant to subclause (ii) of Section 3.3(a); and

(C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clause (i) of Section 3.4(b), but excluding all other Restricted Payments permitted by Section 3.4(b)), is less than the sum of, without duplication:

 

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(1) (x) $75.0 million; provided, however, that the amount of Restricted Payments (as defined in the Opco Notes Indenture) made by Alpha 3 B.V. in connection with the Transactions in reliance on clause (C)(1)(x) of Section 3.4(a) of the Opco Notes Indenture shall reduce the capacity pursuant to this clause (x), unless and until such amount is reclassified to another available exception under the Opco Notes Indenture pursuant to the last paragraph of Section 3.4 of the Opco Notes Indenture, in which case such amount shall be deemed to reduce capacity under the exception under this Indenture corresponding to the exception under the Opco Notes Indenture to which such amount is reclassified; plus (y) 50.0% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) beginning on April 1, 2018 to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case that such Consolidated Net Income for such period is a deficit, minus 100% of such deficit, plus

(2) 100% of the aggregate net proceeds, including cash and the Fair Market Value of assets (other than cash), received by the Issuer after the Issue Date from the issue or sale of Equity Interests of the Issuer (other than Excluded Equity), including such Equity Interests issued upon exercise of warrants or options, plus

(3) 100% of the aggregate amount of contributions to the capital of the Issuer received in cash and the Fair Market Value of assets (other than cash) after the Issue Date (other than Excluded Equity), plus

(4) the principal amount of any Indebtedness, or the liquidation preference or Maximum Fixed Repurchase Price, as the case may be, of any Disqualified Stock, in each case, of the Issuer or any Restricted Subsidiary thereof issued after the Issue Date (other than Indebtedness or Disqualified Stock issued to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Issuer or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Issuer or any Restricted Subsidiary)) that, in each case, has been converted into or exchanged for Equity Interests in the Issuer or any direct or indirect parent of the Issuer (other than Excluded Equity), plus

(5) 100% of the aggregate amount received by the Issuer or any Restricted Subsidiary in cash and the Fair Market Value of assets (other than cash) received by the Issuer or any Restricted Subsidiary from:

(A) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary of the Issuer) of Restricted Investments made by the Issuer and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Issuer and its Restricted Subsidiaries by any Person (other than the Issuer or any of its Restricted Subsidiaries) and from repayments of loans or advances that constituted Restricted Investments,

(B) the sale (other than to the Issuer or a Restricted Subsidiary or an employee stock ownership plan or trust established by the Issuer or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Issuer or any Restricted Subsidiary)) of the Capital Stock of an Unrestricted Subsidiary, and

 

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(C) any distribution or dividend from an Unrestricted Subsidiary, plus

(6) in the event any Unrestricted Subsidiary has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary, in each case after the Opco Issue Date, the Fair Market Value of the Investment of the Issuer in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to Section 3.4(b)(xix) or constituted a Permitted Investment, plus

(7) the aggregate amount of Retained Declined Proceeds since the Opco Issue Date (to the extent Holders were provided notice in connection with the Asset Sale Offer related thereto that any Excess Proceeds not accepted by the Holders shall constitute Retained Declined Proceeds and such Retained Declined Proceeds will increase the amount available for Restricted Payments under this Section 3.4(a)(C) to the extent not otherwise applied in accordance with Section 3.4(b)(xi)).

(b) The provisions of Section 3.4(a) will not prohibit:

(i) the payment of any dividend or distribution or consummation of any redemption within 60 days after the date of declaration thereof or the giving of a redemption notice related thereto, if at the date of declaration or notice such payment would have complied with the provisions of this Indenture;

(ii) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) of the Issuer or any direct or indirect parent of the Issuer, or Subordinated Indebtedness of the Issuer or any Guarantor, in exchange for, or out of the proceeds of the issuance or sale of, Equity Interests of the Issuer or any direct or indirect parent of the Issuer or contributions to the equity capital of the Issuer (other than Excluded Equity) (collectively, including any such contributions, “Refunding Capital Stock”);

(b) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the issuance or sale (other than to a Restricted Subsidiary of the Issuer or to an employee stock ownership plan or any trust established by the Issuer or any of its Restricted Subsidiaries) of Refunding Capital Stock; and

(c) if immediately prior to the retirement of the Retired Capital Stock, the declaration and payment of dividends thereon was permitted pursuant to this Section 3.4 and has not been made as of such time (the “Unpaid Amount”), the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of the Issuer or any direct or indirect parent of the Issuer) in an aggregate amount no greater than the Unpaid Amount;

(iii) the prepayment, redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness of the Issuer or any Guarantor made by exchange for, or out of the proceeds of the Incurrence of, Refinancing Indebtedness thereof;

(iv) the purchase, retirement, redemption or other acquisition (or Restricted Payments to the Issuer or any direct or indirect parent of the Issuer to finance any such purchase, retirement, redemption or other acquisition) for value of Equity Interests (including related stock appreciation

 

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rights or similar securities) of the Issuer or any direct or indirect parent of the Issuer held directly or indirectly by any future, present or former employee, officer, director, manager, consultant or independent contractor of the Issuer or any direct or indirect parent of the Issuer or any Subsidiary of the Issuer or their estates, heirs, family members, spouses or former spouses or permitted transferees (including for all purposes of this clause (iv), Equity Interests held by any entity whose Equity Interests are held by any such future, present or former employee, officer, director, manager, consultant or independent contractor or their estates, heirs, family members, spouses or former spouses or permitted transferees) pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement or any stock subscription or shareholder or similar agreement; provided, however, that the aggregate amounts paid under this clause (iv) shall not exceed (x) $20.0 million in any calendar year or (y) subsequent to the consummation of any public Equity Offering of common Equity Interests of the Issuer or any direct or indirect parent of the Issuer, $30.0 million in any calendar year (in each case, with unused amounts in any calendar year being permitted to be carried over for the next two succeeding calendar years); provided, further, however, that such amount in any calendar year may be increased by an amount not to exceed:

(a) the cash proceeds received by the Issuer from the issuance or sale of Equity Interests (other than Disqualified Stock) of the Issuer or any direct or indirect parent of the Issuer (to the extent contributed to the Issuer), in each case, to any future, present or former employees, officers, directors, managers, consultants or independent contractors of the Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Issuer that occurs on or after the Opco Issue Date, other than in connection with, or pursuant to the Equity Contribution; provided that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend will not increase the amount available for Restricted Payments under Section 3.4(a)(C); plus

(b) the cash proceeds of key man life insurance policies received by the Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Issuer (to the extent contributed to the Issuer) after the Opco Issue Date; plus

(c) the amount of any cash bonuses otherwise payable to employees, officers, directors, managers, consultants or independent contractors of the Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Issuer that are foregone in return for the receipt of Equity Interests; less

(d) the amount of cash proceeds described in subclause (a), (b) or (c) of this clause (iv) previously used to make Restricted Payments pursuant to this clause (iv); provided that the Issuer may elect to apply all or any portion of the aggregate increase contemplated by subclause (a), (b) and (c) above in any calendar year;

provided, further, that cancellation of Indebtedness owing to the Issuer or any Restricted Subsidiary from any future, current or former officer, director, employee, manager, consultant or independent contractor (or any permitted transferees thereof) of the Issuer or any of its Restricted Subsidiaries or any direct or indirect parent of the Issuer, in connection with a repurchase of Equity Interests of the Issuer or any direct or indirect parent of the Issuer from such Persons will not be deemed to constitute a Restricted Payment for purposes of this Section 3.4 or any other provisions of this Indenture;

(v) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Issuer or any of its Restricted Subsidiaries and any class or series of Preferred Stock of any Restricted Subsidiaries issued or Incurred in accordance with Section 3.3;

 

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(vi) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) and the declaration and payment of dividends to the Issuer or any direct or indirect parent of the Issuer, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of the Issuer or any direct or indirect parent of the Issuer issued after the Opco Issue Date; provided, however, that (A) for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, (1) in the case of Capital Stock of the Issuer and its Subsidiaries (other than Alpha 3 B.V. and its Subsidiaries), the Issuer could incur $1.00 of additional Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt pursuant to subclause (i) of Section 3.3(a) and (2) in the case of Alpha 3 B.V. and its Subsidiaries, Alpha 3 B.V. could incur $1.00 of additional Indebtedness, Disqualified Stock or preferred Stock as Ratio Debt pursuant to subclause (ii) of Section 3.3(a) and (B) the aggregate amount of dividends declared and paid pursuant to this clause (vi) does not exceed the net cash proceeds actually received by the Issuer from the sale (or the contribution of the net cash proceeds from the sale) of Designated Preferred Stock;

(vii) (A) Restricted Payments made in connection with the consummation of the Transactions, including any dividends (including, for the avoidance of doubt, the Sponsor dividend specified under “Use of Proceeds” in the Offering Memorandum), payments or loans made to the Issuer or any direct or indirect parent of the Issuer to enable it to make any such payments and (B) any Restricted Payments in an aggregate amount not to exceed, in the case of this clause (B), the Specified Sponsor Overfunding Amount;

(viii) the declaration and payment of dividends on the Issuer’s common stock (or the payment of dividends to any direct or indirect parent of the Issuer to fund the payment by any direct or indirect parent of the Issuer of dividends on such entity’s common Equity Interests) of up to 6.0% per annum of the cash proceeds, net of any underwriting spread, received by the Issuer from any public offering of common Equity Interests or contributed to the Issuer by any direct or indirect parent of the Issuer from any public offering of common Equity Interests, other than public offerings with respect to the Issuer’s common Equity Interests registered on Form S-4 or S-8 or successor form thereto and other than any public sale constituting Excluded Contributions;

(ix) Restricted Payments that are made with Excluded Contributions;

(x) Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (x) not to exceed the greater of (x) $125.0 million and (y) 11.25% of Consolidated Net Tangible Assets; provided however, that the amount of Restricted Payments (as defined in the Opco Notes Indenture) made by Alpha 3 B.V. in connection with the Transactions in reliance on Section 3.4(b)(x) of the Opco Notes Indenture shall reduce the capacity pursuant to this clause (x), unless and until such amount is reclassified to another available exception under the Opco Notes Indenture pursuant to the last paragraph of Section 3.4 of the Opco Notes Indenture, in which case such amount shall be deemed to reduce capacity under the exception under this Indenture corresponding to the exception under the Opco Notes Indenture to which such amount is reclassified;

(xi) the payment, purchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Issuer and its Restricted Subsidiaries pursuant to provisions similar to those described under Sections 3.7 and 3.9; provided that, prior to such payment, purchase, redemption, defeasance or other acquisition or retirement for value, the Issuer (or a third party to the extent permitted by this Indenture) have made any Change of Control Offer or Asset Sale Offer, as the case may be, with respect to the Notes, and have repurchased, redeemed, defeased, acquired or retired all Notes validly tendered and not validly withdrawn in connection with such Change of Control Offer or Asset Sale Offer, as the case may be;

 

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(xii) for so long as the Issuer or any of its Subsidiaries are members of a group filing a consolidated, combined, affiliated or unitary income (or franchise in lieu of income) tax return with any Holdings Entity or any other direct or indirect parent of the Issuer, Restricted Payments to any Holdings Entity or such other direct or indirect parent of the Issuer in amounts required for such Holdings Entity or such other parent entity to pay federal, national, foreign, state and local income taxes (and franchise taxes) imposed on such entity to the extent such income taxes (and franchise taxes) are attributable to the income of the Issuer and its Subsidiaries; provided, however, that the amount of such payments in respect of any tax year does not, in the aggregate, exceed the amount that the Issuer and its Subsidiaries that are members of such consolidated, combined, affiliated or unitary group would have been required to pay in respect of federal, national, foreign, state and local income and/or franchise taxes (as the case may be) in respect of such year if the Issuer and its Subsidiaries paid such income (and franchise) taxes directly on a separate company basis or as a stand-alone consolidated, combined, affiliated or unitary income (or franchise in lieu of income) tax group (reduced by any such taxes paid directly by the Issuer or any Subsidiary);

(xiii) the declaration and payment of dividends, other distributions or other amounts to, or the making of loans to Holdings Entity or any other direct or indirect parent of the Issuer, in the amount required for such entity to, if applicable:

(a) pay amounts equal to the amounts required for any Holdings Entity or any other direct or indirect parent of the Issuer to pay fees and expenses (including Related Taxes), customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, employees, directors, managers, consultants or independent contractors of any such Holdings Entity or any other direct or indirect parent of the Issuer, if applicable, and general corporate operating (including, without limitation, expenses related to auditing and other accounting matters) and overhead costs and expenses of the Issuer or any direct or indirect parent of the Issuer, if applicable, in each case to the extent such fees, expenses, salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of the Issuer and its Subsidiaries;

(b) pay, if applicable, amounts equal to amounts required for any Holdings Entity or any other direct or indirect parent of the Issuer to pay interest and/or principal on Indebtedness the proceeds of which have been contributed to the Issuer (other than as Excluded Equity) and that has been guaranteed by, and is otherwise considered Indebtedness of, the Issuer or any Restricted Subsidiary Incurred in accordance with Section 3.3 (except to the extent any such payments have otherwise been made by any such guarantor);

(c) pay fees and expenses incurred by any Holdings Entity or any other direct or indirect parent of the Issuer related to (i) the maintenance of such parent entity of its corporate or other entity existence and performance of its obligations under this Indenture, the Opco Notes Indenture and similar obligations under any Credit Agreement, (ii) any unsuccessful equity or debt offering of such parent entity (or any debt or equity offering from which such parent does not receive any proceeds) and (iii) any equity or debt issuance, incurrence or offering, any disposition or acquisition or any investment transaction by the Issuer or any of its Restricted Subsidiaries (or any acquisition of or investment in any business, assets or property that will be contributed to the Issuer or any of its Restricted Subsidiaries as part of the same or a related transaction) permitted by this Indenture;

 

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(d) make payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial, advisory, financing, underwriting or placement services or in respect of other investment banking activities including, without limitation, in connection with acquisitions or divestitures, including in connection with the consummation of the Transactions, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) approved in respect of such activities by a majority of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer in good faith;

(e) pay franchise and excise taxes and other fees, taxes (including Related Taxes) and expenses in connection with any ownership of the Issuer or any of its Subsidiaries or required to maintain their organizational existences;

(f) make payments for the benefit of the Issuer or any of its Restricted Subsidiaries to the extent such payments could have been made by the Issuer or any of its Restricted Subsidiaries because such payments (x) would not otherwise be Restricted Payments and (y) would be permitted by Section 3.8; and

(g) make Restricted Payments to any direct or indirect parent of the Issuer to finance, or to any direct or indirect parent of the Issuer for the purpose of paying to any other direct or indirect parent of the Issuer to finance, any Investment that, if consummated by the Issuer or any Restricted Subsidiary, would be a Permitted Investment; provided that (i) such Restricted Payment is made substantially concurrently with the closing of such Investment and (ii) promptly following the closing thereof, such direct or indirect parent of the Issuer causes (x) all property acquired (whether assets or Equity Interests) to be contributed to the Issuer or any Restricted Subsidiary or (y) the merger, consolidation or amalgamation (to the extent permitted by Section 4.1) of the Person formed or acquired into the Issuer or any Restricted Subsidiary in order to consummate such acquisition or Investment, in each case, in accordance with the requirements of Section 3.11;

(xiv) (i) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants, (ii) payments made or expected to be made by the Issuer or any Restricted Subsidiary in respect of withholding or similar taxes payable or expected to be payable by any future, present or former director, officer, employee, manager, consultant or independent contractor of the Issuer or any direct or indirect parent of the Issuer or any Subsidiary of the Issuer (or their respective Affiliates, estates or immediate family members) in connection with the exercise of stock options or the grant, vesting or delivery of Equity Interests and (iii) loans or advances to officers, directors, employees, managers, consultants and independent contractors of the Issuer or any direct or indirect parent of the Issuer or any Subsidiary of the Issuer in connection with such Person’s purchase of Equity Interests of the Issuer or any direct or indirect parent of the Issuer; provided that no cash is actually advanced pursuant to this subclause (iii) other than to pay taxes due in connection with such purchase, unless immediately repaid;

(xv) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing and the payment or distribution of Receivables Fees;

(xvi) payments or distributions to satisfy dissenters’ rights, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of assets that complies with the provisions of this Indenture;

 

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(xvii) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Cash Equivalents);

(xviii) the payment of cash in lieu of the issuance of fractional shares of Equity Interests in connection with any merger, consolidation, amalgamation or other business combination, or in connection with any dividend, distribution or split of or upon exercise, conversion or exchange of Equity Interests, warrants, options or other securities exercisable or convertible into, Equity Interests of the Issuer or any direct or indirect parent of the Issuer;

(xix) Investments in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (xix) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, Cash Equivalents or marketable securities, not to exceed the greater of (x) $100.0 million and (y) 9.00% of Consolidated Net Tangible Assets (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(xx) the making of payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, including in connection with the consummation of the Transactions, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) are approved in respect of such activities by a majority of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer in good faith;

(xxi) any Restricted Payment so long as immediately after giving effect to the making of such Restricted Payment, the Issuer’s Consolidated Total Net Debt Ratio does not exceed 4.50 to 1.00;

(xxii) payments, dividends or distributions with any Total Leverage Excess Proceeds; and

(xxiii) any payment that is intended to prevent any Indebtedness from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (vii)(B), (x), (xxi) and (xxii) of this Section 3.4(b), no Event of Default shall have occurred and be continuing or would occur as a consequence thereof. For purposes of clauses (xii) and (xiii) of this Section 3.4(b), taxes and Related Taxes shall include all interest and penalties with respect thereto and all additions thereto.

The Issuer shall cause Alpha 3 B.V. to make the Restricted Payments (as defined in the Opco Notes Indenture) being made on the Issue Date in connection with the Transactions first in reliance on Section 3.4(a)(C)(1) of the Opco Notes Indenture and to make the remainder in excess of the amounts permitted under such Section 3.4(a)(C)(1) in reliance on Section 3.4(b)(x) of the Opco Notes Indenture.

As of the Issue Date, all of the Issuer’s Subsidiaries are Restricted Subsidiaries. The Issuer will not permit any Restricted Subsidiary to become an Unrestricted Subsidiary, or any Unrestricted Subsidiary to become a Restricted Subsidiary, except pursuant Section 3.14 and the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all

 

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outstanding Investments by the Issuer and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments or Permitted Investments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation will only be permitted if a Restricted Payment or Permitted Investment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture.

For purposes of this Section 3.4, if any Investment or Restricted Payment (or a portion thereof) would be permitted pursuant to one or more provisions described above and/or one or more of the exceptions contained in the definition of “Permitted Investments,” the Issuer may divide and classify such Investment or Restricted Payment (or a portion thereof) in any manner that complies with this Section 3.4 and may later divide and reclassify any such Investment or Restricted Payment so long as the Investment or Restricted Payment (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception as of the date of such reclassification; provided that any Restricted Payment made in reliance on Section 3.4(b)(vii)(B) shall not be permitted to be reclassified as made pursuant to any other provision described above and shall be deemed at all times to have been made in reliance on Section 3.4(b)(vii)(B).

SECTION 3.5. Liens.

(a) Prior to a Covenant Suspension Event, following any Reversion Date and during any Suspension Period when there is no election by the Issuer pursuant to Section 3.5(b), the Issuer will not, and will not permit any Guarantor to, directly or indirectly, create or Incur any Lien securing Indebtedness (other than Permitted Liens) on any asset or property of the Issuer or any Guarantor, unless (1) in the case of Liens securing Subordinated Indebtedness, the Notes and any applicable Guarantee are secured by a Lien on such property or assets and the proceeds thereof that is senior in priority to such Liens; or (2) in all other cases, the Notes and the applicable Guarantee are secured by a Lien on such property or assets and the proceeds thereof equally and ratably with or prior to such Liens.

(b) Following a Covenant Suspension Event, the Issuer may elect by written notice to the Trustee to be subject to this Section 3.5(b) with respect to the limitation on Liens in lieu of Section 3.5(a) (the date such notice is delivered, the “Election Date”). From and after an Election Date and until a Reversion Date, the Issuer will not, and will not permit any of the Issuer’s Principal Property Subsidiaries to, directly or indirectly, create, Incur any Lien of any kind upon any (1) Restricted Property or (2) shares of Capital Stock or evidence of Indebtedness for borrowed money issued by any Principal Property Subsidiary, whether owned at the Issue Date or thereafter acquired, without making effective provision, and the Issuer in such case will make or cause to be made effective provision, whereby the Notes and the applicable Guarantees shall be secured by such Lien equally and ratably with any and all other Indebtedness or obligations thereby secured, so long as such Indebtedness or obligations shall be so secured; provided, however, that the foregoing shall not apply to any of the following:

(1) Liens that exist on the date of the Covenant Suspension Event;

(2) Liens on property, shares of Capital Stock or evidence of Indebtedness of any corporation existing at the time such corporation becomes a Guarantor;

(3) Liens in favor of the Issuer or any Guarantor;

 

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(4) Liens in favor of governmental bodies to secure progress, advance or other payments pursuant to contract or statute or Indebtedness incurred to finance all or a part of construction of or improvements to property subject to such Liens;

(5) Liens (i) on property, shares of Capital Stock or evidences of Indebtedness for borrowed money existing at the time of acquisition thereof (including acquisition through merger, amalgamation or consolidation), and construction and improvement Liens that are entered into within one year from the date of such construction or improvement; provided that in the case of construction or improvement the Lien shall not apply to any property theretofore owned by the Issuer or any Guarantor except substantially unimproved real property on which the property so constructed or the improvement is located and (ii) for the acquisition of any real property, which Liens are created within 180 days after the completion of such acquisition to secure or provide for the payment of the purchase price of the real property acquired; provided that with respect to clauses (i) and (ii), any such Liens do not extend to any other property of the Issuer or any of the Guarantors (whether such property is then owned or thereafter acquired);

(6) mechanics’, landlords’ and similar Liens arising in the ordinary course of business in respect of obligations not due or being contested in good faith;

(7) Liens for taxes, assessments, or governmental charges or levies that are not delinquent or are being contested in good faith;

(8) Liens arising from any legal proceedings that are being contested in good faith;

(9) any Liens that (i) are incidental to the ordinary conduct of its business or the ownership of its properties and assets, including Liens incurred in connection with workmen’s compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts, (ii) were not incurred in connection with the borrowing of money or the obtaining of advances or credit and (iii) do not in the aggregate materially detract from the value of the property of the Issuer or any Guarantor or materially impair the use thereof in the operation of its business; and

(10) Liens for the sole purpose of extending, renewing or replacing in whole or in part any of the foregoing.

(c) Notwithstanding the provisions of Section 3.5(b), during any Suspension Period, if the Election Date has occurred, the Issuer or any Subsidiary may, without equally and ratably securing the Notes and the Guarantees, create or assume Liens that would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 10.0% of Consolidated Total Assets.

(d) Any Lien that is granted to secure the Notes or the applicable Guarantee pursuant to clause (a) or (b) of this Section 3.5 shall be automatically and unconditionally released and discharged at the same time as the release of the Lien that gave rise to the obligation to secure the Notes or the Guarantee under clause (a) or (b) of this Section 3.5 (other than a release as a result of the enforcement of remedies in respect of such Lien or the Obligations secured by such Lien).

(e) With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the Incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The “Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the

 

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accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms, accretion of original issue discount or liquidation preference, any fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection therewith and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness.

SECTION 3.6. Dividend and Other Payment Restrictions Affecting Subsidiaries.

(a) The Issuer will not, and will not permit any of its Restricted Subsidiaries (other than the Guarantors, if any) to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary (other than the Guarantors, if any) to:

(A) (x) pay dividends or make any other distributions to the Issuer or any of its Restricted Subsidiaries on its Capital Stock; or (y) pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

(B) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

(C) sell, lease or transfer any of its properties or assets to the Issuer or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(i) contractual encumbrances or restrictions of the Issuer or any of its Restricted Subsidiaries in effect on the Issue Date, including those in effect on the Issue Date pursuant to the Senior Credit Agreement and the other documents relating to the Senior Credit Agreement, related Swap Contracts, the Opco Notes Indenture, the Existing Opco Notes and the other documents relating to the Opco Notes Indenture and Indebtedness permitted pursuant to clause (iii) of Section 3.3(b);

(ii) this Indenture, the Notes, the Guarantees and other documents relating to this Indenture and the Notes;

(iii) applicable law or any applicable rule, regulation or order;

(iv) any agreement or other instrument of a Person acquired by or merged, amalgamated or consolidated with or into the Issuer or any Restricted Subsidiary or an Unrestricted Subsidiary that is designated a Restricted Subsidiary that was in existence at the time of such acquisition (or at the time it merges with or into the Issuer or any Restricted Subsidiary or assumed in connection with the acquisition of assets from such Person (but, in each case, not created in contemplation thereof)), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired or designated; provided that in connection with a merger, amalgamation or consolidation under this clause (iv), if a Person other than the Issuer or such Restricted Subsidiary is the successor company with respect to such merger, amalgamation or consolidation, any agreement or instrument of such Person or any Subsidiary of such Person, shall be deemed acquired or assumed, as the case may be, by the Issuer or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;

 

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(v) customary encumbrances or restrictions contained in contracts or agreements for the sale of assets applicable to such assets pending consummation of such sale, including customary restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Restricted Subsidiary;

(vi) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(vii) customary provisions in operating or other similar agreements, asset sale agreements and stock sale agreements entered into in connection with the entering into of such transaction, which limitation is applicable only to the assets that are the subject of those agreements;

(viii) purchase money obligations for property acquired and Capitalized Lease Obligations, to the extent such obligations impose restrictions of the nature discussed in clause (C) of this Section 3.6(a) on the property so acquired;

(ix) customary provisions contained in leases, sub-leases, licenses, sublicenses, contracts and other similar agreements entered into in the ordinary course of business to the extent such obligations impose restrictions of the type described in clause (C) of this Section 3.6(a) on the property subject to such lease;

(x) any encumbrance or restriction effected in connection with a Qualified Receivables Financing that, in the good faith determination of the Issuer, is necessary or advisable to effect such Qualified Receivables Financing;

(xi) any encumbrance or restriction contained in other Indebtedness, Disqualified Stock or Preferred Stock of the Issuer or any Restricted Subsidiary that is Incurred subsequent to the Issue Date pursuant to Section 3.3; provided that (i) such encumbrances and restrictions contained in any agreement or instrument will not materially affect the Issuer’s ability to make anticipated principal or interest payments on the Notes in cash (as determined by the Issuer or a direct or indirect parent of the Issuer in good faith) or (ii) such encumbrances and restrictions contained in any agreement or instrument taken as a whole, are not materially less favorable to the Holders than the encumbrances and restrictions contained in this Indenture, the Opco Notes Indenture or the Senior Credit Agreement, in each case as in effect on the Issue Date (as determined by the Issuer in good faith);

(xii) any encumbrance or restriction contained in Secured Indebtedness otherwise permitted to be Incurred pursuant to Sections 3.3 and 3.5 to the extent limiting the right of the debtor to dispose of the assets securing such Indebtedness;

(xiii) any encumbrance or restriction arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, (x) detract from the value of the property or assets of the Issuer or any Restricted Subsidiary in any manner material to the Issuer or any Restricted Subsidiary or (y) materially affect the Issuer’s ability to make future principal or interest payments on the Notes, in each case, as determined by the Issuer in good faith;

 

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(xiv) customary provisions in joint venture agreements or arrangements and other similar agreements or arrangements relating solely to the applicable joint venture; and

(xv) any encumbrances or restrictions of the type referred to in clauses (A), (B) and (C) of this Section 3.6(a) imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in the immediately preceding clauses (i) through (xiv) of this second paragraph of this Section 3.6(a); provided that such encumbrances and restrictions contained in any such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing are, in the good faith judgment of the Issuer, not materially more restrictive, taken as a whole, than the encumbrances and restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

(b) For purposes of determining compliance with this Section 3.6, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Issuer or a Restricted Subsidiary to other Indebtedness Incurred by the Issuer or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

SECTION 3.7. Asset Sales.

(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale, unless:

(i) the Issuer or any of its Restricted Subsidiaries, as the case may be, receives consideration (including by way of relief from, or by any other person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Sale at least equal to the Fair Market Value (as determined at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of; and

(ii) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Issuer or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents or Replacement Assets; provided that the amount of:

(1) any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto for which internal financial statements are available immediately preceding such date or, if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Issuer’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet in the good faith determination of the Issuer) of the Issuer or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are extinguished in connection with the transactions relating to such Asset Sale, or that are assumed by the transferee of any such assets or Equity Interests, in each case, pursuant to an agreement that releases or indemnifies the Issuer or such Restricted Subsidiary, as the case may be, from further liability;

 

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(2) any notes or other obligations or other securities or assets received by the Issuer or such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within 180 days of the receipt thereof; and

(3) any Designated Non-cash Consideration received by the Issuer or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this subclause (3) that is at that time outstanding, not to exceed the greater of (x) $125.0 million and (y) 11.25% of Consolidated Net Tangible Assets, calculated at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value);

shall each be deemed to be Cash Equivalents for the purposes of this clause (ii).

(b) Within 455 days after the Issuer’s or any Restricted Subsidiary’s receipt of the Net Cash Proceeds of any Asset Sale, the Issuer or such Restricted Subsidiary may apply an amount equal to the Net Cash Proceeds from such Asset Sale, at its option:

(i) to reduce Obligations under the Senior Credit Agreement and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto;

(ii) to reduce Obligations under Indebtedness (other than Subordinated Indebtedness) that is secured by a Lien, which Lien is permitted by this Indenture and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto;

(iii) to reduce Obligations under (x) Pari Passu Indebtedness of the Issuer or the Guarantors, if any, (provided that if the Issuer or any Guarantor shall so reduce such Obligations under Pari Passu Indebtedness other than the Notes, the Issuer shall (A) equally and ratably reduce Obligations under the Notes as provided in Section 5.1 or through open-market purchases (to the extent such purchases are at or above 100.0% of the principal amount thereof) or (B) make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase at a purchase price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest, if any, the principal amount of Notes that would otherwise be redeemed under subclause (A) above), or (y) Indebtedness of a Non-Guarantor Subsidiary, in each case, other than Indebtedness owed to the Issuer or another Restricted Subsidiary (and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto);

(iv) to make an investment in any one or more businesses, assets (other than working capital assets), or property or capital expenditures, in each case used or useful in a Similar Business;

(v) to make an investment in any one or more businesses, properties (other than working capital assets) or assets (other than working capital assets) that replace the businesses, properties and/or assets that are the subject of such Asset Sale; or

(vi) any combination of the foregoing;

 

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provided that the Issuer and its Restricted Subsidiaries will be deemed to have complied with the provisions described in clause (iv) or (v) of this Section 3.7(b) if and to the extent that, within 455 days after the Asset Sale that generated the Net Cash Proceeds, the Issuer or such Restricted Subsidiary, as applicable, has entered into and not abandoned or rejected a binding agreement to make an investment in compliance with the provision described in clauses (iv) or (v) of this Section 3.7(b), and that investment is thereafter completed within 180 days after the end of such 455-day period.

(c) Notwithstanding the foregoing, to the extent that repatriation to the Netherlands of any or all of the Net Cash Proceeds of any Asset Sales by a Foreign Subsidiary (a “Foreign Disposition”) (x) is prohibited or delayed by applicable local law or (y) would have a material adverse tax consequence (taking into account any foreign tax credit or other net benefit actually realized in connection with such repatriation that would not otherwise be realized), as determined by the Issuer in its sole discretion, the portion of such Net Cash Proceeds so affected will not be required to be applied in compliance with this Section 3.7, and such amounts may be retained by the applicable Foreign Subsidiary; provided that subclause (x) of this clause (c) shall apply to such amounts so long, but only so long, as the applicable local law will not permit repatriation to the Netherlands (the Issuer hereby agreeing to use commercially reasonable efforts to cause the applicable Foreign Subsidiary to take all actions reasonably required by the applicable local law, applicable organizational impediments or other impediment to permit such repatriation to the Netherlands), and if such repatriation of any of such affected Net Cash Proceeds is permitted under the applicable local law and is not subject to subclause (y) of this clause (c), then such repatriation will be promptly effected and such repatriated Net Cash Proceeds will be applied (net of additional taxes payable or reserved against as a result thereof) in compliance with this Section 3.7. The time periods set forth in this Section 3.7 shall not start until such time as the Net Cash Proceeds may be repatriated to the Netherlands (whether or not such repatriation actually occurs).

(d) Pending the final application of any such amount of Net Cash Proceeds, the Issuer or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest or utilize such Net Cash Proceeds in any manner not prohibited by this Indenture. Any amount of Net Cash Proceeds from any Asset Sale that is not invested or applied as provided and within the time period set forth in Section 3.7(b) shall be deemed to constitute “Excess Proceeds”; provided that any amount of proceeds offered to Holders pursuant to Section 3.7(b)(iii)(x) or pursuant to an Asset Sale Offer made at any time after the Asset Sale shall be deemed to have been applied as required and shall not be deemed to be Excess Proceeds without regard to the extent to which such offer is accepted by the Holders. When the aggregate amount of Excess Proceeds less Total Leverage Excess Proceeds, if any, exceeds $30.0 million, the Issuer shall make an offer (an “Asset Sale Offer”) to all Holders and, if required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness, to purchase the maximum principal amount of such Notes and Pari Passu Indebtedness, as appropriate, on a pro rata basis, that may be purchased out of the Excess Proceeds less Total Leverage Excess Proceeds, if any, at an offer price, in the case of the Notes, in cash in an amount equal to 100.0% of the principal amount thereof (or in the event such other Indebtedness was issued with original issue discount, 100.0% of the accreted value thereof), plus accrued and unpaid interest, if any (or such lesser price with respect to Pari Passu Indebtedness, if any, as may be provided by the terms of such other Indebtedness), to (but not including) the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture and the agreement governing such Pari Passu Indebtedness.

(e) Notwithstanding the foregoing, the Issuer shall only be required to make an Asset Sale Offer with 50% of the Excess Proceeds if the Consolidated Total Net Debt Ratio for the Issuer is less than or equal to the Specified Consolidated Total Net Debt Ratio after giving effect to any application of any Net Cash Proceeds as set forth herein, including completion of any prior offer to repurchase a portion of the Notes (any Excess Proceeds not required to be offered in an Asset Sale Offer in reliance on this sentence (i.e., such 50%) shall constitute “Total Leverage Excess Proceeds”). The Issuer will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that such Excess Proceeds less any Total Leverage Excess Proceeds exceed $30.0 million by transmitting

 

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electronically or by mailing to the Holders the notice required pursuant to the terms of this Indenture, with a copy to the Trustee or otherwise in accordance with the procedures of the Depositary. The Issuer may satisfy the foregoing obligations with respect to such Net Cash Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Cash Proceeds at any time prior to the expiration of the application period or by electing to make an Asset Sale Offer with respect to such Net Cash Proceeds before the aggregate amount of Excess Proceeds less any Total Leverage Excess Proceeds exceeds $30.0 million.

(f) To the extent that the aggregate amount of Notes and any other Pari Passu Indebtedness tendered or otherwise surrendered in connection with an Asset Sale Offer made with Excess Proceeds less any Total Leverage Excess Proceeds is less than the amount offered in an Asset Sale Offer, the Issuer may use any remaining Excess Proceeds less any Total Leverage Excess Proceeds (any such amount, “Retained Declined Proceeds”) for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and Pari Passu Indebtedness tendered or otherwise surrendered by holders thereof exceeds the amount offered in an Asset Sale Offer, the Trustee shall select the applicable Notes (and the Issuer or its agents shall select such Pari Passu Indebtedness) to be purchased in the manner described below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. To the extent the Excess Proceeds less any Total Leverage Excess Proceeds exceed the outstanding aggregate principal amount of the Notes (and, if required by the terms thereof, all Pari Passu Indebtedness), the Issuer need only make an Asset Sale Offer up to the outstanding aggregate principal amount of Notes (and any such Pari Passu Indebtedness), and any additional Excess Proceeds less any Total Leverage Excess Proceeds shall not be subject to this Section and shall be permitted to be used for any purpose in the Issuer’s discretion.

(g) The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws or regulations are applicable in connection with the purchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.7 by virtue of such compliance.

(h) If more Notes are tendered pursuant to an Asset Sale Offer than the Issuer is required to purchase, selection of such Notes for purchase will be made in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed (so long as the Trustee knows of such listing) or if such Notes are not listed, on a pro rata basis based on the total amount of Notes and Pari Passu Indebtedness tendered in connection with an Asset Sale Offer (with adjustments so that only Notes in denominations of the minimum denomination of $200,000 or integral multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof) shall be purchased), by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements and, in the case of Global Notes, the procedures of the Depositary); provided that the selection of Notes for purchase shall not result in a Holder with a principal amount of Notes less than the minimum denomination of $200,000 (or if a PIK Payment has been made, in the minimum denomination of $1.00). No Note will be repurchased in part if less than the minimum denomination of such Note would be left outstanding.

(i) Notices of an Asset Sale Offer shall be sent by first class mail, postage prepaid, or sent electronically, at least ten days but not more than 60 days before the purchase date to each Holder at such Holder’s registered address or otherwise in accordance with the Depositary’s procedures. If any Note is to be purchased in part only, any notice of purchase that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased.

 

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(j) A new Note in principal amount equal to the unpurchased portion of any Note (other than a global note) purchased in part will be issued in the name of the Holder thereof upon cancellation of the Note. On and after the purchase date, unless the Issuer default in payment of the purchase price, interest shall cease to accrue on Notes or portions thereof purchased.

SECTION 3.8. Transactions with Affiliates.

(a) The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer involving aggregate consideration in excess of $30.0 million (each of the foregoing, an “Affiliate Transaction”), unless:

(i) such Affiliate Transaction is on terms that are not materially less favorable to the Issuer or the relevant Restricted Subsidiary than those that could have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis (as determined in good faith by the senior management or the Board of Directors of the Issuer or any direct or indirect parent of the Issuer); and

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $40.0 million, the Issuer delivers to the Trustee a resolution adopted in good faith by the majority of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer, approving such Affiliate Transaction, together with an Officer’s Certificate certifying that the Board of Directors of the Issuer or any direct or indirect parent of the Issuer determined or resolved that such Affiliate Transaction complies with clause (i) above.

(b) The provisions of Section 3.8(a) shall not apply to the following:

(i) (a) transactions between or among the Issuer and/or any of its Restricted Subsidiaries (or an entity that becomes a Restricted Subsidiary as a result of such transaction) and (b) any merger, amalgamation or consolidation of the Issuer and Holdings Entity or any other direct or indirect parent of the Issuer; provided that Holdings Entity or such parent entity shall have no material liabilities and no material assets (other than cash, Cash Equivalents and the Capital Stock of the Issuer) and such merger, amalgamation or consolidation is otherwise in compliance with the terms of this Indenture and effected for a bona fide business purpose;

(ii) (a) Restricted Payments permitted by this Indenture and (b) Permitted Investments;

(iii) transactions in which the Issuer or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 3.8(a)(i);

(iv) payments, loans, advances or guarantees (or cancellation of loans, advances or guarantees) to employees, officers, directors, managers, consultants or independent contractors for bona fide business purposes or in the ordinary course of business;

 

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(v) any agreement or arrangement as in effect as of the Issue Date or as thereafter amended, supplemented or replaced (so long as such amendment, supplement or replacement agreement or arrangement is not materially disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Issuer or any direct or indirect parent of the Issuer) to the Holders when taken as a whole as compared to the original agreement or arrangement as in effect on the Issue Date) or any transaction or payments contemplated thereby;

(vi) the Management Agreements or any transaction or payments (including reimbursement of out-of-pocket expenses or payments under any indemnity obligations) contemplated thereby;

(vii) the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of its obligations under the terms of, the Acquisition Agreement, any stockholders or similar agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party entered into in connection with the Transactions or similar transactions, arrangements or agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing transaction, arrangement or agreement or under any similar transaction, arrangement or agreement entered into after the Issue Date shall only be permitted by this clause (vii) to the extent that the terms of any such existing transaction, arrangement or agreement, together with all amendments thereto, taken as a whole, or new transaction, arrangement or agreement, are not otherwise disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Issuer or any direct or indirect parent of the Issuer) to the Holders in any material respect when taken as a whole as compared with the original transaction, arrangement or agreement entered into in connection with the Transactions;

(viii) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case, in the ordinary course of business and otherwise in compliance with the terms of this Indenture, which are fair to the Issuer and its Restricted Subsidiaries or are on terms at least as favorable (as determined in good faith by the senior management or the Board of Directors of the Issuer or any direct or indirect parent of the Issuer) as might reasonably have been obtained at such time from an unaffiliated party;

(ix) any transaction effected as part of a Qualified Receivables Financing;

(x) the sale, issuance or transfer of Equity Interests (other than Disqualified Stock) of the Issuer;

(xi) payments by the Issuer or any of its Restricted Subsidiaries to or on behalf of the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are (x) made pursuant to agreements with the Sponsor or (y) approved by a majority of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer in good faith or a majority of the disinterested members of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer in good faith;

(xii) any contribution to the capital of the Issuer (other than Disqualified Stock) or any investments by the Sponsor or a direct or indirect parent of the Issuer in Equity Interests (other than Disqualified Stock of the Issuer) of the Issuer (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of the Issuer in connection therewith);

 

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(xiii) any transaction with a Person (other than an Unrestricted Subsidiary) that would constitute an Affiliate solely because the Issuer or a Restricted Subsidiary owns an Equity Interest in or otherwise controls such Person; provided that no Affiliate of the Issuer or any of its Subsidiaries (other than the Issuer or a Restricted Subsidiary) shall have a beneficial interest or otherwise participate in such Person;

(xiv) transactions between the Issuer or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate solely because such Person is a director or such Person has a director which is also a director of the Issuer or any direct or indirect parent of the Issuer; provided, however, that such director abstains from voting as a director of the Issuer or such direct or indirect parent of the Issuer, as the case may be, on any matter involving such other Person;

(xv) the entering into of any tax sharing agreement or arrangement and any payments permitted by Section 3.4(b)(xii), (b)(xiii)(a) or (b)(xiii)(e);

(xvi) transactions to effect the Transactions and the payment of all transaction, underwriting, commitment and other fees and expenses related to the Transactions (including the Transactions costs);

(xvii) pledges of Equity Interests of Unrestricted Subsidiaries;

(xviii) the issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Issuer or any direct or indirect parent of the Issuer in good faith;

(xix) (1) any employment, consulting, service or termination agreement, or customary indemnification arrangements, entered into by the Issuer or any of its Restricted Subsidiaries with current, former or future officers, directors, employees, managers, consultants and independent contractors of the Issuer or any of its Restricted Subsidiaries (or of any direct or indirect parent of the Issuer to the extent such agreements or arrangements are in respect of services performed for the Issuer or any of the Restricted Subsidiaries), (2) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with current, former or future officers, directors, employees, managers, consultants and independent contractors of the Issuer or any of its Restricted Subsidiaries or of any direct or indirect parent of the Issuer and (3) any payment of compensation or other employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers officers, directors, employees, managers, consultants and independent contractors of the Issuer or any of its Restricted Subsidiaries or any direct or indirect parent of the Issuer (including amounts paid pursuant to any management equity plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, stock option or similar plans and any successor plan thereto and any supplemental executive retirement benefit plans or arrangements), in each case in the ordinary course of business or as otherwise approved in good faith by the Board of Directors of the Issuer or of a Restricted Subsidiary or any direct or indirect parent of the Issuer;

 

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(xx) investments by Affiliates in Indebtedness or preferred Equity Interests of the Issuer or any of its Subsidiaries, so long as non-Affiliates were also offered the opportunity to invest in such Indebtedness or preferred Equity Interests, and transactions with Affiliates solely in their capacity as holders of Indebtedness or preferred Equity Interests of the Issuer or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally;

(xxi) the existence of, or the performance by the Issuer or any of its Restricted Subsidiaries of their obligations under the terms of, any registration rights agreement to which they are a party or become a party in the future;

(xxii) investments by the Sponsor or a direct or indirect parent of the Issuer in securities of the Issuer or debt securities or Preferred Stock of any Restricted Subsidiary (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of the Issuer in connection therewith);

(xxiii) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business;

(xxiv) any lease entered into between the Issuer or any Restricted Subsidiary, as lessee, and any Affiliate of the Issuer, as lessor, in the ordinary course of business;

(xxv) (i) intellectual property licenses in the ordinary course of business and (ii) intercompany intellectual property licenses and research and development agreements;

(xxvi) transactions pursuant to, and complying with, (i) Section 3.3 to the extent such transaction complies with Section 3.8(a)(i) or (ii) the second paragraph of Section 4.1(a) or Section 4.1(c); and

(xxvii) intercompany transactions undertaken in good faith for the purpose of improving the consolidated tax efficiency of the Issuer and its Restricted Subsidiaries and not for the purpose of circumventing any covenant set forth in this Indenture.

SECTION 3.9. Change of Control.

(a) Upon the occurrence of a Change of Control after the Issue Date, each Holder shall have the right to require the Issuer to purchase all or any part of such Holder’s Notes at a purchase price in cash (the “Change of Control Payment”) equal to 101.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the purchase date), except to the extent the Issuer has previously elected to redeem all of the Notes pursuant to Section 5.1.

(b) Prior to or within 30 days following any Change of Control, except to the extent that the Issuer has exercised its right to redeem all the Notes as described under Section 5.1, the Issuer shall deliver a notice (a “Change of Control Offer”) to each Holder with a copy to the Trustee and the Paying Agent, or otherwise in accordance with the procedures of the Depositary, describing:

 

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(i) that a Change of Control has occurred or, if the Change of Control Offer is being made in advance of a Change of Control, that a Change of Control is expected to occur, and that such Holder has, or upon such occurrence will have, the right to require the Issuer to purchase such Holder’s Notes at a purchase price in cash equal to 101.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on a Record Date to receive interest on the relevant Interest Payment Date falling prior to or on the purchase date);

(ii) the transaction or transactions that constitute, or are expected to constitute, such Change of Control;

(iii) the purchase date (which shall be no earlier than ten days nor later than 60 days (unless delivered in advance of the occurrence of such Change of Control) from the date such notice is delivered) (the “Change of Control Payment Date”);

(iv) that any Note not properly tendered will remain outstanding and continue to accrue interest;

(v) that unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(vi) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(vii) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuer to purchase such Notes; provided that the Paying Agent receives, not later than the expiration time of the Change of Control Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

(viii) that if a Holder (other than a Holder of a Global Note) is tendering for purchase less than all of its Notes, the Issuer will issue new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered and the unpurchased portion of the Notes must be equal to $200,000 or an integral multiple of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof);

(ix) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and

(x) the other instructions determined by the Issuer, consistent with this Section 3.9, that a Holder must follow in order to have its Notes purchased.

While the Notes are in global form and the Issuer makes an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes to be made through the facilities of the Depositary in accordance with the rules and regulations thereof.

 

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(c) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Paying Agent at the address specified in the notice at least three Business Days prior to the Change of Control Payment Date. Holders shall be entitled to withdraw their election if the Paying Agent receives not later than prior to the expiration time of the Change of Control Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount at maturity of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing its tendered Note and its election to have such Note purchased.

(d) On the Change of Control Payment Date, all Notes purchased by the Issuer under this Section 3.9 shall be delivered by the Issuer to the Trustee for cancellation, and the Issuer shall pay through the Paying Agent the purchase price plus accrued and unpaid interest, if any, to, but not including the Change of Control Payment Date, to the Holders entitled thereto. With respect to any Note purchased in part (other than a Global Note), the Issuer shall issue a new Note in a principal amount equal at maturity to the unpurchased portion of the original Note in the name of the Holder upon cancellation of the original Note.

(e) Notwithstanding the provisions of this Section 3.9, the Issuer shall not be required to make a Change of Control Offer (i) upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes validly tendered and not validly withdrawn under such Change of Control Offer or (ii) if the Issuer has previously issued a notice of a full redemption pursuant to the provisions of Section 5.1.

(f) Prior to any Change of Control Offer, the Issuer shall deliver to the Trustee an Officer’s Certificate stating that all conditions precedent contained herein to the right of the Issuer to make such offer have been complied with.

(g) The Issuer shall comply, to the extent applicable, with the requirements of Rule 14e-1 of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 3.9. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 3.9, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.9 by virtue of such compliance.

(h) A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon such Change of Control.

(i) On the Change of Control Payment Date, the Issuer shall, to the extent permitted by law,

(i) accept for payment all Notes issued by the Issuer or portions thereof validly tendered and not withdrawn pursuant to the Change of Control Offer;

(ii) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered; and

(iii) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuer.

 

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SECTION 3.10. Maintenance of Insurance. The Issuer and the Guarantors, if any, shall maintain with financially sound and reputable insurance companies not Affiliates of the Issuer, insurance with respect to their properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

SECTION 3.11. Future Guarantors. If, on or after the Issue Date, (a) any Restricted Subsidiary of the Issuer (including any newly formed, newly acquired or newly redesignated Restricted Subsidiary, but excluding any Receivables Subsidiary and any Designated Non-Guarantor Subsidiary) that is not then the Issuer or a Guarantor (1) guarantees or co-borrows any Indebtedness under a Holdco Credit Agreement (excluding Certain Capital Markets Debt) or (2) guarantees or co-issues any capital markets Indebtedness of the Issuer with an aggregate principal amount in excess of $200.0 million (“Certain Capital Markets Debt”) or (b) the Issuer otherwise elects to have any Restricted Subsidiary of the Issuer become a Guarantor, then, in each such case, the Issuer shall cause such Restricted Subsidiary to execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit E hereto pursuant to which such Restricted Subsidiary shall become a Guarantor under this Indenture providing for a Guarantee by such Restricted Subsidiary on the same terms and conditions as those set forth in this Indenture and applicable to the other Guarantors; provided that, in the case of clause (a), such supplemental indenture shall be executed and delivered to the Trustee within 20 Business Days of the date that the Indebtedness under such Holdco Credit Agreement or such Certain Capital Markets Debt has been guaranteed, co-borrowed or co-issued, as applicable, by such Restricted Subsidiary.

In the event that any Restricted Subsidiary of the Issuer has not provided a Guarantee in respect of the Notes because such Restricted Subsidiary is a Receivables Subsidiary or a Designated Non-Guarantor Subsidiary, and on any subsequent date such Restricted Subsidiary no longer constitutes a Receivables Subsidiary or a Designated Non-Guarantor Subsidiary but is an obligor or guarantor with respect to a Holdco Credit Agreement or Certain Capital Markets Debt, then the Issuer shall cause such Restricted Subsidiary to execute and deliver to the Trustee within 20 Business Days of such subsequent date a supplemental indenture substantially in the form of Exhibit E hereto pursuant to which such Restricted Subsidiary shall become a Guarantor under this Indenture providing for a Guarantee by such Restricted Subsidiary on the same terms and conditions as those set forth in this Indenture and applicable to other Guarantors.

Each Guarantee shall be released in accordance with Section 10.2(b).

SECTION 3.12. Compliance Certificate; Statement by Officers as to Default. The Issuer shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Issuer ending after the Issue Date, an Officer’s Certificate, to the effect that to the best knowledge of the signer thereof on behalf of the Issuer, the Issuer is or is not in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Issuer (through its own actions or omissions or through the action or omission of any Guarantor, as applicable) shall be in default, specifying all such defaults and the nature and status thereof of which such signer may have knowledge. The individual signing any certificate given by any Person pursuant to this Section 3.12 shall be the principal executive, financial or accounting officer of such Person or the direct or indirect parent of such Person.

So long as any of the Notes are outstanding, upon any Officer of the Issuer becoming aware of any Default or Event of Default, the Issuer shall deliver to the Trustee, within 30 days of such Officer becoming aware of such Default or Event of Default (unless such Default or Event of Default has been cured or waived within such 30-day time period), an Officer’s Certificate specifying such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

SECTION 3.13. [Reserved].

 

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SECTION 3.14. Designation of Restricted and Unrestricted Subsidiaries.

(a) The Board of Directors of the Issuer or any direct or indirect parent of the Issuer may designate any Subsidiary of the Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary of the Issuer) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns or holds any Lien on any property of, the Issuer or any other Subsidiary of the Issuer that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either:

(i) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or

(ii) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 3.4.

(b) The Board of Directors of the Issuer or any direct or indirect parent of the Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

(x) (1) the Issuer could Incur $1.00 of additional Indebtedness as Ratio Debt or (2) the Fixed Charge Coverage Ratio for the Issuer and its Restricted Subsidiaries would be equal to or greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such designation, in each case on a Pro Forma Basis taking into account such designation; and

(y) no Event of Default shall have occurred and be continuing as a result of such designation.

(c) Any such designation by the Board of Directors of the Issuer or any direct or indirect parent of the Issuer pursuant to this Section 3.14 shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Issuer or any direct or indirect parent of the Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with this Section 3.14.

SECTION 3.15. Covenant Suspension.

(a) If on any date following the Issue Date (i) the Notes have Investment Grade Ratings from both Rating Agencies and (ii) no Default has occurred and is continuing under this Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), the Guarantees will be automatically and unconditionally released and discharged and Sections 3.3, 3.4, 3.5(a) (to the extent the Issuer makes an election pursuant to Section 3.5(b)), 3.6, 3.7, 3.8, 3.9, 3.11 and 4.1(a)(iv) (collectively, the “Suspended Covenants”) shall no longer be applicable to the Notes.

(b) In the event that the Issuer and its Restricted Subsidiaries are not subject to the Suspended Covenants under this Indenture for any period of time pursuant to Section 3.15(a), and on any subsequent date (the “Reversion Date”) one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the Notes below an Investment Grade Rating, then the Issuer and its Restricted Subsidiaries shall thereafter again be subject to the Suspended Covenants under this Indenture with respect to future events. The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to as the “Suspension Period.”

 

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(c) Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Net Cash Proceeds shall be reset at zero.

(d) With respect to Restricted Payments made after the Reversion Date, the amount of Restricted Payments made shall be calculated as though Section 3.4 had been in effect prior to, but not during, the Suspension Period. No Subsidiary may be designated as an Unrestricted Subsidiary during the Suspension Period, unless such designation would have complied with Section 3.4 as if Section 3.4 were in effect during such period. In addition, all Indebtedness Incurred, or Disqualified Stock or Preferred Stock issued, during the Suspension Period shall be classified to have been Incurred or issued pursuant to Section 3.3(b)(iii). In addition, for purposes of Section 3.8, all agreements and arrangements entered into by the Issuer and any Restricted Subsidiary with an Affiliate of the Issuer during the Suspension Period prior to such Reversion Date shall be deemed to have been entered pursuant to Section 3.8(b)(v), and for purposes of Section 3.6, all contracts entered into during the Suspension Period prior to such Reversion Date that contain any of the restrictions contemplated by Section 3.6 shall be deemed to have been entered into pursuant to Section 3.6(a)(i). In addition, any Change of Control during such Suspension Period shall not require a Change of Control Offer during or after the Suspension Period; provided that if the public notice of an arrangement that could result in a Change of Control occurs during a Suspension Period and the Notes are rated below Investment Grade by either of the Rating Agencies during the period commencing 90 days prior to such notice until the end of the 90-day period following such notice (which 90-day period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies) then the Issuer shall be required to make a Change of Control Offer upon the Reversion Date.

(e) During the Suspension Period, any reference in Section 3.14, the definition of “Unrestricted Subsidiary” or “Permitted Liens” to Section 3.3 or any provision thereof shall be construed as if Section 3.3 had remained in effect since the Issue Date and during the Suspension Period.

(f) In addition, during the Suspension Period, the Guarantees, if any, will be automatically released and the obligation to grant further Guarantees, if any, will be suspended. Upon the Reversion Date, the obligation to grant Guarantees pursuant to Section 3.11 will be reinstated (and the Reversion Date will be deemed to be the date on which any Indebtedness under a Holdco Credit Agreement or Certain Capital Markets Debt of the Issuer was guaranteed, co-borrowed or co-issued, as applicable, for purposes of Section 3.11).

(g) Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of any failure to comply with the Suspended Covenants during any Suspension Period and the Issuer and any Subsidiary of the Issuer will be permitted, without causing a Default or Event of Default or breach of any of the Suspended Covenants (notwithstanding the reinstatement thereof) under this Indenture, to honor, comply with or otherwise perform any contractual commitments or obligations entered into during a Suspension Period following a Reversion Date and to consummate the transactions contemplated thereby; provided that, to the extent any such commitment or obligation results in the making of a Restricted Payment, such Restricted Payment shall be made under Section 3.4(a)(C) or Section 3.4(b) and, if not permitted by Section 3.4(a)(C) or Section 3.4(b), such Restricted Payment shall be deemed permitted by Section 3.4(a)(C) and shall be deducted for purposes of calculating the amount pursuant to Section 3.4(a)(C) (so that the amount available under Section 3.4(a)(C) immediately following such Restricted Payment shall be negative).

The Issuer shall provide an Officer’s Certificate to the Trustee indicating the occurrence of any Covenant Suspension Event or Reversion Date. The Trustee shall have no obligation to (i) independently determine or verify if such events have occurred, (ii) make any determination regarding the impact of actions taken during the Suspension Period on the Issuer and its Restricted Subsidiaries’ future compliance with their covenants or (iii) notify the Holders of any Covenant Suspension Event or Reversion Date.

 

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SECTION 3.16. Stay, Extension and Usury Laws. The Issuer and each of the Guarantors, if any, covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer and each of the Guarantors, if any, (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

ARTICLE IV

Merger, Consolidation, Amalgamation or Sale of Assets

SECTION 4.1. When the Issuer and Guarantors May Merge, Amalgamate or Otherwise Dispose of Assets.

(a) The Issuer may not consolidate, merge or amalgamate with or into or wind up into (whether or not the Issuer is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless:

(i) the Issuer is the surviving Person or the Person formed by or surviving any such consolidation, merger, amalgamation or winding up (if other than the Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is (or is the foreign analog of) a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Opco Issue Date) (the Issuer or such Person, as the case may be, being herein called the “Successor Company”);

(ii) the Successor Company (if other than the Issuer) expressly assumes all the obligations of the Issuer under this Indenture and the Notes pursuant to supplemental indentures or other documents or instruments;

(iii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, either:

(1) the Issuer (or a Successor Company to the Issuer, if applicable) would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt pursuant to subclause (i) of Section 3.3(a); or

 

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(2) the Fixed Charge Coverage Ratio for the Issuer (or a Successor Company to the Issuer, if applicable) would be equal to or greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;

(v) each Guarantor (if any), unless it is the other party to the transactions described above, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s Obligations under this Indenture and the Notes; and

(vi) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indentures (if any) comply with this Indenture.

The Successor Company (if other than the Issuer) shall succeed to, and be substituted for, the Issuer under this Indenture and the Notes, and the Issuer shall automatically be released and discharged from its obligations under this Indenture and the Notes. Notwithstanding the foregoing clauses (iii) and (iv), (A) the Issuer may consolidate or amalgamate with, merge into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to any Guarantor, (B) the Issuer may merge, consolidate or amalgamate with an Affiliate of the Issuer solely for the purpose of reincorporating or reorganizing the Issuer in another state of the United States, any state or territory thereof or the District of Columbia or in any member country of the European Union (as it is constituted on the Opco Issue Date) so long as the principal amount of Indebtedness of the Issuer and its Restricted Subsidiaries is not increased thereby (unless such increase is permitted by this Indenture), (C) the Issuer may convert into a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of the Issuer or the laws of the United States, any state or territory thereof or the District of Columbia, (D) the Issuer or any Guarantor may change its name and (E) any Restricted Subsidiary may merge, amalgamate or consolidate with the Issuer; provided that the Issuer is the Successor Company in such merger, amalgamation or consolidation.

(b) Subject to Section 10.2, each Guarantor shall not, and the Issuer shall not permit any Guarantor to, consolidate, merge or amalgamate with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless:

(i) (A) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, merger, amalgamation or winding up (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Opco Issue Date) or the laws of any other jurisdiction so long as a Guarantee provided by such surviving Person under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of the predecessor Guarantor (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”);

(B) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s Guarantee pursuant to a supplemental indenture or other documents or instruments;

 

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(C) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Guarantor or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Guarantor or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and

(D) the Successor Guarantor (if other than such Guarantor) shall have delivered or caused to be delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indenture (if any) comply with this Indenture; or

(ii) such sale or disposition or consolidation, amalgamation or merger is made in compliance with Section 3.7.

(c) Subject to Article X, the Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee, and such Guarantor shall automatically be released and discharged from its obligations under this Indenture and such Guarantor’s Guarantee. Notwithstanding the foregoing, (1) a Guarantor may merge, consolidate or amalgamate with an Affiliate of the Issuer incorporated or organized solely for the purpose of reincorporating or reorganizing such Guarantor in the United States, any state or territory thereof or the District of Columbia or in any member country of the European Union (as it is constituted on the Opco Issue Date), so long as the principal amount of Indebtedness of the Issuer and the Restricted Subsidiaries is not increased thereby (unless such increase is permitted by this Indenture), (2) a Guarantor may (a) consolidate, merge or amalgamate with or into or wind up into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets to, the Issuer or a Guarantor or (b) dissolve if such Guarantor sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its properties and assets to another Person in compliance with Section 3.7 and, after giving effect to such sale, assignment, transfer, lease, conveyance or disposition and prior to such dissolution, has no or a de minimis amount of assets, (3) a Guarantor may convert into a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Opco Issue Date) or the laws of any other jurisdiction so long as a Guarantee provided under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of such Guarantor prior to such conversion, (4) a Guarantor may change its name and (5) any Restricted Subsidiary may merge, amalgamate or consolidate into any Guarantor; provided, in the case of this clause (5), that the surviving Person (i) is a corporation, partnership, limited partnership or limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia or the laws of any member country of the European Union (as it is constituted on the Opco Issue Date) or the laws of any other jurisdiction so long as a Guarantee provided by such surviving Person under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of the predecessor Guarantor or the laws of the jurisdiction of organization of such Restricted Subsidiary or Guarantor and (ii) is or becomes a Guarantor upon consummation of such merger, amalgamation or consolidation.

(d) For purposes of this Section 4.1, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Issuer, which properties and assets, if held by the Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.

 

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ARTICLE V

Redemption of Notes

SECTION 5.1. Optional Redemption.

(a) The Notes may be redeemed, in whole at any time, or in part from time to time, subject to the conditions and at the redemption prices set forth in Paragraph 6 of the form of Note set forth in Exhibit A hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the redemption date.

(b) Any redemption of the Notes may, at the Issuer’s discretion, be subject to one or more conditions precedent. The redemption date of any redemption that is subject to satisfaction of one or more conditions precedent may, in the Issuer’s discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuer in its sole discretion), or such redemption may not occur and any notice with respect to such redemption may be modified or rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuer in its sole discretion) by the redemption date, or by the redemption date so delayed (which may exceed 60 days from the date of the redemption notice in such case). In addition, such notice of redemption may be extended if such conditions precedent have not been satisfied or waived by the Issuer, by providing notice to the Holders.

(c) The Issuer or its Affiliates may at any time and from time to time purchase Notes. Any such purchases may be made through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as the Issuer or any such Affiliates may determine.

SECTION 5.2. Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions. If the Issuer elects to redeem Notes pursuant to Section 5.1, the Issuer shall furnish to the Trustee, at least two Business Days for Global Notes and ten calendar days for Definitive Notes before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to Section 5.4, an Officer’s Certificate setting forth (a) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (b) the Redemption Date, (c) the principal amount of the Notes to be redeemed and (d) the redemption price. The Issuer may also include a request in such Officer’s Certificate that the Trustee give the notice of redemption in the Issuer’s name and at its expense and setting forth the information to be stated in such notice as provided in Section 5.4. The Issuer shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 5.3.

SECTION 5.3. Selection by Trustee of Notes to Be Redeemed. If less than all of the Notes are to be redeemed at any time, the Trustee shall select Notes for redemption in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed (so long as the Trustee knows of such listing), or if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements and, in the case of the Global Notes, the procedures of the Depositary) in minimum denominations of $200,000 and in integral multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof); provided that the selection of Notes for redemption shall not result in a Holder with a principal amount of Notes less than the minimum denomination of $200,000 (or if a PIK Payment has been made, in the minimum denomination of $1.00). If any Note is to be purchased or redeemed in part only, the notice of purchase or redemption relating to such Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. A new Note in principal amount equal to the

 

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unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note in accordance with Section 5.7. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption so long as the Issuer has deposited with the Trustee funds sufficient to pay the principal of and premium, if any, plus accrued and unpaid interest, if any, on the Notes to be redeemed.

The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

SECTION 5.4. Notice of Redemption. The Issuer shall deliver to each Holder’s registered address or otherwise in accordance with the procedures of the Depositary, a notice of redemption to each Holder whose Notes are to be redeemed not less than ten nor more than 60 days prior to a date fixed for redemption (a “Redemption Date”); provided, however, that redemption notices may be delivered more than 60 days prior to a Redemption Date if (a) the notice is issued pursuant to Article VIII or (b) in the case of a redemption that is subject to one or more conditions precedent, the date of redemption is extended as permitted by this Indenture. At the Issuer’s written request, the Trustee may give notice of redemption in the Issuer’s names and at the Issuer’s expense.

All notices of redemption shall be prepared by the Issuer and shall state:

(a) the Redemption Date,

(b) the redemption price and the amount of accrued interest to, but excluding, the Redemption Date payable as provided in Section 5.6, if any,

(c) if less than all outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption,

(d) in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder shall receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,

(e) that on the Redemption Date the redemption price (and accrued interest to, but excluding, the Redemption Date payable as provided in Section 5.6, if any) shall become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Issuer defaults in making the redemption payment, that interest on Notes called for redemption (or the portion thereof) shall cease to accrue on and after said date,

(f) the place or places where such Notes are to be surrendered for payment of the redemption price and accrued interest, if any,

(g) the name and address of the Paying Agent,

 

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(h) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price,

(i) the CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes,

(j) the Section of this Indenture pursuant to which the Notes are to be redeemed, and

(k) any applicable conditions precedent.

At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s names and at its expense; provided, however, that the Issuer shall have delivered to the Trustee, at least two Business Days prior to when the notice of the redemption is to be given, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Such Officer’s Certificate shall state that all conditions precedent to the delivery of such notice have been complied with.

SECTION 5.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time, on any Redemption Date, the Issuer shall deposit with the Trustee or with a Paying Agent (or, if the Issuer is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the redemption price of, and accrued interest on, all the Notes which are to be redeemed on that date.

SECTION 5.6. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to, but excluding, the Redemption Date), and from and after such date (unless the Issuer shall default in the payment of the redemption price and accrued interest, if any, to, but excluding, the Redemption Date) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Issuer at the redemption price, together with accrued interest, if any, to, but excluding, the Redemption Date (subject to the rights of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date).

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.

If a Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, shall be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no further interest shall be payable to Holders whose Notes shall be subject to redemption by the Issuer.

SECTION 5.7. Notes Redeemed in Part. Any Note which is to be redeemed only in part (pursuant to the provisions of this Article V) shall be surrendered at the office or agency of the Issuer maintained for such purpose pursuant to Section 2.3 (with, if the Issuer so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Issuer duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Issuer shall execute, and the Trustee upon receipt of an Authentication Order shall authenticate and make available for delivery to the Holder of such Note at the expense of the Issuer, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered; provided that each such new Note shall be in a minimum principal amount of $200,000 and integral multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof).

 

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SECTION 5.8. Offer to Repurchase. In the event that, pursuant to Section 3.7, the Issuer is required to commence an offer to all Holders to purchase the Notes (an “Offer to Repurchase”), they shall follow the procedures specified below:

(a) The Offer to Repurchase shall remain open for a period of at least ten days following its commencement and not more than 60 days, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than five Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuer shall apply all Excess Proceeds less any Total Leverage Excess Proceeds (the “Offer Amount”) to the purchase of Notes and such Pari Passu Indebtedness, if any (in each instance, on a pro rata basis, if applicable), or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Offer to Repurchase. Payment for any Notes so purchased shall be made pursuant to Section 3.1.

(b) If the Purchase Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Offer to Repurchase.

(c) Upon the commencement of an Offer to Repurchase, the Issuer shall send, by first class mail (or electronically for Global Notes), a notice to the Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Repurchase. The notice, which shall govern the terms of the Offer to Repurchase, shall state:

(i) that the Offer to Repurchase is being made pursuant to this Section 5.8 and Section 3.7, and the length of time the Offer to Repurchase shall remain open;

(ii) the Offer Amount, the purchase price and the Purchase Date;

(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;

(iv) that, unless the Issuer defaults in making such payment, any Note accepted for payment pursuant to the Offer to Repurchase shall cease to accrue interest after the Purchase Date;

(v) that Holders electing to have a Note purchased pursuant to an Offer to Repurchase may elect to have Notes purchased in a minimum amount of $200,000 or an integral multiple of $1.00 in excess thereof only (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof);

(vi) that Holders electing to have Notes purchased pursuant to any Offer to Repurchase shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Issuer, a Depositary, if appointed by the Issuer, or a Paying Agent at the address specified in the notice at least three Business Days before the Purchase Date;

 

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(vii) that Holders shall be entitled to withdraw their election if the Issuer, the Depositary or the Paying Agent, as the case may be, receives, not later than on the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased;

(viii) that, if the aggregate principal amount of Notes and, if applicable, Pari Passu Indebtedness, if any, surrendered by Holders thereof exceeds the Offer Amount, the Trustee shall select the Notes and, if applicable, the Issuer shall select such Pari Passu Indebtedness to be purchased or prepaid, on a pro rata basis based on the principal amount of Notes and Pari Passu Indebtedness, if any, surrendered (with such adjustments as may be deemed appropriate by the Issuer so that only Notes in minimum denominations of $200,000, or integral multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof), shall be purchased); and

(ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

(d) On or before the Purchase Date, the Issuer shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Offer to Repurchase, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating that such Notes or portions thereof were accepted for payment by the Issuer in accordance with the terms of this Section 5.8. The Issuer, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuer for purchase, and the Issuer shall promptly issue a new Note, and the Trustee, upon written request from the Issuer, shall authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Issuer to the Holder thereof. The Issuer shall publicly announce the results of the Offer to Repurchase on the Purchase Date.

SECTION 5.9. Redemption for Taxation Reasons. The Issuer may redeem the Notes, at its option, in whole, but not in part, upon giving not less than 10 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to (but not including) the date fixed for redemption (a “Tax Redemption Date”) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date) and all Additional Amounts, if any, then due or that will become due on the Tax Redemption Date as a result of the redemption or otherwise if the Issuer determines in good faith that, as a result of:

(a) any change in, or amendment to, the law or treaties (or any regulations, protocols or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affecting taxation; or

 

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(b) any change in official position regarding the application, administration or interpretation of such laws, treaties, regulations, protocols or rulings (including a holding, judgment or order by a government agency or court of competent jurisdiction) (each of the foregoing in clauses (a) and (b), a “Change in Tax Law”),

any Payor with respect to the Notes or a Guarantee is, or on the next date on which any amount would be payable in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to such Payor (including the appointment of a new Paying Agent or, where such action would be reasonable, payment through another Payor).

In the case of any Payor, the Change in Tax Law with respect to a given Relevant Taxing Jurisdiction, must be announced and become effective on or after the later of the Issue Date or the date a jurisdiction becomes a Relevant Taxing Jurisdiction. Notwithstanding the foregoing, no such notice of redemption shall be given (a) earlier than 90 days prior to the earliest date on which the Payor would be obligated to make such payment of Additional Amounts and (b) unless at the time such notice is given, such obligation to pay Additional Amounts remains in effect. Prior to the publication, mailing or delivery of any notice of redemption of the Notes pursuant to the foregoing, the Issuer shall deliver to the Trustee (1) an Officer’s Certificate stating that it is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to its right so to redeem have been satisfied (including that the obligation to pay such Additional Amounts cannot be avoided by the Payor taking reasonable measures available to it) and (2) an opinion of an independent tax counsel of recognized standing to the effect that the Payor would be obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee shall accept such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it shall be conclusive and binding on the Holders.

The provisions of this Section 5.9 shall apply mutatis mutandis to the laws and official positions of any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. The provisions of this Section 5.9 shall survive any termination, defeasance or discharge of this Indenture.

ARTICLE VI

Defaults and Remedies

SECTION 6.1. Events of Default. Each of the following is an “Event of Default”:

(i) a default in any payment of interest on any Note when due, continued for 30 days (it being understood that any failure to pay Cash Interest on that portion of any interest payment required to be paid in Cash Interest pursuant to the terms of this Indenture is a default in the payment of interest for purposes of this clause (i), irrespective of whether all or part of such portion is paid in the form of PIK Interest);

(ii) a default in the payment of principal or premium, if any, of any Note when due at its Stated Maturity, upon optional redemption, upon required purchase, upon acceleration or otherwise;

(iii) the failure by the Issuer or any Restricted Subsidiary to comply for 60 days after receipt of written notice referred to below with any of its obligations, covenants or agreements (other than a default pursuant to Sections 6.1(i) or 6.1(ii)) contained in the Notes or this Indenture; provided that in the case of a failure to comply with Section 3.2, such period of continuance of such default or breach shall be 120 days after written notice described in this clause (iii) has been given;

 

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(iv) (x) the failure by the Issuer or any Restricted Subsidiary to pay the principal amount of any Indebtedness for borrowed money (other than Indebtedness for borrowed money owing to the Issuer or a Restricted Subsidiary) within any applicable grace period after final maturity or (y) the acceleration of any Indebtedness for borrowed money (other than Indebtedness for borrowed money owing to the Issuer or a Restricted Subsidiary) by the holders thereof because of a default, in each case of clauses (x) and (y), if the total amount of such Indebtedness unpaid at final maturity or accelerated exceeds $50.0 million or its foreign currency equivalent;

(v) the Issuer or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(1) commences a voluntary case;

(2) consents to the entry of an order for relief against it in any voluntary case;

(3) consents to the appointment of a Custodian of it or for any substantial part of its property;

(4) makes a general assignment for the benefit of its creditors; or

(5) takes any action that is comparable to any of the actions described in clauses (1) through (4) of this clause (v);

(vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(1) is for relief against the Issuer or any Significant Subsidiary in an involuntary case;

(2) appoints a Custodian of the Issuer or any Significant Subsidiary or for any substantial part of its property; or

(3) orders the winding up or liquidation of the Issuer or any Significant Subsidiary;

or any similar relief is granted under any foreign laws (including any foreign Bankruptcy Law) and the order or decree remains unstayed and in effect for 60 days;

(vii) failure by the Issuer or any Significant Subsidiary to pay final and non-appealable judgment or judgments aggregating in excess of $50.0 million or its foreign currency equivalent (net of any amounts which are covered by enforceable insurance policies issued by solvent insurance companies), which judgment or judgments are not discharged, waived or stayed for a period of 60 days after such judgment or judgments become final and, in the event such judgment or judgments are covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or judgments or decree which is not promptly stayed; or

 

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(viii) the Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof or of this Indenture), or any Guarantor that is a Significant Subsidiary denies in writing that it has any further liability under its Guarantee or gives written notice to such effect, other than by reason of the termination or discharge of this Indenture or the release of any such Guarantee in accordance with this Indenture and such Default continues for ten days.

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

However, a default under Section 6.1(iii) shall not constitute an Event of Default until the Trustee or the Holders of at least 30% in principal amount of outstanding Notes notify in writing the Issuer of the default and such default is not cured within the time specified in Section 6.1(iii) after receipt of such notice.

SECTION 6.2. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(v) or (vi) above with respect to the Issuer) occurs and is continuing, the Trustee or the Holders of at least 30% in principal amount of outstanding Notes by written notice to the Issuer (and to the Trustee, if given by the Holders) may declare the principal of, premium, if any, and accrued but unpaid interest on, all the Notes to be due and payable. Upon such a declaration, such principal, premium, if any, and interest shall be due and payable immediately. If an Event of Default specified in Section 6.1(v) or (vi) occurs with respect to the Issuer, the principal of, premium, if any, and interest on all the Notes shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture (including sums owed to the Trustee and its agents and counsel) and the Guarantees.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the then-outstanding Notes by written notice to the Trustee and the Issuer may, on behalf of the Holders of all of the Notes, waive, rescind or cancel any declaration of an existing or past Default or Event of Default and its consequences under this Indenture if such waiver, rescission or cancellation would not conflict with any judgment or decree, except a continuing Default or Event of Default in the payment of interest or premium on, or the principal of, the Notes (other than such nonpayment of principal or interest that has become due as a result of such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

In the event of any Event of Default specified in Section 6.1(iv), such Event of Default and all consequences thereof shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if prior to 20 days after such Event of Default arose, the Issuer delivers an Officer’s Certificate to the Trustee stating that (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged or (y) the requisite amount of Holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has otherwise been cured.

 

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SECTION 6.5. Control by Majority. The Holders of a majority in principal amount of the then-outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability unless such Holders have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. Prior to taking any action under this Indenture, the Trustee shall be entitled to security or indemnification satisfactory to it in its sole discretion against all losses, liabilities and expenses that may be caused by taking or not taking such action.

SECTION 6.6. Limitation on Suits. In case an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

(i) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(ii) Holders of at least 30% of the aggregate principal amount of the outstanding Notes have requested in writing the Trustee to pursue the remedy;

(iii) such Holders have offered the Trustee security or indemnity reasonably satisfactory to it in respect of any loss, liability or expense;

(iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a written direction inconsistent with such request within such 60-day period.

SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium, if any, or interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.8. Collection Suit by Trustee. If an Event of Default specified in Sections 6.1(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.6.

 

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SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Issuer, its Subsidiaries or its creditors or properties and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders (pursuant to the written direction of Holders of a majority in principal amount of the then-outstanding Notes) in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in such proceeding.

SECTION 6.10. Priorities. The Trustee shall pay out any money or property received by it in the following order:

First: to the Trustee for amounts due under Section 7.6;

Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

Third: to the Issuer or, to the extent the Trustee receives any amount for any Guarantor, to such Guarantor as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. At least 15 days before such record date, the Issuer (or the Trustee) shall deliver to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.

ARTICLE VII

Trustee

SECTION 7.1. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall, in the exercise of its rights and powers under this Indenture, use the same degree of care and skill in its exercise of such rights and powers as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs, subject to the provisions of clause (h) below.

 

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(b) Except during the continuance of an Event of Default of which a Trust Officer has actual knowledge, the Trustee:

(i) and the Agents undertake to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Agents; and

(ii) in the absence of gross negligence or bad faith on its part, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee under this Indenture, the Notes and the Guarantees, if any, as applicable. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Notes and the Guarantees as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i) this Section 7.1(c) does not limit the effect of Section 7.1(b);

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer or Trust Officers unless it is proved in a final non-appealable decision of a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.

(d) The Trustee and the Agents shall not be liable for interest on any money received by it except as the Trustee and the Agents may agree in writing with the Issuer.

(e) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(f) No provision of this Indenture, the Notes or the Guarantees shall require the Trustee or an Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1.

(h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee, security and indemnity satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction.

 

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SECTION 7.2. Rights of Trustee.

(a) The Trustee and the Agents may conclusively rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or any other paper or document believed by it to be genuine and to have been signed or presented by the proper Person or Persons. The Trustee and the Agents need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting it may require an Officer’s Certificate or an Opinion of Counsel or both, except that (x) no Officer’s Certificate or Opinion of Counsel will be required in connection with the original issuance of the Initial Notes on the date hereof and (y) no Opinion of Counsel will be required in connection with the execution of any amendment or supplement adding a new Guarantor under this Indenture or the release of a Guarantor pursuant to Section 10.2(b) hereof. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate or Opinion of Counsel.

(c) The Trustee may act through its attorneys, custodians, nominees and agents and shall not be responsible for the misconduct or negligence of or for the supervision of any agent, custodians, nominees or attorney appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct or negligence as determined in a final non-appealable decision of a court of competent jurisdiction.

(e) The Trustee may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Notes and the Guarantees shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder or under the Notes and the Guarantees in good faith and in accordance with the advice or opinion of such counsel.

(f) The Trustee and the Agents shall not be bound to make any investigation into any statement, warranty or representation, or the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or other paper or document made or in connection with this Indenture; moreover, the Trustee and the Agents shall not be bound to make any investigation into (i) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (ii) the occurrence of any default, or the validity, enforceability, effectiveness or genuineness of this Indenture or any other agreement, instrument or document or (iii) the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other evidence of indebtedness or other paper or document, but the Trustee or an Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee or an Agent, as applicable, shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(g) The Trustee shall not be deemed to have knowledge of any Default or Event of Default except any Default or Event of Default of which a Trust Officer shall have (x) received written notification from the Issuer or a Holder at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture or (y) obtained “actual knowledge.” “Actual knowledge” shall mean the actual fact or statement of knowing by a Trust Officer without independent investigation with respect thereto.

 

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(h) In no event shall the Trustee or an Agent be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee or Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent (including the Agents), custodian and other Person employed to act hereunder.

(j) The Trustee may request that the Issuer delivers a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(k) The Trustee shall not have any duty (A) to see to any recording, filing, or depositing of this Indenture or any agreement referred to herein, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, re-filing or redepositing of any thereof or (B) to see to any insurance.

(l) The right of the Trustee or an Agent to perform any discretionary act enumerated in this Indenture shall not be construed as a duty.

SECTION 7.3. Individual Rights of Trustee. Subject to the TIA, the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer, the Guarantors (if any) or its Affiliates with the same rights it would have if it were not the Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Section 7.9. In addition, the Trustee shall be permitted to engage in transactions with the Issuer; provided, however, that if the Trustee acquires any conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the SEC for permission to continue acting as Trustee or (iii) resign.

SECTION 7.4. Disclaimer. Neither the Trustee nor any Agent shall be responsible for and none of them makes any representation as to the validity or adequacy of this Indenture, the Notes or the Guarantees (if any), neither of them shall be accountable for the Issuer’s use of the Notes or the proceeds from the Notes, and neither of them shall be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication or for the use or application of any funds received by any Paying Agent other than the Trustee.

SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing and is actually known to the Trustee, the Trustee shall deliver to each Holder notice of the Default within 90 days after it is known to the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders.

SECTION 7.6. Compensation and Indemnity. The Issuer shall pay to the Trustee and the Agents from time to time such compensation for their services as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a

 

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trustee of an express trust. The Issuer shall reimburse the Trustee and the Agents upon request for all reasonable out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Holders and reasonable costs of counsel, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Issuer shall indemnify the Trustee or any predecessor Trustee in each of its capacities hereunder (including as Paying Agent and Registrar), and each of their officers, directors, employees, counsel and agents, against any and all loss, liability or expense (including, but not limited to, reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of their duties hereunder and under the Notes and the Guarantees (if any), including the costs and expenses of enforcing this Indenture (including this Section 7.6), the Notes and the Guarantees (if any) and of defending itself against any claims (whether asserted by any Holder, the Issuer or otherwise). The Trustee and the Agents shall notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Trustee or an Agent to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer shall defend the claim and the Trustee and the Agents may have separate counsel and the Issuer shall pay the reasonable fees and expenses of such counsel. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee or an Agent as a result of its own willful misconduct, negligence or bad faith.

To secure the Issuer’s payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes. The right of the Trustee to receive payment of any amounts due under this Section 7.6 shall not be subordinate to any other liability or indebtedness of the Issuer.

The Issuer’s obligations pursuant to this Section and any lien arising hereunder shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee or an Agent. When the Trustee or an Agent incurs expenses after the occurrence of a Default specified in Sections 6.1(v) or (vi) with respect to the Issuer, the expenses are intended to constitute expenses of administration under any Bankruptcy Law.

Pursuant to Section 10.1, the obligations of the Issuer hereunder are jointly and severally guaranteed by the Guarantors.

SECTION 7.7. Replacement of Trustee. The Trustee may resign at any time by so notifying the Issuer. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Issuer and the Trustee in writing and may appoint a successor Trustee. The Issuer shall remove the Trustee if:

(i) the Trustee fails to comply with Section 7.9;

(ii) the Trustee is adjudged bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Trustee or its property; or

(iv) the Trustee otherwise becomes incapable of acting.

 

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If the Trustee resigns or is removed by the Issuer or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Issuer shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.6. All costs reasonably incurred in connection with any resignation or removal hereunder shall be borne by the Issuer.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Notes may petition, at the Issuer’s expense, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.9, unless the Trustee’s duty to resign is stayed, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.7, the Issuer’s obligations under Section 7.6 shall continue for the benefit of the retiring Trustee.

SECTION 7.8. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture; provided that the certificate of the Trustee shall have.

SECTION 7.9. Eligibility; Disqualification. The Trustee shall have a combined capital and surplus of at least $50.0 million as set forth in its most recent filed annual report of condition.

This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

SECTION 7.10. Limitation on Duty of Trustee. The Trustee shall not have any duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture, the Notes and the Guarantees (if any) by the Issuer, the Guarantors (if any) or any other Person.

SECTION 7.11. Preferential Collection of Claims Against the Issuer. The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

 

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SECTION 7.12. Reports by Trustee to Holders of the Notes. Within 60 days after each May 1, beginning with May 1, 2019, the Trustee shall send to the Holders a brief report dated as of such reporting date that complies with TIA § 311(a) (but if no event described in TIA § 311(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA § 311(b). The Trustee shall also transmit all reports as required by TIA § 311(c).

The Issuer shall promptly notify the Trustee in writing when any Notes are listed on any stock exchange and of any delisting thereof.

ARTICLE VIII

Discharge of Indenture; Defeasance

SECTION 8.1. Discharge of Liability on Notes; Defeasance.

(a) This Indenture shall be discharged and shall cease to be of further effect and any collateral then securing the Notes shall be released (except as to surviving rights of registration of transfer or exchange of Notes, as expressly provided for in this Indenture) as to all outstanding Notes when:

(1) either (i) all the Notes theretofore authenticated and delivered (other than Notes pursuant to Section 2.7 which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust) have been delivered to the Trustee for cancellation or (ii) all of the Notes not previously delivered to the Trustee for cancellation (a) have become due and payable, (b) will become due and payable at their Stated Maturity within one year or (c) have been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of a full redemption by the Trustee in the name, and at the expense, of the Issuer, and the Issuer or Affiliate has deposited or caused to be deposited with the Trustee or the Paying Agent in a manner that is not revocable by the Issuer or any of its Affiliates cash in U.S. dollars or U.S. Government Obligations or a combination thereof in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of maturity or redemption, as the case may be, together with irrevocable instructions from the Issuer directing the Trustee or the Paying Agent to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(2) the Issuer and/or the Guarantors (if any) have paid all other sums then due and payable under this Indenture; and

(3) the Issuer has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

(b) Subject to Sections 8.1(c) and 8.2, the Issuer at any time may terminate (i) all its obligations under the Notes and this Indenture (with respect to such Notes) and have each Guarantor’s (if any) obligation discharged with respect to its Guarantee (if any) (“legal defeasance option”) and cure all then-existing Events of Default or (ii) its obligations under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.14 and the operation of Section 4.1 (other than Sections 4.1(a)(i), (ii) and (vi) and Section 4.1(b)(i)(D)) and Sections 6.1(iii) (with respect to any Default under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.14), 6.1(iv), 6.1(v) (with respect to Significant Subsidiaries of the Issuer), 6.1(vi) (with respect to Significant Subsidiaries of the Issuer), 6.1(vii) (with respect to Significant

 

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Subsidiaries of the Issuer) and 6.1(viii) (“covenant defeasance option”). The Issuer may exercise its legal defeasance option notwithstanding their prior exercise of its covenant defeasance option. In the event that the Issuer exercises its legal defeasance option or its covenant defeasance option with respect to the Notes, the obligations of each Guarantor under its Guarantee of such Notes shall be terminated simultaneously with the termination of the applicable obligations of the Issuer being terminated.

If the Issuer exercises its legal defeasance option, payment of the Notes so defeased may not be accelerated because of an Event of Default with respect thereto. If the Issuer exercises its covenant defeasance option, payment of the Notes so defeased may not be accelerated because of an Event of Default specified in Section 6.1(iii) (with respect to any Default under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.14), 6.1(iv), 6.1(v) (with respect to Significant Subsidiaries of the Issuer), 6.1(vi) (with respect to Significant Subsidiaries of the Issuer), 6.1(vii) (with respect to Significant Subsidiaries of the Issuer) or 6.1(viii).

Upon satisfaction of the conditions set forth herein and upon request of the Issuer, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuer terminates.

(c) Notwithstanding clauses (a) and (b) above, the Issuer’s obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.6, and 7.7 and in this Article VIII shall survive until the Notes have been paid in full. Thereafter, the Issuer’s obligations in Sections 7.6, 8.5 and 8.6 shall survive such satisfaction and discharge.

SECTION 8.2. Conditions to Defeasance.

(a) The Issuer may exercise its legal defeasance option or its covenant defeasance option only if:

(i) the Issuer irrevocably deposits or causes to be deposited with the Trustee or Paying Agent cash in U.S. dollars or U.S. Government Obligations or a combination thereof in an amount that, in the opinion of a nationally recognized certified public accounting firm, is sufficient to pay the principal, premium (if any) and interest on the Notes to redemption or maturity, as the case may be; provided that if such redemption is made pursuant to Paragraph 6(b) of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note), then (x) the amount of money or U.S. Government Obligations that the Issuer must irrevocably deposit or cause to be deposited will be determined using an assumed Applicable Premium calculated as of the date of such deposit, as calculated by the Issuer in good faith, and (y) the Issuer must irrevocably deposit or cause to be deposited additional money in trust on the redemption date as necessary to pay the Applicable Premium as determined on such date;

(ii) the Issuer delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing its opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment shall provide cash at such times and in such amounts as shall be sufficient to pay principal, premium, if any, and interest when due on all the Notes to maturity or redemption, as the case may be;

(iii) 91 days pass after the deposit is made and during the 91-day period no Default specified in Sections 6.1(v) or (vi) with respect to the Issuer occurs which is continuing at the end of the period;

 

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(iv) the deposit does not constitute a default under any other agreement binding on the Issuer;

(v) the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment advisor under the Investment Advisors Act of 1940;

(vi) the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the Holders shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of the legal defeasance option only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or change in applicable U.S. federal income tax law after the Issue Date); and

(vii) the Issuer delivers to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes to be so defeased and discharged as contemplated by this Article VIII have been complied with.

Before or after a deposit, the Issuer may make arrangements satisfactory to the Trustee for the redemption of such Notes at a future date in accordance with Article V.

SECTION 8.3. Application of Trust Money. The Trustee or Paying Agent, as applicable, shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.

SECTION 8.4. Repayment to Issuer. Anything herein to the contrary notwithstanding, the Trustee or the Paying Agent, as applicable, shall deliver or pay to the Issuer from time to time upon Company Order any money or U.S. Government Obligations held by it as provided in this Article VIII which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee or Paying Agent, as applicable, are in excess of the amount thereof which would then be required to be deposited to effect legal defeasance option or covenant defeasance option, as applicable; provided that neither the Trustee nor the Paying Agent shall be required to liquidate any U.S. Government Obligations in order to comply with the provisions of this Section 8.4.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuer upon written request any money held by them for the payment of principal of or interest on the Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Issuer for payment as general creditors.

SECTION 8.5. Indemnity for U.S. Government Obligations. The Issuer shall pay and shall indemnify the Trustee and the Paying Agent against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

 

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SECTION 8.6. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Issuer and each Guarantor (if any) under this Indenture, the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or the Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if the Issuer or any of the Guarantors (if any) has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Issuer or any Guarantor (if any), as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or the Paying Agent.

ARTICLE IX

Amendments

SECTION 9.1. Without Consent of Holders. Notwithstanding Section 9.2 hereof, this Indenture, the Notes and Guarantees may be amended or supplemented by the Issuer, any Guarantor (with respect to this Indenture or a Guarantee to which it is a party) and the Trustee without notice to or consent of any Holder:

(i) to cure any ambiguity, omission, mistake, defect or inconsistency identified in an Officer’s Certificate delivered to the Trustee;

(ii) to conform the text of this Indenture (including any supplemental indenture or other instrument pursuant to which Additional Notes are issued), the Guarantees or the Notes to the “Description of notes” in the Offering Memorandum or, with respect to any Additional Notes and any supplemental indenture or other instrument pursuant to which such Additional Notes are issued, to the “Description of notes” relating to the issuance of such Additional Notes solely to the extent that such “Description of notes” provides for terms of such Additional Notes that differ from the terms of the Initial Notes, as contemplated by Section 2.2;

(iii) to comply with Section 4.1;

(iv) to provide for the assumption by a successor Person of the obligations of the Issuer or any Guarantor under this Indenture and the Notes or Guarantee, as the case may be;

(v) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code;

(vi) (A) to add or release Guarantees in accordance with the terms of this Indenture with respect to the Notes or (B) to add additional co-issuers of the Notes to the extent it does not result in adverse tax consequences to the Holders;

(vii) to secure the Notes;

(viii) to add to the covenants of the Issuer for the benefit of the Holders or to surrender any right or power herein conferred upon the Issuer or any Guarantor;

 

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(ix) to make any change that does not adversely affect the rights of any Holder in any material respect upon delivery to the Trustee of an Officer’s Certificate certifying the absence of such adverse effect;

(x) to comply with any requirement of the SEC in connection with any qualification of this Indenture under the TIA;

(xi) to make any amendment to the provisions of this Indenture relating to the transfer and legending of the Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;

(xii) to evidence and provide for the acceptance of appointment by a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture;

(xiii) to modify any notice period or notice procedure under the Minimum Liquidity Provision set forth in the Notes (but not, for the avoidance of doubt, any of the definitions set forth in Paragraph 1 of the form of Note set forth in Exhibit A hereto) in order to comply with the requirements of DTC, so long as such modification is not materially adverse to the Holders;

(xiv) to provide for or confirm the issuance of Additional Notes in accordance with this Indenture; or

(xv) in the event that PIK Notes are issued in certificated form, to make appropriate amendments to this Indenture to reflect an appropriate minimum denomination of certificated PIK Notes and establish minimum redemption amounts for certificated PIK Notes.

No Opinion of counsel shall be required for the Trustee to execute any amendment or supplement entered into in connection with (x) adding a Guarantor or Guarantors (substantially in the form attached hereto as Exhibit E) or (y) releasing a Guarantor due to the release or discharge of the Indebtedness or guarantee that resulted in the grant of a Guarantee.

SECTION 9.2. With Consent of Holders.

(a) This Indenture, the Notes and the Guarantees (if any) may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes) and any existing or past Default or compliance with any provisions of such documents may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the Notes (including, for the avoidance of doubt, any increases thereof as the result of a PIK Payment, any PIK Notes and Additional Notes, if any) then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes); provided that (x) if any such amendment or waiver will only affect one series of Notes (or less than all series of Notes) then outstanding under this Indenture, then only the consent of the holders of at least a majority in principal amount of the Notes of such series then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such series of the Notes) shall be required and (y) if any such amendment or waiver by its terms will affect a

 

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series of Notes in a manner that is different from and materially adverse relative to the manner in which such amendment or waiver affects other series of Notes, then the consent of the holders of at least a majority in principal amount of the Notes of such series then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such series of the Notes) shall be required. However, without the consent of each Holder of a Note affected (including, for the avoidance of doubt, any Notes held by Affiliates), no amendment, supplement or waiver may (with respect to any Notes held by a non-consenting Holder):

(i) reduce the percentage of the aggregate principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(ii) reduce the rate of or extend the time for payment of interest or Additional Amounts, if any, on any Note;

(iii) reduce the principal of or change the Stated Maturity of any Note;

(iv) waive a Default in the payment of principal of or premium, if any, or interest on the Notes, except a rescission of acceleration of the Notes with respect to a nonpayment default by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration;

(v) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under Section 5.1 or Paragraph 6 of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note) (other than, in each case, any change to the notice periods with respect to such redemption) or Section 5.9 or Paragraph 7 of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note);

(vi) make any Note payable in money other than that stated in such Note;

(vii) impair the right of any Holder to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

(viii) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes;

(ix) make the Notes or any Guarantee subordinated in right of payment to any other obligations; or

(x) make any change in the amendment or waiver provisions of this Indenture that require each Holder’s consent as described in clauses (i) through (ix) above.

(b) The consent of the Holders shall not be necessary under this Section 9.2 to approve the particular form of any proposed amendment. It shall be sufficient if such consent approves the substance of the proposed amendment. For the avoidance of doubt, no amendment to, or deletion of, any of the covenants contained in Article III of this Indenture (other than Section 3.1) shall be deemed to impair or affect any rights of Holders of the Notes to receive payment of principal of, or premium, if any, or interest in respect of the Notes.

 

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(c) Promptly after an amendment under this Section 9.2 becomes effective, the Issuer shall (or shall cause the Trustee, at the expense of and at the written request of the Issuer, to) mail or electronically deliver to the Holders of Notes affected thereby a notice briefly describing such amendment. The failure of the Issuer to deliver such notice, or any defect therein, shall not in any way impair or affect the validity of an amendment under this Section 9.2.

SECTION 9.3. Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. After an amendment or waiver becomes effective, it shall bind every Holder unless it makes a change described in clauses (i) through (x) of Section 9.2(a), in which case the amendment or waiver or other action shall bind each Holder who has consented to it and every subsequent Holder of a Note that evidences the same debt as the consenting Holder’s Notes. Any amendment, other than an amendment that in the sole determination of the Trustee adversely affects the rights, duties, liabilities or immunities of the Trustee or a waiver, in each case, made pursuant to Section 9.2 shall become effective upon receipt by the Trustee of the requisite number of written consents.

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to take any such action, whether or not such Persons continue to be Holders after such record date.

SECTION 9.4. Notation on or Exchange of Notes. If an amendment changes the terms of a Note, the Trustee, at the request of the Issuer, may require the Holder to deliver it to the Trustee. The Trustee, at the request of the Issuer, may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Issuer so determines, the Issuer in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

SECTION 9.5. Trustee To Sign Amendments. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not, in the sole determination of the Trustee, adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing any amendment, supplement or waiver pursuant to this Article IX, the Trustee shall be entitled to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by or complies with this Indenture and that all conditions precedent to such amendment required by this Indenture have been complied with and, in the case of the Opinion of Counsel, that such amendment, supplement or waiver is the legally valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to customary exceptions. Notwithstanding the foregoing, no Opinion of Counsel will be required for the Trustee to execute any amendment or supplement substantially in the form of Exhibit E adding a new Guarantor under this Indenture or releasing a Guarantee by a Guarantor pursuant to Section 10.2(b).

 

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ARTICLE X

Guarantees

SECTION 10.1. Guarantees.

(a) To the extent any Restricted Subsidiary becomes a Guarantor pursuant to Section 3.11 or otherwise, subject to the provisions of this Article X, such Guarantor, (if any), hereby jointly and severally, irrevocably, fully and unconditionally guarantees, as guarantor and not as a surety, with each other Guarantor, to each Holder, to the extent lawful, and the Trustee, the full and punctual payment and performance when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Notes and all other Obligations of the Issuer under this Indenture and the Notes (including, without limitation, interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Issuer or any Guarantor (or that would have accrued but for the filing of such petition or the commencement of such proceeding) whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and the obligations under Section 7.6) (all the foregoing being hereinafter collectively called the “Guarantor Obligations”). Each Guarantor (if any) agrees (to the extent lawful) that the Guarantor Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it shall remain bound under this Article X notwithstanding any extension or renewal of any Guarantor Obligation.

(b) Each Guarantor (if any) waives (to the extent lawful) presentation to, demand of, payment from and protest to the Issuer of any of the Guarantor Obligations and also waives (to the extent lawful) notice of protest for nonpayment. Each Guarantor (if any) waives (to the extent lawful) notice of any default under the Notes or the Guarantor Obligations.

(c) Each Guarantor (if any) further agrees that its Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guarantor Obligations.

(d) Except as set forth in Section 10.2 and Article VIII, the obligations of each Guarantor (if any) hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guarantor Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not (to the extent lawful) be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantor Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor (if any) herein shall not (to the extent lawful) be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Issuer or any other Person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security held by any Holder for the Guarantor Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Guarantor; (f) any change in the ownership of the Issuer or of any other Guarantor; (g) any default, failure or delay, willful or otherwise, in the performance of the Guarantor Obligations; or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

 

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(e) Each Guarantor (if any) agrees that its Guarantee herein shall remain in full force and effect until payment in full of all the Guarantor Obligations or such Guarantor is released from its Guarantee in compliance with Section 4.1, Section 10.2 and Article VIII. Each Guarantor (if any) further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium, if any, or interest on any of the Guarantor Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Issuer or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay any of the Guarantor Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid amount of such Guarantor Obligations then due and owing and (ii) accrued and unpaid interest on such Guarantor Obligations then due and owing (but only to the extent not prohibited by law) (including interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Issuer or any Guarantor (or that would have accrued but for the filing of such petition or the commencement of such proceeding) whether or not a claim for post-filing or post-petition interest is allowed in such proceeding).

(g) Each Guarantor (if any) further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guarantor Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guarantor Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guarantor Obligations, such Guarantor Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Guarantee.

(h) Each Guarantor (if any) also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Section.

(i) Each Guarantor (if any) acknowledges and agrees that the Guarantee of such Guarantor will be a general senior obligation of such Guarantor and will rank senior in right of payment to all future obligations of such Guarantor that are, by their terms, expressly subordinated in right of payment to such Guarantee and equal in right of payment with all existing and future obligations of such Guarantor that are not so subordinated.

(j) Neither the Issuer nor the Guarantors (if any) shall be required to make a notation on the Notes to reflect any Guarantee or any release, termination or discharge thereof and any such notation shall not be a condition to the validity of any Guarantee.

SECTION 10.2. Limitation on Liability; Termination, Release and Discharge.

(a) Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Guarantor hereunder (other than any Guarantor incorporated or formed in Canada) shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law or the laws of the jurisdiction of organization of such Guarantor and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally. Other than with respect to fraudulent transfer or conveyance and voidable preference, this Section 10.2(a) shall not apply to any Guarantor that is organized in a jurisdiction that is specifically addressed in Sections 10.7 through 10.14 below.

 

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(b) A Guarantee by a Guarantor shall be automatically and unconditionally released and discharged, and each Guarantor and its obligations under the Guarantee and this Indenture shall be released and discharged upon:

(1) the sale, exchange, disposition or other transfer (including through merger, consolidation or dissolution) of (x) the Capital Stock of such Guarantor, if after such transaction the Guarantor is no longer a Restricted Subsidiary, or (y) all or substantially all the assets of such Guarantor if such sale, exchange, disposition or other transfer (including through merger, consolidation or dissolution) is made in compliance with this Indenture and so long as such Guarantor is also released, if applicable, from its guarantee of each Holdco Credit Agreement and its guarantee of each Certain Capital Markets Debt (if applicable);

(2) the Issuer designating such Guarantor to be an Unrestricted Subsidiary in accordance with the provisions set forth in Section 3.4, Section 3.14 and the definition of “Unrestricted Subsidiary”;

(3) in the case of any Restricted Subsidiary that after the Issue Date is required to guarantee the Notes pursuant to Section 3.11, the release or discharge of the guarantee by such Restricted Subsidiary (or the co-issuer or co-borrower obligation of such Restricted Subsidiary) of Indebtedness of the Issuer or the repayment of the Indebtedness or Disqualified Stock, in each case, that resulted in the obligation to guarantee the Notes (and the release, discharge or repayment of any other Indebtedness and Disqualified Stock that would require such Restricted Subsidiary to guarantee the Notes pursuant to Section 3.11), except if a release, discharge or repayment is by or as a result of payment in connection with the enforcement of remedies under such other guarantee or direct obligation;

(4) the Issuer’s exercise of its legal defeasance option or covenant defeasance option as described under Article VIII or if this Indenture is discharged (including through redemption or repurchase of all the Notes as a result of satisfaction and discharge or otherwise) in accordance with the terms of this Indenture;

(5) any such Guarantor becoming a Receivables Subsidiary or a Designated Non-Guarantor Subsidiary so long as such Guarantor is also released, if applicable, from its guarantee of each Holdco Credit Agreement and its guarantee of each Certain Capital Markets Debt; or

(6) upon the occurrence of a Covenant Suspension Event pursuant to Section 3.15.

If any Guarantor is released from its Guarantee, any of its Subsidiaries that are Guarantors shall be released from their Guarantees, if any.

In the case of Section 10.2(b), to the extent the Issuer requests evidence of the release of a Guarantor through a supplemental indenture or amendment to this Indenture or other documentation, the Issuer shall deliver to the Trustee an Officer’s Certificate stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.

The release of a Guarantor from its Guarantee and its obligations under this Indenture in accordance with the provisions of this Section 10.2 shall not preclude the future applications of Section 3.11 to such Person.

 

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SECTION 10.3. Right of Contribution. Each Guarantor (if any) hereby agrees that to the extent that any such Guarantor shall have paid more than its proportionate share of any payment made on the obligations under its Guarantee, such Guarantor shall be entitled to seek and receive contribution from and against the Issuer or any other Guarantor (if any) that has not paid its proportionate share of such payment. The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee and the Holders and each Guarantor (if any) shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Guarantor hereunder.

SECTION 10.4. No Subrogation. Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Issuer or any other Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guarantor Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Issuer or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Issuer on account of the Guarantor Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Guarantor Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Guarantor Obligations.

SECTION 10.5. [Reserved].

SECTION 10.6. Execution and Delivery.

(a) To evidence its Guarantee set forth in Section 10.1, each Guarantor (if any) hereby agrees that this Indenture (as supplemented by a supplemental indenture) shall be executed on behalf of such Guarantor by an Officer or person holding an equivalent title.

(b) Each Guarantor (if any) hereby agrees that its Guarantee set forth in Section 10.1 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

(c) If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Guarantees shall be valid nevertheless.

(d) The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors (if any).

(e) If required by Section 3.11, the Issuer shall cause any newly created or acquired Restricted Subsidiary to comply with the provisions of Section 3.11 and this Article X, to the extent applicable.

 

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ARTICLE XI

INTENTIONALLY OMITTED

ARTICLE XII

Miscellaneous

SECTION 12.1. Notices. Notices given by publication shall be deemed given on the first date on which publication is made, and notices given by first-class mail, postage prepaid, shall be deemed given five calendar days after mailing. Notices personally delivered will be deemed given at the time delivered by hand. Notices given by facsimile or email will be deemed given when receipt is acknowledged. Notices given by overnight air courier guaranteeing next day delivery will be deemed given the next Business Day after timely delivery to the courier and notices given to the Depositary shall be sufficiently given if given according to the applicable procedures of such Depositary. Any notice or communication shall be in writing and delivered in person, by facsimile or email or mailed by first-class mail addressed as follows:

if to the Issuer and/or any Guarantor:

Alpha 2 B.V.

Attn: the Directors

Strijkviertel 35-2

3454 PJ De Meern

The Netherlands

With copies to:

Latham & Watkins LLP

Attn: Jason Licht

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004-1304

P: (202) 637-2258

F: (202) 637-2201

E: jason.licht@lw.com

if to the Trustee:

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

P: (203) 453-4130

F: (203) 453-1183

Attention: Alpha 2 B.V. Administrator

The Issuer, any Guarantor (if any) or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

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If a notice or communication is mailed to a Holder, such notice or communication shall be mailed to the Holder at the Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to send a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is sent in the manner provided above, it is duly given, whether or not the addressee receives it.

The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods. If the party elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption or purchase) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Note (or its designee) pursuant to the standing instructions from such Depositary.

SECTION 12.2. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Trustee to take or refrain from taking any action under this Indenture, the Issuer shall furnish to the Trustee the following (except that (x) no Officer’s Certificate or Opinion of Counsel will be required in connection with the original issuance of the Initial Notes on the date hereof and (y) no Opinion of Counsel will be required in connection with the execution of any amendment or supplement adding a new Guarantor under this Indenture or the release of a Guarantor pursuant to Section 10.2(b) hereof):

(i) an Officer’s Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 12.3. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and also shall include:

(i) a statement that the individual making such certificate or opinion has read such covenant or condition;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

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(iii) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officer’s Certificate or on certificates of public officials.

SECTION 12.4. Currency Indemnity. The U.S. Dollar is the sole currency (the “Required Currency”) of account and payment for all sums payable by the Issuer or any Guarantor (if any) under or in connection with the Notes, this Indenture and the Guarantees (if any), including damages. Any amount with respect to the Notes, this Indenture or the Guarantees (if any) received or recovered in a currency other than the Required Currency, whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer or any Guarantor (if any) or otherwise by any Holder or by the Trustee or Paying Agent, in respect of any sum expressed to be due to it from the Issuer or any Guarantor (if any) will only constitute a discharge to the Issuer or such Guarantor to the extent of the Required Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).

If that Required Currency amount is less than the Required Currency amount expressed to be due to the recipient or the Trustee or Paying Agent under the Notes, the Issuer and each Guarantor (if any) will indemnify such recipient and/or the Trustee or Paying Agent against any loss sustained by it as a result. In any event, the Issuer and each Guarantor will indemnify the recipient against the cost of making any such purchase. For the purposes of this currency indemnity provision, it will be prima facie evidence of the matter stated therein, for the Holder of a Note or the Trustee or Paying Agent to certify in a manner satisfactory to the Issuer (indicating the sources of information used) the loss it incurred in making any such purchase. These indemnities constitute a separate and independent obligation from the Issuer’s and each Guarantor’s (if any) other obligations, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any Holder of a Note or the Trustee or Paying Agent (other than a waiver of the indemnities set out herein) and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or to the Trustee. For the purposes of determining the amount in a currency other than the Required Currency, such amount shall be determined using the Exchange Rate then in effect.

SECTION 12.5. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or a meeting of, Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 12.6. Days Other than Business Days. If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period. If a regular Record Date is not a Business Day, the Record Date shall not be affected.

SECTION 12.7. Governing Law. This Indenture, the Notes and the Guarantees (if any) shall be governed by, and construed in accordance with, the laws of the State of New York.

 

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SECTION 12.8. Jurisdiction and Service. In relation to any legal action or proceedings arising out of or in connection with this Indenture, the Notes and the Guarantees (if any), the Issuer and each Guarantor (if any) that is organized under laws other than the United States or a state thereof hereby (i) irrevocably submit to the jurisdiction of the federal and state courts in the Borough of Manhattan in the City, County and State of New York, United States (ii) consent that any such action or proceeding may be brought in such courts and waive, to the fullest extent permitted by law, any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agree not to plead or claim the same, (iii) designate and appoint Alpha US Bidco, Inc. as its authorized agent upon which process may be served in any such action or proceeding that may be instituted in any such court, and (iv) agree that service of any process, summons, notice or document by U.S. registered mail addressed to Alpha US Bidco, Inc., with written notice of said service to such Person at the address of Alpha US Bidco, Inc. , 1001 Pennsylvania Avenue, NW, Suite 220 South, Washington, D.C. 20004-2505, shall be effective service of process for any such legal action or proceeding brought in any such court.

SECTION 12.9. Waiver of Jury Trial. EACH OF THE ISSUER, THE GUARANTORS (IF ANY) AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 12.10. No Recourse Against Others. No manager, managing director, director, officer, employee, incorporator or holder of equity interests in the Issuer, any Subsidiary or any direct or indirect parent of the Issuer, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes or this Indenture or any Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

SECTION 12.11. Successors. All agreements of the Issuer and any Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Trustee and the Agents in this Indenture shall bind its successors.

SECTION 12.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Delivery of an executed counterpart of a signature page to this Indenture by telecopier, facsimile or other electronic transmission (i.e., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof. One signed copy is enough to prove this Indenture.

SECTION 12.13. Variable Provisions. The Issuer initially appoints the Trustee as Paying Agent and Registrar and Notes Custodian with respect to any Global Notes.

SECTION 12.14. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

 

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SECTION 12.15. Force Majeure. In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

SECTION 12.16. USA Patriot Act. The parties hereto acknowledge that, in accordance with Section 326 of the USA Patriot Act, the Trustee and the Trust Officers, like all financial institutions and in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account. The parties to this Indenture agree that they shall provide the Trustee and the Trust Officers with such information as they may request in order to satisfy the requirements of the USA Patriot Act.

SECTION 12.17. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA § 312(b) with other Holders of Notes with respect to their rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

SECTION 12.18. TIA § 314(d) Not Applicable. For the avoidance of doubt, the Issuer and the Guarantors shall not be subject to TIA § 314(d).

ARTICLE XIII

Measuring Compliance

SECTION 13.1. Compliance in Connection with Certain Investments and Repayments.

(a) With respect to any (x) Investment or acquisition, in each case the consummation of which is not conditioned on the availability of, or on obtaining, third-party financing and (y) repayment, repurchase or refinancing of Indebtedness with respect to which a notice of repayment (or similar notice), which may be conditional, has been delivered, in each case for purposes of determining:

(i) whether any Indebtedness (including Acquired Indebtedness) that is being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is permitted to be incurred in compliance with Section 3.3;

(ii) whether any Lien being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness or to secure any such Indebtedness is permitted to be incurred in accordance with Section 3.5 or the definition of “Permitted Liens”;

(iii) whether any other transaction undertaken or proposed to be undertaken in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness complies with the covenants or agreements contained in this Indenture or the Notes; and

(iv) any calculation of the ratios or financial metrics, including Fixed Charge Coverage Ratio, Consolidated Total Net Debt Ratio, Consolidated Senior Secured Net Debt Ratio, Specified Consolidated Total Net Debt Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets, Consolidated Total Assets and/or Pro Forma Cost Savings and, whether a Default or Event of Default exists in connection with the foregoing,

 

-138-


at the option of the Issuer, the date that the definitive agreement for such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is entered into or the date of such notice, which may be conditional, of such repayment, repurchase or refinancing of Indebtedness is given to the holders of such Indebtedness (the “Transaction Agreement Date”), may be used as the applicable date of determination, as the case may be, in each case with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Pro Forma Basis” or “Consolidated EBITDA.” For the avoidance of doubt, if the Issuer elects to use the Transaction Agreement Date as the applicable date of determination in accordance with the foregoing, (a) any fluctuation or change in the Fixed Charge Coverage Ratio, Consolidated Total Net Debt Ratio, Consolidated Senior Secured Net Debt Ratio, Specified Consolidated Total Net Debt Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets, Consolidated Total Assets and/or Pro Forma Cost Savings of the Issuer from the Transaction Agreement Date to the date of consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, will not be taken into account for purposes of determining whether any Indebtedness or Lien that is being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, or in connection with compliance by the Issuer or any of the Restricted Subsidiaries with any other provision of this Indenture or the Notes or any other transaction undertaken in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, is permitted to be Incurred and (b) until such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is consummated or such definitive agreements are terminated, such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness and all transactions proposed to be undertaken in connection therewith (including the incurrence of Indebtedness and Liens) will be given pro forma effect when determining compliance of other transactions (including the incurrence of Indebtedness and Liens unrelated to such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness) that are consummated after the Transaction Agreement Date and on or prior to the date of consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, and any such transactions (including any incurrence of Indebtedness and the use of proceeds thereof) will be deemed to have occurred on the date the definitive agreements are entered into and deemed to be outstanding thereafter for purposes of calculating any baskets or ratios under this Indenture after the date of such agreement and before the date of consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness. Compliance with any requirement relating to the absence of a Default or Event of Default may be determined as of the Transaction Agreement Date and not as of any later date as would otherwise be required under this Indenture.

(b) For purposes hereof, the “Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Issuer.

[Signature Pages Follow]

 

-139-


IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.

 

ALPHA 2 B.V., as Issuer
By:  

/s/ Cornelis Siemon Stigter

  Name: Cornelis Siemon Stigter
  Title: Director A
By:  

/s/ Ingo Steinbeck

  Name: Ingo Steinbeck
  Title: Director B

[Signature Page to the Indenture]


WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

By:  

/s/ Joseph P. O’Donnell

  Name: Joseph P. O’Donnell
  Title: Vice President

[Signature Page to the Indenture]


EXHIBIT A

[FORM OF FACE OF NOTE]

Global Note Legend, if applicable

Private Placement Legend, if applicable

Temporary Regulation S Legend, if applicable

Insert “This is a PIK Note”, if applicable

THIS NOTE HAS BEEN ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (WITHIN THE MEANING OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). HOLDERS SHOULD CONTACT OUR CHIEF FINANCIAL OFFICER, VICE PRESIDENT-FINANCE AT ERASMUSSTRASSE 20, 10553 BERLIN, GERMANY FOR INFORMATION REGARDING: (1) THE ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE AND (3) THE YIELD TO MATURITY OF THE NOTE.

 

A-1


ALPHA 2 B.V.

8.750% / 9.500% Senior PIK Toggle Notes due 2023

[Initially] $____ plus any PIK Interest

added to the principal amount hereof

[If the Note is a Global Note, include the following:

and as such amount may otherwise be revised

by the Schedule of Increases or Decreases

in [Global Note][Temporary Regulation S Global Note]

CUSIP No. ___________

ISIN No. ___________

Certificate No. ___________

Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442, promises to pay to _________________, or registered assigns, the principal sum of ____________________ DOLLARS, plus any PIK Interest added to the principal amount hereof [If this Note is a Global Note, add the following: and as such amount may otherwise be revised by the Schedule of Increases or Decreases in [Global Note][Temporary Regulation S Global Note] attached hereto], on June 1, 2023 (the “Final Maturity Date”).

Interest Payment Dates: June 1 and December 1, commencing on December 1, 2018.

Record Dates: May 15 and November 15.

Additional provisions of this Note are set forth on the other side of this Note.

 

A-2


ALPHA 2 B.V., as Issuer
By:  

 

  Name:
  Title:
By:  

 

  Name:
  Title:

 

A-3


TRUSTEE’S CERTIFICATE OF  
AUTHENTICATION  
WILMINGTON TRUST, NATIONAL ASSOCIATION  
as Trustee, certifies that this is one of the  
Notes referred to in the Indenture.  
By: _______________________________  

Authorized Signatory

 

Date:

 

A-4


[FORM OF REVERSE SIDE OF NOTE]

8.750% / 9.500% Senior PIK Toggle Notes due 2023

1. Interest

Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442 (the “Issuer”), promises to pay interest on the principal amount of this Note at 8.750% per annum with respect to Cash Interest (as defined below) and 9.500% per annum with respect to PIK Interest (as defined below).

The Issuer shall pay interest semiannually in arrear on June 1 and December 1 of each year, with the first interest payment to be made on December 1, 2018.1 Interest on the Notes shall accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from May 30, 2018.2 The Issuer shall pay interest on overdue principal or premium, if any (plus interest on such interest to the extent lawful), at the rate borne by the Notes to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuer shall pay interest on overdue principal at 2% per annum in excess of the above rate and shall pay interest on overdue installments of interest at such higher rate to the extent lawful.

Except as provided in the immediately succeeding sentence and the definition of “Applicable Amount” or in the Minimum Liquidity Provision below, interest on the Notes shall be payable entirely in cash (“Cash Interest”). For any Interest Period after the initial Interest Period (other than the final Interest Period ending at Stated Maturity), if the Applicable Amount (as defined below) as determined on the Determination Date (as defined below) for such Interest Period:

(a) is equal to or exceeds 75%, but is less than 100%, of the aggregate amount of Cash Interest that would otherwise be due on the relevant Interest Payment Date, then the Issuer may, at its option, elect to pay interest on up to 25% of the then outstanding principal amount of the Notes by increasing the principal amount of the outstanding Notes or by issuing PIK Notes in a principal amount equal to such interest (in each case, “PIK Interest”);

(b) is equal to or exceeds 50%, but is less than 75%, of the aggregate amount of Cash Interest that would otherwise be due on the relevant Interest Payment Date, then the Issuer may, at its option, elect to pay interest on up to 50% of the then outstanding principal amount of the Notes as PIK Interest;

(c) is equal to or exceeds 25%, but is less than 50%, of the aggregate amount of Cash Interest that would otherwise be due on the relevant Interest Payment Date, then the Issuer may, at its option, elect to pay interest on up to 75% of the then outstanding principal amount of the Notes as PIK Interest; or

(d) is less than 25% of the aggregate amount of Cash Interest that would otherwise be due on the relevant Interest Payment Date, then the Issuer may, at its option, elect to pay interest on up to 100% of the then outstanding principal amount of the Notes as PIK Interest.

After making the determination pursuant to the immediately preceding paragraph with respect to an Interest Period (the “Initial Interest Determination”), unless the Issuer is required to (or otherwise intends to) pay 100% in Cash Interest, the Issuer shall deliver a notice (the “Initial Interest Determination Notice”) to the Trustee no later than the date that is two Business Days prior to the commencement of

 

1 

With respect to the Initial Notes.

2 

With respect to the Initial Notes.

 

A-5


such Interest Period, which notice shall state the percentage of the outstanding principal amount of Notes with respect to which such interest shall be paid in the form of Cash Interest (the “Cash Interest Percentage”), the corresponding amount of such Cash Interest, the percentage of the outstanding principal amount of Notes with respect to which interest shall be paid in the form of PIK Interest (the “PIK Interest Percentage”) and the corresponding amount of such PIK Interest. The Trustee shall promptly deliver the same notice to the holders of record. If the Issuer does not deliver an Initial Interest Determination Notice to the Trustee with respect to any Interest Period on or prior to the date that is two Business Days prior to the commencement of such Interest Period, then the Initial Interest Determination with respect to such Interest Period shall be deemed to be 100% Cash Interest and 0% PIK Interest.

For any Interest Period after the initial Interest Period (other than the final Interest Period ending at Stated Maturity), notwithstanding the Initial Interest Determination made with respect to the applicable Interest Payment Date, if, as of the Subsequent Determination Date, the Pro Forma Liquidity Amount with respect to the applicable Interest Payment Date is less than the Minimum Liquidity Threshold, then the Issuer may, at its option, elect to increase the PIK Interest Percentage in respect of such Interest Payment Date (and correspondingly decrease the Cash Interest Percentage in respect of such Interest Payment Date) such that the Pro Forma Liquidity Amount, after giving effect to such changes in the PIK Interest Percentage and Cash Interest Percentage, is equal to or less than the Minimum Liquidity Threshold. If the Issuer is permitted to make such election and does so make such election, the Issuer shall deliver a notice to the Trustee and the Paying Agent on or prior to the date falling eight Business Days prior to the relevant Interest Payment Date, which notice shall (a) state that the Issuer is increasing the PIK Interest Percentage in respect of such Interest Payment Date and correspondingly decreasing the Cash Interest Percentage in respect of such Interest Payment Date from the corresponding percentages in the Initial Interest Determination, (b) state the amount of interest to be paid as PIK Interest and the amount of interest to be paid as Cash Interest and (c) certify that the Issuer is permitted to do so pursuant to the Minimum Liquidity Provision. The Trustee or the Paying Agent, as the case may be, shall promptly deliver the same notice to the Holders. Notwithstanding anything else in the Indenture or the Notes to the contrary, the Issuer may, at its option elect to pay Cash Interest even if it would be entitled to pay PIK Interest. In the event that the Issuer is not permitted to make such election or does not make such election on or prior to the date that is eight Business Days prior to the relevant Interest Payment Date, the Issuer shall be required to make payments of PIK Interest and Cash Interest in accordance with the Initial Interest Determination. This paragraph is herein referred to as the “Minimum Liquidity Provision”.

Except as provided in the Minimum Liquidity Provision, the insufficiency or lack of funds available to the Issuer to pay Cash Interest shall not permit the Issuer to pay PIK Interest in respect of any Interest Period and the sole right of the Issuer to elect to pay PIK Interest shall be as (and to the extent) provided in this Paragraph 1.

To the extent the Issuer is required to pay Cash Interest for all or any portion of the interest due on any Interest Payment Date, the Issuer shall and shall cause each of the Restricted Subsidiaries to take all such shareholder, corporate and other actions necessary or appropriate to permit the making of dividends or distributions (or loans or advances) to the Issuer so that the Issuer is able to pay such Cash Interest on such Interest Payment Date, provided that any such shareholder, corporate and other actions would not violate applicable law or cause a breach of any applicable contract.

Notwithstanding anything in the Indenture or this Note to the contrary, (x) interest for the first Interest Period commencing on the Issue Date shall be payable entirely in Cash Interest, (y) interest for the final Interest Period ending at the Final Maturity Date shall be payable entirely in Cash Interest and (z) the payment of accrued interest in connection with any redemption or repurchase of the Notes as described under Section 3.7, Section 3.9, Section 5.1 and Section 5.9 of the Indenture, will be made solely in cash.

 

A-6


If the Issuer pays a portion of the interest on the Notes as Cash Interest and as PIK Interest, such Cash Interest and PIK Interest shall be paid to Holders pro rata in accordance with their interests.

As used herein,

(1) “Applicable Amount” shall be the amount equal to the sum (without duplication) of,

(A) (i) the maximum amount of all dividends and distributions that, as of the applicable Determination Date, would be permitted to be paid in cash to the Issuer for the purpose of paying Cash Interest by all Restricted Subsidiaries (other than any Restricted Subsidiaries organized under the laws of the PRC) after giving effect to all corporate, shareholder or other comparable actions required in order to make such payment, requirements of applicable law and all restrictions on the ability to make such dividends or distributions (to the extent such restrictions are permitted by the covenant described under Section 3.6 of the Indenture (including, without limitation, any restrictions and limitations in the Senior Credit Agreement, the Opco Notes Indenture, all other Indebtedness of the Issuer and its Subsidiaries in existence on the Issue Date or any agreement that amends, modifies, renews, increases, supplements, refunds, replaces or refinances such Indebtedness), net of all taxes attributable solely to such dividend or distribution, if any, and, in each case, without regard to whether any such Restricted Subsidiary shall have any funds available to make any such dividends or distributions; provided that the amount pursuant to this clause (A)(i) shall not include (a) the “Specified Sponsor Overfunding Amount” set forth in Section 7.05(7)(B) of the Senior Credit Agreement or the “Specified Sponsor Overfunding Amount” set forth in Section 3.4(b)(vii)(B) of the Opco Notes Indenture, or (b) any cash that cannot be dividended, distributed, loaned, advanced or otherwise transferred to the Issuer by the applicable Interest Payment Date without violating applicable law or resulting in material adverse tax consequences for the Issuer and its Restricted Subsidiaries (taking into account any tax credit or other net benefit actually realized in connection with such transfer that would not otherwise be realized), in each case as determined by the Issuer in good faith, less (ii) $10 million; provided, further that the amount pursuant to this clause (A) shall not be less than $0; plus

(B) (i) all cash and Cash Equivalents on hand at the Issuer as of such Determination Date (other than any cash and Cash Equivalents on hand at the Issuer that has been distributed to the Issuer and the distribution of which is conditioned upon such cash and Cash Equivalents being utilized for a purpose other than paying Cash Interest (including, without limitation, amounts permitted to be distributed to the Issuer solely for the purpose of paying taxes attributable to the Issuer’s consolidated Subsidiaries) as the result of restrictions on the ability to make such dividends or distributions provided such restrictions are otherwise permitted by the covenant described under Section 3.6 of the Indenture (including, without limitation, any restrictions and limitations in the Senior Credit Agreement, the Opco Notes Indenture, all Indebtedness of the Issuer and its Subsidiaries in existence on the Issue Date or any agreement that amends, modifies, renews, increases, supplements, refunds, replaces or refinances such Indebtedness)) less (ii) $10 million; provided that there shall be excluded from this clause (B) any net proceeds from the Initial Notes pending the final application of such proceeds in connection with the Transactions and any cash and Cash Equivalents on hand to be used for payment of Cash Interest on the Interest Payment Date next succeeding such Determination Date; provided, further that the amount pursuant to this clause (B) shall not be less than $0.

(2) “Average Liquidity Amount” shall mean, with respect to any Interest Payment Date, the average daily balance of the Liquidity Amount during the 30 calendar days commencing on the 45th calendar day immediately preceding the relevant Interest Payment Date.

 

A-7


(3) “Cash Interest Amount” shall mean, with respect to any Interest Payment Date, the amount of interest required to be paid on such Interest Payment Date in cash.

(4) “Determination Date” shall mean, with respect to each Interest Period, the fifth business day immediately prior to the first day of the relevant Interest Period.

(5) “Liquidity Amount” shall mean, on any day, the sum of (i) the cash and Cash Equivalents of the Issuer and its Restricted Subsidiaries (other than Restricted Subsidiaries organized under the laws of the PRC), provided that the amount pursuant to this clause (i) shall not be less than $0, plus (ii) the unused borrowing availability of the Issuer and its Restricted Subsidiaries under any revolving credit facilities, provided that the amount pursuant to this clause (ii) shall not be less than $0, in each case of clause (i) and (ii) calculated at 5:00 p.m. (GMT) on a consolidated basis.

(6) “Minimum Liquidity Threshold” means, as of any Subsequent Determination Date, the sum of (i) $100 million plus (ii) any amounts committed to be paid by the Issuer or any of its Restricted Subsidiaries as of such Subsequent Determination Date on acquisitions, Investments or capital expenditures that have not yet been paid and which are intended to be paid from cash or Cash Equivalents on hand.

(7) “Pro Forma Liquidity Amount” means, with respect to any Interest Payment Date, the Average Liquidity Amount with respect to such Interest Payment Date minus the Cash Interest Amount with respect to such Interest Payment Date.

(8) “Subsequent Determination Date” means, with respect to any Interest Payment Date, the 15th calendar day immediately preceding such Interest Payment Date.

2. Method of Payment

The Issuer shall pay interest (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the May 15 and November 15 preceding the Interest Payment Date unless Notes are cancelled, repurchased or redeemed after the Record Date and before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer shall pay principal, premium, if any, and Cash Interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or Cash Interest on any Note is due and payable, the Issuer shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or Cash Interest. Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and Cash Interest) shall be made by the Paying Agent by the transfer of immediately available funds to the accounts specified by the Depositary. The Issuer shall make all cash payments in respect of a Definitive Note (including principal, premium, if any, and Cash Interest) through the Paying Agent by (i) mailing a check to the registered address of each Holder thereof, or (ii) if a Holder has given wire instructions to the Issuer or the Paying Agent, by transfer of immediately available funds to the account(s) specified by such Holder.

 

A-8


If the Issuer is entitled to pay PIK Interest in respect of this Note, the Issuer may elect (subject to the restrictions contained in this Note), without the consent of the Holders of the Notes (and without regard to any restrictions or limitations set forth under Section 3.3 of the Indenture), to pay the applicable amount of PIK Interest (in accordance with the requirements contained in this Note) for such Interest Period in respect of this Note on the Interest Payment Date in respect of such Interest Period by (i) increasing the outstanding principal amount of this Note by an amount equal to the PIK Interest elected to be paid (rounded up to the nearest whole dollar), [with respect to Global Notes: and, upon receipt of a Company Order, an adjustment shall be made by the Trustee to reflect such increase in the [“Schedule of Increases or Decreases in Global Note”][“Schedule of Increases or Decreases in Temporary Regulation S Global Note”,]] or (ii) issuing PIK Notes under the Indenture on the same terms and conditions as this Note in an amount equal to the PIK Interest elected to be paid (rounded up to the nearest whole dollar) (in each case of (i) and (ii), a “PIK Payment”).    Following an increase in the principal amount of the outstanding Notes as a result of a PIK Payment, the Notes will bear interest on such increased principal amount from and after the date of such PIK Payment. Any PIK Notes issued will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. All Notes issued pursuant to a PIK Payment will mature on the same date as the Notes in respect of which such PIK Payment was made as a payment of PIK Interest, and will be governed by, and subject to the terms, provisions and conditions of, the Indenture and will have the same rights and benefits of the Notes in respect of which such PIK Payment was made as a payment of PIK Interest. Any certificated PIK Notes will be issued with the description “PIK” on the face of such PIK Notes.

3. Paying Agent and Registrar

Initially, Wilmington Trust, National Association, duly organized and existing under the laws of the United States of America and having a corporate trust office at 246 Goose Lane, Suite 105, Guilford, CT 06437 (“Trustee”), shall act as Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Issuer or any of its Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4. Indenture

The Issuer issued this Note under an Indenture dated as of May 30, 2018 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), between the Issuer and the Trustee. The terms of the Notes include those stated in the Indenture. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Securities Act for a statement of those terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

The Notes are senior unsecured obligations of the Issuer. This Note is one of the 8.750% / 9.500% Senior PIK Toggle Notes due 2023 referred to in the Indenture. The Notes include (i) $300,000,000 aggregate principal amount of the Issuer’s 8.750% / 9.500% Senior PIK Toggle Notes due 2023 issued under the Indenture on May 30, 2018 (herein called “Initial Notes”), any increases thereof as the result of a PIK Payment and any PIK Notes issued as PIK Payments with respect thereto and (ii) if and when issued, additional Notes of the Issuer that may be issued from time to time under the Indenture subsequent to May 30, 2018 (herein called “Additional Notes”) including any increases thereof as the result of a PIK Payment and any PIK Notes issued as PIK Payments with respect to such Additional Notes.

 

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5. Guarantee

To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Notes and all other amounts payable by the Issuer under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Guarantors (if any) have unconditionally Guaranteed (and future guarantors shall unconditionally Guarantee), jointly and severally, such obligations, subject to the limitations described in Article X of the Indenture.

On the Issue Date, no Guarantors Guarantee the Notes.

6. Optional Redemption

(a) On and after June 1, 20193, the Issuer may redeem the Notes, at its option, in whole at any time or in part from time to time, upon notice as described in Section 5.4 of the Indenture, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to (but not including) the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date), if redeemed during the 12-month period commencing on June 14 of the years set forth below:

 

Period

   Redemption price  

2019

     102.000

2020

     101.000

2021 and thereafter

     100.000

(b) At any time prior to June 1, 20195, the Issuer may redeem the Notes at its option, in whole at any time or in part from time to time, upon notice as described in Section 5.4 of the Indenture, at a redemption price equal to 100.0% of the principal amount of the Notes redeemed plus the Applicable Premium as of the date of the redemption notice, and accrued and unpaid interest, if any, to (but not including) the applicable Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date).

(c) At any time and from time to time prior to June 1, 20196, upon notice as described in Section 5.4 of the Indenture, the Issuer may redeem the Notes, at its option, in whole at any time or in part from time to time with an amount equal to the cash proceeds, less underwriting fees paid in cash, of one or more Equity Offerings, to the extent (in the case of an Equity Offering by a direct or indirect parent of the Issuer) that such cash proceeds are contributed to the common equity capital of the Issuer or used to purchase Capital Stock (other than Disqualified Stock) of the Issuer through an issuance of Capital Stock by the Issuer, in each case, at a redemption price (expressed as a percentage of the principal amount thereof) equal to 102.00%, plus accrued and unpaid interest, if any, to (but not including) the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the Redemption Date); provided, however, that for purposes of calculating the principal amount of the Notes able to be redeemed with such cash proceeds of such Equity Offering or Equity Offerings, such amount shall include only the principal amount of the Notes to be redeemed plus the premium on such Notes to be redeemed; provided, further, that such redemption shall occur within 120 days after the date on which any such Equity Offering is consummated.

 

3 

With respect to the Initial Notes.

4 

With respect to the Initial Notes.

5 

With respect to the Initial Notes.

6 

With respect to the Initial Notes.

 

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(d) At any time, the Issuer or a third party will have the right to redeem the Notes of any series at 101.0% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the purchase date) following the consummation of a Change of Control if at least 90% of the Notes of such series outstanding prior to such date of purchase are purchased pursuant to a Change of Control Offer with respect to such Change of Control.

(f) Any redemption of the Notes may, at the Issuer’s discretion, be subject to one or more conditions precedent. The Redemption Date of any redemption that is subject to satisfaction of one or more conditions precedent may, in the Issuer’s discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuer in its sole discretion), or such redemption may not occur and any notice with respect to such redemption may be modified or rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuer in its sole discretion) by the Redemption Date, or by the Redemption Date so delayed (which may exceed 60 days from the date of the redemption notice in such case). In addition, such notice of redemption may be extended, if such conditions precedent have not been satisfied or waived by the Issuer, by providing notice to the Holders.

(g) Unless the Issuer defaults in the payment of the redemption price, interest shall cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

(h) Any redemption pursuant to this Paragraph 6 shall be made pursuant to the provisions of Article V of the Indenture.

7. Redemption for Taxation Reasons

The Issuer may redeem the Notes, at its option, in whole, but not in part, upon giving not less than 10 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to (but not including) the Tax Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date falling prior to or on the redemption date) and all Additional Amounts, if any, then due or that will become due on the Tax Redemption Date as a result of the redemption or otherwise if the Issuer determines in good faith that, as a result of a Change in Tax Law, any Payor with respect to the Notes or a Guarantee is, or on the next date on which any amount would be payable in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to such Payor (including the appointment of a new Paying Agent or, where such action would be reasonable, payment through another Payor).

In the case of any Payor, the Change in Tax Law with respect to a given Relevant Taxing Jurisdiction must be announced and become effective on or after the later of the Issue Date or the date a jurisdiction becomes a Relevant Taxing Jurisdiction. Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the Payor would be obligated to make such payment of Additional Amounts and (b) unless at the time such notice is given, such obligation to pay Additional Amounts remains in effect. Prior to the publication, mailing or delivery of any notice of redemption of the Notes pursuant to the foregoing, the Issuer will deliver to the Trustee (1) an Officer’s Certificate stating that it is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to its right so to redeem have been satisfied (including that the obligation to pay such Additional Amounts cannot be avoided by the Payor taking reasonable measures available to it) and (2) an opinion of an independent tax counsel of recognized standing to the effect that the Payor would be obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee will accept such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it will be conclusive and binding on the Holders.

 

A-11


The foregoing provisions will apply mutatis mutandis to the laws and official positions of any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. The foregoing provisions will survive any termination, defeasance or discharge of the Indenture.

8. Change of Control; Asset Sales

(a) Upon the occurrence of a Change of Control, the Issuer will be required to make a Change of Control Offer in accordance with Section 3.9 of the Indenture.

(b) The Issuer will be required to make an Asset Sale Offer in accordance with Section 3.7 of the Indenture.

9. Denominations; Transfer; Exchange

The Notes are in registered form without coupons in minimum denominations of principal amount of $200,000 and whole multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof). A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes for a period beginning 15 Business Days before an Interest Payment Date and ending on such Interest Payment Date.

10. Persons Deemed Owners

The registered Holder of this Note may be treated as the owner of it for all purposes.

11. Unclaimed Money

If money for the payment of the principal of or premium, if any, or interest remains unclaimed for two years, the Trustee or the Paying Agent shall pay the money back to the Issuer at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuer and not to the Trustee for payment.

12. Discharge and Defeasance

Subject to certain conditions set forth in the Indenture, the Issuer at any time may terminate some or all of its obligations under the Notes and the Indenture if the Issuer irrevocably deposits in trust with the Trustee or Paying Agent money or U.S. Government Obligations (sufficient, without reinvestment, in the opinion of a nationally recognized certified public accounting firm) for the payment of principal, premium (if any) and interest on the Notes to redemption or maturity, as the case may be.

13. Amendment, Waiver

The Indenture and the Notes may be amended or waived as set forth in Article IX of the Indenture.

 

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14. Defaults and Remedies

Events of Default shall be as set forth in Article VI of the Indenture.

15. Trustee Dealings with the Issuer

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuer or its Affiliates and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not the Trustee.

16. No Recourse Against Others

No manager, managing director, director, officer, employee, incorporator or holder of any equity interests in the Issuer, any Subsidiary or any direct or indirect parent of the Issuer, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, the Indenture or any Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. The waiver and release shall be part of the consideration for the issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

17. Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

18. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

19. CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures the Issuer has caused CUSIP numbers to be printed on the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers placed thereon.

20. Successor Entity

When a successor entity assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, and immediately before and thereafter no Default or Event of Default exists and all other conditions of the Indenture are satisfied, the predecessor entity shall be released from those obligations.

21. Governing Law

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

 

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint ____________agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

 

Date: ______________    Your Signature: __________________

Signature Guarantee: _________________________

(Signature must be guaranteed)

 

 

Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

 

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[INSERT IN EACH GLOBAL NOTE (OTHER THAN ANY TEMPORARY REGULATION S GLOBAL NOTE):]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial outstanding principal amount of this Global Note is $___________. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, or increase (including for PIK Payments) or decrease in the principal amount of this Global Note have been made:

 

Date of Exchange

or

Increase/Decrease

   Amount of
decrease in
Principal Amount
of this Global Note
   Amount of
increase in
Principal Amount
of this Global Note
   Principal Amount
of this Global Note
following such
decrease or
increase
   Signature of
authorized
signatory of
Trustee or Notes
Custodian

[INSERT IN EACH TEMPORARY REGULATION S GLOBAL NOTE:]

SCHEDULE OF INCREASES OR DECREASES IN TEMPORARY

REGULATION S GLOBAL NOTE

The initial outstanding principal amount this Temporary Regulation S Global Note is $___________. The following exchanges of a part of this Temporary Regulation S Global Note for an interest in another Global Note, or exchanges of a part of another Restricted Global Note for an interest in this Temporary Regulation S Global Note, or increase (including for PIK Payments) or decrease in the principal amount this Temporary Regulation S Global Note have been made:

 

Date of Exchange

or

Increase/Decrease

   Amount of
decrease in
Principal Amount
of this Global Note
   Amount of
increase in
Principal Amount
of this Global Note
   Principal Amount
of this Global Note
following such
decrease or
increase
   Signature of
authorized
signatory of
Trustee or Notes
Custodian

 

A-15


OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Issuer pursuant to Section 3.7 or 3.9 of the Indenture, check the box:

 

3.7

          

3.9

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in principal amount (must be in denominations of $200,000 or integral multiples of $1.00 in excess thereof (or if a PIK Payment has been made, in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof)): $

 

Date:                                                                                     Your Signature:                                                                                
 

(Sign exactly as your name appears on the other

side of the Note)

Signature Guarantee:                                                          

(Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

 

A-16


EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Alpha 2 B.V.

Attn: the Directors

Strijkviertel 35-2

3454 PJ De Meern

The Netherlands

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Alpha 2 B.V. Administrator

Email: jodonnell@wilmingtontrust.com

Re: 8.750% / 9.500% Senior PIK Toggle Notes due 2023

Reference is hereby made to the Indenture, dated as of May 30, 2018 (the “Indenture”), between Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442 and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

__________________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $____ in such Note[s] or interests (the “Transfer”), to ___________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

 

1.    ☐

Check if Transferee shall take delivery of a beneficial interest in the 144A Global Note or a Definitive Note pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

 

B-1


2.    ☐

Check if Transferee shall take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

 

3.    ☐

Check and complete if Transferee shall take delivery of a beneficial interest in the IAI Global Note or an Unrestricted Global Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

 

  (a)    ☐

such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

or

 

  (b)    ☐

such Transfer is being effected to the Issuer or a subsidiary thereof;

or

 

  (c)    ☐

such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;

or

 

  (d)    ☐

such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by

 

B-2


  the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

 

4.    ☐

Check if Transferee shall take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

 

  (a)    ☐

Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

  (b)    ☐

Check if Transfer is pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

  (c)    ☐

Check if Transfer is pursuant to other exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

B-3


This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

 

[Insert Name of Transferor]

By:  

 

  Name:
  Title:

Dated:                    

 

B-4


ANNEX A TO CERTIFICATE OF TRANSFER

 

1.    The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
   (a)       a beneficial interest in the:
      (i)       144A Global Note (CUSIP [            ]), or
      (ii)       Regulation S Global Note (CUSIP [                    ]), or
      (iii)       IAI Global Note (CUSIP [            ]), or
   (b)       a Restricted Definitive Note.
2.    After the Transfer the Transferee shall hold:
   [CHECK ONE]
   (a)       a beneficial interest in the:
      (i)       144A Global Note (CUSIP [            ]), or
      (ii)       Regulation S Global Note (CUSIP [                    ]), or
      (iii)       Unrestricted Global Note (CUSIP [            ]), or
      (iv)       IAI Global Note (CUSIP [            ]), or
   (b)       a Restricted Definitive Note; or
   (c)       an Unrestricted Definitive Note,
   in accordance with the terms of the Indenture.

 

 

B-5


EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Alpha 2 B.V.

Attn: the Directors

Strijkviertel 35-2

3454 PJ De Meern

The Netherlands

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Alpha 2 B.V. Administrator

Email: jodonnell@wilmingtontrust.com

Re: 8.750% / 9.500% Senior PIK Toggle Notes due 2023

(CUSIP [                ])

Reference is hereby made to the Indenture, dated as of May 30, 2018 (the “Indenture”), between Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442 (the “Issuer”) and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

                    (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been

 

C-1


effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) ☐ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued shall continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] _ 144A Global Note, _ Regulation S Global Note, _ IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

 

C-2


This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

 

  [Insert Name of Transferor]
By:  

 

  Name:
  Title:

Dated:                    

 

C-3


EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Alpha 2 B.V.

Attn: the Directors

Strijkviertel 35-2

3454 PJ De Meern

The Netherlands

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Alpha 2 B.V. Administrator

Email: jodonnell@wilmingtontrust.com

Re: 8.750% / 9.500% Senior PIK Toggle Notes due 2023

Reference is hereby made to the Indenture, dated as of May 30, 2018 (the “Indenture”), between Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442 (the “Issuer”) and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

In connection with our proposed purchase of $                     aggregate principal amount of:

(a)        ☐ a beneficial interest in a Global Note, or

(b)        ☐ a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we shall do so only (A) to the Issuer or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuer a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the

 

D-1


time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Issuer to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we shall be required to furnish to you and the Issuer such certifications, legal opinions and other information as you and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us shall bear a legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

 

 

[Insert Name of Accredited Investor]
By:  

 

  Name:
  Title:

Dated:                    

 

D-2


EXHIBIT E

FORM OF SUPPLEMENTAL INDENTURE

THIS [●] SUPPLEMENTAL INDENTURE, dated as of [●], 20[●] (this “Supplemental Indenture”), is by and between Alpha 2 B.V., a private company with limited liability (besloten vennootschap met beperkete aansprakelijkheid) incorporated under the laws of the Netherlands with corporate seat in De Meern and registered with the Dutch chamber of commerce under number 66937442 (the “Issuer”), each of the parties identified as a New Guarantor on the signature pages hereto (each, a “New Guarantor” and collectively, the “New Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuer, the Guarantors and the Trustee are parties to an indenture dated as of May 30, 2018 (as amended and supplemented, the “Indenture”), providing for the issuance of the Issuer’s 8.750%/9.500% Senior PIK Toggle Notes due 2023 (the “Notes”);

WHEREAS, Section 3.11 – Future Guarantors of the Indenture provides that under certain circumstances the New Guarantors shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantors shall unconditionally guarantee all of the Issuer’s obligations under the Notes and the Indenture on the terms and conditions set forth herein; and

WHEREAS, pursuant to Section 9.1 – Amendments Without Consent of Holders of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. Agreements to Become Guarantors. Each of the New Guarantors hereby (x) becomes a party to the Indenture as a Guarantor, (y) unconditionally guarantees the Issuer’s obligations for the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance and observance of each other obligation and covenant set forth in the Indenture to be performed or observed on the part of the Issuer, on the terms and subject to the conditions set forth in Article X – Guarantees of the Indenture and (z) agrees to be bound by all other provisions of the Indenture and the Notes applicable to a Guarantor therein.

3. Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

 

E-1


4. No Recourse Against Others. No manager, managing director, director, officer, employee, incorporator or holder of any Equity Interests in either of the Issuer, any Subsidiary or any direct or indirect parent of the Issuer, as such, shall have any liability for any obligations of the Issuer or the New Guarantors under the Notes, the Indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes, by accepting a Note, waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

5. Notices. For purposes of Section 12.1 – Notices of the Indenture, the address for notices to the Issuer and the Guarantors shall be:

Alpha 2 B.V.

Attn: the Directors

Strijkviertel 35-2

3454 PJ De Meern

The Netherlands

With copies to:

Latham & Watkins LLP

Attn: Jason Licht

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004-1304

P: (202) 637-2258

F: (202) 637-2201

E: jason.licht@lw.com

6. Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

7. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement. Delivery of an executed counterpart of a signature page to this Supplemental Indenture by telecopier, facsimile or other electronic transmission (e.g. a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.

8. Effect of Headings. The section headings herein are for convenience only and shall not affect the construction hereof.

9. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuer and the New Guarantors.

[remainder of page intentionally blank]

 

E-2


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

ALPHA 2 B.V., as Issuer
By:  

 

  Name:     [                                         ]
  Title:       [                                         ]
By:  

 

  Name:
  Title:
[•], as a New Guarantor
By:  

 

  Name:     [                                         ]
  Title:       [                                         ]

 

E-3


WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

By:  

 

  Name:     [                                         ]
  Title:       [                                         ]

 

E-4

EX-10.1

Exhibit 10.1

EXECUTION VERSION

 

 

 

CREDIT AGREEMENT

DATED AS OF JANUARY 31, 2017

AMONG

ALPHA 3 B.V.,

AS PARENT BORROWER,

ALPHA US BIDCO, INC.,

AS SUBSIDIARY BORROWER,

ATOTECH DEUTSCHLAND GMBH,

AS GERMAN BORROWER,

ATOTECH S.E.A. PTE LTD.,

AS SINGAPORE BORROWER,

ALPHA 2 B.V.,

AS HOLDINGS,

BARCLAYS BANK PLC,

AS ADMINISTRATIVE AGENT, COLLATERAL AGENT AND A L/C ISSUER,

THE OTHER LENDERS AND L/C ISSUERS PARTY HERETO,

BARCLAYS BANK PLC

J.P. MORGAN LIMITED

CITIGROUP GLOBAL MARKETS LIMITED

CREDIT SUISSE SECURITIES (USA) LLC

HSBC BANK PLC

NOMURA SECURITIES INTERNATIONAL, INC.

RBC CAPITAL MARKETS, LLC

AND

BANK OF CHINA LIMITED, SHANGHAI BRANCH,

AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS,

 

 

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I.

    

Definitions and Accounting Terms

     1  

Section 1.01

  Defined Terms      1  

Section 1.02

  Other Interpretive Provisions      81  

Section 1.03

  Accounting Terms      83  

Section 1.04

  Rounding      83  

Section 1.05

  References to Agreements and Laws      83  

Section 1.06

  Times of Day      84  

Section 1.07

  Timing of Payment or Performance      84  

Section 1.08

  Currency Equivalents Generally      84  

Section 1.09

  Times of Day      85  

Section 1.10

  Letter of Credit Amounts      85  

Section 1.11

  Pro Forma Calculations      85  

Section 1.12

  Calculation of Baskets      85  

Section 1.13

  Dutch Terms      86  

Section 1.14

  Guaranty and Security Principles      86  

Section 1.15

  Foreign Guarantor Provisions      86  

Section 1.16

  Borrower Representative      86  

ARTICLE II.

    

The Commitments and Credit Extensions

     87  

Section 2.01

  The Loans      87  

Section 2.02

  Borrowings, Conversions and Continuations of Loans      88  

Section 2.03

  Letters of Credit      90  

Section 2.04

  Borrowings of, and Redenominations to, Term B-3 Loans      97  

Section 2.05

  Prepayments      99  

Section 2.06

  Termination or Reduction of Commitments      103  

Section 2.07

  Repayment of Loans      104  

Section 2.08

  Interest      105  

Section 2.09

  Fees      106  

Section 2.10

  Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate      107  

Section 2.11

  Evidence of Indebtedness      107  

Section 2.12

  Payments Generally; Administrative Agent’s Clawback      108  

Section 2.13

  Sharing of Payments      110  

Section 2.14

  Incremental Facilities      111  

Section 2.15

  New Incremental Notes      114  

Section 2.16

  Cash Collateral      115  

Section 2.17

  Defaulting Lenders      116  

Section 2.18

  Specified Refinancing Debt      117  

Section 2.19

  Permitted Debt Exchanges      119  

Section 2.20

  Additional Alternative Currencies      120  

Section 2.21

  Ancillary Facilities      121  

ARTICLE III.

    

Taxes, Increased Costs Protection and Illegality

     125  

Section 3.01

  Taxes      125  

Section 3.02

  [Reserved]      129  

Section 3.03

  Illegality      129  

 

i


Section 3.04

  Inability to Determine Rates      129  

Section 3.05

  Increased Cost and Reduced Return; Capital Adequacy and Liquidity Requirements      130  

Section 3.06

  Funding Losses      131  

Section 3.07

  Matters Applicable to All Requests for Compensation      131  

Section 3.08

  Replacement of Lenders under Certain Circumstances      132  

ARTICLE IV.

    

Conditions Precedent to Credit Extensions

     134  

Section 4.01

  Conditions to the Initial Credit Extension on the Closing Date      134  

Section 4.02

  Certain Funds Period      136  

Section 4.03

  Conditions to All Credit Extensions      136  

ARTICLE V.

    

Representations and Warranties

     137  

Section 5.01

  Existence, Qualification and Power; Compliance with Laws      137  

Section 5.02

  Authorization; No Contravention      137  

Section 5.03

  Governmental Authorization; Other Consents      137  

Section 5.04

  Binding Effect      138  

Section 5.05

  Financial Statements; No Material Adverse Effect      138  

Section 5.06

  Litigation      138  

Section 5.07

  Use of Proceeds      138  

Section 5.08

  Ownership of Property; Liens      139  

Section 5.09

  Environmental Compliance      139  

Section 5.10

  Taxes      139  

Section 5.11

  Employee Benefits Plans      139  

Section 5.12

  Subsidiaries; Capital Stock      140  

Section 5.13

  Margin Regulations; Investment Company Act      141  

Section 5.14

  Disclosure      141  

Section 5.15

  Compliance with Laws      141  

Section 5.16

  Intellectual Property; Licenses, Etc.      141  

Section 5.17

  Solvency      141  

Section 5.18

  Perfection, Etc.      141  

Section 5.19

  Anti-Terrorism Laws; OFAC      142  

Section 5.20

  Anti-Corruption Laws      142  

Section 5.21

  COMI Regulation      142  

ARTICLE VI.

    

Affirmative Covenants

     143  

Section 6.01

  Financial Statements      143  

Section 6.02

  Certificates; Other Information      144  

Section 6.03

  Notices      146  

Section 6.04

  Payment of Taxes      146  

Section 6.05

  Preservation of Existence, Etc.      146  

Section 6.06

  Maintenance of Properties      147  

Section 6.07

  Maintenance of Insurance      147  

Section 6.08

  Compliance with Laws      147  

Section 6.09

  Books and Records      147  

Section 6.10

  Inspection Rights      147  

Section 6.11

  Use of Proceeds      148  

Section 6.12

  Covenant to Guarantee Obligations and Give Security      148  

Section 6.13

  Compliance with Environmental Laws      149  

Section 6.14

  Further Assurances      150  

 

ii


Section 6.15

  Maintenance of Ratings      151  

Section 6.16

  Post-Closing Undertakings      151  

Section 6.17

  No Change in Line of Business      151  

Section 6.18

  Transactions with Affiliates.      151  

Section 6.19

  COMI Regulation.      154  

Section 6.20

  People with Significant Control Regime      154  

ARTICLE VII.

    

Negative Covenants

     155  

Section 7.01

  Indebtedness      155  

Section 7.02

  Limitations on Liens      162  

Section 7.03

  Fundamental Changes      162  

Section 7.04

  Asset Sales      163  

Section 7.05

  Restricted Payments      164  

Section 7.06

  Burdensome Agreements      171  

Section 7.07

  Accounting Changes      173  

Section 7.08

  Financial Covenant      173  

Section 7.09

  Holding Company      174  

ARTICLE VIII.

    

Events of Default and Remedies

     174  

Section 8.01

  Events of Default      174  

Section 8.02

  Remedies Upon Event of Default      177  

Section 8.03

  Right to Cure      178  

Section 8.04

  Application of Funds      179  

ARTICLE IX.

    

Administrative Agent and Other Agents

     181  

Section 9.01

  Appointment and Authorization of Agents.      181  

Section 9.02

  Delegation of Duties      182  

Section 9.03

  Liability of Agents.      182  

Section 9.04

  Reliance by Agents      183  

Section 9.05

  Notice of Default      184  

Section 9.06

  Credit Decision; Disclosure of Information by Agents      184  

Section 9.07

  Indemnification of Agents      184  

Section 9.08

  Agents in their Individual Capacities      185  

Section 9.09

  Successor Agents      185  

Section 9.10

  Administrative Agent May File Proofs of Claim      187  

Section 9.11

  Collateral and Guaranty Matters      187  

Section 9.12

  Other Agents; Arranger and Managers      189  

Section 9.13

  Secured Cash Management Agreements and Secured Hedge Agreements      189  

Section 9.14

  Appointment of Supplemental Agents, Incremental Arrangers, Incremental Notes Arrangers and Specified Refinancing Agents      189  

Section 9.15

  Intercreditor Agreement      190  

ARTICLE X.

    

Miscellaneous

       191  

Section 10.01

  Amendments, Etc.      191  

Section 10.02

  Notices; Electronic Communications      194  

Section 10.03

  No Waiver; Cumulative Remedies; Enforcement      196  

Section 10.04

  Costs and Expenses      196  

Section 10.05

  Indemnification by the Borrowers      197  

 

iii


Section 10.06

  Payments Set Aside      198  

Section 10.07

  Successors and Assigns      198  

Section 10.08

  Confidentiality      205  

Section 10.09

  Setoff      206  

Section 10.10

  Interest Rate Limitation      206  

Section 10.11

  Counterparts      206  

Section 10.12

  Integration; Effectiveness      207  

Section 10.13

  Survival of Representations and Warranties      207  

Section 10.14

  Severability      207  

Section 10.15

  Governing Law; Jurisdiction; Etc.      207  

Section 10.16

  Service of Process      208  

Section 10.17

  Waiver of Right to Trial by Jury      208  

Section 10.18

  Binding Effect      208  

Section 10.19

  No Advisory or Fiduciary Responsibility      209  

Section 10.20

  Affiliate Activities.      209  

Section 10.21

  Electronic Execution of Assignments and Certain Other Documents      209  

Section 10.22

  USA PATRIOT Act      210  

Section 10.23

  Judgment Currency      210  

Section 10.24

  Joint and Several Liability      210  

Section 10.25

  Acknowledgement and Consent to Bail-In of EEA Financial Institutions.      210  

Section 10.26

  Parallel Liability.      210  

Section 10.27

  Waiver of Sovereign Immunity.      211  

Section 10.28

  Lender Affiliates and Facility Office      211  

 

iv


SCHEDULES

 

1    Guarantors
1.01(a)    Adjustments to Consolidated EBITDA
1.01(b)    Foreign Security and Pledge Documents
1.01(e)    Contracts Prohibiting Subsidiary Guarantees
1.01(l)    Benchmark PBOC Rate
1.14    Guaranty and Security Principles
1.15    Foreign Guarantor Provisions
2.01    Commitments and Pro Rata Shares
2.21    Ancillary Facilities
5.03    Governmental Authorizations; Other Consents
5.08(b)    Owned Real Property
5.12    Subsidiaries and Other Equity Investments
5.16    Intellectual Property Matters
6.16    Post-Closing Undertakings
7.01    Closing Date Indebtedness
7.02    Closing Date Liens
7.05    Closing Date Investments
10.02    Administrative Agent’s Office and Redenomination Term Facilities Administrative Agent’s Office, Certain Addresses for Notices

EXHIBITS

Form of

 

A-1    Committed Loan Notice
A-2    Request for L/C Credit Extension
A-3    RMB Committed Loan Notice
A-4    RMB Notice
C-1    Term Note
C-2    Revolving Credit Note
D    Compliance Certificate
E-1    Assignment and Assumption
E-2    Affiliate Lender Assignment and Assumption
E-3    Administrative Questionnaire
F-1    New York Law Guaranty
F-2    PRC Guaranty
H    U.S. Security Agreement
I    Intercompany Subordination Agreement
J-1    U.S. Tax Compliance Certificate
J-2    U.S. Tax Compliance Certificate
J-3    U.S. Tax Compliance Certificate
J-4    U.S. Tax Compliance Certificate
K-1    Optional Prepayment of Loans
L    Form of Substitute Affiliate Lender Designation Notice

 

 

v


This CREDIT AGREEMENT is entered into as of January 31, 2017, among ALPHA 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of The Netherlands and registered with the Dutch trade register under number 66940532 (the “Parent Borrower”), ALPHA US BIDCO, INC., a Delaware corporation (the “Subsidiary Borrower”), ATOTECH DEUTSCHLAND GMBH, a company organized and existing under the laws of Germany with principal offices located at Erasmusstrasse 20, Berlin, Germany 10553 (the “German Borrower”), ATOTECH S.E.A. PTE LTD., a private company limited by shares incorporated under the laws of Singapore with company registration no. 198904489 (the “Singapore Borrower”, and together with the German Borrower, Parent Borrower and Subsidiary Borrower, the “Borrowers”), ALPHA 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of The Netherlands and registered with the Dutch trade register under number 66937442 (“Holdings”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), each L/C Issuer party hereto, BARCLAYS BANK PLC, J.P. MORGAN LIMITED, CITIGROUP GLOBAL MARKETS LIMITED, CREDIT SUISSE SECURITIES (USA) LLC, HSBC BANK plc, NOMURA SECURITIES INTERNATIONAL, INC., RBC CAPITAL MARKETS, LLC and BANK OF CHINA LIMITED, SHANGHAI BRANCH, as Joint Lead Arrangers and Joint Bookrunners, BANK OF CHINA LIMITED, SHANGHAI BRANCH, as Redenomination Term Facilities Administrative Agent and BARCLAYS BANK PLC, as Administrative Agent, Collateral Agent and an L/C Issuer.

PRELIMINARY STATEMENTS

The Borrowers have requested that, upon the satisfaction (or waiver) in full of the conditions precedent set forth in the applicable provisions of Article IV below, the applicable Lenders (a) make term loans to the Parent Borrower and the Subsidiary Borrower in an aggregate principal amount of $900,000,000 under the Initial Term B-1 Commitment, (b) make term loans to the Parent Borrower in an aggregate principal amount of (or the aggregate Dollar Amount of which is) $500,000,000 under the Initial Term B-2 Commitment and/or the Initial Term B-3 Commitment and (c) make available to the Borrowers a multicurrency revolving credit facility in an aggregate principal Dollar Amount of $250,000,000, in each case, for the making, from time to time, of revolving loans and the issuance, from time to time, of letters of credit, in each case on the terms and subject to the conditions set forth in this Agreement.

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 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

Accepting Lender” has the meaning specified in Section 10.01.

Acquired Indebtedness” means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person is merged, amalgamated or consolidated with or into or becomes a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is Incurred in connection with, or in contemplation of, such other Person merging, amalgamating or consolidating with or into, or becoming a Restricted Subsidiary of, such specified Person and (b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Acquisition” means (i) the acquisition by the Sponsor and certain other investors arranged by and/or designated by the Sponsor (including members of management of the Target), directly or indirectly, of all of the outstanding share capital of Atotech B.V. and its subsidiaries (collectively, the “Target”) pursuant to the Acquisition Agreement, (ii) the other transactions contemplated by the Acquisition Agreement, and (iii) the payment of all fees, costs and expenses incurred in connection with the transactions contemplated by the Acquisition Agreement.

 

1


Acquisition Agreement” means that certain Share Purchase Agreement dated as of October 6, 2016, among Total Holdings Europe, Total Gestion USA, Alpha 3 B.V. and the other parties party thereto, together with all exhibits and schedules thereto, and as amended through the Closing Date.

Adjusted Cash” means the amount of unrestricted cash after giving effect to unrealized gains and losses under (and as determined by) any Swap Contracts in place at the time of determination (but only with respect to the then-elapsed portion of the current monthly or quarterly (as applicable under the relevant Swap Contract) calculation period thereunder).

Adjusted Eurocurrency Rate” means, with respect to any Eurocurrency Rate Borrowing for any Interest Period, an interest rate per annum equal to the Eurocurrency Rate for such Interest Period (which, if negative, shall be deemed to be 0%), multiplied by the Statutory Reserve Rate; provided that, solely with respect to Initial Term Loans (other than Initial Term B-3 Loans), the Adjusted Eurocurrency Rate shall not be less than 1.00% per annum and, solely with respect to Revolving Credit Loans, the Adjusted Eurocurrency Rate shall not be less than 0.00% per annum.

Administrative Agent” means Barclays Bank PLC, acting through such of its Affiliates or branches as it may designate, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent permitted by the terms hereof.

Administrative Agents Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 or such other address or account as the Administrative Agent may from time to time notify the Borrowers and the Lenders.

Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-3 or any other form approved by the Administrative Agent.

Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

Affiliate Lender Assignment and Assumption” has the meaning specified in Section 10.07(i)(i).

Affiliate Lenders” means, collectively, the Sponsor and their respective Affiliates (other than any natural person, Holdings, the Borrowers or any of their respective Subsidiaries).

Affiliate Transaction” shall have the meaning specified in Section 6.18(a).

Agent’s Spot Rate of Exchange” means the Administrative Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular Business Day.

Agent-Related Distress Event” means, with respect to the Administrative Agent, the Collateral Agent, Redenomination Term Facilities Administrative Agent or any Person that directly or indirectly controls the applicable Agent (each, a “Distressed Agent-Related Person”), a voluntary or involuntary case with respect to such Distressed Agent-Related Person under any Debtor Relief Law is commenced, or a custodian, conservator, receiver or similar official is appointed for such Distressed Agent-Related Person or any substantial part of such Distressed Agent-Related Person’s assets, or such Distressed Agent-Related Person makes a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Distressed Agent-Related Person to be, insolvent or bankrupt; provided, that an Agent-Related Distress Event shall not be deemed to have occurred solely by virtue of the ownership or acquisition of any Equity Interests in the Administrative Agent, the Collateral Agent, the Redenomination Term Facilities Administrative Agent or any Person that directly or indirectly controls the applicable Agent by a Governmental Authority or an instrumentality thereof.

 

2


Agent-Related Persons” means, with respect to any Agent, that Agent, together with its Related Parties.

Agents” means, collectively, the Administrative Agent, the Redenomination Term Facilities Administrative Agent, the Collateral Agent, the Arrangers and the Supplemental Agents (if any).

Aggregate Commitments” means the Commitments of all the Lenders.

Agreement” means this credit agreement.

Agreement Currency” has the meaning specified in Section 10.23.

All-in Yield” means, with respect to any Indebtedness, the yield of such Indebtedness, whether in the form of interest rate, margin, OID, upfront fees, index floors or otherwise, in each case payable by the Borrowers generally to lenders, provided that OID and upfront fees shall be equated to interest rate assuming a four-year life to maturity, and shall not include arrangement fees, structuring fees, ticking fees, commitment fees, unused line fees, underwriting fees and any amendment and similar fees (regardless of whether paid in whole or in part to the relevant lenders); provided that if the Adjusted Eurocurrency Rate in respect of any New Term Facility of a like currency includes an index floor greater than the one applicable to the Initial Term Loans, such increased amount shall be equated to All-in Yield for purposes of determining the All-in Yield of such New Term Facility.

Alternative Currency” means (i) Dollars, Euros, Canadian Dollars, Australian Dollars, Swiss Francs, Sterling, Japanese Yen, Swedish Krona and Singapore Dollars and (ii) subject to Section 2.20, any other currency.

Ancillary Commencement Date” means, with respect to any Ancillary Facility, the date (which must be a Business Day until and excluding the Business Day preceding the Maturity Date for the Revolving Credit Facility) on which such Ancillary Facility is first made available.

Ancillary Commitment” means, with respect to any Ancillary Lender and any Ancillary Facility, the maximum applicable Dollar Amount which such Ancillary Lender has agreed (whether or not subject to the satisfaction of conditions precedent) to make available from time to time under an Ancillary Facility in accordance with Section 2.21 hereof to the extent such amount has not been cancelled or reduced under this Agreement or the Ancillary Documents relating to such Ancillary Facility; provided, that the aggregate amount of Ancillary Commitments shall not exceed the Dollar Amount (as calculated by the Administrative Agent) of $100,000,000 at any time.

Ancillary Document” means each document or instrument relating to or evidencing the terms of an Ancillary Facility.

Ancillary Facility” means (a) any overdraft, automated payment, check drawing and/or other current account facility, (b) any same day or short term loan facility in local currencies, (c) any foreign exchange facility, (d) any letter of credit, guarantee and/or bonding facility, (e) any derivatives facility and/or (f) any other facility or financial accommodation that may be required in connection with the business of the Borrowers and their Restricted Subsidiaries and is agreed by the relevant Ancillary Lender.

Ancillary Lender” means each Lender (or Affiliate of a Lender) that makes available an Ancillary Facility in accordance with Section 2.21.

Ancillary Outstandings” means at any time, with respect to any Ancillary Lender and any Ancillary Facility then in effect, the amount of the sum of the Dollar Amount (as calculated by that Ancillary Lender) of the following amounts outstanding under such Ancillary Facility: (a) the principal amount owing under each overdraft facility and on-demand short term loan facility, (b) the face amount of each guaranty, bond and letter of credit provided or issued under such Ancillary Facility, (c) all net obligations owing to such Ancillary Lender under any

 

3


derivatives facility and (d) the amount fairly representing the aggregate exposure (excluding interest and similar charges) of such Ancillary Lender under each other type of accommodation provided under such Ancillary Facility, in each case (i) net of any Available Credit Balance and (ii) as determined by such Ancillary Lender acting reasonably in accordance with its normal banking practice and the terms of the relevant Ancillary Document.

Anticipated Cure Deadline” has the meaning specified in Section 8.03(a).

Anti-Corruption Laws” shall have the meaning set forth in Section 5.20.

Applicable Agent” refers to either the Administrative Agent or the Redenomination Term Facilities Administrative Agent, as the context may require.

Applicable Benchmark PBOC Margin” means, with respect to any Term B-3 Loan, (i) as at any date from or after the Closing Date until the date falling 5 years from the Closing Date, 100% of the Benchmark PBOC Rate applicable to the relevant Term B-3 Loan (as set forth on Schedule 1.01(l)) or (ii) on any date thereafter, 130% of the Benchmark PBOC Rate applicable to the relevant Term B-3 Loan (as set forth on Schedule 1.01(l)).

Applicable Commitment Fee” means a percentage per annum equal to (a) from the Closing Date until the first Business Day that immediately follows the date on which a Compliance Certificate is delivered pursuant to Section 6.02(b) in respect of the first full fiscal quarter ending after the Closing Date, 0.500% per annum, and (b) thereafter, the applicable percentage per annum set forth below, as determined by reference to Consolidated First Lien Net Leverage Ratio, as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b):

 

Applicable Commitment Fee

Pricing Level

   Consolidated First Lien Net
Leverage Ratio
   Applicable
Commitment Fee

1

   ³ 4.00:1.00    0.500%

2

   < 4.00:1.00    0.375%

Any increase or decrease in the Applicable Commitment Fee resulting from a change in the Consolidated First Lien Net Leverage Ratio shall become effective as of the first Business Day immediately following the date the applicable Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however, that “Pricing Level 1” shall apply without regard to the Consolidated First Lien Net Leverage Ratio (x) at any time after the date on which any annual or quarterly financial statement was required to have been delivered pursuant to Section 6.01(a) or Section 6.01(b) but was not delivered (or the Compliance Certificate related to such financial statements was required to have been delivered pursuant to Section 6.02(b) but was not delivered), commencing with the first Business Day immediately following such date and continuing until the first Business Day immediately following the date on which such financial statements (or, if later, the Compliance Certificate related to such financial statements) are delivered or (y) at all times if an Event of Default shall have occurred and be continuing.

Applicable Rate” means a percentage per annum equal to, (a) with respect to the Initial Term Loans (other than Initial Term B-3 Loans), 3.00% per annum for Eurocurrency Rate Loans and 2.00% per annum for Base Rate Loans and (b) with respect to the Revolving Credit Facility, (i) from the Closing Date until the first Business Day that immediately follows the date on which a Compliance Certificate is delivered pursuant to Section 6.02(b) in respect of the first full fiscal quarter ending after the Closing Date, 3.75% per annum for Eurocurrency Rate Loans and 2.75% per annum for Base Rate Loans and (ii) thereafter, the applicable percentage per annum set forth below (with no limits on reduction to be effected as of any date of determination), as determined by reference to the Consolidated First Lien Net Leverage Ratio, as set forth in the then most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b):

 

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APPLICABLE RATE

REVOLVING CREDIT FACILITY

Pricing Level

   Consolidated First Lien Net
Leverage Ratio
  Eurocurrency
Rate Loans
  Base Rate Loans

1

   ³4.00:1.00   3.75%   2.75%

2

   <4.00:1.00 and ³3.50:1.00   3.50%   2.50%

3

   <3.50:1.00   3.25%   2.25%

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated First Lien Net Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however, that “Pricing Level 1” shall apply without regard to the Consolidated First Lien Net Leverage Ratio (x) at any time after the date on which any annual or quarterly financial statement was required to have been delivered pursuant to Section 6.01(a) or Section 6.01(b) but was not delivered (or the Compliance Certificate related to such financial statements was required to have been delivered pursuant to Section 6.02(b) but was not delivered), commencing with the first Business Day immediately following such date and continuing until the first Business Day immediately following the date on which such financial statements (or, if later, the Compliance Certificate related to such financial statements) are delivered or (y) at all times if an Event of Default shall have occurred and be continuing.

Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10(b).

Applicable Time” means, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.

Appropriate Lender” means, at any time, (a) with respect to any Term Facility, a Lender that has a Commitment with respect to such Facility or holds a Term Loan under such Term Facility at such time, (b) with respect to the Letter of Credit Sublimit, (i) each L/C Issuer and (ii) if any Letters of Credit have been issued pursuant to Section 2.03(a), the Revolving Credit Lenders, (c) with respect to any New Term Facility, a Lender that holds a New Term Loan at such time, and (d) with respect to any Specified Refinancing Debt, a Lender that holds Specified Refinancing Term Loans or Specified Refinancing Revolving Loans.

Approved Fund” means any Fund that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.

Arrangers” means each of Barclays Bank PLC, J.P. Morgan Limited, Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, HSBC Bank plc, Nomura Securities International, Inc., RBC Capital Markets, LLC and Bank of China Limited, Shanghai Branch, in their respective capacities as exclusive joint lead arrangers and bookrunners.

Asset Sale” means:

(a) the sale, conveyance, transfer or other Disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) of the Borrowers or any Restricted Subsidiary, or

(b) the issuance or sale of Equity Interests (other than preferred stock of Restricted Subsidiaries issued in compliance with Section 7.01 and directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary (other than to the Borrowers or another Restricted Subsidiary) (whether in a single transaction or a series of related transactions),

 

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(each of the foregoing referred to in this definition as a “Disposition”). Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(a) a sale, exchange or other disposition of cash, Cash Equivalents or Investment Grade Securities, or of obsolete, damaged, unnecessary, unsuitable or worn out equipment or other assets in the ordinary course of business, or dispositions of property no longer used, useful or economically practicable to maintain in the conduct of the business of the Borrowers and the Restricted Subsidiaries (including allowing any registrations or any applications for registration of any intellectual property or other intellectual property rights to lapse or become abandoned);

(b) without limiting the provisions of Section 8.01(k), the sale, conveyance, lease or other disposition of all or substantially all of the assets of either of the Borrowers in compliance with the provisions of Sections 7.03 or 7.04 or any Disposition that constitutes a Change of Control;

(c) any Restricted Payment that is permitted to be made, and is made, pursuant to Section 7.05 or any Permitted Investment;

(d) any Disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary, in a single transaction or series of related transactions, with an aggregate Fair Market Value of less than or equal to $20,000,000;

(e) any transfer or Disposition of property or assets or issuance or sale of Equity Interests by a Restricted Subsidiary to the Borrowers or by the Borrowers or a Restricted Subsidiary to another Restricted Subsidiary;

(f) the creation of any Lien permitted under this Agreement;

(g) any issuance, sale, pledge or other disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(h) the sale, lease, assignment, license or sublease of inventory, equipment, accounts receivable, notes receivable or other current assets held for sale in the ordinary course of business or the conversion of accounts receivable to notes receivable or dispositions of accounts receivable in connection with the collection or compromise thereof;

(i) the lease, assignment, license, sublicense or sublease of any real or personal property in the ordinary course of business;

(j) a sale or transfer of accounts receivable, or participations therein, and related assets of the type specified in the definition of “Receivables Financing” to a Receivables Subsidiary in a Qualified Receivables Financing or in factoring or similar transactions;

(k) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;

(l) any exchange of assets for Related Business Assets (including a combination of Related Business Assets and a de minimis amount of cash or Cash Equivalents) of comparable or greater market value than the assets exchanged, as determined in good faith by the Borrowers;

(m) (i) non-exclusive licenses, sublicenses or cross-licenses of intellectual property, other IP Rights or other general intangibles and (ii) exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles in the ordinary course of business of the Borrowers and the Restricted Subsidiaries of the Parent Borrower;

 

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(n) any Sale/Leaseback Transaction with respect to property acquired or built after the Closing Date by the Borrowers or any Restricted Subsidiaries; provided, that such sale is for at least Fair Market Value;

(o) the surrender or waiver of obligations of trade creditors or customers or other contract rights that were incurred in the ordinary course of business of the Borrowers or any Restricted Subsidiary of the Parent Borrower, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or compromise, settlement, release or surrender of a contract, tort or other litigation claim, arbitration or other disputes;

(p) Dispositions arising from foreclosures, condemnations, eminent domain, seizure, nationalization or any similar action with respect to assets, dispositions of property subject to casualty events and (except for purposes of calculating Net Cash Proceeds of any Asset Sale under the second and third paragraphs of Section 7.04) Dispositions necessary or advisable (as determined by the Parent Borrower in good faith) in order to consummate any acquisition of any Person, business or assets;

(q) Dispositions of Investments (including Equity Interests) in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements or rights of first refusal between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(r) to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(s) the issuance of directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law;

(t) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is purchased within 90 days of such disposition or (ii) the proceeds of such Asset Sale are applied within 90 days of such disposition to the purchase price of such replacement property (which replacement property is purchased within 90 days of such disposition);

(u) a sale or transfer of equipment receivables, or participations therein, and related assets; and

(v) any Dispositions in connection with the Transactions.

For the avoidance of doubt, the unwinding of Swap Contracts shall not be deemed to constitute an Asset Sale.

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 substantially in the form of Exhibit E-1, or otherwise in form and substance reasonably acceptable to the Administrative Agent.

Auction Amount” has the meaning specified in the definition of “Dutch Auction.”

Auction Notice” has the meaning specified in the definition of “Dutch Auction.”

Auto-Renewal Letter of Credit” has the meaning specified in Section 2.03(c)(iii).

Available Ancillary Commitment” means, with respect to any Ancillary Facility, the relevant Ancillary Lender’s Ancillary Commitment minus the amount of Ancillary Outstandings under such Ancillary Facility.

 

7


Available Credit Balance” means, in relation to an Ancillary Facility, credit balances on any account of any Borrower of that Ancillary Facility with the Ancillary Lender making available that Ancillary Facility to the extent that those credit balances are freely available to be set off by that Ancillary Lender against liabilities owed to it by that Borrower under that Ancillary Facility.

Backstop Commitment Letter” means that certain Backstop Commitment Letter dated January 9, 2017 by and among the Parent Borrower, Barclays Bank PLC, JPMorgan Chase Bank, N.A., J.P. Morgan Limited, Citibank N.A., London Branch, Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse AG, HSBC Bank plc, Nomura Securities International, Inc., Royal Bank of Canada and RBC Capital Markets, LLC and Bank of China Limited, Shanghai Branch, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

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.

Base Rate” means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate (which, if negative, shall be deemed to be 0%) on such day plus 1/2 of 1%, (b) the Prime Rate, (c) the Adjusted Eurocurrency Rate (without regard to the proviso set forth in the definition thereof) published on such day (or if such day is not a Business Day the next previous Business Day) for an Interest Period of one month plus 1% and (d) solely with respect to Initial Term Loans (other than Initial Term B-3 Loans), 2.00% per annum and solely with respect to Revolving Credit Loans, 0.00% per annum; provided that for the purposes of clause (c), the Adjusted Eurocurrency Rate for any day shall be based on the rate determined on such day at approximately 11:00 a.m. (London time) by reference to the Screen Rate. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Base Rate shall be determined without regard to clause (a) above until the circumstances giving rise to such inability no longer exist. To the extent applicable to the Initial Term B-2 Loans, the Administrative Agent will notify the Redenomination Term Facilities Administrative Agent of the Base Rate at such time promptly upon request thereof.

Base Rate Loan” means a Loan that bears interest based on the Base Rate.

Benchmark PBOC Rate” the prevailing official lending rate per annum (for term loans with a tenor of more than 5 years) as promulgated and announced by PBOC, in the case of (i) Initial Term B-3 Loans, the Closing Date or (ii) Redenominated Term B-3 Loans, the date of the Redenomination Event for such Redenominated Term B-3 Loan, or (iii) any New Term Loans denominated in RMB, the date such New Term Loans are incurred or (in each case) if such official lending rate is not available as at such date, such lending rate per annum (for term loans denominated in RMB with a tenor of more than 5 years) as quoted by the BOC Arranger (or an Affiliate of the BOC Arranger specified by the BOC Arranger) to the Redenominated Term Facilities Administrative Agent as at such date. The Benchmark PBOC Rate for each Term B-3 Loan shall be set forth on Schedule 1.01(l) as such Schedule 1.01(l) shall be amended by the Parent Borrower and the Redenomination Term Facilities Administrative Agent each time an Initial Term B-3 Loan or a New Term Loan denominated in RMB is made or a Redenomination Event occurs in relation to a Redenominated Term B-3 Loan (with a copy to the Administrative Agent). For the avoidance of doubt, the Benchmark PBOC Rate for any Term B-3 Loans Sub-Tranche shall remain constant (irrespective of subsequent rate changes) until the maturity of such Term B-3 Loans Sub-Tranche.

Benchmark PBOC Rate Loan” means (a) an Initial Term B-3 Loan, (b) a Redenominated Term B-3 Loan or (c) a New Term B-3 Loan (which New Term B-3 Loan bears interest based on the Benchmark PBOC Rate).

Board of Directors” means as to any Person, the board of directors, board of managers, sole member or managing member or other governing body of such Person, or if such Person is owned or managed by a single entity or a general partner, the board of directors, board of managers, sole member or managing member or other governing body of such entity or general partner, or in each case, any duly authorized committee thereof, and the term “directors” means members of the Board of Directors.

 

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BOC Arranger” means Bank of China Limited, Shanghai Branch as an Arranger.

Borrower Materials” has the meaning specified in Section 6.02.

Borrower Parties” means the collective reference to the Borrowers and the Restricted Subsidiaries, and “Borrower Party” means any one of them.

Borrower Representative” means the entity appointed to act on behalf of the Borrowers pursuant to Section 1.16.

Borrowers” has the meaning specified in the introductory paragraph to this Agreement.

Borrowing” means a Revolving Credit Borrowing or a Term Borrowing, as the context may require.

Business Day” means:

(1) 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, New York City, London, Berlin or Singapore;

(2) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Euros, Sterling or Dollars, means any such day described in clause (1) above that is also a London Banking Day;

(3) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Canadian Dollars, means any such day described in clause (1) above that is also a day on which banks are open for foreign exchange business in Toronto, Ontario;

(4) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in an Alternative Currency other than Euros, Sterling or Dollars, any fundings, disbursements, settlements or payments in such Alternative Currency, or any other dealings in such Alternative Currency to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency; and

(5) if such day relates to any funding, disbursement, settlement, payment, interest rate determination or Redenomination Event with respect to any Term B-3 Loan or Term B-3 Loans Sub-Tranche or any notice or communication to or from the Redenomination Term Facilities Administrative Agent, means any such day described in clause (1) above that is also a day (other than a Saturday or a Sunday or a public holiday) on which banks are open for general business in the PRC.

Canadian Anti-Terrorism Laws” means any law, judgment, order, executive order, decree, ordinance, rule or regulation related to terrorism financing or money laundering including Part II.1 of the Criminal Code, R.S.C. 1985, c.C-46, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17, and regulations promulgated pursuant to the Special Economic Measures Act, S.C. 1992, c. 17 and the United Nations Act, R.S.C. 1985, c. U-2.

Capital Stock” means:

(1) in the case of a corporation or a company, corporate stock or share capital;

 

9


(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person (it being understood and agreed, for the avoidance of doubt, that “cash-settled phantom appreciation programs” in connection with employee benefits that do not require a dividend or distribution shall not constitute Capital Stock).

Capitalized Lease Obligation” means at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease or operating lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with IFRS.

Cash-Capped Incremental Facility” has the meaning specified in Section 2.14(a).

Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent or L/C Issuer (as applicable) and the Lenders, as collateral for L/C Obligations or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash, Cash Equivalents (if reasonably acceptable to the Administrative Agent and the applicable L/C Issuer) or deposit account balances (in the case of L/C Obligations in the respective currency or currencies in which the applicable L/C Obligations are denominated unless otherwise agreed by the Administrative Agent or L/C Issuer benefiting from such collateral) or, if the Administrative Agent or L/C Issuer benefiting from such collateral shall agree in its sole discretion, other credit support (including by backstop with a letter of credit satisfactory to the applicable L/C Issuer or by being deemed reissued under another agreement acceptable to the applicable L/C Issuer), in each case pursuant to documentation in form and substance reasonably satisfactory to (a) the Administrative Agent and (b) the applicable L/C Issuer (which documents are hereby consented to by the Lenders).

Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of the Borrowers or any Subsidiary Guarantor (other than from a Restricted Subsidiary) and designated as a “Cash Contribution Amount” as described in the definition of “Contribution Indebtedness.”

Cash Equivalents” means:

(1) Dollars, Canadian Dollars, Japanese Yen, Sterling, Euros, RMB, the national currency of any participating member of the European Union (as it is constituted on the Closing Date), Alternative Currencies and other currencies held by a Holdings Entity or any Subsidiaries in the ordinary course of business;

(2) securities issued or directly guaranteed or insured by the government of the United States or any country that is a member of the European Union (as it is constituted on the Closing Date) or any agency or instrumentality thereof in each case with maturities not exceeding two years from the date of acquisition;

(3) money market deposits, certificates of deposit, time deposits and eurodollar time deposits with maturities of two years or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding two years, and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250,000,000 in the case of domestic banks or $100,000,000 (or the dollar equivalent thereof) in the case of foreign banks;

 

10


(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above and clause (6) below entered into with any financial institution or securities dealers of recognized national standing meeting the qualifications specified in clause (3) above;

(5) commercial paper or variable or fixed rate notes issued by a corporation or other Person (other than an Affiliate of the Borrowers) rated at least “A-2” or “P-2” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) and in each case maturing within two years after the date of acquisition;

(6) readily marketable direct obligations issued by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition;

(7) Indebtedness issued by Persons (other than the Sponsor) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition, and marketable short-term money market and similar securities having a rating of at least “A-2” or “P-2” from either S&P or Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency);

(8) investment funds investing at least 95% of their assets in investments of the types described in clauses (1) through (7) above and (9) and (10) below;

(9) Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency); and

(10) in the case of investments by any Non-U.S. Subsidiary or investments made in a country outside the United States of America, other investments of comparable tenor and credit quality to those described in the foregoing clauses (1) through (9) customarily utilized in the countries where such Non-U.S. Subsidiary is located or in which such investment is made.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (1) above; provided that such amounts are converted into any currency listed in clause (1) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

Cash Management Agreement” means any agreement or arrangement to provide Cash Management Services to any Loan Party.

Cash Management Bank” means any Person that (i) at the time it enters into a Cash Management Agreement, is a Lender or an Agent or an Affiliate of a Lender or an Agent, (ii) in the case of any Cash Management Agreement in effect on or prior to the Closing Date, is, as of the Closing Date or within 30 days thereafter, a Lender or an Agent or an Affiliate of a Lender or an Agent and a party to a Cash Management Agreement or (iii) within 30 days after the time it enters into the applicable Cash Management Agreement, becomes a Lender or an Affiliate of a Lender or an Agent, in each case, in its capacity as a party to such Cash Management Agreement.

Cash Management Services” means any of the following to the extent not constituting a line of credit (other than an overnight draft facility that is not in default); automated clearing house transactions, treasury and/or cash management services, including, without limitation, treasury, depository, overdraft, credit, purchasing or debit card, non-card e-payables services, electronic funds transfer, treasury management services (including controlled disbursement services, overdraft automatic clearing house fund transfer services, return items and interstate depository network services), other demand deposit or operating account relationships, foreign exchange facilities and merchant services.

 

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Casualty Event” means any event that gives rise to the receipt by the Parent Borrower or any Restricted Subsidiary of any casualty insurance proceeds or condemnation awards or that gives rise to a taking by a Governmental Authority in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace, restore or repair, or compensate for the loss of, such equipment, fixed assets or real property.

CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.

CERCLIS” means the Comprehensive Environmental Response, Compensation, and Liability Information System maintained by the U.S. Environmental Protection Agency.

Certain Funds Period” means the period on October 6, 2016 and ending on and including the earliest of:

(a) the termination date set forth in Section 10.1 of the Acquisition Agreement as in effect on the date of the Commitment Letter;

(b) July 13, 2017; and

(c) the Closing Date,

or such later date as is agreed by all Lenders under each Facility (acting reasonably).

A “Change of Control” will be deemed to occur if:

(a) at any time, (i) Holdings ceases to own, directly or indirectly, beneficially, 100% of the issued and outstanding Voting Stock of the Parent Borrower, (ii) Parent Borrower (x) ceases to own beneficially, directly or indirectly, 100% of the issued and outstanding Voting Stock of the Subsidiary Borrower or (y) ceases to own beneficially, directly or indirectly, 100% of the issued and outstanding Voting Stock of Atotech B.V., or (iii) a “change of control” (or comparable event) occurs under the Senior Notes Indenture or the documentation governing any Permitted Refinancing in respect of the foregoing; or

(b) at any time prior to the consummation of a Qualified IPO, the Permitted Holders, taken together, shall cease to beneficially own (within the meaning of Rule 13d-5 under the Exchange Act), directly or indirectly, at least 50.1% of the Voting Stock (measured by reference to voting power) of Holdings (determined on a fully diluted basis); or

(c) at any time after the consummation of a Qualified IPO, any person or “group” (within the meaning of Rule 13d-5 under the Exchange Act, but excluding any employee benefit plan and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders, acquires beneficial ownership of (i) more than 35% of the Voting Stock (measured by reference to voting power) of Holdings (determined on a fully diluted basis) and (ii) more than the percentage of the Voting Stock (measured by reference to voting power) of Holdings (determined on a fully diluted basis) that is at the time beneficially owned, directly or indirectly, by the Permitted Holders, taken together; or

(d) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Borrowers and their Subsidiaries, taken as a whole, to any Person other than one or more Permitted Holders;

Class” means, (a) with respect to Commitments or Loans, those of such Commitments or Loans that have the same terms and conditions and (b) with respect to Lenders, those of such Lenders that have Commitments or Loans of a particular Class.

 

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Clean-Up Default” has the meaning specified in Section 8.01.

Clean-Up Period” has the meaning specified in Section 8.01.

Closing Date” means January 31, 2017.

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

Collateral” means all of the “Collateral” (or similar term) referred to in the Collateral Documents and all of the other property and assets that are or are required under the terms of the Collateral Documents to be subject to Liens in favor of (i) the Collateral Agent for the benefit of the Secured Parties and/or (ii) the Secured Parties in their capacities as such (or any of them) to the extent required by applicable Law.

Collateral Agent” means Barclays Bank PLC, acting through such of its Affiliates or branches as it may designate, in its capacity as collateral agent under any of the Loan Documents, or any successor collateral agent or sub agent permitted by the terms hereof.

Collateral Documents” means, collectively, the Security Agreement, the Dutch Security Agreement, the Intellectual Property Security Agreement, those certain foreign security and pledge agreements listed on Schedule 1.01(b) hereto (subject to Section 6.16), the Mortgages (if any), each of the mortgages, collateral assignments, Security Agreement Supplements, Intellectual Property Security Agreement Supplements, security agreements, pledge agreements or other similar agreements delivered to the Collateral Agent pursuant to Section 6.12, Section 6.14 or Section 6.16, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of (i) the Collateral Agent for the benefit of the Secured Parties and/or (ii) the Secured Parties in their capacities as such (or any of them) to the extent required by applicable Law.

COMI Regulation” has the meaning specified in Section 5.21.

Commitment” means a Term Commitment and/or a Revolving Credit Commitment, as the context may require.

Commitment Letter” means that certain Amended and Restated Commitment Letter dated October 21, 2016, by and among the Parent Borrower, Barclays Bank PLC, JPMorgan Chase Bank, N.A., J.P. Morgan Limited, Citibank N.A., London Branch, Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse AG, HSBC Bank plc, Nomura Securities International, Inc., Royal Bank of Canada and RBC Capital Markets, LLC, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

Committed Loan Notice” means a notice of (a) a Term Borrowing (other than a Term Borrowing of an Initial Term B-3 Loan), (b) a Revolving Credit Borrowing, (c) a conversion of Loans from one Type to the other (other than a Benchmark PBOC Rate Loan) or (d) a continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A-1.

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et. seq.), as amended from time to time, and any successor statute.

Company Competitor” means any Person that competes with the business of Holdings, the Borrowers and their Subsidiaries from time to time.

Compliance Certificate” means a certificate substantially in the form of Exhibit D or such other form as may be agreed between the Borrowers and the Administrative Agent.

Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

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Consolidated Current Assets” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis, all assets of such Person and its Restricted Subsidiaries on a consolidated basis that, in accordance with IFRS, would be classified as current assets on the balance sheet of a company conducting a business the same as or similar to that of such Person and its Restricted Subsidiaries on a consolidated basis, after deducting appropriate and adequate reserves therefrom in each case in which a reserve is proper in accordance with IFRS, but excluding (i) cash, (ii) Cash Equivalents, (iii) Swap Contracts to the extent that the mark-to-market Swap Termination Value would be reflected as an asset on the consolidated balance sheet of such Person, (iv) deferred financing fees, (v) amounts related to current or deferred taxes (but excluding assets held for sale, loans (permitted) to third parties, pension assets, deferred bank fees and derivative financial instruments) (so long as the items described in clauses (iv) and (v) are non-cash items) and (vi) in the event that a Qualified Receivables Financing is accounted for off balance sheet, (x) gross accounts receivable comprising part of the receivables and other related assets subject to such Qualified Receivables Financing minus (y) collection by such Person against the amounts sold pursuant to clause (x).

Consolidated Current Liabilities” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis, all liabilities in accordance with IFRS that would be classified as current liabilities on the consolidated balance sheet of such Person, but excluding (a) the current portion of Indebtedness (including the Swap Termination Value of any Swap Contracts) to the extent reflected as a liability on the consolidated balance sheet of such Person, (b) the current portion of interest, (c) accruals for current or deferred taxes based on income or profits, (d) accruals of any costs or expenses related to restructuring reserves or severance, (e) deferred revenue, (f) escrow account balances, (g) the current portion of pension liabilities, (h) liabilities in respect of unpaid earn-outs, (i) amounts related to derivative financial instruments and assets held for sale and (j) any L/C Obligations or Revolving Credit Loans or Ancillary Outstandings and any letter of credit obligations, swing line loans or revolving loans under any other revolving credit facility.

Consolidated EBITDA” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of such Person for such period:

(1) increased, in each case (other than with respect to clause (k), (l) and (n) below) to the extent deducted and not added back in calculating such Consolidated Net Income (and without duplication), by:

(a) provision for taxes based on income, profits or capital, including federal, state, franchise, excise, property and similar taxes and foreign withholding taxes paid or accrued, including giving effect to any penalties and interest with respect thereto, and state taxes in lieu of business fees (including business license fees) and payroll tax credits, income tax credits and similar credits and including an amount equal to the amount of tax distributions actually made to the holders of Equity Interests of such Person or its Restricted Subsidiaries or any direct or indirect parent of such Person or its Restricted Subsidiaries in respect of such period (in each case, to the extent attributable to the operations of such Person and its Subsidiaries), which shall be included as though such amounts had been paid as income taxes directly by such Person or its Restricted Subsidiaries; plus

(b) Consolidated Interest Expense; plus

(c) all depreciation and amortization charges and expenses, including amortization or expense recorded for upfront payments related to any contract signing and signing bonus and incentive payments; plus

(d) the amount of any interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any Restricted Subsidiary of such Person that is not a Wholly Owned Restricted Subsidiary of such Person; plus

 

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(e) the amount of management, monitoring, consulting, transaction and advisory fees (including termination fees) and related indemnities, charges and expenses paid or accrued to or on behalf of any direct or indirect parent of the Borrowers or any of the Permitted Holders, in each case, to the extent permitted by Section 6.18; plus

(f) earn-out obligations incurred in connection with any acquisition or other Investment and paid or accrued during the applicable period; plus

(g) all charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of equity interests held by management and all losses, charges and expenses related to payments made to holders of options or other derivative equity interests in the common equity of such Person or any direct or indirect parent of the Borrowers in connection with, or as a result of, any distribution being made to equityholders of such Person or any of its direct or indirect parents, which payments are being made to compensate such optionholders as though they were equityholders at the time of, and entitled to share in, such distribution; plus

(h) all non-cash losses, charges and expenses, including any write-offs or write-downs; provided that if any such non-cash charge represents an accrual or reserve for potential cash items in any future four-fiscal quarter period, (i) such Person may determine not to add back such non-cash charge in the period for which Consolidated EBITDA is being calculated and (ii) to the extent such Person does decide to add back such non-cash charge, the cash payment in respect thereof in such future four-fiscal quarter period will be subtracted from Consolidated EBITDA for such future four-fiscal quarter period; plus

(i) all costs and expenses in connection with pre-opening and opening and closure and/or consolidation of facilities that were not already excluded in calculating such Consolidated Net Income; plus

(j) restructuring charges, accruals or reserves and business optimization expense, including any restructuring costs and integration costs incurred in connection with the Transactions and any other acquisitions, start-up costs (including entry into new market/channels and new service offerings), costs related to the closure, relocation, reconfiguration and/or consolidation of facilities and costs to relocate employees, integration and transaction costs, retention charges, severance, contract termination costs, recruiting and signing bonuses and expenses, future lease commitments, systems establishment costs, systems, facilities or equipment conversion costs and excess pension charges and consulting fees, expenses attributable to the implementation of costs savings initiatives, costs associated with tax projects/audits and costs consisting of professional consulting or other fees relating to any of the foregoing; plus

(k) Pro Forma Cost Savings; plus

(l) amounts included on Schedule 1.01(a), attached hereto, to the extent such amounts, or amounts of similar type and nature to those listed on Schedule 1.01(a), without duplication, continue to be applicable during such period; plus

(m) the amount of loss or discount on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Financing; plus

(n) with respect to any joint venture that is not a Restricted Subsidiary, an amount equal to the proportion of those items described in clauses (a), (b) and (c) above relating to such joint venture corresponding to such Person’s and the Restricted Subsidiaries’ proportionate share of such joint venture’s Consolidated Net Income (determined as if such joint venture were a Restricted Subsidiary) solely to the extent Consolidated Net Income was reduced thereby;

(2) decreased (without duplication and to the extent increasing such Consolidated Net Income for such period) by (i) non-cash gains or income, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that were deducted (and not added

 

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back) in the calculation of Consolidated EBITDA for any prior period ending after the Closing Date and (ii) the amount of any minority interest income consisting of a Subsidiary loss attributable to minority equity interest of third parties in any non-Wholly Owned Subsidiary (to the extent not deducted from Consolidated Net Income for such period);

(3) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any net cash or realized gains and losses relating to (i) amounts denominated in foreign currencies resulting from the application of IAS 21 (including net realized gains and losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains or losses from related Swap Contracts (entered into in the ordinary course of business or consistent with past practice)) or (ii) any other amounts denominated in or otherwise trued-up to provide similar accounting as if it were denominated in foreign currencies; and

(4) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any gain or loss relating to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice);

provided, that the Parent Borrower may, in its sole discretion, elect to not make any adjustment for any item pursuant to the foregoing clauses (a) through (n) above if any such item individually is less than $2,000,000 in any fiscal quarter.

Consolidated First Lien Net Leverage Ratio” means, on any date of determination, with respect to the Borrower Parties on a consolidated basis, the ratio of (a) Consolidated Funded First Lien Indebtedness (less the Adjusted Cash and Cash Equivalents of the Borrower Parties as of such date) of the Borrower Parties on such date to (b) Consolidated EBITDA of the Borrower Parties for the four fiscal quarter period most recently then ended for which financial statements have been delivered pursuant to Section 6.01(a) or (b), as applicable.

Consolidated Funded First Lien Indebtedness” means Consolidated Funded Indebtedness that is (i) secured by a Lien on the Collateral that does not rank junior in priority (but without regard to the control of remedies) with the Liens on the Collateral securing the Obligations or (ii) in an amount in excess of $100,000,000 (in the aggregate for all such Indebtedness) and secured by a Lien on any asset or property of Holdings or any Restricted Subsidiary that is not either expressly subordinated in right of payment or junior in right of security to the Obligations.

Consolidated Funded Indebtedness” means all Indebtedness of the type described in clauses (a)(i), (a)(ii) (but excluding surety bonds, performance bonds or other similar instruments), (a)(iv) (but solely in respect of the amount of outstanding Indebtedness of the type described in (a)(iv) that is in excess of $5,000,000) and (b) (in respect of Indebtedness of the type described in (a)(i), (a)(ii) (but excluding Indebtedness constituting surety bonds, performance bonds or other similar instruments) and (a)(iv) (but solely in respect of the amount of Indebtedness of the type described in (a)(iv) that is in excess of $5,000,000)) of the definition of “Indebtedness”, of a Person and its Restricted Subsidiaries on a consolidated basis, in an amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with IFRS (but (x) excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with the Transactions or any acquisition and (y) any Indebtedness that is issued at a discount to its initial principal amount shall be calculated based on the entire stated principal amount thereof, without giving effect to any discounts or upfront payments), excluding obligations in respect of letters of credit (including Letters of Credit), bank guarantees and guarantees on first demand, in each case, except to the extent of unreimbursed amounts thereunder. For the avoidance of doubt, it is understood that obligations (i) under Swap Contracts, Cash Management Agreements, and any Receivables Financing and (ii) owed by Unrestricted Subsidiaries, do not constitute Consolidated Funded Indebtedness.

Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(a) the aggregate interest expense of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with IFRS, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including pay in kind interest

 

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payments, amortization of original issue discount, the interest component of Capitalized Lease Obligations and net payments and receipts (if any) pursuant to interest rate Swap Contracts (other than in connection with the early termination thereof) but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, discounts, fees and expenses and expensing of any bridge, commitment or other financing fees, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities, and all discounts, commissions, fees and other charges associated with any Receivables Financing); plus

(b) consolidated capitalized interest of the referent Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

(c) interest income of the referent Person and its Restricted Subsidiaries for such period;

provided that (a) when determining Consolidated Interest Expense in respect of any four-quarter period ending prior to the first anniversary of the Closing Date, Consolidated Interest Expense will be calculated by multiplying the aggregate Consolidated Interest Expense accrued since the Closing Date by 365 and then dividing such product by the number of days from and including the Closing Date to and including the last day of such period and (b) in the case of any Person that became a Restricted Subsidiary of such Person after the commencement of such four-quarter period, the interest expense of such Person paid in cash prior to the date on which it became a Restricted Subsidiary of such Person will be disregarded. For purposes of this definition, interest on Capitalized Lease Obligations will be deemed to accrue at the interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligations in accordance with IFRS.

Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with IFRS and before any reduction in respect of Preferred Stock dividends; provided that (without duplication):

(a) all net after-tax extraordinary, nonrecurring, exceptional or unusual gains, losses, income, expenses and charges in each case as determined in good faith by such Person, and in any event including, without limitation, all restructuring, severance, relocation, retention and completion payments, consolidation, integration or other similar charges and expenses, contract termination costs, system establishment charges, conversion costs, start-up or closure or transition costs, expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to curtailments, settlements or modifications to pension and post-retirement employee benefit plans in connection with the Transactions or any acquisition or Permitted Investment, expenses associated with strategic initiatives, facilities shutdown and opening costs, and any fees, expenses, charges or change in control payments related to the Transactions or any acquisition or Permitted Investment (including any transition-related expenses (including retention or transaction-related bonuses or payments) incurred before, on or after the Closing Date), will be excluded;

(b) all (i) charges and expenses relating to the Transactions, (ii) transaction fees, costs and expenses incurred in connection with the consummation of any equity issuances, investments, acquisitions, dispositions, recapitalizations, mergers, amalgamations, option buyouts and the Incurrence, modification or repayment of Indebtedness permitted to be Incurred hereunder (including any Refinancing Indebtedness in respect thereof) or any amendments, waivers or other modifications under the agreements relating to such Indebtedness or similar transactions, and (iii) without duplication of any of the foregoing, non-operating or non-recurring professional fees, costs and expenses for such period will be excluded;

(c) all net after-tax income, loss, expense or charge from abandoned, closed or discontinued operations and any net after-tax gain or loss on the disposal of abandoned, closed or discontinued operations (and all related expenses) other than in the ordinary course of business (as determined in good faith by such Person) will be excluded;

 

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(d) all net after-tax gain, loss, expense or charge attributable to business dispositions and asset dispositions, including the sale or other disposition of any Equity Interests of any Person, other than in the ordinary course of business (as determined in good faith by such Person), will be excluded;

(e) all net after-tax income, loss, expense or charge attributable to the early extinguishment or cancellation of Indebtedness, Swap Contracts or other derivative instruments (including deferred financing costs written off and premiums paid) will be excluded;

(f) all non-cash gains, losses, expenses or charges attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments will be excluded;

(g) any non-cash or unrealized foreign currency translation or foreign currency transaction gains and losses related to changes in currency exchange rates (including remeasurements of Indebtedness and any net loss or gain resulting from Swap Contracts for currency exchange risk), will be excluded;

(h) (i) the net income for such period of any Person that is not a Restricted Subsidiary of the referent Person or that is accounted for by the equity method of accounting, will be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or converted into cash) with respect to such equity ownership to the referent Person or a Restricted Subsidiary thereof in respect of such period; and (ii) the net income for such period will include any ordinary course dividends or distributions or other payments paid in cash (or converted into cash) with respect to such equity ownership received from any such Person during such period in excess of the amounts included in subclause (i) above;

(i) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies will be excluded;

(j) the effects of purchase accounting, fair value accounting or recapitalization accounting adjustments (including the effects of such adjustments pushed down to the referent Person and its Restricted Subsidiaries) resulting from the application of purchase accounting, fair value accounting or recapitalization accounting in relation to the Transactions or any acquisition consummated before or after the Closing Date, and the amortization, write-down or write-off of any amounts thereof, net of taxes, will be excluded;

(k) all non-cash impairment charges and asset write-ups, write-downs and write-offs, in each case pursuant to IFRS, and the amortization of intangibles arising from the application of IFRS will be excluded;

(l) all non-cash expenses realized in connection with or resulting from equity or equity-linked compensation plans, employee benefit plans or agreements or post-employment benefit plans or agreements, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other similar rights will be excluded;

(m) any costs or expenses incurred in connection with the payment of dividend equivalent rights to option holders pursuant to any management equity plan, stock option plan or any other management or employee benefit plan or agreement or post-employment benefit plan or agreement will be excluded;

(n) accruals and reserves for liabilities or expenses that are established or adjusted as a result of the Transactions within 24 months after the Closing Date will be excluded;

(o) all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, fees and expenses, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities, and expensing of any bridge, commitment or other financing fees (including in connection with a transaction undertaken but not completed), will be excluded;

 

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(p) all discounts, commissions, fees and other charges (including interest expense) associated with any Receivables Financing will be excluded;

(q) (i) the non-cash portion of “straight-line” rent expense will be excluded and (ii) the cash portion of “straight-line” rent expense that exceeds the amount expensed in respect of such rent expense will be included;

(r) expenses and lost profits with respect to liability or casualty events or business interruption will be disregarded to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer, but only to the extent that such amount (i) has not been denied by the applicable carrier in writing and (ii) is in fact reimbursed within 365 days of the date on which such liability was discovered or such casualty event or business interruption occurred (with a deduction for any amounts so added back that are not reimbursed within such 365-day period); provided that any proceeds of such reimbursement when received will be excluded from the calculation of Consolidated Net Income to the extent the expense or lost profit reimbursed was previously disregarded pursuant to this clause (q);

(s) losses, charges and expenses that are covered by indemnification or other reimbursement provisions in connection with any asset disposition will be excluded to the extent actually reimbursed, or, so long as such Person has made a determination that a reasonable basis exists for indemnification or reimbursement, but only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days);

(t) non-cash charges or income relating to adjustments to deferred tax asset valuation allowances will be excluded;

(u) cash dividends or returns of capital from Investments (such return of capital not reducing the ownership interest in the underlying Investment), in each case received during such period, to the extent not otherwise included in Consolidated Net Income for that period or any prior period subsequent to the Closing Date will be included;

(v) solely for the purpose of determining the amount available for Restricted Payments under clause (c) of the first paragraph of Section 7.05, and without duplication of provisions under clause (c) of the first paragraph of Section 7.05 with respect to cash dividends or returns on Investments, the net income (or loss) for such period of any Restricted Subsidiary (other than the Subsidiary Borrower or a Guarantor) will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to such Person or any of its Restricted Subsidiaries in respect of such period, to the extent not already included therein (subject, in the case of a dividend to another Restricted Subsidiary (other than the Subsidiary Borrower or a Guarantor), to the limitation contained in this clause);

(w) any Initial Public Company Costs will be excluded; and

(x) any non-cash interest expense and non-cash interest income, in each case to the extent there is no associated cash disbursement or receipt, as the case may be, before the latest maturity date of any then outstanding Term Loan Tranche, shall be excluded;

provided that the Parent Borrower may, in its sole discretion, elect to not make any adjustment for any item pursuant to clauses (a) through (x) above if any such item individually is less than $2,000,000 in any fiscal quarter.

 

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For the purpose of Section 7.05 only, there shall be excluded from Consolidated Net Income any income arising from the sale or other disposition of Restricted Investments, from repurchases or redemptions of Restricted Investments, from repayments of loans or advances which constituted Restricted Investments or from any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries, in each case to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause (c)(v) or (c)(vi) of the first paragraph of Section 7.05.

Consolidated Net Tangible Assets” means, with respect to any Person and its Restricted Subsidiaries, the aggregate amount of assets (including deferred tax assets (without reducing such deferred tax assets by deferred tax liabilities), and less applicable reserves and other properly deductible items) after deducting therefrom all goodwill, indemnification assets in connection with the Transactions, trade names, trademarks, patents, unamortized debt discount and expense, investments and other like intangibles, all as set forth in the most recent consolidated balance sheet of the Parent Borrower and its Restricted Subsidiaries and computed in accordance with IFRS, determined on a Pro Forma Basis.

Consolidated Total Assets” means the total consolidated assets of the Parent Borrower and its Restricted Subsidiaries, as shown on the most recent consolidated balance sheet of the Parent Borrower and its Restricted Subsidiaries, determined on a Pro Forma Basis.

Consolidated Total Net Leverage Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Funded Indebtedness of the Parent Borrower and its Restricted Subsidiaries as of such date minus (y) the amount of Adjusted Cash and Cash Equivalents of the Parent Borrower and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Parent Borrower for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis.

Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds:

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, loan agreement, indenture, mortgage, deed of trust, lease, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

Contribution Indebtedness” means Indebtedness of the Parent Borrower or any Restricted Subsidiary in an aggregate principal amount not greater than the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Parent Borrower (other than Cure Equity) or any Restricted Subsidiary (other than, in the case of such Restricted Subsidiary, contributions by the Parent Borrower or any other Restricted Subsidiary to its capital) after the Closing Date and designated as a Cash Contribution Amount; provided that such Contribution Indebtedness (a) is Incurred within 210 days after the making of such cash contributions and (b) is so designated as “Contribution Indebtedness” pursuant to a certificate signed by a Responsible Officer of the Parent Borrower on the Incurrence date thereof.

 

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Controlled Foreign Subsidiary” means any Subsidiary of (i) the Subsidiary Borrower or (ii) a Guarantor that is organized under the laws of the United States, any state thereof or the District of Columbia, in each case, that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

Corresponding Liabilities” shall mean the Obligations of a Loan Party, excluding its Parallel Liability.

Credit Agreement” means (i) this Agreement and (ii) whether or not this Agreement remains outstanding, if designated by the Borrowers to be included in the definition of “Credit Agreement,” one or more (A) debt facilities, indentures or commercial paper facilities providing for revolving credit loans, term loans, notes, debentures, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, notes, mortgages, guarantees, collateral documents, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different borrower(s) or issuer(s) and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, increased (provided that such increase in borrowings is permitted under this Agreement), replaced or refunded in whole or in part from time to time and whether by the same or any other agent, lender or investor or group of lenders or investors.

Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

Cure Amount” has the meaning specified in Section 8.03(a).

Cure Equity” has the meaning specified in Section 8.03(a).

Cure Right” has the meaning specified in Section 8.03(a).

Debt Fund Affiliate” means any Affiliate of a Sponsor (other than a natural person, Holdings or any of its Subsidiaries) that is primarily engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which no Sponsor, directly or indirectly, possesses the power to direct or cause the direction of the investment policies of any such Affiliate.

Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, judicial management, 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.

Declined Amounts” has the meaning specified in Section 2.05(c).

Declining Lender” has the meaning specified in Section 2.05(c).

Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

Default Rate” means an interest rate equal to (after as well as before judgment), (a) with respect to any overdue principal for any Loan (other than a Benchmark PBOC Rate Loan), the applicable interest rate for such Loan plus 2.00% per annum (provided that with respect to Eurocurrency Rate Loans, the determination of the applicable interest rate is subject to Section 2.02(c) to the extent that Eurocurrency Rate Loans may not be converted to, or continued as, Eurocurrency Rate Loans, pursuant thereto), (b) with respect to any Benchmark PBOC Rate Loan or any interest or fee relating thereto (including any Redenomination Fee in respect of any Redenomination Event relating to such Benchmark PBOC Rate Loan), 200% of the Benchmark PBOC Rate applicable to such Benchmark PBOC Rate Loan and (c) with respect to any other overdue amount, including overdue interest, the interest rate applicable to Base Rate Loans of the same Class as the Loan under which such amount is overdue plus 2.00% per annum, in each case, to the fullest extent permitted by applicable Laws.

 

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Defaulting Lender” means, subject to Section 2.17(b), any Lender that (a) has failed to perform any of its funding obligations hereunder, including in respect of its Loans or participations in respect of Letters of Credit within three Business Days of the date required to be funded by it hereunder, (b) has notified the Parent Borrower or the Applicable Agent 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, solely with respect to a Revolving Credit Lender, under other agreements generally in which it commits to extend credit, (c) has failed, within three Business Days after reasonable request by the Applicable Agent, to confirm in a manner satisfactory to the Applicable Agent that it will comply with its funding obligations (provided that the Administrative Agent shall request such confirmation upon reasonable request from any L/C Issuer; provided further that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such confirmation by the Applicable Agent) or (d) has, or has a direct or indirect parent company that has, other than via an Undisclosed Administration, (i) become the subject of a proceeding under any Debtor Relief Law, (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 subject to a Bail-In Action; provided that no Lender shall be a Defaulting Lender solely by virtue of (x) the ownership or acquisition by a Governmental Authority of any Equity Interest in that Lender or any direct or indirect parent company thereof so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within 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 with such Lender, or (y) the occurrence of any of the events described in clause (d)(i), (d)(ii) or (d)(iii) of this definition which in each case has been dismissed or terminated prior to the date of this Agreement. Any determination by the Applicable Agent (or the Required Lenders to the extent that the Applicable Agent is the Defaulting Lender) that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b)) upon delivery of written notice of such determination to the Applicable Agent, the Parent Borrower, each L/C Issuer and each Lender, as applicable.

Designated Gross Amount” means the amount notified by a Borrower to the Administrative Agent upon the establishment of a Multi-account Overdraft as being the maximum amount of Gross Outstandings that will, at any time, be outstanding under that Multi-account Overdraft.

Designated Loans” has the meaning specified in Section 10.28(a).

Designated Net Amount” means the amount notified by a Borrower to the Administrative Agent upon the establishment of a Multi-account Overdraft as being the maximum amount of Net Outstandings that will, at any time, be outstanding under that Multi-account Overdraft.

Designated Non-Cash Consideration” means the Fair Market Value of non-cash consideration received by the Parent Borrower or any of the Restricted Subsidiaries in connection with a Disposition made pursuant to Section 7.04(2)(c) that is designated as “Designated Non-Cash Consideration” on the date received pursuant to a certificate of a Responsible Officer of the Parent Borrower, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on or conversion of such Designated Non-Cash Consideration.

Designated PRC Subsidiary” means initially, Atotech (China) Chemicals, Ltd. or such other Restricted Subsidiary incorporated in the PRC that is identified by the Parent Borrower (selected in consultation with the Redenomination Term Facilities Administrative Agent) pursuant to a written notice by Parent Borrower to the Redenomination Term Facilities Administrative Agent.

Designated Preferred Stock” means Preferred Stock of Holdings or any direct or indirect parent of Holdings, as applicable (other than Excluded Equity), that is issued after the Closing Date for cash and is so designated as Designated Preferred Stock, pursuant to an officer’s certificate of the Parent Borrower, on the issuance date thereof, the cash proceeds of which are contributed to the capital of the Parent Borrower (if issued by Holdings or any other direct or indirect parent of Holdings) and excluded from the calculation set forth in clause (c) of the first paragraph of Section 7.05.

 

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Designated Taiwan Subsidiary” means any Restricted Subsidiary organized under the laws of Taiwan.

Designating Lender” has the meaning specified in Section 10.28(a).

Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition of any property by any Person (including any Sale/Leaseback Transaction and any issuance of Capital Stock by a Restricted Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith; provided, however, that “Disposition” and “Dispose” shall not be deemed to include any issuance by Holdings of any of its Capital Stock to another Person.

Disqualified Institution” means (a) each person identified as a “Disqualified Institution” on a list made available to the Administrative Agent by the Borrowers prior to the general launch of syndication of the Initial Term B-1 Loans, (b) any Company Competitor identified on a list made available to the Administrative Agent by the Borrowers from time to time and (c) as to any entity referenced in each of clause (a) and (b) above (the “Primary Disqualified Institution”), any of such Primary Disqualified Institution’s Affiliates readily identifiable as such by name, but excluding any Affiliate that is primarily engaged in, or that advises funds, or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the Primary Disqualified Institution does not, directly or indirectly, possess the power to direct or cause the direction of such entity. Notwithstanding the foregoing, any list of Disqualified Institutions shall only be required to be available to any Lender on the Platform or another similar electronic system to the extent the Parent Borrower desires to prevent any such Disqualified Institution from being a Lender or a Participant. For purposes of clauses (a) and (b), such list shall be made available to the Administrative Agent and the Redenomination Term Facilities Administrative Agent from time to time and to any Lender upon request thereof.

Disqualified Stock” means, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is puttable, redeemable or exchangeable), in each case, at the option of the holder thereof or upon the happening of any event:

(1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Equity Interests than the asset sale and change of control provisions in the Senior Notes (as in effect on the date hereof) and any purchase requirement triggered thereby may not become operative until compliance with, in the case of an asset sale, the provisions of Section 7.04 or, in the case of a change of control, the repayment in full of the Obligations),

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock, or

(3) is redeemable at the option of the holder thereof, in whole or in part,

in each case prior to the date that is 91 days after the Latest Maturity Date of the Term Loans at the time of issuance of the respective Disqualified Stock; provided that only the portion of Equity Interests that so mature or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Parent Borrower or its Subsidiaries or a direct or indirect parent of the Parent Borrower or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Parent Borrower or its Subsidiaries or a direct or indirect parent of the Parent Borrower in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided, further, that any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

 

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Dollar” and “$” mean lawful money of the United States.

Dollar Amount” means, at any time:

(i) with respect to any Loan denominated in Dollars, the principal amount thereof then outstanding (or in which such participation is held);

(ii) with respect to any Loan denominated in an Alternative Currency (other than RMB), the principal amount thereof then outstanding in the relevant Alternative Currency, converted to Dollars in accordance with Section 1.08; and

(iii) with respect to any Loan denominated in RMB (other than a Redenominated Term B-3 Loan), the principal amount thereof then outstanding in RMB, converted to Dollars in accordance with the RMB Exchange Rate as of the date on which such Loan is made;

(iv) with respect to any Redenominated Term B-3 Loan, the principal amount thereof then outstanding in RMB, converted to Dollars in accordance with the RMB Redenomination Exchange Rate (in respect of the Relevant Redenomination Event relating to such Redenominated Term B-3 Loan); and

(v) in relation to an Ancillary Commitment, the amount specified as such in the notice delivered to the Administrative Agent by the Parent Borrower pursuant to Section 2.21(a) (or, if the amount specified is not denominated in the Dollars, that amount converted into the Dollars at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Ancillary Commencement Date for that Ancillary Facility or, if later, the date the Administrative Agent receives the notice of the Ancillary Commitment in accordance with the terms of this Agreement).

Dutch Auction” means an auction (an “Auction”) conducted by Holdings or one of its Subsidiaries in order to purchase any Term Loans under a Tranche (the “Purchase”) in accordance with the following procedures or such other procedures as may be agreed to between the Administrative Agent and the Borrowers:

(a) Notice Procedures. In connection with any Auction, the Borrowers shall provide notification to the Administrative Agent (for distribution to the Appropriate Lenders) of the Term Loans under such Tranche that will be the subject of the Auction (an “Auction Notice”). Each Auction Notice shall be in a form reasonably acceptable to the Administrative Agent and shall specify (i) the total cash value of the bid, in a minimum amount of $10,000,000 with minimum increments of $2,000,000 in excess thereof (the “Auction Amount”) and (ii) the discounts to par, which shall be expressed as a range of percentages of the par principal amount of the Term Loans under such Tranche at issue (the “Discount Range”), representing the range of purchase prices that could be paid in the Auction.

(b) Reply Procedures. In connection with any Auction, each applicable Lender may, in its sole discretion, participate in such Auction by providing the Administrative Agent with a notice of participation (the “Return Bid”) which shall be in a form reasonably acceptable to the Administrative Agent and shall specify (i) a discount to par that must be expressed as a price (the “Reply Discount”), which must be within the Discount Range, and (ii) a principal amount of the applicable Loans such Lender is willing to sell, which must be in increments of $2,000,000 or in an amount equal to such Lender’s entire remaining amount of the applicable Loans (the “Reply Amount”). Lenders may only submit one Return Bid per Auction. In addition to the Return Bid, each Lender wishing to participate in such Auction must execute and deliver, to be held in escrow by the Administrative Agent, an assignment and acceptance agreement in a form reasonably acceptable to the Administrative Agent.

(c) Acceptance Procedures. Based on the Reply Discounts and Reply Amounts received by the Administrative Agent, the Administrative Agent, in consultation with the Borrowers, will determine the applicable discount (the “Applicable Discount”) for the Auction, which shall be the lowest Reply Discount for which Holdings or its Subsidiary, as applicable, can complete the Auction at the Auction Amount; provided that, in the event that the Reply Amounts are insufficient to allow Holdings or its Subsidiary, as

 

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applicable, to complete a purchase of the entire Auction Amount (any such Auction, a “Failed Auction”), Holdings or such Subsidiary shall either, at its election, (i) withdraw the Auction or (ii) complete the Auction at an Applicable Discount equal to the highest Reply Discount. Holdings or its Subsidiary, as applicable, shall purchase the applicable Loans (or the respective portions thereof) from each applicable Lender with a Reply Discount that is equal to or greater than the Applicable Discount (“Qualifying Bids”) at the Applicable Discount; provided that if the aggregate proceeds required to purchase all applicable Loans subject to Qualifying Bids would exceed the Auction Amount for such Auction, Holdings or its Subsidiary, as applicable, shall purchase such Loans at the Applicable Discount ratably based on the principal amounts of such Qualifying Bids (subject to adjustment for rounding as specified by the Administrative Agent). Each participating Lender will receive notice of a Qualifying Bid as soon as reasonably practicable but in no case later than five Business Days from the date the Return Bid was due.

(d) Additional Procedures. Once initiated by an Auction Notice, Holdings or any of its Subsidiaries, as applicable, may not withdraw an Auction other than a Failed Auction. Furthermore, in connection with any Auction, upon submission by a Lender of a Qualifying Bid, such Lender will be obligated to sell the entirety or its allocable portion of the Reply Amount, as the case may be, at the Applicable Discount. The Purchase shall be consummated pursuant to and in accordance with Section 10.07 and, to the extent not otherwise provided herein, shall otherwise be consummated pursuant to procedures (including as to timing, rounding and minimum amounts, Interest Periods, and other notices by Holdings or such Subsidiary, as applicable) reasonably acceptable to the Administrative Agent and the Parent Borrower.

Dutch Security Agreement” means, collectively, (i) a Dutch law governed notarial deed of pledge of shares between Holdings as pledgor, the Collateral Agent as pledgee and Parent Borrower as the company in the capital of which shares are being pledged and (ii) a Dutch law governed omnibus deed of pledge in respect of, amongst other things, bank accounts, insurance receivables, intercompany receivables, intellectual property collateral, receivables and moveable assets between, amongst others, the Holding and Parent Borrower as pledgors and the Collateral Agent as pledgee.

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.

Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.07(b) (subject to receipt of such consents, if any, as may be required for the assignment of the applicable Loan and/or Commitments to such Person under Section 10.07(b)(iii)).

Enforcement Event” has the meaning specified in Section 8.02.

Environmental Laws” means any and all applicable federal, state, local and foreign statutes, laws (including common law), regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses or governmental restrictions relating to pollution, the protection of the environment, human health (to the extent relating to exposure to Hazardous Materials) or safety, including those related to Hazardous Materials, air emissions and discharges to public pollution control systems.

 

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Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, monitoring or oversight by a Governmental Authority, fines, penalties or indemnities), of the Borrowers, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) human exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other binding consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

Equity Contribution” has the meaning specified in the definition of “Transactions.”

Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any Capital Stock that arises only by reason of the happening of a contingency or any debt security that is convertible into, or exchangeable for, Capital Stock).

Equity Issuance” means any issuance by any Person to any other Person of (a) its Equity Interests for cash, (b) any of its Equity Interests pursuant to the exercise of options or warrants, (c) any of its Equity Interests pursuant to the conversion of any debt securities to equity or (d) any options or warrants relating to its Equity Interests.

ERISA” means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, each as amended or modified from time to time.

ERISA Affiliate” means any Person who together with any Loan Party is treated as a single employer within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code) or Section 4001 of ERISA.

ERISA Event” means (a) a Reportable Event with respect to a Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA) or insolvent (within the meaning of Section 4245 of ERISA); (d) the filing of a notice of intent to terminate or the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA, respectively, (e) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; (g) the determination that any Plan is considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; (h) the determination that any Multiemployer Plan is considered a plan in “endangered”, “critical”, or “critical and declining” status within the meaning of Section 432 of the Code or Section 305 of ERISA; (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate; (j) the conditions for the imposition of a Lien under Section 430(k) of the Code or Section 303(k) of ERISA shall have been met with respect to any Plan; (k) any Non-U.S. Benefit Event or (l) any other event or condition with respect to a Plan or Multiemployer Plan that could result in liability of the Borrowers or any Subsidiary.

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 Rate” means, in the case of any Eurocurrency Rate Loan for any Interest Period:

(a) in the case of any Eurocurrency Rate Loan denominated in Dollars:

 

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(i) the rate per annum determined by the Applicable Agent to be the offered rate which appears on the page of the Reuters screen (or any successor thereto) which displays the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over administration of that rate) (such page currently being the LIBOR01 page) for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London time), two Business Days prior to the first day of such Interest Period;

(ii) in the event the rate referenced in the preceding clause (a)(i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Applicable Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period; and

(iii) if Screen Rates are quoted under either of the preceding clauses (a)(i) or (a)(ii), but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate; or

(b) in the case of any Eurocurrency Rate Loan denominated in Euros:

(i) the rate per annum determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters screen (or any successor thereto) which displays the euro interbank offered rate administered by the Banking Federation of the European Union (or any other person which takes over administration of that rate) (such page currently being the EURIBOR01 page) for deposits in Euros (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (Brussels time) two Business Days prior to the first day of such Interest Period;

(ii) in the event the rate referenced in the preceding clause (b)(i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Euros, determined as of approximately 11:00 a.m. (Brussels time) two Business Days prior to the first day of such Interest Period; and

(iii) if Screen Rates are quoted under either of the preceding clauses (b)(i) or (b)(ii), but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate; or

(c) in the case of any Eurocurrency Rate Loan denominated in Australian Dollars,

(i) the rate per annum determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters screen (or any successor thereto) which displays the Australian Bank Bill Swap Benchmark Rate administered by the Australian Securities Exchange (or any other person which takes over administration of that rate) (such page currently being the BBSW page) for deposits in Australian Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (Sydney time) two Business Days prior to the first day of such Interest Period;

(ii) in the event the rate referenced in the preceding clause (c)(i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Australian Dollars, determined as of approximately 11:00 a.m. (Sydney time) two Business Days prior to the first day of such Interest Period; and

 

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(iii) if Screen Rates quoted under either of the preceding clauses (c)(i) or (c)(ii) are quoted, but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate; or

(d) in the case of any Eurocurrency Rate Loan denominated in Canadian Dollars:

(i) the rate per annum equal to the Canadian deposit offered rate which, in turn, means on any day the sum of the annual rate of interest determined with reference to the arithmetic average of the discount rate quotations of all institutions listed in respect of the relevant Interest Period for Canadian Dollar denominated bankers’ acceptances displayed and identified as such on the applicable Reuters screen (or any successor thereto) (such page currently being the CDOR page), determined by the Administrative Agent as of approximately 11:00 a.m. (Toronto time) two Business Days prior to the first day of such Interest Period;

(ii) if the rate referenced in the preceding clause (d)(i) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate reasonably determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average rate for deposits in Canadian Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (Toronto time) two Business Days prior to the first day of such Interest Period; and

(iii) if Screen Rates are quoted under either of the preceding clauses (d)(i) or (d)(ii), but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate; or

(e) in the case of any Eurocurrency Rate Loan denominated in Swedish Krona:

(i) the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Swedish Krona, determined as of approximately 11:00 a.m. (Copenhagen time) two Business Days prior to the first day of such Interest Period; or

(ii) in the event the rate referenced in the preceding clause (e)(i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Swedish Krona, determined as of approximately 11:00 a.m. (Copenhagen time) two Business Days prior to the first day of such Interest Period; and

(iii) if Screen Rates are quoted under either of the preceding clauses (e)(i) or (e)(ii), but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate; or

(f) in the case of any Eurocurrency Rate Loan denominated in Singapore Dollars:

(i) the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Singapore Dollars, determined as of approximately 11:00 a.m. (Singapore time) two Business Days prior to the first day of such Interest Period; and

 

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(ii) in the event the rate referenced in the preceding clause (f)(i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays the Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Singapore Dollars, determined as of approximately 11:00 a.m. (Singapore time) two Business Days prior to the first day of such Interest Period; and

(iii) if Screen Rates are quoted under either of the preceding clauses (f)(i) or (f)(ii), but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate; or

(g) in the case of any Eurocurrency Rate Loan denominated in an Alternative Currency other than Euros, Australian Dollars, Canadian Dollars, Swedish Krona or Singapore Dollars:

(i) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the applicable Reuters screen which displays the London interbank offered rate administered by ICE Benchmark Administration Limited (or any successor thereto) that displays an offered rate administered by ICE Benchmark Administration Limited for deposits in such Alternative Currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period;

(ii) if the rate referenced in the preceding clause (g)(i) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate reasonably determined by the Administrative Agent to be the offered rate on such other page or other service that displays an offered rate administered by ICE Benchmark Administration Limited for deposits in such Alternative Currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period; and

(iii) if Screen Rates are quoted under either of the preceding clauses (g)(i) or (g)(ii), but there is no such quotation for the Interest Period elected, the Screen Rate shall be equal to the applicable Interpolated Rate.

Eurocurrency Rate Borrowing” means a Borrowing comprising Eurocurrency Rate Loans.

Eurocurrency Rate Loan” means a Loan, whether denominated in Dollars or in an Alternative Currency, that bears interest at a rate based on the applicable Adjusted Eurocurrency Rate.

Euros” means the single currency of the Participating Member States.

Event of Default” has the meaning specified in Section 8.01.

Excess Cash Flow” means, with respect to any Excess Cash Flow Period, an amount, not less than zero, equal to:

(a) Consolidated Net Income of the Borrower Parties for such Excess Cash Flow Period, minus

(b) the sum, without duplication (in each case, for the Parent Borrower and the Restricted Subsidiaries on a consolidated basis), of:

 

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(i) repayments, prepayments, repurchases, redemptions and other cash payments made with respect to the principal of any Indebtedness (including principal representing capitalized interest) or the principal component of any Capitalized Lease Obligations of such Person or any of its Restricted Subsidiaries during such period (excluding voluntary and mandatory prepayments of Term Loans, but including all premium, make-whole or penalty payments paid in cash (to the extent such payments are not expensed during such period or are not deducted in calculating Consolidated Net Income and such payments are not otherwise prohibited under this Agreement) and all repayments with respect to revolving Indebtedness to the extent accompanied by a corresponding reduction in commitments); provided that, with respect to any mandatory prepayment of Indebtedness (other than, for the avoidance of doubt, Term Loans), such prepayments shall only be deducted pursuant to this clause (i) to the extent not deducted in the computation of net proceeds in respect of the asset disposition or condemnation giving rise thereto; minus

(ii) (A) cash payments made by such Person or any of its Restricted Subsidiaries during such period in respect of capital expenditures, acquisitions of intellectual property, acquisitions, Investments and Restricted Payments (excluding (x) Restricted Payments made pursuant to clause (c)(i)(B) of the first paragraph of Section 7.05 (other than such Restricted Payments made to pay interest expense for Qualified Holding Company Indebtedness or Indebtedness of any Parent Holding Company), and pursuant to clauses (7)(B) and (21) of the second paragraph of Section 7.05 and (y) any Permitted Investments pursuant to clauses (1), (2), (17), (18) and (24) of the definition thereof) and (B) cash payments that such Person or any of its Restricted Subsidiaries has committed to make or is required to make in respect of capital expenditures, acquisitions of intellectual property, acquisitions and Investments within 365 days after the end of such period pursuant to binding obligations entered into prior to or during such period; provided that amounts described in this clause (B) will not reduce Excess Cash Flow in subsequent periods, and, to the extent not paid, will increase Excess Cash Flow in the subsequent period; minus

(iii) (A) cash payments made by such Person or any of its Restricted Subsidiaries during such period in respect of Taxes (including distributions to any Parent Holding Company in respect of Taxes), to the extent such payments exceed the amount of tax expense deducted in calculating such Consolidated Net Income, and (B) cash payments that such Person or any of its Restricted Subsidiaries will be required to make in respect of Taxes (including distributions to any Parent Holding Company in respect of Taxes) within 180 days after the end of such period; provided that amounts described in this clause (B) will not reduce Excess Cash Flow in subsequent periods, and, to the extent not paid, will increase Excess Cash Flow in the subsequent period; minus

(iv) all cash payments and other cash expenditures made by such Person or any of its Restricted Subsidiaries during such period (A) with respect to items that were excluded in the calculation of such Consolidated Net Income pursuant to clauses (a) through (x) of the definition of Consolidated Net Income or (B) that were not expensed during such period in accordance with IFRS; minus

(v) all non-cash credits or gains included in calculating such Consolidated Net Income (including insured or indemnified losses referred to in clauses (r) and (s) of Consolidated Net Income to the extent not reimbursed in cash during such period); minus

(vi) an amount equal to the sum of (A) the increase in the Working Capital of such Person during such period (measured as the excess, if any, of Working Capital at the end of such Excess Cash Flow Period minus Working Capital at the beginning of such Excess Cash Flow Period), if any, plus (B) the increase in long-term accounts receivable of such Person and its Restricted Subsidiaries, if any; minus

(vii) cash payments made in satisfaction of noncurrent liabilities (excluding payments of Indebtedness for borrowed money) not made directly or indirectly using proceeds, payments or any other amounts available from events or circumstances that were not included in determining Consolidated Net Income during such period; minus

 

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(viii) to the extent not deducted in arriving at Consolidated Net Income, cash fees, expenses and purchase price adjustments incurred in connection with the Transactions, any acquisition consummated before or after the Closing Date or any Permitted Investment, Equity Issuance or debt issuance (whether or not consummated) and any Restricted Payment made to pay any of the foregoing incurred by Holdings; minus

(ix) the amount of cash payments made in respect of pensions and other postemployment benefits in such period to the extent not deducted in arriving at such Consolidated Net Income; minus

(x) cash payments made by such Person or any of its Restricted Subsidiaries during such period in respect of items for which an accrual or reserve was established in a prior period, in each case to the extent such payments are not expensed during such period or are not deducted in calculating Consolidated Net Income; plus

(xi) all non-cash charges, losses and expenses (including, without limitation, taxes) of such Person or any of its Restricted Subsidiaries that were deducted in calculating such Consolidated Net Income (provided, in each case, that if any non-cash charge represents an accrual or reserve for cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Excess Cash Flow in such future period); plus

(xii) an amount equal to the sum of (A) the decrease in Working Capital of such Person during such period (measured as the excess, if any, of Working Capital at the beginning of such Excess Cash Flow Period minus Working Capital at the end of such Excess Cash Flow Period), if any, plus (B) the decrease in long-term accounts receivable of such Person and its Restricted Subsidiaries, if any (other than any such decreases contemplated by clauses (A) and (B) of this clause (xii) that are directly attributable to acquisitions of a Person or business unit by a Borrower and its Restricted Subsidiaries during such period); plus

(xiii) such amounts referred to in clauses (b)(i) and (b)(ii) above to the extent funded with the proceeds of the issuance or the incurrence of Indebtedness (other than proceeds of revolving loans) and the sale or issuance of Equity Interests.

Excess Cash Flow Period” means any fiscal year of the Parent Borrower, commencing with the fiscal year ending on December 31, 2018.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

Exchange Agent” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Parent Borrower (whether or not an Affiliate of the Administrative Agent), after consultation with the Administrative Agent, to act as an arranger in connection with any Permitted Debt Exchange pursuant to Section 2.19; provided that the Parent Borrower shall not designate the Administrative Agent as the Exchange Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Exchange Agent); provided, further, that neither the Parent Borrower nor any of their Affiliates may act as the Exchange Agent.

Exchange Rate” means on any day with respect to any currency other than Dollars, the rate at which such currency may be exchanged into Dollars, as set forth at approximately 11:00 a.m. (London time) on such day on the Reuters “FXFIX” Page for such currency; in the event that such rate does not appear on any Reuters “FXFIX” Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrowers, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m. on such date for the purchase of Dollars for delivery two Business Days later.

 

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Excluded Accounts” means (1) payroll, healthcare and other employee wage and benefit accounts, (2) tax accounts, including, without limitation, sales tax accounts, (3) escrow, defeasance and redemption accounts, (4) fiduciary or trust accounts, (5) disbursement accounts and (6) the funds or other property held in or maintained for such purposes in any such account described in clauses (1) through (5).

Excluded Contributions” means the net cash proceeds and Cash Equivalents, or the Fair Market Value of other assets, received by the Parent Borrower after the Closing Date from:

(1) contributions to its common equity capital, and

(2) the sale of Capital Stock (other than Excluded Equity) of the Parent Borrower,

in each case designated as Excluded Contributions pursuant to an officer’s certificate of a Responsible Officer, or that has been utilized to make a Restricted Payment pursuant to clause (2) of the second paragraph of Section 7.05. Excluded Contributions will be excluded from the calculation set forth in clause (c) of the first paragraph of Section 7.05.

Excluded Equity” means (i) Disqualified Stock, (ii) any Equity Interests issued or sold to a Restricted Subsidiary or any employee stock ownership plan or trust established by Holdings or any of its Subsidiaries or a direct or indirect parent of Holdings (to the extent such employee stock ownership plan or trust has been funded by Holdings or any Subsidiary or a direct or indirect parent of Holdings), (iii) any Equity Interest that has already been used or designated (x) as (or the proceeds of which have been used or designated as) a Cash Contribution Amount, Designated Preferred Stock, an Excluded Contribution or Refunding Capital Stock, or (y) to increase the amount available under clause (4)(a) of the second paragraph under Section 7.05 or clause (14) of the definition of “Permitted Investments” or is proceeds of Indebtedness referred to in clause (13)(b) of the second paragraph in Section 7.05 and (iv) the Equity Contribution.

Excluded Property” means, with respect to any Loan Party, (a) (1) any fee-owned real property not constituting Material Real Property and any leased or subleased real property and (2) any portion of Material Real Property that contains improvements located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a “special flood hazard area”, (b) with respect to any U.S. Loan Party, motor vehicles and other assets subject to certificates of title to the extent a Lien thereon cannot be perfected by filing a UCC financing statement, letter of credit rights (other than letter of credit rights that can be perfected by the filing of a UCC financing statement) with a value not in excess of $5,000,000 in the aggregate and commercial tort claims with a value not in excess of $5,000,000 in the aggregate, (c) assets to the extent a security interest in such assets would result in material adverse tax consequences (including, without limitation, as a result of the operation of Section 956 of the Code or any similar law or regulation in any applicable jurisdiction), or material adverse regulatory consequences, in each case, as reasonably determined by the Borrowers and notified to the Administrative Agent, (d) pledges of, and security interests in, certain assets, in favor of the Collateral Agent which are prohibited by applicable Law; provided, that (i) any such limitation described in this clause (d) on the security interests granted under the Collateral Documents shall only apply to the extent that any such prohibition could not be rendered ineffective pursuant to the UCC or any other applicable Law or principles of equity and shall not apply (where the UCC is applicable) to any proceeds or receivables thereof, the assignment of which is expressly deemed effective under the UCC notwithstanding such prohibition and (ii) in the event of the termination or elimination of any such prohibition contained in any applicable Law, a security interest in such assets shall be automatically and simultaneously granted under the applicable Collateral Documents and shall be included as Collateral, (e) any governmental licenses (but not the proceeds thereof) or state or local franchises, charters and authorizations, to the extent security interests in favor of the Collateral Agent in such licenses, franchises, charters or authorizations are prohibited or restricted thereby, in each case, except to the extent such prohibition is unenforceable after giving effect to the applicable anti-assignment provisions of the UCC or other applicable Law other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC or other applicable Law notwithstanding such prohibition; provided that (i) any such limitation described in this clause (e) on the security interests granted under the Collateral Documents shall only apply to the extent that any such prohibition or restriction could not be rendered ineffective pursuant to the UCC or any other applicable Law or principles of equity and (ii) in the event of the termination or elimination of any such prohibition or restriction contained in any applicable license, franchise, charter or authorization, a security interest in such licenses, franchises, charters or

 

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authorizations shall be automatically and simultaneously granted under the applicable Collateral Documents and shall be included as Collateral, (f) Equity Interests in (A) any Person other than Restricted Subsidiaries of Holdings to the extent and for so long as the pledge thereof in favor of the Collateral is not permitted by the terms of such Person’s joint venture agreement or other applicable Organization Documents; provided, that such prohibition exists on the Closing Date or at the time such Equity Interests are acquired (so long as such prohibition did not arise in contemplation of the Closing Date or such acquisition), (B) any not-for-profit Subsidiary, (C) any captive insurance Subsidiary and (D) any special purpose securitization vehicle (or similar entity), including any Receivables Subsidiary, (g) any lease, license or other agreement or any property subject to a purchase money security interest, Capitalized Lease Obligation or similar arrangement in each case permitted to be incurred under this Agreement, to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money arrangement or create a right of termination in favor of any other party thereto (other than a Loan Party or their Subsidiaries), in each case, except to the extent such prohibition is unenforceable after giving effect to the applicable anti-assignment provisions of the UCC or other applicable Law, other than (where the UCC is applicable) proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC notwithstanding such prohibition, (h) “intent-to-use” trademark applications to the extent that, and solely during the period prior to the filing of evidence of use of such trademark, the grant of a security interest therein would invalidate such intent-to-use trademark application under Federal law, (i) any assets sold pursuant to a Qualified Receivables Financing, (j) Voting Stock in excess of 65% of the Voting Stock of (A) any Controlled Foreign Subsidiary or (B) any FSHCO, (k) Margin Stock, (l) Excluded Accounts, (m) any assets or property of a PRC Subsidiary (other than the shares of any PRC Subsidiary pledged pursuant to the applicable Collateral Documents), to the extent the State Administration of Foreign Exchange of the PRC (including its successors), or any appropriate local branch thereof, have either (x) irrevocably and finally declined to register the Secured Parties’ Lien on such assets and all reasonable options for appeal thereof have been irrevocably and finally declined or (y) failed to register the Secured Parties’ Lien on such assets as a “Nei Bao Wai Dai” transaction within 9 months after the date of the applicable Collateral Document executed by such PRC Subsidiary and (n) assets of any Designated Taiwan Subsidiary (other than the shares of any Designated Taiwan Subsidiary pledged pursuant to the Collateral Documents). Other assets shall be deemed to be “Excluded Property” if the Administrative Agent and the Borrowers agree in writing that the cost of obtaining or perfecting a security interest in such assets is excessive in relation to the value of such assets as Collateral. Notwithstanding anything herein or the Collateral Documents to the contrary, Excluded Property shall not include any Proceeds (as defined in the UCC), substitutions or replacements of any Excluded Property (unless such Proceeds, substitutions or replacements would otherwise constitute Excluded Property referred to above).

Excluded Subsidiary” means any Subsidiary that is (a) an Unrestricted Subsidiary, (b) not owned directly by Holdings or one or more of their respective Subsidiaries, (c) an Immaterial Subsidiary that is designated in writing to the Administrative Agent as such by the Borrower Representative, (d) a FSHCO or Controlled Foreign Subsidiary (or any direct or indirect Subsidiary of such FSHCO or Controlled Foreign Subsidiary), (e) established or created pursuant to clause (13)(g) of the second paragraph of Section 7.05 and meeting the requirements of the proviso thereto; provided that such Subsidiary shall only be an Excluded Subsidiary for the period immediately prior to such acquisition, (f) a Non-U.S. Subsidiary for which the providing of a guarantee would reasonably be expected to result in a violation or breach of, or conflict with, fiduciary duties of such Non-U.S. Subsidiary’s officers, directors, or managers, as reasonably determined by the Borrower Representative in consultation with the Administrative Agent, (g) a Subsidiary that is prohibited by applicable Law from guaranteeing the Facilities, or which would require governmental (including regulatory) consent, approval, license or authorization to provide a guarantee unless, such consent, approval, license or authorization has been received, (h) a Subsidiary that is prohibited from guaranteeing the Facilities by any Contractual Obligation in existence on the Closing Date (but not entered into in contemplation thereof) and is listed on Schedule 1.01(e) hereto and for so long as any such Contractual Obligation exists (or, in the case of any newly-acquired Subsidiary, in existence at the time of acquisition thereof but not entered into in contemplation thereof for so long as any such Contractual Obligation exists), (i) a Subsidiary with respect to which a guarantee by it of the Facilities would result in material adverse tax consequences to Holdings, the Subsidiary Borrower or one or more of its Restricted Subsidiaries, as reasonably determined by the Borrower Representative in consultation with the Administrative Agent, (j) any Receivables Subsidiary, (k) not-for-profit subsidiaries, (l) any Non-U.S. Subsidiary to the extent excluded by application of the Guaranty and Security Principles, (m) Subsidiaries that are special purpose entities, (n) any other Subsidiary with respect to which the Administrative Agent and the Parent Borrower agree in writing that the cost or other consequences (including any adverse tax consequences) of guaranteeing the Facilities would be excessive in view of

 

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the benefits to be obtained by the Lenders therefrom; and (o) any PRC Subsidiary, to the extent the State Administration of Foreign Exchange of the PRC (including its successors), or any appropriate local branch thereof, have either (x) irrevocably and finally declined to register the PRC Guaranty applicable to such PRC Subsidiary and all reasonable options for appeal thereof have been irrevocably and finally declined or (y) failed to register the PRC Guaranty applicable to such PRC Subsidiary as a “Nei Bao Wai Dai” transaction within 9 months after the date of the PRC Guaranty; provided that if a Subsidiary executes a Guaranty as a “Subsidiary Guarantor,” then it shall not constitute an “Excluded Subsidiary” (unless released from its obligations under the applicable Guaranty as a “Subsidiary Guarantor” in accordance with the terms hereof and thereof); provided, further, that no Subsidiary of the Parent Borrower shall be an Excluded Subsidiary if such Subsidiary is a guarantor with respect to any Refinancing Notes, any New Incremental Notes, the Senior Notes or, to the extent incurred by a Restricted Subsidiary any other Indebtedness that is treated as an “obligation of a United States person” within the meaning of the Code Section 956, in each case, with an aggregate outstanding principal amount in excess of $50,000,000.

Excluded Swap Obligation” means, with respect to any Guarantor, (a) any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) (i) by virtue of such Guarantor’s failure to constitute an “eligible contract participant,” as defined in the Commodity Exchange Act and the regulations thereunder (determined after giving effect to any applicable keepwell, support, or other agreement for the benefit of such Guarantor), at the time the guarantee of (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation or (ii) in the case of a Swap Obligation that is subject to a clearing requirement pursuant to section 2(h) of the Commodity Exchange Act, because such Guarantor is a “financial entity,” as defined in section 2(h)(7)(C) the Commodity Exchange Act, at the time the guarantee of (or grant of such security interest by, as applicable) such Guarantor becomes or would become effective with respect to such Swap Obligation or (b) any other Swap Obligation designated as an “Excluded Swap Obligation” of such Guarantor as specified in any agreement between the relevant Loan Parties and Hedge Bank applicable to such Swap Obligation.

Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by such Recipient’s net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Recipient (other than any Recipient (i) becoming a party hereto pursuant to a request by any Loan Party under Section 3.08 or (ii) changing its Lending Office under Section 3.01(g) or Section 3.07), any U.S. federal withholding Taxes imposed pursuant to a Law in effect on the date on which such Recipient becomes a party hereto or changes its Lending Office, except in each case to the extent that (x) pursuant to Section 3.01, additional amounts with respect to such Taxes were payable either to such Recipient’s assignor immediately before such Recipient became a party hereto or to such Recipient immediately before it changed its Lending Office or (y) such Taxes are imposed on a payment made with respect to any Initial Term B-2 Loan, Initial Term B-2 Commitment, Term B-3 Loan, Initial Term B-3 Commitment, Term B-3 Commitment or Term B-3 Loans Sub-Tranche (including any fees set forth in Sections 2.09(d) and (e)), (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(h) and (d) any Taxes imposed under FATCA.

Executive Order” means Executive Order No. 13224 of September 23, 2001, entitled Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

Facility” means the Term Facilities, the Revolving Credit Facility or the Letter of Credit Sublimit, as the context may require.

Fair Market Value” means, with respect to any asset or property, the price that could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction (as determined in good faith by the senior management or the Board of Directors of the Parent Borrower, Holdings or any Parent Holding Company, whose determination will be conclusive for all purposes under the Loan Documents).

 

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FATCA” means Sections 1471 through 1474 of the 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 Treasury regulations or official administrative interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above) and any intergovernmental agreements implementing the foregoing (together with any Laws or practices implementing such agreements).

Federal Funds Rate” means, for any day, the rate calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided, (a) that if the federal funds effective rate for any day is less than zero, the federal funds effective rate for such day will be deemed to be zero and (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 the Administrative Agent on such day on such transactions as determined by the Administrative Agent (and to the extent applicable to the Initial Term B-2 Loans, the Administrative Agent will notify the Redenomination Term Facilities Administrative Agent of the Federal Funds Rate at such time promptly upon request thereof).

Fee Letter” means (A) that certain Amended and Restated Fee Letter, dated as of October 21, 2016, by and among the Parent Borrower, Barclays Bank PLC, Citigroup Global Markets Limited, Citibank N.A., London Branch, Credit Suisse AG, Credit Suisse Securities (USA) LLC, HSBC Bank plc, JPMorgan Chase Bank, N.A., J.P. Morgan Limited, Nomura Securities International, Inc., Royal Bank of Canada and RBC Capital Markets, LLC, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time and (B) that certain amended and restated Fee Letter, dated as of January 31, 2017, by and between Parent Borrower and Bank of China Limited, Shanghai Branch.

Financial Covenant” has the meaning specified in Section 7.08.

Financial Covenant Event of Default” has the meaning specified in Section 8.01(b).

Fixed Charge Coverage Ratio” means, with respect to any Person as of any date, the ratio of (1) Consolidated EBITDA of such Person for the most recent period of four consecutive fiscal quarters for which internal financial statements are available immediately preceding the date on which such calculation of the Fixed Charge Coverage Ratio is made, calculated on a Pro Forma Basis for such period to (2) the Fixed Charges of such Person for such period calculated on a Pro Forma Basis. In the event that the Parent Borrower or any of its Restricted Subsidiaries Incurs or redeems or repays any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing unless the related commitments have been terminated and such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Preferred Stock or Disqualified Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to, substantially simultaneously with, or in connection with the event for which the calculation of the Fixed Charge Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated on a Pro Forma Basis; provided that, in the event that the Parent Borrower shall classify Indebtedness Incurred on the date of determination as Incurred in part as Ratio Debt and in part pursuant to one or more clauses of the definition of “Permitted Debt” (other than in respect of clause (o) of such definition), as provided in the third paragraph of Section 7.01, any calculation of Fixed Charges pursuant to this definition on such date (but not in respect of any future calculation following such date) shall not include any such Indebtedness (and shall not give effect to any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness from the proceeds thereof) to the extent Incurred pursuant to any such other clause of such definition.

Fixed Charges” means, with respect to any Person for any period, the sum of:

(1) Consolidated Interest Expense of such Person for such period, and

 

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(2) the product of (a) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries for such period and (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person and its Restricted Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and in accordance with IFRS.

Fixed IFRS Date” means the Closing Date after giving effect to the application of IFRS 16 as such standard is constituted as of the Closing Date (notwithstanding that IFRS 16 is not mandatorily applicable as of the Closing Date); provided that at any time and from time to time after the Closing Date, the Parent Borrower may by written notice to the Administrative Agent elect to change the Fixed IFRS Date to be the date specified in such notice, and upon such notice, the Fixed IFRS Date shall be such date for all periods beginning on and after the date specified in such notice.

Fixed IFRS Terms” means (a) the definitions of the terms “Capitalized Lease Obligation,” “Consolidated Interest Expense,” “Consolidated Net Income,” “Consolidated Net Tangible Assets”, “Consolidated Total Assets,” “Consolidated First Lien Net Leverage Ratio,” “Consolidated Total Net Leverage Ratio,” “Consolidated Funded First Lien Indebtedness,” “Consolidated Funded Indebtedness,” “Consolidated EBITDA” and “Indebtedness,” (b) all defined terms in this Agreement to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions, and (c) any other term or provision of this Agreement that, at the Parent Borrower’s election, may be specified by the Parent Borrower by written notice to the Administrative Agent from time to time; provided that the Parent Borrower may elect to remove any term from constituting a Fixed IFRS Term; provided, further, that for all purposes under the Credit Agreement, the Parent Borrower hereby elects that “Fixed IFRS Terms” shall give effect to the application of IFRS 16 as such standard is constituted as of the Closing Date (notwithstanding that IFRS 16 is not mandatorily applicable as of the Closing Date).

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

Fronting Exposure” means, at any time there is a Defaulting Lender under any Tranche of the Revolving Credit Facility, with respect to an L/C Issuer under such Tranche, such Defaulting Lender’s Pro Rata Share of the outstanding L/C Obligations under such Tranche (other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Non-Defaulting Lenders under such Tranche or Cash Collateralized in accordance with the terms hereof).

FSHCO” means any Subsidiary of the Subsidiary Borrower or any Subsidiary of a Guarantor that is organized under the laws of the United States, any state thereof or the District of Columbia, in each case, which Subsidiary owns no material assets other than Capital Stock and/or indebtedness of one or more Controlled Foreign Subsidiaries or another FSHCO.

Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

Funds Flow Memorandum” has the meaning specified in Section 4.01(i).

GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession (but excluding the policies, rules and regulations of the SEC applicable only to public companies).

German Borrower” has the meaning specified in the introductory paragraph to this Agreement.

German Qualifying Lender”: in respect of interest payable by the German Borrower, a Lender which is beneficially entitled to interest payable to that Lender in respect of any amounts hereunder and is:

 

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(a) resident for tax purposes in Germany;

(b) lending through a Facility Office in Germany to which the relevant interest payment is effectively attributable for tax purposes; or

(c) a German Treaty Lender.

German Treaty”: as defined in the definition of “German Treaty State”.

German Treaty Lender”: a Lender which (a) is treated as a resident of a German Treaty State for the purposes of the German Treaty; and (b) is entitled to receive payments of interest without a deduction of Tax imposed by Germany under the German Treaty; and (c) does not carry on a business in Germany through a permanent establishment with which that Lender’s participation in the Loan is effectively connected.

German Treaty State”: a jurisdiction having a double taxation agreement with Germany (a “German Treaty”) which makes provision for full exemption from tax imposed by Germany on interest payable pursuant to any Loan Document.

Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

Granting Lender” has the meaning specified in Section 10.07(g).

Gross Outstandings” means, in relation to a Multi-account Overdraft, the Ancillary Outstandings of that Multi-account Overdraft but calculated on the basis that the words “(net of any Available Credit Balance)” in paragraph (i) of the definition of “Ancillary Outstandings” were deleted.

Guarantee” means, as to any Person, without duplication, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any Obligation of such Person, direct or indirect (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance of such Indebtedness or other monetary obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other monetary obligation of any other Person, whether or not such Indebtedness or other monetary obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term “Guarantee” shall not include endorsements for collection or deposit, in either case in the ordinary course of business, or customary or reasonable indemnity obligations in effect on the Closing Date, or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

Guarantors” means, collectively, Holdings, the Borrowers and, as of the Closing Date (subject to Section 6.16), the Subsidiaries of the Parent Borrower listed on Schedule 1 (such Subsidiaries not to include the Subsidiary Borrower or any Excluded Subsidiary) and each other Subsidiary of the Parent Borrower that shall be required to execute and deliver (or otherwise does execute and deliver) a guaranty or guaranty supplement pursuant to Section 6.12 or 6.16, unless it has ceased to be a Guarantor pursuant to the terms hereof.

 

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Guaranty” means, collectively, the New York Law Guaranty and any PRC Guaranty.

Guaranty and Security Principles” means the Guaranty and Security Principles set forth on Schedule 1.14.

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

Hedge Bank” means any Person that (i) at the time it enters into a Swap Contract, is a Lender or an Agent or an Affiliate of a Lender or an Agent, (ii) within 30 days after the time it enters into a Swap Contract, becomes a Lender or an Agent or an Affiliate of a Lender or an Agent, or (iii) with respect to Swap Contracts in effect as of the Closing Date, is, as of the Closing Date or within 30 days after the Closing Date, a Lender or an Agent or an Affiliate of a Lender or an Agent, in each case, in its capacity as a party to such Swap Contract.

Holdings” has the meaning specified in the introductory paragraph to this Agreement.

Holdings Entities” means each of (a) Atotech UK TopCo Limited, a private company limited by shares organized under the laws of England and Wales, so long as Holdings is a Wholly Owned Subsidiary of Atotech UK TopCo Limited and (b) Holdings, so long as the Parent Borrower is a direct Wholly Owned Subsidiary of Holdings.

Honor Date” has the meaning specified in Section 2.03(d)(i).

IFRS” means the International Financial Reporting Standards as issued by the International Accounting Standards Board as in effect on the Fixed IFRS Date (for purposes of Fixed IFRS Terms) and as in effect from time to time (for all other purposes of this Agreement); provided that at any date after the Closing Date, the Parent Borrower may make an irrevocable election to establish that IFRS shall mean IFRS as in effect on a date that is on or prior to the date of such election; provided further that the Parent Borrower may at any time elect by written notice to the Administrative Agent to use GAAP in lieu of IFRS for financial reporting purposes and, upon any such notice, references herein to IFRS shall thereafter be construed to mean (a) for periods beginning on and after the date specified in such notice, GAAP as in effect on the date specified in such notice (for purposes of the Fixed IFRS Terms) and as in effect from time to time (for all other purposes of this Agreement) and (b) for prior periods, IFRS as defined in the first sentence of this definition without giving effect to the proviso thereto.

Immaterial Subsidiary” means any Subsidiary of the Parent Borrower that, as of the date of the most recent financial statements required to be delivered pursuant to Section 6.01(a) or (b), does not have (a) assets (when combined with the assets of all other Immaterial Subsidiaries, after eliminating intercompany obligations) in excess of 5.0% of Consolidated Total Assets or (b) Consolidated EBITDA (when combined with the Consolidated EBITDA of all other Immaterial Subsidiaries, after eliminating intercompany obligations) for the period of four consecutive fiscal quarters ending on such date in excess of 5.0% of the Consolidated EBITDA of the Parent Borrower and the Restricted Subsidiaries for such period; provided that (x), at all times prior to the first delivery of financial statements pursuant to Section 6.01(a) or (b), this definition shall be applied based on the pro forma consolidated financial statements of the Parent Borrower and its Subsidiaries delivered to the Administrative Agent prior to the date hereof and (y) any Subsidiary existing on the Closing Date that (1) is not a Guarantor on the Closing Date or (2) shall not become a Guarantor pursuant to the requirements of Section 6.16, shall not, in each case, be deemed to be an “Immaterial Subsidiary” for purposes of the definition of “Excluded Subsidiary” and the requirements of Section 6.12; provided that the Subsidiaries of Atotech Asia Pacific Ltd. existing on the Closing Date will be deemed Immaterial Subsidiaries and count towards the thresholds set forth in this definition.

Increase Effective Date” has the meaning specified in Section 2.14(c).

Incremental Amount” has the meaning specified in Section 2.14(a).

 

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Incremental Arranger” has the meaning specified in Section 2.14(a).

Incremental Facility Agreement” means an agreement in form and substance satisfactory to the Borrowers, the Incremental Arranger or Lenders providing such Incremental Amount.

Incremental Notes Arranger” has the meaning specified in Section 2.15(a).

Incur” means, with respect to any Indebtedness, Capital Stock or Lien, to issue, assume, guarantee, incur or otherwise become liable for such Indebtedness, Capital Stock or Lien, as applicable; provided that any Indebtedness, Capital Stock or Lien of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

Indebtedness” means, with respect to any Person, without duplication:

(a) the principal of any indebtedness of such Person, whether or not contingent, (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (iii) representing the deferred and unpaid purchase price of any property, (iv) in respect of Capitalized Lease Obligations or (v) representing any Swap Contracts, in each case, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Swap Contracts) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with IFRS;

(b) to the extent not otherwise included, any guarantee by such Person of the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and

(c) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person.

The term “Indebtedness” (x) shall include any lease, concession or license of property (or guarantee thereof) that would be considered an operating lease under IFRS as in effect on the Closing Date in accordance with the Fixed IFRS Terms and (y) shall not include any prepayments of deposits received from clients or customers in the ordinary course of business or consistent with past practices, or obligations under any license, permit or other approval (or guarantees given in respect of such obligations) Incurred prior to the Closing Date or in the ordinary course of business or consistent with past practices.

Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

(i) Contingent Obligations Incurred in the ordinary course of business or consistent with past practices;

(ii) obligations under or in respect of Receivables Financings;

(iii) any balance that constitutes a trade payable, accrued expense or similar obligation to a trade creditor, in each case Incurred in the ordinary course of business;

(iv) intercompany liabilities that would be eliminated on the consolidated balance sheet of the Parent Borrower and its consolidated Subsidiaries;

(v) prepaid or deferred revenue arising in the ordinary course of business;

(vi) Cash Management Services;

 

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(vii) in connection with the purchase by the Borrowers or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid in a timely manner;

(viii) obligations, to the extent such obligations would otherwise constitute Indebtedness, under any agreement that have been defeased or satisfied and discharged pursuant to the terms of such agreement;

(ix) for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or termination obligations, deferred compensatory or employee or director equity plans, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes; or

(x) Capital Stock (other than Disqualified Stock and Preferred Stock).

Indemnified Liabilities” has the meaning specified in Section 10.05.

Indemnified Taxes” means (a) all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), all Other Taxes.

Indemnitees” has the meaning specified in Section 10.05.

Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing that is, in the good faith determination of the Parent Borrower, qualified to perform the task for which it has been engaged.

Information” has the meaning specified in Section 10.08.

Initial Public Company Costs” means, as to any Person, costs relating to compliance with the provisions of the Securities Act and the Exchange Act (or similar regulations applicable in other listing jurisdictions), as applicable to companies with equity securities held by the public, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes Oxley Act of 2002 (or similar non-U.S. regulations) and the rules and regulations promulgated in connection therewith (or similar regulations applicable in other listing jurisdictions), the rules of national securities exchange companies with listed equity, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees, in each case to the extent arising solely by virtue of the initial listing of such Person’s equity securities on a national securities exchange (or similar non-U.S. exchange); provided that any such costs arising from the costs described above in respect of the ongoing operation of such Person as a listed equity or its listed debt securities following the initial listing of such Person’s equity securities or debt securities, respectively, on a national securities exchange (or similar non-U.S. exchange) shall not constitute Initial Public Company Costs.

Initial Term B-1 Borrowing” means a borrowing consisting of simultaneous Initial Term B-1 Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the applicable Term Lenders pursuant to Section 2.01(a), in each case, on the Closing Date.

Initial Term B-1 Commitment” means, as to each Term Lender, its obligation to make Initial Term B-1 Loans to the Borrowers pursuant to Section 2.01(a) in an aggregate principal amount not to exceed the amount set forth opposite such Term Lender’s name on Schedule 2.01 under the caption “Initial Term B-1 Commitment” as such amount may be adjusted from time to time in accordance with this Agreement. The initial aggregate amount of the Initial Term B-1 Commitments is $900,000,000.

 

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Initial Term B-1 Loans” has the meaning specified in Section 2.01(a).

Initial Term B-2 Borrowing” means a borrowing consisting of simultaneous Initial Term B-2 Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the applicable Term Lenders pursuant to Section 2.01(a), in each case, on the Closing Date.

Initial Term B-2 Commitment” means, as to each Term Lender, its obligation to make Initial Term B-2 Loans to the Parent Borrower pursuant to Section 2.01(a) in an aggregate principal amount not to exceed the amount set forth opposite such Term Lender’s name on Schedule 2.01 under the caption “Aggregate Dollar Amount of Initial Term B-2 Commitment and Initial Term B-3 Commitment” as such amount may be adjusted from time to time in accordance with this Agreement (including, upon notification of any Initial Term B-3 Commitment pursuant to Section 2.04(a)(i), in accordance with the following sentence). The initial aggregate amount of the Initial Term B-2 Commitments is $500,000,000 less, subject to the proviso in Section 2.04(a)(ii), the Dollar Amount of any Initial Term B-3 Commitment (and which aggregate amount shall be communicated to the Administrative Agent in accordance with Section 2.04(a)(i)).

Initial Term B-2 Loans” has the meaning specified in Section 2.01(a).

Initial Term B-3 Borrowing” means a borrowing consisting of simultaneous Initial Term B-3 Loans that are Benchmark PBOC Rate Loans made by each of the applicable Term Lenders pursuant to Section 2.01(a) on the Closing Date.

Initial Term B-3 Commitment” means, as to each Term Lender, its obligation to make Initial Term B-3 Loans to the Parent Borrower pursuant to Section 2.01(a) in an aggregate principal amount not to exceed the aggregate amount (in RMB) that the Redenomination Term Facilities Administrative Agent notifies the Parent Borrower is available from such Term Lender prior to the Closing Date pursuant to Section 2.04(a)(i), as such amount may be adjusted from time to time in accordance with this Agreement. The initial aggregate amount of the Initial Term B-3 Commitments is the aggregate amount (in RMB) that the Redenomination Term Facilities Administrative Agent notifies the Parent Borrower is available prior to the Closing Date pursuant to Section 2.04(a)(i) as such amount may be reduced on the Closing Date pursuant to Section 2.04(a)(ii).

Initial Term B-3 Loans” has the meaning specified in Section 2.01(a).

Initial Term Commitment” means Initial Term B-1 Commitments, Initial Term B-2 Commitments and Initial Term B-3 Commitments.

Initial Term Loans” means Initial Term B-1 Loans, Initial Term B-2 Loans and Initial Term B-3 Loans.

Intellectual Property Security Agreement” means, collectively, the intellectual property security agreement, substantially in the form of Exhibit B to the U.S. Security Agreement, entered into by the applicable Loan Parties dated the date of this Agreement, together with each other intellectual property security agreement or Intellectual Property Security Agreement Supplement executed and delivered pursuant to Section 6.12, 6.14 or Section 6.16.

Intellectual Property Security Agreement Supplement” means, collectively, any intellectual property security agreement supplement entered into in connection with, and pursuant to the terms of, any Intellectual Property Security Agreement.

Intercompany Subordination Agreement” means an intercompany subordination agreement, in substantially the form of Exhibit I hereto, or otherwise in form and substance reasonably satisfactory to the Administrative Agent.

Interest Payment Date” means, (a) as to any Eurocurrency Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date of the Facility under which such Loan was made; provided, however, that if any Interest Period for a Eurocurrency Rate Loan exceeds three months, the respective dates that fall every

 

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three months after the beginning of such Interest Period shall also be Interest Payment Dates; (b) as to any Base Rate Loan, the last Business Day of each fiscal quarter of the Parent Borrower and the Maturity Date of the Facility under which such Loan was made (commencing with March 31, 2017) and (c) as to any Benchmark PBOC Rate Loan, each March 21, June 21, September 21, and December 21, as applicable (commencing with March 21, 2017 if applicable); provided that if any such date is not a Business Day, the applicable Interest Payment Date shall be the immediately preceding Business Day.

Interest Period” means, (A) as to each Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one (1), two (2) (provided, that no two (2) month interest period shall be available for Singapore Dollars), three (3) or six (6) months thereafter, or to the extent consented to by all Appropriate Lenders, twelve months thereafter (or such shorter interest period as may be agreed to by all Lenders of the applicable Tranche) as the Parent Borrower may elect; as selected by the Parent Borrower in a Committed Loan Notice; provided that:

(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c) no Interest Period shall extend beyond the scheduled Maturity Date of the Facility under which such Loan was made.

(B) as to each Benchmark PBOC Rate Loan, the period commencing on the date such Benchmark PBOC Rate Loan is disbursed (or, in the case of a Redenominated Term B-3 Loan, the date on which the Redenomination Event in relation to such Redenominated Term B-3 Loan occurred) and ending on the next succeeding Interest Payment Date and each subsequent period commencing on the last day of the immediately preceding Interest Period for such Benchmark PBOC Rate Loan and ending on the next succeeding Interest Payment Date.

Interpolated Rate” means, with respect to any Eurocurrency Rate Borrowing for any Interest Period, a rate per annum which results from interpolating on a linear basis between (a) the applicable Screen Rate for the longest maturity for which a Screen Rate is available that is shorter than such Interest Period and (b) the applicable Screen Rate for the shortest maturity for which a Screen Rate is available that is longer than such Interest Period, in each case as of 11:00 a.m., London time on the day two Business Days prior to the first day of such Interest Period rounded to the same number of decimal places as the two relevant Screen Rates.

Investment” means, with respect to any Person, (i) all investments by such Person in other Persons (including Affiliates) in the form of (a) loans (including guarantees of Indebtedness), (b) advances or capital contributions (excluding accounts receivable, trade credit and advances or other payments made to customers, dealers, suppliers and distributors and payroll, commission, travel and similar advances to officers, directors, managers, employees, consultants and independent contractors made in the ordinary course of business), and (c) purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any such other Person and (ii) investments that are required by IFRS to be classified on the balance sheet of the Parent Borrower in the same manner as the other investments included in clause (i) of this definition to the extent such transactions involve the transfer of cash or other property; provided that Investments shall not include, in the case of the Parent Borrower and the Restricted Subsidiaries, intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business. If any Borrower or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Parent Borrower, the Parent Borrower shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. In no event shall a guarantee of an operating lease of any Borrower or any Restricted Subsidiary be deemed an Investment. For purposes of the definition of “Unrestricted Subsidiary” and Section 7.05:

 

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(1) “Investments” shall include the portion (proportionate to the Parent Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Parent Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Parent Borrower shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Parent Borrower’s “Investment” in such Subsidiary at the time of such redesignation; less

(b) the portion (proportionate to the Parent Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

The amount of any Investment outstanding at any time (including for purposes of calculating the amount of any Investment outstanding at any time under any provision of Section 7.05 and otherwise determining compliance with Section 7.05) shall be the original cost of such Investment (determined, in the case of any Investment made with assets of any Borrower or any Restricted Subsidiary, based on the Fair Market Value of the assets invested and without taking into account subsequent increases or decreases in value), reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by any Borrower or a Restricted Subsidiary in respect of such Investment and shall be net of any Investment by such Person in any Borrower or any Restricted Subsidiary.

Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

Investment Grade Securities” means:

(1) securities issued or directly and guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),

(2) securities that have an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Parent Borrower and its Subsidiaries,

(3) investments in any fund that invests at least 95.0% of its assets in investments of the type described in clauses (1) and (2) above and clause (4) below which fund may also hold immaterial amounts of cash pending investment and/or distribution, and

(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

IP Rights” has the meaning specified in Section 5.16.

IRS” means the United States Internal Revenue Service.

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 and to which such Letter of Credit is subject).

 

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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 Parent Borrower or Subsidiary Borrower (or, if applicable, a Restricted Subsidiary) or in favor of such L/C Issuer and relating to such Letter of Credit.

joint venture” means any joint venture or similar arrangement (in each case, regardless of legal formation), including but not limited to collaboration arrangements, profit sharing arrangements or other contractual arrangements.

Judgment Currency” has the meaning specified in Section 10.23.

Junior Financing” has the meaning specified in Section 7.05.

Junior Financing Document” means any documentation governing any Junior Financing.

JV Distribution” means, at any time, 50% of the aggregate amount of all cash dividends or distributions received by the Parent Borrower or any of its Restricted Subsidiaries as a return on an Investment in a Permitted Joint Venture during the period from the Closing Date through the end of the fiscal quarter most recently ended immediately prior to such date for which financial statements are internally available; provided that the Parent Borrower or any of its Restricted Subsidiaries are not required to reinvest such dividends or distributions in the Permitted Joint Venture.

Latest Maturity Date” means, at any date of determination, the latest maturity or expiration date applicable to any Term Loan Tranche or Revolving Tranche at such time under this Agreement, in each case as extended in accordance with this Agreement from time to time.

Laws” means, collectively, all applicable international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

L/C Advance” means, with respect to each Revolving Credit Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its applicable Pro Rata Share.

L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed by the Borrowers on the date required under Section 2.03(d)(i) or refinanced as a Revolving Credit Borrowing.

L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

L/C Issuer” means (a) each of Barclays Bank PLC, JPMorgan Chase Bank, N.A., Credit Suisse AG, Citibank N.A., London Branch and RBC Europe Limited in their capacities as an issuer of Letters of Credit hereunder (it being understood that none of the L/C Issuers identified in this clause (a) shall be obligated to issue any trade letters of credit hereunder unless such L/C Issuer consents to do so) and (b) any other Lender reasonably acceptable to the Borrowers and the Administrative Agent that agrees to issue Letters of Credit pursuant hereto, in each case in its capacity as an issuer of Letters of Credit hereunder, or 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 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 1.10. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but (a) any amount may still be drawn

 

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thereunder by reason of the operation of Rule 3.13 or 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, or (b) any drawing was made thereunder on or before the last day permitted thereunder and such drawing has not been honored or refused by the applicable L/C Issuer, such Letter of Credit shall be deemed to be “outstanding” in the amount of such drawing.

Legal Reservations” means:

(a) the principle that equitable remedies may be granted or refused at the discretion of a court, the limitation of enforcement by laws relating to insolvency, bankruptcy, liquidation, judicial management, reorganization, court schemes, moratoria, administration and other laws generally affecting the rights of creditors and similar principles or limitations under the laws of any applicable jurisdiction;

(b) the time barring of claims under applicable limitation laws, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of stamp duty may be void and defenses of set-off or counterclaim and similar principles or limitations under the laws of any applicable jurisdiction;

(c) any general principles, reservations or qualifications, in each case as to matters of law as set out in any legal opinion delivered to the Administrative Agent in connection with any provision of any Loan Document;

(d) the principle that any additional interest imposed under any relevant agreement may be held to be unenforceable on the grounds that it is a penalty and thus void;

(e) the principle that in certain circumstances security granted by way of fixed charge may be characterized as a floating charge or that security purported to be constituted by way of an assignment may be recharacterized as a charge;

(f) the principle that a court may not give effect to an indemnity for legal costs incurred by an unsuccessful litigant;

(g) the principle that the creation or purported creation of security over any contract or agreement which is subject to a prohibition against transfer, assignment or charging may be void, ineffective or invalid and may give rise to a breach entitling the contracting party to terminate or take any other action in relation to such contract or agreement;

(h) provisions of a contract being invalid or unenforceable for reasons of oppression or undue influence; and

(i) similar principles, rights and defenses under the laws of any relevant jurisdiction.

Lender” has the meaning specified in the introductory paragraph to this Agreement and, as the context requires, includes each L/C Issuer and Ancillary Lender.

Lending Office” means, as to any Lender or Ancillary Lender, the office, offices or branches of such Lender or any of its Affiliates described as such in such Lender’s Administrative Questionnaire, or such other office, offices or branches as a Lender or any of its Affiliates may from time to time notify the Borrowers and the Administrative Agent.

Letter of Credit” means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.

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, together with a request for L/C Credit Extension, substantially in the form of Exhibit A-2 hereto.

 

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Letter of Credit Expiration Date” means, subject to Section 2.03(a)(ii)(C), the day that is three Business Days prior to the scheduled Maturity Date then in effect for the Revolving Credit Facility (or, if such day is not a Business Day, the immediately preceding Business Day).

Letter of Credit Sublimit” means a Dollar Amount equal to $75,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Credit Facility.

Lien” means, with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent or similar statutes) of any jurisdiction); provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

Loan” means an extension of credit by a Lender to the Borrowers under Article II in the form of a Term Loan, a Revolving Credit Loan or a Specified Refinancing Revolving Loan.

Loan Documents” means, collectively, (i) this Agreement, (ii) the Notes, (iii) the Guaranty, (iv) the Collateral Documents, (v) the Intercompany Subordination Agreement, (vi) any intercreditor agreement required to be entered into pursuant to the terms of this Agreement, (vii) any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.16 of this Agreement, (viii) any Refinancing Amendment, (ix) any Fee Letter, (x) any Incremental Facility Agreement and (xi) any Ancillary Document.

Loan Parties” means, collectively, the Borrowers and each Guarantor.

London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market.

Major Default” means those Events of Default set forth in Sections 8.01(a) with respect to the failure to pay any amount of principal, interest or fees (but not other amounts) (in each case other than where failure to pay is caused by administrative error or delay or technical error or delay in the transmission of funds or a market disruption event and payment is made within five Business Days after such administrative error, delay, technical error, delay in the transmission of funds or market disruption event is cured), 8.01(b) (solely as it relates to any Major Undertaking), 8.01(d) (solely as it relates to any Major Representation), 8.01(f), 8.01(g), 8.01(j) and 8.01(k), in each case solely to the extent that they relate to Holding or the Borrowers; provided, that for the avoidance of doubt, a Major Default shall not apply in respect of or relate to the Target or any of its subsidiaries, or any of the assets of the Target or any of its subsidiaries, or a breach of a procuring obligation with respect to the Target or any of its subsidiaries.

Major Representations” means those representations and warranties set forth in Sections 5.01(a), 5.01(b)(ii) and 5.02, in each case, solely to the extent that they relate to Holdings or the Borrowers; provided, that, for the avoidance of doubt, a Major Representation shall not apply in respect of or relate to any member of the Target or any of the Target’s subsidiaries, or any of the assets of a member of the Target or any of the Target’s subsidiaries, or a breach of a procuring obligation with respect to a member of the Target or any of the Target’s subsidiaries.

Major Undertakings” means those undertakings set forth in Sections 7.01, 7.02, 7.03, 7.04, 7.05, and 7.09, solely to the extent that they relate to Holdings or the Borrowers, as applicable; provided, that, for the avoidance of doubt, a Major Default as it relates to a Major Undertaking shall not apply in respect of or relate to the Target or any of the Target’s subsidiaries, or any of the assets of the Target or any of the Target’s subsidiaries, or a breach of a procuring obligation with respect to the Target or any of the Target’s subsidiaries.

 

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Majority Lenders” of any Tranche shall mean those Non-Defaulting Lenders which would constitute the Required Lenders under, and as defined in, this Agreement if all outstanding Obligations of the other Tranches under this Agreement were repaid in full and all Commitments with respect thereto were terminated.

Management Agreement” means that certain Consulting Services Agreement, by and among the Subsidiary Borrower, Atotech UK TopCo Limited and Carlyle Investment Management L.L.C. and entered into on January 31, 2017, as the same may be amended, restated, modified or replaced, from time to time, to the extent such amendment, modification or replacement is not more disadvantageous to the Lenders in any material respect than such Consulting Services Agreement.

Margin Stock” has the meaning assigned to such term in Regulation U of the Board as from time to time in effect.

Material Adverse Effect” means (a) a material adverse effect on the business, assets, property, liabilities (actual or contingent), financial condition or results of operations of the Borrowers and their Restricted Subsidiaries, taken as a whole, (b) a material adverse effect on the ability of the Loan Parties (taken as a whole) to perform their respective obligations under the Loan Documents or (c) a material adverse effect on the rights and remedies of the Agents or the Lenders under the Loan Documents.

Material Real Property” means any parcel of real property (other than (x) a parcel with a Fair Market Value of less than $7,500,000, (y) a parcel located in Germany and (z) a parcel constituting Excluded Property) owned in fee by a Loan Party; provided, however, that one or more parcels owned in fee by a Loan Party and located adjacent to, contiguous with, or in close proximity to, and comprising one property with a common street address, may, in the reasonable discretion of the Administrative Agent, be deemed to be one parcel for the purposes of this definition.

Maturity Date” means: (a) with respect to the Revolving Credit Facility, the earlier of (i) January 31, 2022 and (ii) the date of termination in whole of the Revolving Credit Commitments and the agreement to provide Letters of Credit hereunder pursuant to Section 2.06(a) or 8.02; and (b) with respect to the Initial Term Loans and Redenominated Term B-3 Loans, the earliest of (i) January 31, 2024, (ii) the date of termination in whole of the Initial Term Commitments pursuant to Section 2.06(a) prior to any Initial Term Borrowing and (iii) the date that the Initial Term Loans and Redenominated Term B-3 Loans are declared due and payable pursuant to Section 8.02; provided that the reference to Maturity Date with respect to (i) Term Loans and Revolving Credit Commitments that are the subject of a loan modification offer pursuant to Section 10.01 and (ii) Term Loans and Revolving Credit Commitments that are incurred pursuant to Sections 2.14 or 2.18 shall, in each case, be the final maturity date as specified in the loan modification documentation, incremental documentation, or specified refinancing documentation, as applicable thereto.

Maximum First Lien Leverage Requirement” means, with respect to any request made in reliance on this definition under Article II for an increase in any Revolving Tranche or any Term Loan Tranche, for a New Revolving Facility, for a New Term Facility or for the issuance of New Incremental Notes, the requirement that, on a Pro Forma Basis, after giving effect to such increase, such new Facility (assuming all commitments thereunder are fully drawn) or such New Incremental Notes (including, in each case, any acquisition consummated concurrently therewith), the Consolidated First Lien Net Leverage Ratio as of the date of the most recent financial statements required to be delivered pursuant to Section 6.01(a) or (b) does not exceed 4.50:1.00; provided, that solely for the purpose of calculating the Consolidated First Lien Net Leverage Ratio pursuant to this definition, (x) any Indebtedness incurred pursuant to Sections 2.14 or 2.15, any Indebtedness described under (or secured pursuant to) clause (24) of the definition of “Permitted Liens” and any New Incremental Notes and any Refinancing Notes (in the case of Refinancing Notes, to the extent that such Refinancing Notes refinance Indebtedness incurred pursuant to Sections 2.14 or 2.15 or New Incremental Notes) and, in each case, whether or not such Indebtedness is unsecured or is secured (it being understood that if any portion of such Indebtedness is reclassified pursuant to the third paragraph of Section 7.01 to any other exception to Section 7.01, such portion of such Indebtedness shall no longer be deemed secured if unsecured at such time) by Liens that rank junior in priority to the Liens securing the Obligations, shall be deemed to constitute Consolidated Funded First Lien Indebtedness and (y) any cash proceeds from Indebtedness to be incurred from such request for an increase in any Revolving Tranche or any Term Loan Tranche, for a New Revolving Facility, for a New Term Facility or for the issuance of New Incremental Notes shall be excluded for purposes of cash netting.

 

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Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price means that such Maximum Fixed Repurchase Price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Funded Indebtedness shall be required to be determined pursuant to this Agreement, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Parent Borrower.

Maximum Rate” has the meaning specified in Section 10.10.

Minimum Tender Condition” has the meaning specified in Section 2.19(b).

Moody’s” means Moody’s Investors Service, Inc. and any successor to the rating agency business thereof.

Mortgage” means, collectively, the deeds of trust, trust deeds and mortgages in respect of Mortgaged Properties made by the Loan Parties in favor or for the benefit of the Collateral Agent on behalf of the Lenders in form and substance reasonably satisfactory to the Administrative Agent, in each case as the same may be amended, amended and restated, extended, supplemented, substituted or otherwise modified from time to time.

Mortgaged Properties” means the parcels of real property identified on Schedule 5.08(b) and any other Material Real Property with respect to which a Mortgage is required pursuant to Section 6.12.

Multi-account Overdraft” means an Ancillary Facility which is an overdraft facility comprising more than one account.

Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes or is obligated to make contributions.

Net Cash Proceeds” means:

(a) with respect to the Disposition of any asset by the Parent Borrower or any of its Restricted Subsidiaries (other than any Disposition of any receivables in a Qualified Receivables Financing by the Parent Borrower or any of its Restricted Subsidiaries to a Receivables Subsidiary) or any Casualty Event, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such Disposition or Casualty Event (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received and, with respect to any Casualty Event, any insurance proceeds or condemnation awards in respect of such Casualty Event received by or paid to or for the account of the Parent Borrower or any of its Restricted Subsidiaries and including any proceeds received as a result of unwinding any related Swap Contract in connection with such related transaction) over (ii) the sum of:

(A) the principal amount of any Indebtedness that is secured by a Lien on the asset subject to such Disposition or Casualty Event and that is repaid in connection with such Disposition or Casualty Event (other than (x) Indebtedness under the Loan Documents and (y), if such asset constitutes Collateral, any Indebtedness secured by such asset with a Lien ranking pari passu with or junior to the Lien securing the Obligations), together with any applicable premiums, penalties, interest or breakage costs,

(B) the fees and out-of-pocket expenses incurred by the Parent Borrower or such Restricted Subsidiary in connection with such Disposition or Casualty Event (including attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith),

 

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(C) all taxes paid or reasonably estimated to be payable in connection with such Disposition or Casualty Event (or any tax distribution the Parent Borrower may be required to make as a result of such Disposition or Casualty Event) and any repatriation costs associated with receipt or distribution by the applicable taxpayer of such proceeds,

(D) any costs associated with unwinding any related Swap Contract in connection with such transaction,

(E) any reserve for adjustment in respect of (x) the sale price of the property that is the subject of such Disposition established in accordance with IFRS and (y) any liabilities associated with such property and retained by the Parent Borrower or any of its Restricted Subsidiaries after such Disposition, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction, and it being understood that “Net Cash Proceeds” shall include, without limitation, any cash or Cash Equivalents (i) received upon the Disposition of any non-cash consideration received by the Parent Borrower or any of its Restricted Subsidiaries in any such Disposition and (ii) upon the reversal (without the satisfaction of any applicable liabilities in cash in a corresponding amount) of any reserve described in this clause (E), and

(F) in the case of any Disposition or Casualty Event by a Restricted Subsidiary that is a joint venture or other non-Wholly Owned Restricted Subsidiary, the pro rata portion of the Net Cash Proceeds thereof (calculated without regard to this clause (F)) attributable to the minority interests and not available for distribution to or for the account of Holdings or a Wholly Owned Restricted Subsidiary as a result thereof; and

(b) with respect to the incurrence or issuance of any Indebtedness by the Parent Borrower or any of its Restricted Subsidiaries, the excess, if any, of (i) the sum of the cash received in connection with such incurrence or issuance and in connection with unwinding any related Swap Contract in connection therewith over (ii) the investment banking fees, underwriting discounts and commissions, premiums, expenses, accrued interest and fees related thereto, taxes reasonably estimated to be payable and other out-of-pocket expenses and other customary expenses, incurred by the Parent Borrower or such Restricted Subsidiary in connection with such incurrence or issuance and any costs associated with unwinding any related Swap Contract in connection therewith and, in the case of Indebtedness of any Non-U.S. Subsidiary, deductions in respect of withholding taxes that are or would otherwise be payable in cash if such funds were repatriated to the United States.

Net Outstandings” means, in relation to a Multi-account Overdraft, the Ancillary Outstandings of that Multi-account Overdraft.

New Incremental Notes” has the meaning specified in Section 2.15(a).

New Incremental Notes Indentures” means, collectively, the indentures or other similar agreements pursuant to which any New Incremental Notes are issued, together with all instruments and other agreements in connection therewith, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, but only to the extent permitted under the terms of the Loan Documents.

New Loan Commitments” has the meaning specified in Section 2.14(a).

New Revolving Commitment” has the meaning specified in Section 2.14(a).

New Revolving Facility” has the meaning specified in Section 2.14(a).

 

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New Revolving Loan” has the meaning specified in Section 2.14(a).

New Term Commitment” has the meaning specified in Section 2.14(a).

New Term Facility” has the meaning specified in Section 2.14(a).

New Term Loan” has the meaning specified in Section 2.14(a).

New York Law Guaranty” means, collectively, the Guaranty made by Holdings and the Subsidiary Guarantors (other than the PRC Subsidiaries) in favor of the Administrative Agent on behalf of the Secured Parties, substantially in the form of Exhibit F-1, together with each other guaranty and guaranty supplement delivered pursuant to Section 6.12 or 6.16.

Non-Consenting Lender” has the meaning specified in Section 3.08(c).

Non-Defaulting Lender” means any Lender other than a Defaulting Lender.

Non-Loan Party” means any Subsidiary of Holdings that is not a Loan Party.

Non-U.S. Benefit Event” means, with respect to any Non-U.S. Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable Law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable Law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Non-U.S. Plan or to appoint a trustee or similar official to administer any such Non-U.S. Plan, or alleging the insolvency of any such Non-U.S. Plan, (d) the incurrence of any liability by the Parent Borrower or any of its Subsidiaries under applicable Law on account of the complete or partial termination of such Non-U.S. Plan or the complete or partial withdrawal of any participating employer therein or (e) the occurrence of any transaction that is prohibited under any applicable Law and that would reasonably be expected to result in the incurrence of any liability by the Parent Borrower or any of its Subsidiaries, or the imposition on the Parent Borrower or any of its Subsidiaries of, any fine, excise tax or penalty resulting from any noncompliance with any applicable Law.

Non-U.S. Casualty Event” shall have the meaning assigned to such term in Section 2.05(b)(viii).

Non-U.S. Disposition” shall have the meaning assigned to such term in Section 2.05(b)(viii).

Non-U.S. Lender” means a Recipient that is not a U.S. Person.

Non-U.S. Plan” means any pension plan, benefit plan, fund (including any superannuation fund) or other similar program established, maintained or contributed to by a Loan Party or any of its Subsidiaries primarily for the benefit of employees employed and residing outside the United States (other than plans, funds or other similar programs that are maintained exclusively by a Governmental Authority), and which plan is not subject to ERISA or the Code.

Non-U.S. Subsidiary” means any Subsidiary of Holdings that is not a U.S. Subsidiary.

Note” means a Term Note or a Revolving Credit Note, as the context may require.

NPL” means the National Priorities List under CERCLA.

Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, Letter of Credit, Ancillary Facility, Secured Cash Management Agreement or Secured Hedge Agreement, in each case whether direct or indirect (including those acquired by assumption), 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 any Loan Party of any

 

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proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that (a) obligations of any Loan Party under any Secured Cash Management Agreement or Secured Hedge Agreement shall be secured and guaranteed pursuant to the Collateral Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed, (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Secured Hedge Agreements or Secured Cash Management Agreements and (c) the Obligations with respect to any Guarantor shall not include Excluded Swap Obligations of such Guarantor. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, indemnities and other amounts payable by any Loan Party under any Loan Document and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing pursuant to Section 10.04.

OFAC” shall have the meaning specified in the definition of Sanctions Laws and Regulations.

OID” means original issue discount.

Organization Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating or limited liability company agreement (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction) and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture, trust or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

Other L/C” has the meaning specified in Section 2.03(c)(v).

Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are imposed with respect to an assignment (other than an assignment made pursuant to Section 3.08).

Outstanding Amount” means: (a) with respect to the Term Loans, Revolving Credit Loans and Specified Refinancing Revolving Loans on any date, the aggregate outstanding principal Dollar Amount thereof after giving effect to any borrowings and prepayments or repayments of the Term Loans, Revolving Credit Loans (including any refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as a Revolving Credit Borrowing) and Specified Refinancing Revolving Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations with respect to any Tranche on any date, the Dollar Amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension with respect to such Tranche occurring on such date and any other changes in the aggregate Dollar Amount of the L/C Obligations with respect to such Tranche as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit (including any refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as a Revolving Credit Borrowing under such Tranche) or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

Parallel Liability” shall mean a Loan Party’s undertaking pursuant to Section 10.26.

 

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Parent Borrower” has the meaning specified in the introductory paragraph to this Agreement.

Parent Holding Company” means any direct or indirect parent entity of Holdings which holds directly or indirectly 100% of the Equity Interests of Holdings and which does not hold Capital Stock in any other Person (except for any other Parent Holding Company).

Pari Passu Indebtedness” means:

(a) with respect to any Borrower, any Indebtedness that ranks pari passu in right of payment to the Loans; and

(b) with respect to any Guarantor, any Indebtedness that ranks pari passu in right of payment to such Guarantor’s guarantee of the Obligations.

Participant” has the meaning specified in Section 10.07(d).

Participant Register” has the meaning specified in Section 10.07(m).

Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

PATRIOT Act” has the meaning specified in Section 10.22.

PBGC” means the Pension Benefit Guaranty Corporation.

PBOC” means the People’s Bank of China or its successor.

Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Plans and set forth in Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

Perfection Exceptions” means that no U.S. Loan Party shall be required to (i) enter into control agreements with respect to, or otherwise perfect any security interest by “control” (or similar arrangements) over securities accounts and deposit accounts of such Loan Party, (ii) perfect the security interest in the following other than by the filing of a UCC financing statement: (1) letter-of-credit rights (as defined in the UCC) and (2) commercial tort claims (as defined in the UCC), (iii) so long as no Event of Default shall have occurred and be continuing, send notices to account debtors or other contractual third-parties or (iv) deliver landlord waivers, estoppels or collateral access letters.

Perfection Requirements” means the making of appropriate registrations, filings, endorsements, notarisations, stamping and/or notifications of the Collateral Documents and/or the Collateral created thereunder; provided that, in respect of the Borrowers, Holdings, or any Guarantor listed on Schedule 1 or contemplated to be delivered pursuant to Schedule 6.16, such Perfection Requirements shall be limited to the extent set forth as a perfection requirement with respect to the applicable Loan Party in any legal opinion delivered in connection with the accession of such Persons.

Permitted Asset Swap” means the purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the Parent Borrower or any of its Restricted Subsidiaries and another Person; provided that such purchase and sale or exchange must occur within 90 days of each other and any cash or Cash Equivalents received must be applied in accordance with Section 7.04.

Permitted Debt” has the meaning specified in Section 7.01.

Permitted Debt Exchange” has the meaning specified in Section 2.19(a).

 

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Permitted Debt Exchange Notes” means Indebtedness in the form of unsecured, first lien, second lien or other junior lien notes; provided that such Indebtedness (i) satisfies the Permitted Other Debt Conditions, (ii) the covenants of such Indebtedness are, taken as a whole, not more restrictive to the Borrowers and the Restricted Subsidiaries than those contained in the Loan Documents (taken as a whole) (except for (x) covenants or other provisions applicable only to periods after the Maturity Date of the applicable Facility existing at the time of incurrence or issuance of such Permitted Debt Exchange Notes and (y) any financial maintenance covenant to the extent such covenant is also added for the benefit of the lenders under the applicable Facility, without further amendment requirement) or otherwise reflect market terms and conditions (as reasonably determined by the Borrowers) at the time of incurrence or issuance of such Permitted Debt Exchange Notes, (iii) does not mature prior to the Latest Maturity Date of the Term Loans, (iv) such Indebtedness is not at any time guaranteed by any Person other than Guarantors, and (v) to the extent secured, such Indebtedness is not secured by property other than the Collateral and the Liens securing such Indebtedness shall be subject to customary intercreditor arrangements reasonably satisfactory to the Administrative Agent and the security agreements governing such Liens shall be substantially the same as of the Collateral Documents (with such differences as are reasonably acceptable to the Administrative Agent).

Permitted Debt Exchange Offer” has the meaning specified in Section 2.19(a).

Permitted Holders” means each of (a) the Sponsor, (b) managers and members of management of the Borrowers (or any Permitted Parent (other than clause (c) of the definition thereof)) or its Subsidiaries that have ownership interests in the Borrowers (or such Permitted Parent (other than clause (c) of the definition thereof)), (c) any other beneficial owner in the common equity of the Borrowers (or such Permitted Parent (other than clause (c) of the definition thereof)) as of the Closing Date, (d) any group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of which any of the Persons described in clauses (a), (b) or (c) above are members; provided that, without giving effect to the existence of such group or any other group, any of the Persons described in clauses (a), (b) and (c), collectively, beneficially own Voting Stock representing 50% or more of the total voting power of the Voting Stock of the Parent Borrower (or any Permitted Parent (other than clause (c) of the definition thereof)) then held by such group, and (e) any Permitted Parent.

Permitted Investments” means:

(1) any Investment in cash and Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;

(2) any Investment in any Borrower or any Restricted Subsidiary;

(3) any Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries;

(4) any Investment by any Borrower or any Restricted Subsidiary in a Person that is primarily engaged in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, a Borrower or a Restricted Subsidiary (and any Investment held by such Person that was not acquired by such Person in contemplation of so becoming a Restricted Subsidiary or in contemplation of such merger, consolidation, amalgamation, transfer, conveyance or liquidation);

(5) any Investment in securities or other assets received in connection with an Asset Sale made pursuant to Section 7.04 or any other Disposition of assets not constituting an Asset Sale;

(6) any Investment (x) existing on the Closing Date and listed on Schedule 7.05, (y) made pursuant to binding commitments in effect on the Closing Date and listed on Schedule 7.05 or (z) that replaces, refinances, refunds, renews or extends any Investment described under either of the immediately preceding clauses (x) or (y); provided that any such Investment is in an amount that does not exceed the amount replaced, refinanced, refunded, renewed or extended, except as contemplated pursuant to the terms of such Investment in existence on the Closing Date or as otherwise permitted under this definition or otherwise under Section 7.05;

 

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(7) loans and advances to, or guarantees of Indebtedness of, employees, directors, officers, managers, consultants or independent contractors in an aggregate amount, taken together with all other Investments made pursuant to this clause (7) that are at the time outstanding, not in excess of $10,000,000 outstanding at any one time in the aggregate;

(8) loans and advances to officers, directors, employees, managers, consultants and independent contractors for business-related travel and entertainment expenses, moving and relocation expenses and other similar expenses, in each case in the ordinary course of business;

(9) any Investment (x) acquired by any Borrower or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by any Borrower or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of any Borrower or any such Restricted Subsidiary of such other Investment or accounts receivable, or (b) as a result of a foreclosure or other remedial action by any Borrower or any of its Restricted Subsidiaries with respect to any Investment or other transfer of title with respect to any Investment in default and (y) received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of any Borrower or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (B) litigation, arbitration or other disputes;

(10) Swap Contracts and cash management services permitted under Section 7.01(j);

(11) any Investment by any Borrower or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) in an aggregate amount, taken together with all other Investments made pursuant to this clause (11) that are at the time outstanding, not to exceed the greater of (x) $100,000,000 and (y) 9.00% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (11) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (11) for so long as such Person continues to be a Restricted Subsidiary;

(12) additional Investments by any Borrower or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (12) that are at the time outstanding, not to exceed the greater of (x) $150,000,000 and (y) 13.50% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (12) for so long as such Person continues to be a Restricted Subsidiary;

(13) any transaction to the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 6.18(b) (except transactions described in clause (2), (3), (4), (8), (9), (13) or (14) of such Section 6.18(b));

(14) Investments the payment for which consists of Equity Interests (other than Excluded Equity) of the Parent Borrower or any direct or indirect parent of the Parent Borrower, as applicable; provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under clause (c) of the first paragraph of Section 7.05;

 

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(15) Investments consisting of the leasing, licensing, sublicensing or contribution of intellectual property in the ordinary course of business or pursuant to joint marketing arrangements with other Persons;

(16) Investments consisting of purchases or acquisitions of inventory, supplies, materials and equipment or purchases, acquisitions, licenses, sublicenses or leases or subleases of intellectual property, or other rights or assets, in each case in the ordinary course of business;

(17) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness;

(18) Investments of a Restricted Subsidiary acquired after the Closing Date or of an entity merged or amalgamated into or consolidated with a Restricted Subsidiary in a transaction that is not prohibited by Section 7.03 after the Closing Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(19) repurchases of the Senior Notes;

(20) guarantees of Indebtedness permitted to be incurred under Section 7.01 and Obligations relating to such Indebtedness and guarantees (other than guarantees of Indebtedness) in the ordinary course of business;

(21) advances, loans or extensions of trade credit in the ordinary course of business by any Borrower or any of the Restricted Subsidiaries;

(22) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business;

(23) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers;

(24) intercompany current liabilities owed to Unrestricted Subsidiaries or joint ventures Incurred in the ordinary course of business in connection with the cash management operations of the Parent Borrower and its Subsidiaries;

(25) Investments in joint ventures of any Borrower or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (25) that are at the time outstanding, not to exceed the greater of (x) $75,000,000 and (y) 6.75% of Consolidated Net Tangible Assets; provided, that the Investments permitted pursuant to this clause (25) may, at the Borrowers’ option, be increased by the amount of JV Distributions, without duplication of dividends or distributions increasing amounts available pursuant to clause (c) of the first paragraph of Section 7.05;

(26) the Transactions (including payment of the purchase consideration under the Acquisition Agreement);

(27) accounts receivable, security deposits and prepayments and other credits granted or made in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and others, including in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, such account debtors and others, in each case in the ordinary course of business;

 

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(28) Investments acquired as a result of a foreclosure by any Borrower or any Restricted Subsidiary with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;

(29) Investments resulting from pledges and deposits that are Permitted Liens;

(30) acquisitions of obligations of one or more officers or other employees of any direct or indirect parent of the Parent Borrower, the Parent Borrower or any Subsidiary of the Parent Borrower in connection with such officer’s or employee’s acquisition of Equity Interests of any direct or indirect parent of the Borrower, so long as no cash is actually advanced by the Parent Borrower or any Restricted Subsidiary to such officers or employees in connection with the acquisition of any such obligations;

(31) guarantees of operating leases (for the avoidance of doubt, excluding Capitalized Lease Obligations as determined without giving effect to the application of IFRS 16) or of other obligations that do not constitute Indebtedness, in each case, entered into by any Borrower or any Restricted Subsidiary in the ordinary course of business;

(32) Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted by Section 7.05;

(33) non-cash Investments made in connection with tax planning and reorganization activities;

(34) Investments made pursuant to obligations entered into when the Investment would have been permitted hereunder so long as such Investment when made reduces the amount available under the clause under which the Investment would have been permitted; and

(35) Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client and customer contracts and loans or advances made to, and guarantees with respect to obligations of, distributors, suppliers, licensors and licensees in the ordinary course of business.

Permitted Joint Venture” means, with respect to any specified Person, a joint venture in any other Person engaged in a Similar Business in respect of which the Parent Borrower or a Restricted Subsidiary beneficially owns at least 35% of the shares of Equity Interests of such Person.

Permitted Liens” means, with respect to any Person:

(1) Liens Incurred in connection with workers’ compensation laws, unemployment insurance laws or similar legislation, or in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or to secure public or statutory obligations of such Person or to secure surety, stay, customs or appeal bonds to which such Person is a party, or as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2) Liens imposed by law, such as carriers’, warehousemen’s, landlords’, materialmen’s, repairman’s, construction contractors’, mechanics’ or other like Liens, in each case for sums not yet overdue by more than 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review (or which, if due and payable, are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained, to the extent required by IFRS) or with respect to which the failure to make payment could not reasonably be expected to have a Material Adverse Effect as determined in good faith by management of any Borrower or indirect parent of the Borrowers;

 

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(3) Liens for taxes, assessments or other governmental charges or levies (i) which are not yet due or payable, (ii) which are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained to the extent required by IFRS, or for property taxes on property such Person or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge, levy or claim is to such property or (iii) with respect to which the failure to make payment could not reasonably be expected to have a Material Adverse Effect;

(4) Liens in favor of the issuers of performance and surety bonds, bid, indemnity, warranty, release, appeal or similar bonds or with respect to regulatory requirements or letters of credit or bankers’ acceptances issued and completion of guarantees provided for, in each case, pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely interfere with the ordinary conduct of the business of such Person;

(6) Liens Incurred to secure obligations in respect of Indebtedness permitted to be Incurred pursuant to Section 7.01(a) or (d) and obligations secured ratably thereunder; provided that, in the case of clause (d), such Lien extends only to the assets and/or Capital Stock the acquisition, lease, construction, repair, replacement or improvement of which is financed thereby and any replacements, additions and accessions thereto and any income or profits thereof; provided, further that individual financings provided by a lender may be cross-collateralized to other financings provided by such lender or its affiliates;

(7) Liens of any Borrower or any of the Guarantors existing on the Closing Date and listed on Schedule 7.02 and any modifications, replacements, renewals or extensions thereof; provided that (i) the Lien does not extend to any additional property other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien or (B) proceeds and products thereof and (ii) the modification, replacement, renewal, extension or refinancing of the obligations secured or benefited by such Liens (if such obligations constitute Permitted Debt);

(8) Liens on assets of, or Equity Interests (other than Equity Interests in any Subsidiary that is required to become a Guarantor pursuant to this Agreement) in, a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (8), if a Person becomes a Subsidiary, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Borrowers, and any property or assets of such Person or any Subsidiary of such Person shall be deemed acquired by the Borrowers at the time of such merger, amalgamation or consolidation;

(9) Liens on assets at the time any Borrower or any Restricted Subsidiary acquired the assets, including any acquisition by means of a merger, amalgamation or consolidation with or into such Borrower or such Restricted Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided, further, that such Liens are limited to all or a portion of the property or assets (and improvements on such property or assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (9), if, in connection with an acquisition by means of a merger, amalgamation or consolidation with or into any Borrower or any Restricted Subsidiary, a Person other than a Borrower or Restricted Subsidiary is the successor company with respect thereto, any Subsidiary of such Person shall be deemed to become a Subsidiary of such Borrower or such Restricted Subsidiary, as applicable, and any property or assets of such Person or any such Subsidiary of such Person shall be deemed acquired by such Borrower or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;

 

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(10) Liens securing Indebtedness or other obligations of a Borrower or a Subsidiary Guarantor owing to another Borrower or another Subsidiary Guarantor permitted to be Incurred in accordance with Section 7.01;

(11) Liens securing Swap Contracts Incurred in accordance with Section 7.01;

(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit entered into in the ordinary course of business issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(13) leases, subleases, licenses, sublicenses, occupancy agreements or assignments of or in respect of real or personal property;

(14) Liens arising from, or from Uniform Commercial Code financing statement filings regarding, operating leases or consignments entered into by the Borrowers and the Guarantors in the ordinary course of business;

(15) Liens in favor of any Borrower or any Subsidiary Guarantor;

(16) (i) Liens on accounts receivable and related assets of the type specified in the definition of Receivables Financing Incurred in connection with a Qualified Receivables Financing and (ii) Liens securing Indebtedness or other obligations of any Receivables Subsidiary;

(17) deposits made or other security provided in the ordinary course of business to secure liability to insurance carriers or under self-insurance arrangements in respect of such obligations;

(18) Liens on the Equity Interests of Unrestricted Subsidiaries;

(19) grants of intellectual property, software and other technology licenses;

(20) judgment and attachment Liens not giving rise to an Event of Default pursuant to Section 8.01(f), (g) or (h) and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

(21) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(22) Liens Incurred to secure Cash Management Services and other “bank products” (including those described in Section 7.01(j) and (w));

(23) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (7), (8), (9) or (11), or succeeding clauses (24), (25) or (49) of this definition; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured (or, under the written arrangements under which the original Lien arose, could secure) the original Lien (plus any replacements, additions, accessions and improvements on such property), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (7), (8), (9), (11), (24), (25) or (49) of this definition at the time the original Lien became a Permitted Lien, and (B) an amount necessary to pay any fees and expenses, including unpaid accrued interest and the aggregate amount of premiums (including tender premiums), and underwriting discounts, defeasance costs and fees and expenses in connection therewith, related to such refinancing, refunding, extension, renewal or replacement and (z) any amounts Incurred under this clause (23) as refinancing indebtedness of clause (25) of this definition shall reduce the amount available under such clause (25);

 

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(24) other than with respect to any Designated Taiwan Subsidiary, Liens securing Pari Passu Indebtedness permitted to be Incurred pursuant to Section 7.01 if at the time of any Incurrence of such Pari Passu Indebtedness and after giving pro forma effect thereto the Consolidated First Lien Net Leverage Ratio would not exceed 4.50 to 1.00; provided that such Pari Passu Indebtedness shall be secured by the Collateral on a first lien “equal and ratable” basis with the Liens securing the Obligations or on a “junior” basis to the Liens securing the Obligations (in each case pursuant to intercreditor arrangements reasonably satisfactory to the Administrative Agent); provided, further that solely for the purpose of calculating the Consolidated First Lien Net Leverage Ratio pursuant to this clause (24), any Indebtedness Incurred pursuant to Sections 2.14 or 2.15, any Indebtedness described under (or secured pursuant to) this clause (24) and any New Incremental Notes and any Refinancing Notes (in the case of Refinancing Notes, to the extent that such Refinancing Notes refinance Indebtedness Incurred pursuant to Sections 2.14 or 2.15 or New Incremental Notes) and, in each case, whether or not such Indebtedness is unsecured or is secured (it being understood that if any portion of such Indebtedness is reclassified pursuant to the third paragraph of Section 7.01 to any other exception to Section 7.01, such portion of such Indebtedness shall no longer be deemed secured if unsecured at such time) by Liens that rank junior in priority to the Liens securing the Obligations, shall be deemed to constitute Consolidated Funded First Lien Indebtedness.

(25) other than with respect to any Designated Taiwan Subsidiary, other Liens securing obligations the principal amount of which does not exceed the greater of (x) $100,000,000 and (y) 9.00% of Consolidated Net Tangible Assets at any one time outstanding;

(26) Liens on the Equity Interests or assets of a joint venture to secure Indebtedness of such joint venture Incurred pursuant to Section 7.01(u);

(27) Liens on equipment of any Borrower or any Guarantor granted in the ordinary course of business to such Borrower’s or such Guarantor’s client at which such equipment is located;

(28) [Reserved.];

(29) Liens on property or assets used to redeem, repay, defease or to satisfy and discharge Indebtedness; provided that such redemption, repayment, defeasance or satisfaction and discharge is not prohibited by this Agreement and that such deposit shall be deemed for purposes of Section 7.05 (to the extent applicable) to be a prepayment of such Indebtedness;

(30) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation and exportation of goods in the ordinary course of business;

(31) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection; (ii) attaching to pooling, commodity trading accounts or other commodity brokerage accounts Incurred in the ordinary course of business; and (iii) in favor of banking or other financial institutions or entities, or electronic payment service providers, arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking or finance industry;

(32) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other Persons not given in connection with the issuance of Indebtedness; (ii) relating to pooled deposit or sweep accounts of any Borrower or any Guarantor to permit satisfaction of overdraft or similar obligations Incurred in the ordinary course of business of the Borrowers and the Guarantors; or (iii) relating to purchase orders and other agreements entered into with customers of any Borrower or any Guarantor in the ordinary course of business;

 

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(33) any encumbrance or restriction (including put and call arrangements) with respect to Equity Interests of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(34) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(35) Liens on vehicles or equipment of any Borrower or any Guarantor granted in the ordinary course of business;

(36) Liens on assets of Non-Loan Parties securing Indebtedness Incurred in accordance with Section 7.01(t);

(37) Liens disclosed by the title insurance policies delivered on or subsequent to the Closing Date for any Mortgaged Property and any replacement, extension or renewal of any such Liens (so long as the Indebtedness and other obligations secured by such replacement, extension or renewal Liens are permitted by this Agreement); provided that such replacement, extension or renewal Liens do not cover any property other than the property that was subject to such Liens prior to such replacement, extension or renewal;

(38) Liens arising solely by virtue of any statutory or common law provision or customary business provision relating to banker’s liens, rights of set-off or similar rights, including any security interest or right of set-off in favor of Dutch banks arising from their general banking conditions (algemene bankvoorwaarden);

(39) (a) Liens solely on any cash earnest money deposits made by any Borrower or any Restricted Subsidiary in connection with any letter of intent or other agreement in respect of any Permitted Investment and (b) Liens on advances of cash or Cash Equivalents in favor of the seller of any property to be acquired in a Permitted Investment to be applied against the purchase price for such Investment;

(40) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

(41) Liens on securities that are the subject of repurchase agreements constituting Cash Equivalents under clause (4) of the definition thereof;

(42) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts Incurred in the ordinary course of business and not for speculative purposes;

(43) rights reserved or vested in any Person by the terms of any lease, license, franchise, grant or permit held by the Parent Borrower or any of its Restricted Subsidiaries or by a statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or periodic payments as a condition to the continuance thereof;

(44) restrictive covenants affecting the use to which real property may be put; provided that such covenants are complied with;

(45) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;

(46) zoning by-laws and other land use restrictions, including, without limitation, site plan agreements, development agreements and contract zoning agreements;

 

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(47) Liens created pursuant to the general conditions of a bank operating in The Netherlands based on the general conditions drawn up by the Netherlands Bankers’ Association (Nederlandse Vereniging van Banken) and the Consumers Union (Consumentenbond) or pursuant to any other general conditions of, or any contractual arrangement with, any such bank to substantially the same effect;

(48) Liens on cash proceeds of Indebtedness (and on the related escrow accounts) in connection with the issuance of such Indebtedness into (and pending the release from) a customary escrow arrangement, to the extent such Indebtedness is Incurred in compliance with Section 7.01;

(49) for purposes of cash management arrangements among the Borrower Parties, Liens Incurred to secure back-to-back reimbursement obligations for working capital enhancement or other similar arrangements, the aggregate principal amount of which obligations or arrangements do not exceed $100,000,000 at any one time outstanding; and

(50) Liens on property constituting Collateral securing obligations issued or Incurred under (i) any Refinancing Notes and the Refinancing Notes Indentures related thereto, and (ii) any New Incremental Notes and the New Incremental Notes Indentures related thereto and, in each case, any Permitted Refinancings thereof (or successive Permitted Refinancings thereof); provided that such Liens are subject to customary intercreditor arrangements reasonably satisfactory to the Administrative Agent;

For purposes of determining compliance with this definition, (x) a Lien need not be Incurred solely by reference to one category of Permitted Liens described in this definition but may be Incurred under any combination of such categories (including in part under one such category and in part under any other such category), (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Permitted Liens, the Parent Borrower shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition, and (z) in the event that a portion of the Indebtedness secured by a Lien could be classified as secured in part pursuant to clause (6) or (24) above (giving effect to the Incurrence of such portion of such Indebtedness), the Parent Borrower, in its sole discretion, may classify such portion of such Indebtedness (and any Obligations in respect thereof) as having been secured pursuant to clause (6) or (24) above and thereafter the remainder of the Indebtedness as having been secured pursuant to one or more of the other clauses of this definition.

Permitted Other Debt Conditions” means that such applicable Indebtedness does not mature or have scheduled amortization payments of principal and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (except (x) customary offers or obligations to repurchase, repay or redeem upon a change of control, asset sale, casualty or condemnation event or initial public offering, (y) maturity payments and customary mandatory prepayments for a customary bridge financing which, subject to customary conditions, provides for automatic conversion or exchange into Indebtedness that otherwise complies with the requirements of this definition or (z) “AHYDO” payments), in each case prior to the Latest Maturity Date at the time such Indebtedness is incurred.

Permitted Parent” means (a) any direct or indirect parent of the Parent Borrower so long as a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof holds 50% or more of the Voting Stock of such direct or indirect parent of the Parent Borrower, (b) any Holdings Entity, so long as such entity constitutes a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof and (c) any Public Company (or Wholly Owned Subsidiary of such Public Company) to the extent and until such time as any Person or group (other than a Permitted Holder under clause (a), (b), (c) or (d) of the definition thereof) is deemed to be or become a beneficial owner of Voting Stock of such Public Company representing more than 50% of the total voting power of the Voting Stock of such Permitted Parent.

Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, replacement, exchange or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, replaced, exchanged or extended except by an amount equal to accrued and unpaid interest and a reasonable premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred (including original issue discount and upfront fees), in connection with such modification, refinancing, refunding, renewal, replacement, exchange or extension and by an amount

 

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equal to any existing commitments unutilized thereunder; (b) other than with respect to Indebtedness under Section 7.01(d), such modification, refinancing, refunding, renewal, replacement, exchange or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended; (c) if the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal, replacement, exchange or extension is subordinated in right of payment to the Obligations on terms, taken as a whole, as favorable in all material respects to the Lenders (including, if applicable, as to Collateral) as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended or otherwise acceptable to the Administrative Agent; (d) if the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended is (i) unsecured, such modification, refinancing, refunding, renewal, replacement, exchange or extension is unsecured, or (ii) if secured by Liens on the Collateral, such modification, refinancing, refunding, replacement, renewal or extension is secured to the same extent, including with respect to any subordination provisions, and subject to intercreditor arrangements reasonably satisfactory to the Administrative Agent; (e) the terms and conditions (including, if applicable, as to collateral) of any such modified, refinanced, refunded, renewed, replaced, exchanged or extended (other than to the extent permitted by any other clause of this definition or with respect to interest rate, optional prepayment premiums and options redemption provisions) Indebtedness are either (i) substantially identical to or less favorable to the investors providing such Permitted Refinancing, taken as a whole, than the terms and conditions of the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended or (ii) when taken as a whole (other than interest rate, prepayment premiums and redemption premiums), not more restrictive to the Parent Borrower and the Restricted Subsidiaries than those set forth in this Agreement or are customary for similar indebtedness in light of current market conditions (provided that a certificate of a Responsible Officer of the Parent Borrower delivered to the Administrative Agent in good faith at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Parent Borrower has determined in good faith that such terms and conditions satisfy the requirement set out in this clause (e), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to the Parent Borrower of its objection during such five Business Day period (including a reasonable description of the basis upon which it objects)), in each case, except for terms and conditions only applicable to periods after the Latest Maturity Date; (f) such modification, refinancing, refunding, renewal, replacement, exchange or extension is incurred by the Person who is or would have been permitted to be the obligor or guarantor (or any successor thereto) on the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended (it being understood that the roles of such obligors as a borrower or a guarantor with respect to such obligations may be interchanged); and (g) at the time thereof, other than with respect to Indebtedness under Section 7.01(d) and Section 7.01(j), no Event of Default shall have occurred and be continuing.

Person” means any individual, corporation, company, partnership, limited liability company, joint venture, association, join stock company, trust, unincorporated organization, government (or any agency or political subdivision thereof) or any other entity.

Plan” means any “employee benefit plan” (other than a Multiemployer Plan) within the meaning of Section 3(3) of ERISA that is maintained or is contributed to by a Loan Party or any ERISA Affiliate and is subject to Title IV of ERISA or the minimum funding standards under Section 412 of the Code or Section 302 of ERISA.

Platform” has the meaning specified in Section 6.02.

Pledged Debt” means “Pledged Debt” (or similar term) as defined in the Security Agreement and each other applicable Collateral Document.

Pledged Interests” means “Pledged Interests” (or similar term) as defined in the Security Agreement and each other applicable Collateral Document.

PRC” has the meaning specified in Section 2.04(b).

 

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PRC Guaranty” means, collectively, a Guaranty made by one or more PRC Subsidiaries in favor of the Administrative Agent on behalf of the Secured Parties, substantially in the form of Exhibit F-2, together with each other guaranty and guaranty supplement delivered pursuant to Section 6.12 or 6.16.

PRC Subsidiary” means any Subsidiary of the Parent Borrower that is organized under the laws of the PRC.

Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

Prepayment Amount” has the meaning specified in Section 2.05(c).

Prepayment-Based Incremental Facility” has the meaning specified in Section 2.14(a).

Prepayment Date” has the meaning specified in Section 2.05(c).

Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the FRB in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the FRB (as determined by the Administrative Agent). To the extent applicable to the Initial Term B-2 Loans, the Administrative Agent will notify the Redenomination Term Facilities Administrative Agent of the Prime Rate at such time promptly upon request thereof.

Pro Forma Basis,” “Pro Forma Compliance” and “Pro Forma Effect” mean, with respect to the calculation of any test, financial ratio, basket or covenant under this Agreement, including the Consolidated First Lien Net Leverage Ratio, the Consolidated Total Net Leverage Ratio and the Fixed Charge Coverage Ratio and the calculation of Consolidated Net Tangible Assets and Consolidated Total Assets of any Person and its Restricted Subsidiaries, as of any date, that pro forma effect will be given to the Transactions, any acquisition, merger, amalgamation, consolidation, Investment, any issuance, Incurrence, assumption or repayment or redemption of Indebtedness (including Indebtedness issued, Incurred or assumed or repaid or redeemed as a result of, or to finance, any relevant transaction and for which any such test, financial ratio, basket or covenant is being calculated), any issuance or redemption of Preferred Stock or Disqualified Stock, all sales, transfers and other dispositions or discontinuance of any Subsidiary, line of business, division, segment or operating unit, any operational change (including the entry into any material contract or arrangement) or any designation of a Restricted Subsidiary to an Unrestricted Subsidiary or of an Unrestricted Subsidiary to a Restricted Subsidiary, in each case that have occurred during the four consecutive fiscal quarter period of such Person being used to calculate such test, financial ratio, basket or covenant (the “Reference Period”), or subsequent to the end of the Reference Period but prior to such date or prior to or substantially simultaneously with the event for which a determination under this definition is made (including any such event occurring at a Person who became a Restricted Subsidiary of the subject Person or was merged, amalgamated or consolidated with or into the subject Person or any other Restricted Subsidiary of the subject Person after the commencement of the Reference Period), as if each such event occurred on the first day of the Reference Period; provided that (x) pro forma effect will be given to reasonably identifiable and quantifiable pro forma cost savings or expense reductions related to operational efficiencies (including the entry into any material contract or arrangement), strategic initiatives or purchasing improvements and other cost savings, improvements or synergies, in each case, that have been realized, or are reasonably expected to be realized, by such Person and its Restricted Subsidiaries based upon actions to be taken within 24 months after the consummation of the action as if such cost savings, expense reductions, improvements and synergies occurred on the first day of the Reference Period and (y) no amount shall be added back pursuant to this definition to the extent duplicative of amounts that are otherwise included in computing Consolidated EBITDA for such Reference Period.

For purposes of making any computation referred to above:

(1) if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date for which a determination under this definition is made had been the applicable rate for the entire period (taking into account any Swap Contracts applicable to such Indebtedness if such Swap Contracts has a remaining term in excess of 12 months);

 

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(2) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of the Parent Borrower or a direct or indirect parent of the Parent Borrower to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with IFRS;

(3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Parent Borrower may designate;

(4) interest on any Indebtedness under a revolving credit facility or a Qualified Receivables Financing computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period; and

(5) to the extent not already covered above, any such calculation may include adjustments calculated in accordance with Regulation S-X under the Securities Act.

Any pro forma calculation may include, without limitation, (1) adjustments calculated in accordance with Regulation S-X under the Securities Act, (2) adjustments calculated to give effect to any Pro Forma Cost Savings and (3) all adjustments included on Schedule 1.01(a) attached hereto, to the extent such adjustments, without duplication, continue to be applicable to the Reference Period; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Cost Savings.”

Pro Forma Cost Savings” means, without duplication of any amounts referenced in the definition of “Pro Forma Basis,” an amount equal to the amount of cost savings, operating expense reductions, operating improvements (including the entry into any material contract or arrangement) and acquisition synergies, in each case, projected in good faith to be realized (calculated on a pro forma basis as though such items had been realized on the first day of such period) as a result of actions taken or to be taken by the Borrowers (or any successor thereto) or any Restricted Subsidiary, net of the amount of actual benefits realized or expected to be realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions; provided that such cost savings, operating expense reductions, operating improvements and synergies are reasonably identifiable (as determined in good faith by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of the Parent Borrower (or any successor thereto) or of any direct or indirect parent of the Parent Borrower) and are reasonably anticipated to be realized within 24 months after the consummation of any change that is expected to result in such cost savings, expense reductions, operating improvements or synergies; provided that no cost savings, operating expense reductions, operating improvements and synergies shall be added pursuant to this definition to the extent duplicative of any expenses or charges otherwise added to Consolidated Net Income or Consolidated EBITDA, whether through a pro forma adjustment, add back exclusion or otherwise, for such period.

Pro Rata Share” means, with respect to each Lender and any Facility or all the Facilities or any Tranche or all the Tranches (as the case may be) at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place, and subject to adjustment as provided in Section 2.17), the numerator of which is the amount of the Commitments of such Lender under the applicable Facility or the Facilities or Tranche or Tranches (and, in the case of any Term Loan Tranche after the applicable borrowing date and without duplication, the outstanding principal amount of Term Loans under such Tranche, of such Lender, at such time) at such time and the denominator of which is the amount of the Aggregate Commitments under the applicable Facility or the Facilities or Tranche or Tranches at such time (and, in the case of any Term Loan Tranche and without duplication, the outstanding principal amount of Term Loans under such Tranche, at such time); provided that if the commitment of each Lender to make Loans and the obligation of each L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, then the Pro Rata Share of each Lender shall be determined based on the Pro Rata Share of such

 

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Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as applicable.

PSC Register” means the register of people with significant control required to be maintained by an entity pursuant to Part 21A of the Companies Act 2006 or the “central register” maintained by Companies House where an entity has elected for its register to be kept by Companies House.

Public Company” means any Person with a class or series of Voting Stock that is traded on a stock exchange or in the over-the-counter market.

Public Lender” has the meaning specified in Section 6.02.

Qualified Holding Company Indebtedness” means Indebtedness of Holdings (A) that is not subject to any Guarantee by any Subsidiary of Holdings (other than a Subsidiary as contemplated under clause (i) of the proviso in Section 7.09 of this Agreement), (B) that has no scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligation (it being understood that such Indebtedness may have mandatory prepayment, repurchase or redemption provisions satisfying the requirements of clause (C) below), (C) that has mandatory prepayment, repurchase or redemption, covenant, default and remedy provisions customary for senior notes (or no more restrictive than is customary) of an issuer that is the parent of a borrower under senior secured credit facilities, and in any event, with respect to covenant, default and remedy provisions, no more restrictive (taken as a whole) than those set forth in this Agreement (other than provisions customary for senior notes of a holding company, including (x) customary assets sale, change of control provisions and customary acceleration rights after an event of default and (y) customary “AHYDO” payments) and (D) if such Indebtedness is secured, it shall only be secured by assets of any Parent Holding Company (other than Holdings) and any Subsidiary of Holdings that is not prohibited from guaranteeing such Indebtedness as provided in clause (A) of this definition; provided that Holdings shall have delivered a certificate of a Responsible Officer to the Administrative Agent at least five Business Days (or such shorter period as may be agreed by the Administrative Agent) prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that Holdings has reasonably determined in good faith that such terms and conditions satisfy the foregoing requirement (and such certificate shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies Holdings within such applicable period that it disagrees with such determination (including a reasonably detailed description of the basis upon which it disagrees)); provided, further, that any such Indebtedness shall constitute Qualified Holding Company Indebtedness only if immediately after giving effect to the issuance or incurrence thereof and the use of proceeds thereof, no Event of Default shall have occurred and be continuing.

Qualified IPO” means the issuance by Holdings or any Parent Holding Company of its common Capital Stock in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) resulting in such Capital Stock being listed on a nationally-recognized stock exchange in the applicable jurisdiction.

Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:

(1) the Board of Directors of any Borrower, Holdings or any Parent Holding Company shall have determined in good faith that such Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Parent Borrower and its Restricted Subsidiaries,

(2) all sales/transfers of accounts receivable and related assets by any Borrower or any Restricted Subsidiary to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Parent Borrower), and

 

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(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms at the time the receivables financing is first introduced (as determined in good faith by the Parent Borrower) and may include Standard Securitization Undertakings.

The grant of a security interest in any accounts receivable of any Borrower or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure any Credit Agreement shall not be deemed a Qualified Receivables Financing.

Rating Agency” means (1) each of Moody’s and S&P and (2) if Moody’s or S&P ceases to rate the Facilities for reasons outside of the Parent Borrower’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3 under the Exchange Act selected by the Parent Borrower or any direct or indirect parent of the Parent Borrower as a replacement agency for Moody’s or S&P, as the case may be.

Ratio Debt” has the meaning specified in the first paragraph of Section 7.01.

Ratio-Based Incremental Facility” has the meaning specified in Section 2.14(a).

Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.

Receivables Financing” means any transaction or series of transactions that may be entered into by the Parent Borrower or any of its Subsidiaries pursuant to which the Parent Borrower or any of its Subsidiaries may sell, contribute, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Parent Borrower or any of its Subsidiaries), and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Parent Borrower or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Swap Contracts entered into by the Parent Borrower or any such Subsidiary in connection with such accounts receivable.

Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

Receivables Subsidiary” means a Person formed for the purposes of engaging in a Qualified Receivables Financing with the Parent Borrower, whether or not the Parent Borrower or any Subsidiary of the Parent Borrower or a direct or indirect parent of the Parent Borrower makes an Investment in such Person, to which the Parent Borrower or any Subsidiary of the Parent Borrower or a direct or indirect parent of the Parent Borrower transfers accounts receivable and related assets, which Person engages in no activities other than in connection with the financing of accounts receivable of the Parent Borrower and its Subsidiaries or a direct or indirect parent of the Parent Borrower, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Parent Borrower or any Parent Holding Company (as provided below) as a Receivables Subsidiary and:

(1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Parent Borrower or any other Subsidiary of the Parent Borrower (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Parent Borrower or any other Subsidiary of the Parent Borrower in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Parent Borrower or any other Subsidiary of the Parent Borrower, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

 

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(2) with which neither the Parent Borrower nor any other Subsidiary of the Parent Borrower has any material contract, agreement, arrangement or understanding other than on terms which the Parent Borrower reasonably believes to be no less favorable to the Parent Borrower or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Parent Borrower, and

(3) to which neither the Parent Borrower nor any other Subsidiary of the Parent Borrower has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

Any such designation by the Board of Directors of the Parent Borrower or any Parent Holding Company shall be evidenced to the Administrative Agent by filing with the Administrative Agent a certified copy of the resolution of the Board of Directors of the Parent Borrower or such Parent Holding Company giving effect to such designation and an officer’s certificate certifying that such designation complied with the foregoing conditions.

Recipient” means any Agent, any Lender, and any L/C Issuer, or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, as applicable.

Redenominated Term B-3 Loans” has the meaning specified in Section 2.04(b).

Redenomination Event” means (a) with respect to any Initial Term B-3 Loan or New Term Loan denominated in RMB, the making of such Initial Term B-3 Loan or New Term Loan (as applicable) or (b) with respect to any Redenominated Term B-3 Loan, the re-denomination of the applicable Initial Term B-2 Loan into such Redenominated Term B-3 Loan pursuant to Section 2.04(b).

Redenomination Fees” has the meaning specified in Section 2.09.

Redenomination Term Facilities Administrative Agent” means Bank of China Limited, Shanghai Branch, acting through such of its Affiliates or branches as it may designate, in its capacity as Redenomination Term Facilities Administrative Agent under this Agreement, or any successor administrative agent permitted by the terms hereof, but solely with respect to the Initial Term B-2 Loans, any Initial Term B-3 Loans and any Redenominated Term B-3 Loans.

Redenomination Term Facilities Administrative Agent’s Office” means the Redenomination Term Facilities Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 or such other address or account as the Redenomination Term Facilities Administrative Agent may from time to time notify the Parent Borrower and the applicable Lenders.

Reference Period” has the meaning given to such term in the definition of Pro Forma Basis.

Refinancing” has the meaning given to such term in the definition of the Transactions.

Refinancing Amendment” means an amendment to this Agreement, in form and substance reasonably satisfactory to the Administrative Agent, among the Borrowers, the Administrative Agent and the Lenders providing Specified Refinancing Debt, effecting the incurrence of such Specified Refinancing Debt in accordance with Section 2.18.

Refinancing Indebtedness” has the meaning specified in Section 7.01(n).

 

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Refinancing Notes” means one or more series of senior unsecured notes, or senior secured notes secured by the Collateral on a first lien “equal and ratable” basis with the Liens securing the Obligations or senior secured notes secured by the Collateral on a “junior” basis to the Liens securing the Obligations, in each case issued in respect of a refinancing of outstanding Indebtedness of the Borrowers under any one or more Term Loan Tranches; provided that, (a) if such Refinancing Notes shall be secured, then (i) such Refinancing Notes shall only be secured by a security interest in the Collateral that secured the Term Loan Tranche being refinanced, and (ii) such Refinancing Notes shall be issued subject to customary intercreditor arrangements that are reasonably satisfactory to the Administrative Agent; (b) no Refinancing Notes shall (i) mature prior to the Latest Maturity Date with respect to Term Loans then in effect immediately after giving effect to such refinancing or (ii) be subject to any amortization prior to the final maturity thereof, or be subject to any mandatory redemption or prepayment provisions or rights (except (x) customary assets sale, casualty events or similar event, change of control provisions and customary acceleration rights after an event of default and (y) customary “AHYDO” payments); (c) the covenants, events of default, guarantees, collateral and other terms of such Refinancing Notes are customary for similar debt securities in light of then-prevailing market conditions at the time of issuance (it being understood that no Refinancing Notes shall include any financial maintenance covenants (including indirectly by way of a cross-default to this Agreement), but that customary cross-acceleration provisions may be included and that any negative covenants with respect to indebtedness, investments, liens or restricted payments shall be incurrence-based) and in any event are not more favorable to the investors providing such Refinancing Notes, taken as a whole, than the terms and conditions of the Indebtedness being refinanced by such Refinancing Notes) (excluding pricing and optional prepayment or redemption terms), except for covenants or other provisions (x) applicable only to periods after the Latest Maturity Date then in effect immediately after giving effect to such refinancing or (y) reasonably satisfactory to the Administrative Agent (provided that a certificate of a Responsible Officer of the Parent Borrower delivered to the Administrative Agent in good faith at least five Business Days (or such shorter period as may be agreed by the Administrative Agent) prior to the incurrence of such Refinancing Notes, together with a reasonably detailed description of the material terms and conditions of such Refinancing Notes or drafts of the documentation relating thereto, stating that the Parent Borrower has determined in good faith that such terms and conditions satisfy the requirement set forth in this clause (c), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to the Parent Borrower of its objection during such five Business Day period (or shorter) (including a reasonable description of the basis upon which it objects)); (d) such Refinancing Notes may not have obligors or Liens that are more extensive than those which applied to the Indebtedness being refinanced (it being understood that the roles of such obligors as a borrower or a guarantor with respect to such obligations may be interchanged); and (e) the Net Cash Proceeds of such Refinancing Notes shall be applied, substantially concurrently with the incurrence thereof, to the pro rata prepayment of outstanding Term Loans under the applicable Term Loan Tranche being so refinanced and the payment of fees, expenses and premiums, if any, payable in connection therewith.

Refinancing Notes Indentures” means, collectively, the indentures or other similar agreements pursuant to which any Refinancing Notes are issued, together with all instruments and other agreements in connection therewith, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, but only to the extent permitted under the terms of the Loan Documents.

Refunding Capital Stock” has the meaning specified in Section 7.05.

Register” has the meaning specified in Section 10.07(c).

Regulation S-X” means Regulation S-X under the Securities Act.

Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided that any assets received by a Borrower or a Restricted Subsidiary in exchange for assets transferred by a Borrower or a Restricted Subsidiary will not be deemed to be Related Business Assets if they consist of securities of a Person, unless such Person is, or upon receipt of the securities of such Person, such Person would become, a Restricted Subsidiary.

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, members, directors, managers, officers, employees, agents, attorneys-in-fact, trustees and advisors of such Person and of such Person’s Affiliates.

 

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Related Taxes” means any taxes, charges or assessments, including, but not limited to, sales, use, transfer, rental, ad valorem, value-added, stamp, property, consumption, franchise, license, capital, net worth, gross receipts, excise, occupancy, intangibles or similar taxes, charges or assessments (other than U.S. federal, state or local income taxes) required to be paid by a Holdings Entity or any other direct or indirect parent of the Parent Borrower by virtue of its being incorporated or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Parent Borrower, any of its Subsidiaries or any other direct or indirect parent of the Parent Borrower), or being a holding company parent of the Parent Borrower, any of its Subsidiaries or any other direct or indirect parent of the Parent Borrower or receiving dividends from or other distributions in respect of the Capital Stock of the Parent Borrower, any of its Subsidiaries or any other direct or indirect parent of the Parent Borrower, or having guaranteed any obligations of the Parent Borrower or any Subsidiary thereof, or having made any payment in respect of any of the items for which the Parent Borrower or any of its Subsidiaries is permitted to make payments to any parent entity pursuant to the covenant described under Section 7.05, or acquiring, developing, maintaining, owning, prosecuting, protecting or defending its intellectual property and associated rights (including but not limited to receiving or paying royalties for the use thereof) relating to the business or businesses of the Parent Borrower or any Subsidiary thereof.

Relevant Redenomination Event” has the meaning specified in Section 2.04(b).

Relevant Transaction” has the meaning specified in Section 2.05(b)(ii).

Replaceable Lender” has the meaning specified in Section 3.08(a).

Replacement Assets” means (1) substantially all the assets of a Person primarily engaged in a Similar Business or (2) a majority of the Voting Stock of any Person primarily engaged in a Similar Business that will become, on the date of acquisition thereof, a Restricted Subsidiary.

Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.

Reports” means the following reports prepared in connection with the Acquisition: (a) a commercial due diligence report prepared by Bain & Company dated 23 September 2016; (b) an operational due diligence report prepared by PwC dated 22 September, 2016; (c) an operational due diligence report prepared by Alvarez & Marsal dated 22 September, 2016; (d) a legal due diligence report prepared by Freshfields Bruckhaus Deringer LLP dated 30 September, 2016; and (e) a tax structuring memorandum prepared by PwC dated January 30, 2017 (the “Tax Structuring Memorandum”).

Repricing Event” means (i) any prepayment or repayment of the Initial Term Loans or Redenominated Term B-3 Loans, in whole or in part, with the proceeds of, or conversion of any portion of the Initial Term Loans or Redenominated Term B-3 Loans into, any new or replacement tranche of syndicated term loans under credit facilities incurred for the primary purpose of repaying, refinancing, or replacing Initial Term Loans or Redenominated Term B-3 Loans, as applicable, with term loans bearing interest with an All-in Yield less than the All-in Yield applicable to such portion of the Initial Term Loans or Redenominated Term B-3 Loans (as such comparative yields are determined in the reasonable judgment of the Administrative Agent consistent with generally accepted financial practices) and (ii) any amendment to the Facility with respect to the Initial Term Loans or Redenominated Term B-3 Loans which reduces the All-in Yield applicable to the Initial Term Loans or Redenominated Term B-3 Loans; provided that a Repricing Event shall not include (i) any event described above that is not consummated for the primary purpose of lowering the effective interest cost or weighted average yield applicable to the Term Facility, including, without limitation, in the context of a transaction involving an initial public offering, a Change of Control or a Transformative Event or (ii) a Redenomination Event.

Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Loans, a Committed Loan Notice or RMB Committed Loan Notice, as applicable, and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.

 

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Required Lenders” means, as of any date of determination, Lenders having more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition), (b) aggregate unused Term Commitments and (c) aggregate unused Revolving Credit Commitments; provided that the unused Term Commitments of, unused Revolving Credit Commitment of, and the portion of the Total Outstandings held or deemed held by (x) any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders and (y) any Affiliate Lenders (other than Debt Fund Affiliates) shall be deemed to have voted in the same proportion as Lenders that are not Affiliate Lenders vote on such matter; provided that, for purposes of this definition, (i) the outstanding principal amount of Alternative Currency Loans as of any date of determination shall be determined using the Dollar Amount thereof and (ii) the outstanding principal amount of any Term B-3 Loans as of any date of determination shall be determined using the Dollar Amount thereof (calculated using (in the case of any Term B-3 Loan other than a Redenominated Term B-3 Loan) the RMB Exchange Rate as of the date on which such Term B-3 Loan is made or (in the case of a Redenominated Term B-3 Loan) the RMB Redenomination Exchange Rate in respect of the Relevant Redenomination Event relating to such Term B-3 Loan).

Required Revolving Lenders” means, as of any date of determination, Revolving Credit Lenders holding (including, for Ancillary Lenders, via an Affiliate of such Revolving Credit Lender) more than 50% of the sum of (a) Total Revolving Credit Outstandings (with the aggregate amount of each Revolving Credit Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Revolving Credit Lender for purposes of this definition), (b) Ancillary Outstandings and (c) aggregate unused Revolving Credit Commitments; provided that the unused Revolving Credit Commitment of, and the portion of the Total Revolving Credit Outstandings and Ancillary Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Revolving Lenders; provided further that, for purposes of this definition, the outstanding principal amount of Alternative Currency Loans at any time shall be determined using the Dollar Amount thereof.

Responsible Officer” means, with respect to any Person, the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary (or any person serving the equivalent function of any of the foregoing) of such Person (or of any direct or indirect parent, general partner, managing member or sole member of such Person) or any individual designated as an “Officer” by the Board of Directors of such Person (or the Board of Directors of any direct or indirect parent or the general partner, managing member or sole member of such Person).

Restricted Investment” means an Investment other than a Permitted Investment.

Restricted Payment” has the meaning specified in Section 7.05.

Restricted Subsidiary” means any Subsidiary of Holdings that is not an Unrestricted Subsidiary.

Restructuring” means the post-closing restructuring and other transactions contemplated by the Tax Structuring Memorandum.

Retired Capital Stock” has the meaning specified in Section 7.05.

Revolving Commitment Increase Lender” has the meaning specified in Section 2.14(e).

Revolving Credit Borrowing” means a borrowing under the Revolving Credit Facility consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Revolving Credit Lenders pursuant to Section 2.01(b).

Revolving Credit Commitment Increase” has the meaning specified in Section 2.14(a).

Revolving Credit Commitments” means, as to any Revolving Credit Lender, its obligation, if any, to (a) make Revolving Credit Loans to the Borrowers pursuant to Section 2.01(b), (b) purchase participations in L/C Obligations and (c) make Ancillary Facilities available to the Borrower pursuant to Section 2.21, in an aggregate

 

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principal and/or face Dollar Amount not to exceed the amount set forth under the heading “Revolving Credit Commitment” opposite such Lender’s name on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as applicable, as the same may be adjusted from time to time in accordance with this Agreement. The Revolving Credit Commitments shall include all Revolving Credit Commitment Increases and Specified Refinancing Revolving Credit Commitments. The original Dollar Amount of the Revolving Credit Commitments shall be $250,000,000 on the Closing Date, as such amount may be adjusted from time to time in accordance with the terms of this Agreement.

Revolving Credit Facility” means, at any time, the aggregate amount of the Revolving Credit Lenders’ Revolving Credit Commitments at such time.

Revolving Credit Lender” means, at any time, any Lender that has a Revolving Credit Commitment at such time (and after the termination of all Revolving Credit Commitments, any Lender that holds any Outstanding Amount in respect of Revolving Credit Loans and/or L/C Obligations).

Revolving Credit Loan” has the meaning specified in Section 2.01(b).

Revolving Credit Note” means a promissory note of the Borrowers payable to any Revolving Credit Lender or its registered assigns, in substantially the form of Exhibit C-2 hereto, evidencing the aggregate indebtedness of the Borrowers to such Revolving Credit Lender resulting from the Revolving Credit Loans made by such Revolving Credit Lender.

Revolving Tranche” means (a) the Revolving Credit Facility pursuant to which Revolving Credit Loans, Ancillary Facilities or Letters of Credit are made under the Revolving Credit Commitments and (b) any Specified Refinancing Debt constituting revolving credit facility commitments, in each case, including the extensions of credit made thereunder. Additional Revolving Tranches may be added after the Closing Date as provided in Section 2.14, i.e., New Revolving Commitments.

RMB means the China yuan renminbi, the currency of the PRC.

RMB Alternative Exchange Rate a rate of exchange for converting RMB (traded outside the PRC) to Dollars from a bank or financial institution (other than the BOC Arranger or one of its Affiliates) that is more favorable to the Parent Borrower than the RMB Exchange Rate.

RMB Committed Loan Notice” means a notice of a Term Borrowing of an an Initial Term B-3 Loan pursuant to Sections 2.04(a), 2.14, 2.18 or or re-denomination of an Initial Term B-2 Loan pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit A-3.

RMB Exchange Rate” means, as at any date, the prevailing CNH/Dollar rate of exchange offered by the BOC Arranger (or a specified Affiliate of the BOC Arranger) with respect to the conversion of RMB (traded outside the PRC) to Dollars on that date, as notified by the Redenomination Term Facilities Administrative Agent to the Parent Borrower (with notice to the Administrative Agent).

RMB Notice” shall mean a delivery of a notice pursuant to Section 2.04 in the form of Exhibit A-4.

RMB Redenomination Exchange Rate” has the meaning specified in Section 2.04(b).

RMB Redenomination Selection Notice” has the meaning specified in Section 2.04(b).

Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by a Borrower or a Restricted Subsidiary whereby a Borrower or a Restricted Subsidiary transfers such property to a Person and such Borrower or such Restricted Subsidiary leases it from such Person, other than leases between a Borrower and a Restricted Subsidiary or between Restricted Subsidiaries.

 

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Same Day Funds” means (a) with respect to disbursements and payments in Dollars, immediately available funds, (b) with respect to disbursements and payments in an Alternative Currency (other than RMB), same day or other funds as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency and (c) with respect to disbursements and payments in RMB, same day or other funds as may be determined by the Redenomination Term Facilities Administrative Agent to be customary in the place of disbursement or payment for the settlement of banking transactions in RMB.

Sanctioned Country” means, at any time, a country, region, or territory that is the subject of a general export, import, financial, investment or other trade-related embargo under any Sanctions Laws and Regulations, which countries as of the date of this Agreement include Cuba, Iran, North Korea, Sudan, Syria, and the Crimea Region.

Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions Laws and Regulations-related lists of designated Persons maintained by the U.S. government, including OFAC’s Specially Designated National’s and Blocked Parties List, the U.S. Department of State’s list of Debarred Parties, and the U.S. Department of Commerce’s Entity List, as well as the United Nations Security Council, Her Majesty’s Treasury of the United Kingdom, the European Union, any European Union member state or the Canadian government, (b) any Person located, operating, organized, or resident in a Sanctioned Country, or (c) any Person owned or controlled by any such Person.

Sanctions Laws and Regulations” means (i) any sanctions or requirements imposed by, or based upon the obligations or authorities set forth in, the PATRIOT Act, the Executive Order No. 13224 of September 23, 2001, entitled Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), the U.S. International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq.), the U.S. Trading with the Enemy Act (50 U.S.C. App. §§ 1 et seq.), the Export Administration Act, the Export Administration Regulations, the U.S. Syria Accountability and Lebanese Sovereignty Act, the U.S. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 or the Iran Sanctions Act, Section 1245 of the National Defense Authorization Act of 2012, all as amended, or any of the foreign assets control regulations (including but not limited to 31 C.F.R., Subtitle B, Chapter V, as amended) or any other law or executive order relating thereto administered by the U.S. Department of the Treasury Office of Foreign Assets Control (“OFAC”), the U.S. Department of Commerce, the U.S. Department of State, and any similar law, regulation, or executive order that may be enacted, from time to time, by the United States government, (ii) any sanctions or requirements imposed under similar laws or regulations enacted by the European Union or the United Kingdom or administered, enacted or enforced by the respective governmental institutions or agencies of any of the foregoing, including, without limitation, Her Majesty’s Treasury in the United Kingdom, that apply to the Borrowers or the Restricted Subsidiaries (as any of the foregoing laws may from time to time be amended, renewed, extended or replaced) and (iii) any sanctions or requirements imposed under similar laws or regulations enacted by Canada or administered, enacted or enforced by the respective governmental institutions or agencies of any of the foregoing, including, without limitation, Global Affairs Canada and Public Safety Canada, or other relevant sanctions authority based upon the obligations and authorities set forth in Canadian Anti-Terrorism Laws that apply to the Borrowers or the Restricted Subsidiaries (as any of the foregoing laws may from time to time be amended, renewed, extended or replaced).

S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business, or any successor to the rating agency business thereof.

Screen Rate” means (a) with respect to the Eurocurrency Rate for any Interest Period for Dollars or any Alternative Currency not listed in clauses (b) through (e) below, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over administration of that rate) for the relevant currency and Interest Period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate); (b) with respect to the Eurocurrency Rate for any Interest Period for Euros, the euro interbank offered rate administered by the Banking Federation of the European Union (or any other person which takes over administration of that rate) for the relevant Interest Period displayed on page EURIBOR01 of the Reuters screen (or any replacement Reuters page which displays that rate); (c) with respect to the Eurocurrency Rate for any Interest Period for Canadian Dollars, the average bid rate for Canadian bankers’

 

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acceptances for the relevant Interest Period displayed on page CDOR of the Reuters screen (or any replacement Reuters page which displays that rate); (d) with respect to the Eurocurrency Rate for any Interest Period for Singapore Dollars, the Singapore interbank offered rate administered by ABS Benchmarks Administration Co Pte. Ltd. (or any other entity or person which takes over the administration of that rate) for the relevant Interest Period displayed on page ABSIRFIX01 of the Reuters screen (or any replacement Reuters page which displays that rate); and (e) with respect to the Eurocurrency Rate for any Interest Period for Swedish Krona, the Stockholm interbank offered rate administered by the Swedish Bankers’ Association (or any other person which takes over the administration of that rate) for the relevant period displayed on page STIBOR= of the Reuters screen (or any replacement Reuters page which displays that rate). If such page or service ceases to be available, the Agent may specify another page or service, displaying the relevant rate after consultation with the Company; provided that, in the event such rate does not appear on a page of the Reuters screen, on the appropriate page of such other information service that publishes such rate as shall be selected by the Applicable Agent from time to time in its reasonable discretion). If, as to any currency, no Screen Rate shall be available for a particular Interest Period but Screen Rates shall be available for maturities both longer and shorter than such Interest Period, then the Screen Rate for such Interest Period shall be the Interpolated Rate. Notwithstanding the foregoing, if the Screen Rate, determined as provided above, would otherwise be less than zero, then the Screen Rate shall be deemed to be zero for all purposes.

SEC” means the U.S. Securities and Exchange Commission.

Secured Cash Management Agreement” means any Cash Management Agreement that is entered into by and between any Loan Party and any Cash Management Bank, except for any such Cash Management Agreement designated by the Borrowers in writing to the Administrative Agent as an “unsecured cash management agreement” as of the Closing Date or, if later, on or about the time of entering into such Cash Management Agreement.

Secured Hedge Agreement” means any Swap Contract permitted under Article VII that is entered into by and between any Loan Party and any Hedge Bank, except for any such Swap Contract designated by the Borrowers and the applicable Hedge Bank in writing to the Administrative Agent as an “unsecured hedge agreement” as of the Closing Date or, if later, as of the time of entering into such Swap Contract.

Secured Obligations” has the meaning specified in the Security Agreement and each other applicable Collateral Document.

Secured Parties” means, collectively, the BOC Arranger, the Redenomination Term Facilities Administrative Agent, the Administrative Agent, the Collateral Agent, the Lenders (including, for the avoidance of doubt, the L/C Issuers), Ancillary Lenders, the Hedge Banks to the extent they are party to one or more Secured Hedge Agreements, the Cash Management Banks to the extent they are party to one or more Secured Cash Management Agreements and each co-agent or subagent appointed by the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent from time to time pursuant to Article IX.

Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

Security Agreement” means, collectively, the U.S. law governed Security Agreement dated as of the date hereof executed by the Loan Parties party thereto, substantially in the form of Exhibit G (the “U.S. Security Agreement”), together with each other security agreement and security agreement supplement executed and delivered pursuant to Section 6.12, 6.14 or 6.16.

Security Agreement Supplement” has the meaning specified in the Security Agreement.

Senior Notes” means the unsecured senior notes of the Parent Borrower and Subsidiary Borrower due 2025 in an aggregate principal amount of $425,000,000 issued on or prior to the Closing Date pursuant to the Senior Notes Indenture.

 

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Senior Notes Indenture” means the Indenture dated as of January 31, 2017, relating to the Senior Notes, among Wilmington Trust, National Association, as trustee, the Parent Borrower and Subsidiary Borrower and the Guarantors party thereto, together with all instruments and other agreements in connection therewith, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, to the extent not prohibited under the Loan Documents.

Similar Business” means any business engaged or proposed to be engaged in by Holdings and its Subsidiaries on the Closing Date and any business or other activities that are similar, ancillary, complementary, incidental or related thereto, or an extension, development or expansion of, the businesses in which Holdings and its Subsidiaries are engaged following the Acquisition on the Closing Date.

Singapore Borrower” has the meaning specified in the introductory paragraph to this Agreement.

Solvent” means, with respect to any Person on any date of determination, that on such date (a) the fair aggregate value of the assets and property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person and is sufficient to enable payment of all such Person’s obligations due and accruing due, (b) the aggregate present fair salable value of the assets and property of such Person is greater than or equal to the total amount that will be required to pay the probable liabilities, including contingent liabilities, of the Loan Parties as they become absolute and matured and is sufficient to enable payment of all such Person’s obligations due and accruing due, (c) the capital of such Person is not unreasonably small in relation to its business as contemplated on such date of determination, (d) such Person has not and does not intend to, and does not believe that it will, incur debts or other obligations, including current obligations, beyond its ability to pay such debts and liabilities as they become due (whether at maturity or otherwise) and is not for any reason unable to pay its debts or meets its obligations as they generally become due and (e) such Person is “solvent” within the meaning given to that term and similar terms under Laws applicable to such Person relating to fraudulent transfers and conveyances, transactions at an undervalue, unfair preferences or equivalent concepts. 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 or, if a different methodology is prescribed by applicable Laws, as prescribed by such Laws.

SPC” has the meaning specified in Section 10.07(g).

Specified Refinancing Agent” has the meaning specified in Section 2.18(a).

Specified Refinancing Debt” has the meaning specified in Section 2.18(a).

Specified Refinancing Revolving Credit Commitment” has the meaning specified in Section 2.18(a).

Specified Refinancing Revolving Loans” means Specified Refinancing Debt constituting revolving loans.

Specified Refinancing Term Commitment” has the meaning specified in Section 2.18(a).

Specified Refinancing Term Loans” means Specified Refinancing Debt constituting term loans.

Specified Sponsor Overfunding Amount” means the amount, if any, not to exceed of $100,000,000, identified in the Funds Flow Memorandum as “overfunding,” as evidenced to exist on the Closing Date and as reduced from time to time when applied in accordance with Section 7.05(7)(B).

Specified Transaction” means any incurrence or repayment of Indebtedness (excluding Indebtedness incurred for working capital purposes other than pursuant to this Agreement) or Investment that results in a Person becoming a Subsidiary, any designation of a Subsidiary as a Restricted Subsidiary or as an Unrestricted Subsidiary, any acquisition or any Disposition that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Parent Borrower, any Investment constituting an acquisition of assets constituting a business unit, line of business or division of another Person or any Disposition of a business unit, line of business or division of the Parent Borrower or any of the Restricted Subsidiaries, in each case whether by merger, consolidation, amalgamation or otherwise or any material restructuring of the Parent Borrower or implementation of any initiative not in the ordinary course of business.

 

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Sponsor” means (1) Carlyle Partners VI Cayman Holdings, L.P., (2) Gamma Holding Company Limited, (3) CEP IV Participations s.à r. l. SICAR and (4) one or more investment funds advised, managed or controlled by the foregoing and, in each case (whether individually or as a group), Affiliates of the foregoing (but excluding any operating portfolio companies of the foregoing).

Sponsor Model” means the sponsor model delivered to the Arrangers on September 23, 2016.

Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Parent Borrower or any Subsidiary of the Parent Borrower which the Parent Borrower has determined in good faith to be customary in a Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

Stated Maturity” means with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the FRB to which the Administrative Agent is subject with respect to the Adjusted Eurocurrency Rate, for Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the FRB). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurocurrency Rate Loans shall be deemed to constitute Eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage and to the extent applicable to the Initial Term B-2 Loans, the Administrative Agent will notify the Redenomination Term Facilities Administrative Agent of the Statutory Reserve Rate at such time promptly upon request thereof.

Sterling”, “GBP” and “£” means the lawful currency of the United Kingdom.

Subject Lien” has the meaning specified in Section 7.02.

Subordinated Indebtedness” means (a) with respect to any Borrower, any Indebtedness of such Borrower which is by its terms expressly subordinated in right of payment to the Obligations, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms expressly subordinated in right of payment to its Guarantee of the Obligations.

Subsidiary” means, with respect to any Person (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, (2) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity and (3) any Person that is consolidated in the consolidated financial statements of the specified Person in accordance with IFRS.

 

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Subsidiary Borrower” has the meaning specified in the introductory paragraph to this Agreement.

Subsidiary Guarantor” means, collectively, the Restricted Subsidiaries of the Parent Borrower that are Guarantors.

Substitute Affiliate Lender” has the meaning specified in Section 10.28(a).

Substitute Lending Office” has the meaning specified in Section 10.28(a).

Supplemental Agent” has the meaning specified in Section 9.14(a).

Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any obligations or liabilities under any such master agreement.

Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts 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 Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

Swiss Francs” or “CHF” means the lawful currency of Switzerland.

Taiwan Collateral Documents” has the meaning specified in Section 9.11.

Target” has the meaning given to such term in the definition of the “Acquisition.”

Tax Structuring Memorandum” has the meaning given to such term in the definition of the “Reports.”

Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other similar charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term B-2 Conversion” has the meaning given to such term in Section 2.04(g).

Term B-2 Relevant Date” has the meaning given to such term in Section 2.04(g).

Term B-3 Commitment means, as to each Term Lender, its commitment with respect to any Redenominated Term B-3 Loans in an aggregate principal amount not to exceed its participation in such Redenominated Term B-3 Loan as determined in accordance with Section 2.04(b) and as set forth on Schedule 2.01 (as such schedule shall be amended by the Parent Borrower and the Redenomination Term Facilities Administrative Agent (with a copy to the Administrative Agent) each time a Relevant Redenomination Event occurs), as such amounts may be adjusted from time to time in accordance with this Agreement.

 

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Term B-3 Loans” means Initial Term B-3 Loans, Redenominated Term B-3 Loans or New Term Loans denominated in RMB incurred pursuant to Section 2.14.

Term B-3 Loans Sub-Tranche means each tranche of Term B-3 Loan designated in the relevant RMB Committed Loan Notice and identified on Schedule 1.01(l) (as such schedule shall be amended by the Parent Borrower and the Redenomination Term Facilities Administrative Agent at the time of delivery of each RMB Committed Loan Notice (with a copy to the Administrative Agent)). Each Term B-3 Loan Sub-Tranche shall be identified in the form of “Term B-3 Loan Sub-Tranche A”, Term B-3 Loan Sub-Tranche B”, etc.

Term Borrowing” means a borrowing of the same Type of Term Loan of a single Tranche from all the Lenders having Term Commitments or Term Loans of the respective Tranche on a given date (or resulting from a conversion or conversions on such date) having, (i) in the case of Eurocurrency Rate Loans, the same Interest Period and (ii) in the case of Benchmark PBOC Rate Loans, the same Benchmark PBOC Rate and the same Interest Period.

Term Commitment” means, as to each Term Lender, (i) its Initial Term Commitment, (ii) its Term B-3 Commitment, (iii) its Term Commitment Increase, (iv) its New Term Commitment or (v) its Specified Refinancing Term Commitment. The amount of each Lender’s Initial Term Commitment or Term B-3 Commitment is as set forth in the definition thereof and the amount of each Lender’s other Term Commitments shall be as set forth (x) in the applicable Assignment and Assumption or (y) in the amendment or agreement relating to the respective Term Commitment Increase, New Term “Commitment or Specified Refinancing Term Commitment pursuant to which such Lender shall have assumed its Term Commitment, as the case may be, as such amounts may be adjusted from time to time in accordance with this Agreement.

Term Commitment Increase” has the meaning specified in Section 2.14(a).

Term Facility” means a facility in respect of any Term Loan Tranche (including any Term Commitment Increase with respect to any Term Loan Tranche), as the context may require.

Term Lender” means (a) at any time on or prior to the Closing Date, any Lender that has an Initial Term Commitment at such time and (b) at any time after the Closing Date, any Lender that holds Term Loans and/or Term Commitments at such time.

Term Loan” means an advance made by any Term Lender under any Term Facility (including any Redenominated Term B-3 Loan arising from any re-denomination pursuant to Section 2.04(b)).

Term Loan Tranche” means the respective facility and commitments utilized in making (or, where applicable, conversion of) Term Loans hereunder, with there being up to three tranches on the Closing Date (i.e. (i) Initial Term B-1 Loans and Initial Term B-1 Commitments, (ii) Initial Term B-2 Loans and Initial Term B-2 Commitments, and/or (iii) Initial Term B-3 Loans and Initial Term B-3 Commitments). Additional Term Loan Tranches may be added after the Closing Date, i.e., New Term Loans (including New Term Loans denominated in RMB), Specified Refinancing Term Loans, New Term Commitments, Specified Refinancing Term Commitments and each Term B-3 Loans Sub-Tranche.

Term Note” means a promissory note of the applicable Parent Borrower or Subsidiary Borrower payable to the order of any Term Lender or its registered assigns, in substantially the form of Exhibit C-1 hereto, evidencing the indebtedness of the applicable Parent Borrower or Subsidiary Borrower to such Term Lender resulting from the Term Loans under the same Term Loan Tranche made or held by such Term Lender.

Threshold Amount” means $50,000,000.

Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

 

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Total Revolving Credit Outstandings” means the aggregate Outstanding Amount of all Revolving Credit Loans and L/C Obligations.

Tranche” means any Term Loan Tranche or any Revolving Tranche.

Transaction Costs” has the meaning given to such term in the definition of the “Transaction.”

Transactions” means:

(a) Cash or rollover equity investments made, either directly or indirectly, by the Sponsor, together with certain other investors arranged by and/or designated by the Sponsor (including members of management of the Target) to the Parent Borrower in an aggregate amount equal to at least 30.0% of the total pro forma consolidated net debt and equity capitalization of Parent Borrower and its Subsidiaries on the Closing Date (excluding any issued Letters of Credit, amounts funded on the Closing Date under the Revolving Credit Facility to fund working capital, amounts Incurred on the Closing Date under the Senior Notes to fund upfront fees or original issue discount or any other debt incurred on the Closing Date to fund upfront fees or original issue discount) after giving effect to the Transactions (as defined below); provided that the Sponsor shall directly or indirectly own at least 50.1% of the voting equity securities of the Target immediately following the consummation of the Transactions (the “Equity Contribution”);

(b) the Borrowers obtaining the Facilities;

(c) the Borrowers issuing and selling the Senior Notes in a Rule 144A private placement under the Securities Act on or prior to the Closing Date, yielding $425,000,000 in aggregate gross proceeds;

(d) the Acquisition;

(e) the Restructuring;

(f) the refinancing or repayment of all existing third party Indebtedness for borrowed money of the Target and its Subsidiaries, other than (i) ordinary course capital leases, purchase money indebtedness, equipment financings and related guarantees, hedging obligations and related guarantees and other ordinary short term capital facilities, (ii) Indebtedness described on Schedule 7.01, including certain Indebtedness that the Arrangers and Borrower Representative agree may remain outstanding on and after the Closing Date (the “Refinancing”); and

(g) the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provisions of this definition (the “Transaction Costs”).

Transformative Event” means any merger, acquisition, amalgamation, investment, dissolution, liquidation, consolidation or disposition that is either (a) not permitted by the terms of the Loan Documents immediately prior to the consummation of such transaction or (b) if permitted by the terms of the Loan Documents immediately prior to the consummation of such transaction, would not provide Holdings and its Restricted Subsidiaries with adequate flexibility under the Loan Documents for the continuation and/or expansion of their combined operations following such consummation, as reasonably determined by the Borrowers acting in good faith.

Type” means, with respect to a Loan, its character as a Base Rate Loan, a Eurocurrency Rate Loan or a Benchmark PBOC Rate Loan.

UK PSC Loan Party” means a Loan Party incorporated in England and Wales who is required to maintain a PSC Register and whose shares are Collateral.

Undisclosed Administration” means in relation to a Lender or its direct or indirect parent company the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Person is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.

 

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Unfunded Advances/Participations” means (a) with respect to the Administrative Agent, the aggregate amount, if any (i) made available to the Borrowers on the assumption that each Lender has made available to the Administrative Agent such Lender’s share of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.12(b) and (ii) with respect to which a corresponding amount shall not in fact have been returned to the Administrative Agent by the Borrowers or made available to the Administrative Agent by any such Lender, and (b) with respect to any L/C Issuer, the aggregate amount, if any, of amounts drawn under Letters of Credit in respect of which a Revolving Credit Lender shall have failed to make Revolving Credit Loans or L/C Advances to reimburse such L/C Issuer pursuant to Section 2.03(c).

Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under Section 4001(a) of ERISA over the current value of such Plan’s assets, determined in accordance with assumptions used for funding the Plan pursuant to Section 412 of the Code for the applicable plan year.

Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.

United States” and “U.S.” mean the United States of America.

Unpaid Amount” has the meaning specified in Section 7.05.

Unreimbursed Amount” has the meaning specified in Section 2.03(d)(i).

Unrestricted Subsidiary” means:

(1) any Subsidiary of the Parent Borrower that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower may designate any Subsidiary of the Parent Borrower (including any existing Subsidiary and any newly acquired or newly formed Subsidiary of the Parent Borrower but excluding the Subsidiary Borrower) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns or holds any Lien on any property of, the Parent Borrower or any other Subsidiary of the Parent Borrower that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either:

(a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or

(b) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 7.05.

The Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

(1) the Parent Borrower could Incur $1.00 of additional Indebtedness as Ratio Debt, or

 

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(2) the Fixed Charge Coverage Ratio for the Parent Borrower and its Restricted Subsidiaries would be equal to or greater than such ratio for the Parent Borrower and its Restricted Subsidiaries immediately prior to such designation

in each case on a Pro Forma Basis taking into account such designation, and no Event of Default shall have occurred and be continuing as a result of such designation.

Any such designation by the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower shall be evidenced to the Administrative Agent by promptly filing with the Administrative Agent a copy of the resolution of the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower giving effect to such designation and an officer’s certificate certifying that such designation complied with the foregoing provisions.

Notwithstanding the foregoing, (i) no Subsidiary of the Parent Borrower may be designated an Unrestricted Subsidiary if such Subsidiary is a “Restricted Subsidiary” (or any comparable term) under the Senior Notes Indenture or under the documentation governing any other Indebtedness that is treated as an “obligation of a United States person” within the meaning of the Code Section 956, in each case, with an aggregate outstanding principal amount in excess of $50,000,000 and (ii) simultaneously with any Subsidiary being designated as a “Restricted Subsidiary” (or any comparable term) under the Senior Notes Indenture or under the documentation governing any other Indebtedness described in clause (i), such Subsidiary shall be designated as a Restricted Subsidiary.

U.S. Loan Party” means the Subsidiary Borrower and each Subsidiary Guarantor that is a U.S. Subsidiary.

U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

U.S. Security Agreement” has the meaning specified in the definition of “Security Agreement”.

U.S. Subsidiary” means any Subsidiary of the Parent Borrower that (i) is organized under the laws of the United States, any state thereof or the District of Columbia, (ii) is not a Subsidiary of a Controlled Foreign Subsidiary and (iii) is not a FSHCO.

U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 3.01(h)(ii).

Voting Stock” of any Person as of any date means the Capital Stock of such Person that is entitled to vote in the election of the Board of Directors of such Person.

Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock or Preferred Stock, as the case may be, at any date, the number of years (and/or portion thereof) obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of such Indebtedness or redemption or similar payment, in respect of such Disqualified Stock or Preferred Stock, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.

Wholly Owned Restricted Subsidiary” means any Wholly Owned Subsidiary that is a Restricted Subsidiary.

Wholly Owned Subsidiary” of any Person means a direct or indirect Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

Working Capital” means, with respect to the Borrowers and the Restricted Subsidiaries on a consolidated basis, Consolidated Current Assets minus Consolidated Current Liabilities.

 

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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 Member Country, which write-down and conversion powers are described from time to time in the EU Bail-In Legislation Schedule.

Section 1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.

(c) References in this Agreement to an Exhibit, Schedule, Article, Section, clause or subclause refer (A) to the appropriate Exhibit or Schedule to, or Article, Section, clause or subclause in this Agreement or (B) to the extent such references are not present in this Agreement, to the Loan Document in which such reference appears.

(d) The term “including” is by way of example and not limitation.

(e) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

(f) Any reference herein to any Person shall be construed to include such Person’s successors and assigns.

(g) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(h) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

(i) In measuring compliance with this Agreement with respect to any (x) Investment or acquisition, in each case, for which the Parent Borrower or any Subsidiary thereof may not terminate its obligations under the documentation therefor due to a lack of financing for such Investment or acquisition (whether by merger, amalgamation, consolidation or other business combination or the acquisition of Capital Stock or otherwise) as applicable and (y) repayment, repurchase or refinancing of Indebtedness with respect to which an irrevocable notice of repayment (or similar irrevocable notice), which may be conditional, has been delivered, in each case for purposes of determining:

(1) whether any Indebtedness (including Acquired Indebtedness) that is being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is permitted to be incurred in compliance with Section 7.01;

(2) whether any Lien being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness or to secure any such Indebtedness is permitted to be incurred in accordance with Section 7.02 or the definition of “Permitted Liens”;

(3) whether any other transaction undertaken or proposed to be undertaken in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness complies with the covenants or agreements contained in this Agreement; and

 

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(4) any calculation of the ratios, baskets or financial metrics, including Fixed Charge Coverage Ratio, Consolidated First Lien Net Leverage Ratio, Consolidated Total Net Leverage Ratio, Consolidated Net Income, Consolidated EBITDA and/or Pro Forma Cost Savings and baskets determined by reference to Consolidated EBITDA or Consolidated Net Tangible Assets and, whether a Default or Event of Default exists in connection with the foregoing,

at the option of the Parent Borrower, the date that the definitive agreement for such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is entered into or irrevocable notice, which may be conditional, of such repayment, repurchase or refinancing of Indebtedness is given to the holders of such Indebtedness (the “Transaction Agreement Date”) may be used as the applicable date of determination, as the case may be, in each case with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Pro Forma Basis” or “Consolidated EBITDA.” For the avoidance of doubt, if the Parent Borrower elects to use the Transaction Agreement Date as the applicable date of determination in accordance with the foregoing, (a) any fluctuation or change in the Fixed Charge Coverage Ratio, Consolidated First Lien Net Leverage Ratio, Consolidated Total Net Leverage Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets and/or Pro Forma Cost Savings of the Parent Borrower from the Transaction Agreement Date to the consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, will not be taken into account for purposes of determining whether any Indebtedness or Lien that is being incurred in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, or in connection with compliance by Holdings or any of the Restricted Subsidiaries with any other provision of the Loan Documents or any other transaction undertaken in connection with such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness, is permitted to be incurred and (b) until such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness is consummated or such definitive agreements are terminated (or conditions in any conditional notice can no longer be met), such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness and all transactions proposed to be undertaken in connection therewith (including the incurrence of Indebtedness and Liens) will be given pro forma effect when determining compliance of other transactions (including the incurrence of Indebtedness and Liens unrelated to such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness) that are consummated after the Transaction Agreement Date and on or prior to the consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness and any such transactions (including any incurrence of Indebtedness and the use of proceeds thereof) will be deemed to have occurred on the date the definitive agreements are entered and outstanding thereafter for purposes of calculating any baskets or ratios under the Loan Documents after the date of such agreement and before the consummation of such Investment, acquisition or repayment, repurchase or refinancing of Indebtedness; provided that the calculation of Consolidated Net Income (and any defined term a component of which is Consolidated Net Income) shall not include the Consolidated Net Income of the Person or assets to be acquired in the relevant Investment or acquisition for purposes of calculating whether the Parent Borrower or any Restricted Subsidiary is permitted to make any Restricted Payment pursuant to Section 7.05 until such time as such Investment or acquisition is actually consummated.

(j) A Borrower “repaying” or “prepaying” Ancillary Outstandings means:

(1) that Borrower providing cash cover in respect of the Ancillary Outstandings;

(2) the maximum amount payable under the Ancillary Facility being reduced or cancelled in accordance with its terms; or

(3) the Ancillary Lender being satisfied that it has no further liability under that Ancillary Facility,

and the amount by which the Ancillary Outstandings are repaid or prepaid under paragraphs (j)(1) and (j)(2) above is the amount of the relevant cash cover, reduction or cancellation.

(k) A Borrower providing “cash cover” for an Ancillary Facility means a Borrower paying an amount in the currency of the Ancillary Facility to an interest-bearing account in the name of the Borrower and the following conditions being met:

(1) the account is with the Ancillary Lender for which that cash cover is to be provided;

 

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(2) until no amount is or may be outstanding under that Ancillary Facility, withdrawals from the account may only be made to pay the relevant Secured Party amounts due and payable to it under this Agreement in respect of that Ancillary Facility; and

(3) the Borrower has executed a security document over that account, in form and substance satisfactory to the Ancillary Lender with which that account is held, creating a first ranking security interest over that account.

(l) An amount borrowed includes any amount utilized under an Ancillary Facility.

(m) Notwithstanding paragraph (j) and (k) above, the “cash cover” (or the appropriate portion thereof) shall be released to the extent that such cash cover is no longer needed and consistent with Section 2.16(d).

Section 1.03 Accounting Terms.

(a) 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, IFRS, as in effect from time to time.

(b) If at any time any change in IFRS or the application thereof, or any election by the Borrower to report in GAAP in lieu of IFRS for financial reporting purposes, would affect the computation or interpretation of any financial ratio, basket, requirement or other provision set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Administrative Agent and the Borrowers shall negotiate in good faith to amend such ratio, basket, requirement or other provision to preserve the original intent thereof in light of such change in IFRS or the application thereof (subject to the approval of the Required Lenders not to be unreasonably withheld, conditioned or delayed) (provided that any change affecting the computation of the ratio set forth in Section 7.08 shall be subject solely to the approval of the Required Revolving Lenders (not to be unreasonably withheld, conditioned or delayed) and the Borrowers); provided that, until so amended, (i) (A) such ratio, basket, requirement or other provision shall continue to be computed or interpreted in accordance with IFRS or the application thereof prior to such change therein and (B) the Borrowers shall provide to the Administrative Agent and the Lenders a written reconciliation in form and substance reasonably satisfactory to the Administrative Agent, between calculations of such ratio, basket, requirement or other provision made before and after giving effect to such change in IFRS or the application thereof or (ii) the Borrowers may elect to fix IFRS (for purposes of such ratio, basket, requirement or other provision) as of another later date notified in writing to the Administrative Agent from time to time.

(c) Notwithstanding anything to the contrary contained herein, all such financial statements shall be prepared, and all financial covenants contained herein or in any other Loan Document shall be calculated, in each case, without giving effect to any election under FASB ASC 825 (or any similar accounting principle) permitting a Person to value its financial liabilities at the fair value thereof.

Section 1.04 Rounding. Any financial ratios required to be maintained by the Borrowers, or satisfied in order for a specific action to be permitted, under this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

Section 1.05 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted by any Loan Document and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

 

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Section 1.06 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight savings or standard, as applicable).

Section 1.07 Timing of Payment or Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as specifically provided in Section 2.12 or as described in the definition of Interest Period or Interest Payment Date) or performance shall extend to the immediately succeeding Business Day.

Section 1.08 Currency Equivalents Generally.

(a) Any amount specified in this Agreement (other than in Articles II, IX and X or as set forth in clause (b) of this Section 1.08) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount to be determined at the rate of exchange quoted by the Reuters World Currency Page for such other currency at 11:00 a.m. (London time) on such day (or, in the event such rate does not appear on any Reuters World Currency Page, by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrowers, or, in the absence of such agreement, such rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m. on such date for the purchase of Dollars for delivery two Business Days later); provided that if any basket is exceeded solely as a result of fluctuations in applicable currency exchange rates after the last time such basket was utilized, such basket will not be deemed to have been exceeded solely as a result of such fluctuations in currency exchange rates.

(b) For purposes of determining the Consolidated First Lien Net Leverage Ratio, and the Consolidated Total Net Leverage Ratio, amounts denominated in a currency other than Dollars will be converted to Dollars for the purposes of (A) testing the Financial Covenant, at the Exchange Rate as of the last day of the fiscal quarter for which such measurement is being made, and (B) calculating any Consolidated Total Net Leverage Ratio and the Consolidated First Lien Net Leverage Ratio (other than for the purposes of determining compliance with Section 7.08), at the Exchange Rate as of the date of calculation, and will, in the case of Indebtedness and Consolidated Funded Indebtedness, be the weighted average exchange rates used for determining Consolidated EBITDA for the relevant period determined in accordance with IFRS, provided that if Holdings or any Subsidiary has entered into any currency Swap Contracts in respect of any borrowings, the Dollar Amount of such borrowings shall be determined by first taking into account the effects of that currency Swap Contract.

(c) The Administrative Agent shall determine the Dollar Amount of each Revolving Loan denominated in an Alternative Currency and L/C Obligation in respect of Letters of Credit denominated in an Alternative Currency (i) for Revolving Credit Loans, as of the first day of each Interest Period applicable thereto, (ii) upon the issuance and increase of any Letter of Credit denominated in an Alternative Currency and (iii) shall, on a semi-annual basis, promptly notify the Borrowers and the Revolving Credit Lenders of each Dollar Amount so determined by it. Each such determination shall be based on the Exchange Rate on the date of the related Borrowing request for purposes of the initial such determination for any Revolving Loan.

(d) Notwithstanding anything to the contrary in this Agreement, any (i) representation or warranty that would be untrue or inaccurate, (ii) any undertaking that would be breached or (iii) any event that would constitute a Default or an Event of Default, in each case, solely as a result of fluctuations in applicable currency exchange rates, shall not be deemed to be untrue, inaccurate, breached or so constituted, as applicable, solely as a result of such fluctuations in currency exchange rates.

(e) Wherever in this Agreement in connection with a Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in an Alternative Currency (other than RMB), such amount shall be the relevant Dollar Amount of such Alternative Currency (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.

 

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(f) The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate” or with respect to any comparable or successor rate thereto. The Administrative Agent will have no obligations with respect to the calculation, payment, funding or receipt of payment in respect of any Term B-3 Loans or Term B-3 Commitment (except that it shall notify applicable rates to the Redenomination Term Facilities Administrative Agent for the determination of rates applicable to Term B-3 Loans where specified in this Agreement), provided that any payment or distribution to be made by the Administrative Agent in respect of any Initial Term B-2 Loans, Initial Term B-2 Commitments, Term B-3 Loans, Term B-3 Commitments or New Term Loans denominated in RMB pursuant to Section 2.12(f), 2.12(g), 2.13 or 8.04 shall be made by the Administrative Agent in favor of the Redenomination Term Facilities Administrative Agent (for further payment or distribution by the Redenomination Term Facilities Administrative Agent in respect of such Term B-3 Loans or Term B-3 Commitment).

(g) The Redenomination Term Facilities Administrative Agent does not warrant, nor accept responsibility, nor shall the Redenomination Term Facilities Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate” or “Benchmark PBOC Rate” or with respect to any comparable or successor rate thereto, provided that any payment or distribution to be made by the Redenomination Term Facilities Administrative Agent in respect of any Facilities (other than any Initial Term B-2 Loans, Initial Term B-2 Commitment,Term B-3 Loans, Term B-3 Commitments or New Term Loans denominated in RMB) pursuant to Section 2.12(f), 2.12(g), 2.13 or 8.04 shall be made by the Redenomination Term Facilities Administrative Agent in favor of the Administrative Agent (for further payment or distribution by the Administrative Agent in respect of such Facilities). Notwithstanding any other provision hereof, the Redenomination Term Facilities Administrative Agent shall have no obligation to determine or notify any rate of interest, to the extent that the determination of such rate of interest requires any determination or notification by the Administrative Agent, unless and until the Redenomination Term Facilities Administrative Agent receives such determination or notification from the Administrative Agent.

Section 1.09 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to New York City time (daylight or standard, as applicable).

Section 1.10 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time after giving effect to any expiration periods applicable thereto; provided, however, that (i) if any presentation of drawing documents shall have been made on or prior to the expiration date of such Letter of Credit and the applicable L/C Issuer shall not yet have honored such drawing or given notice of dishonor, the amount of such Letter of Credit that is the subject of such drawing shall be treated as still outstanding and (ii) 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 maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

Section 1.11 Pro Forma Calculations. Notwithstanding anything to the contrary herein (subject to Section 1.02(i)), the Consolidated First Lien Net Leverage Ratio, the Consolidated Total Net Leverage Ratio and the Fixed Charge Coverage Ratio, Consolidated Net Tangible Assets and Consolidated Total Assets shall be calculated (including for purposes of Sections 2.14 and 2.15) on a Pro Forma Basis with respect to each Specified Transaction occurring during the applicable four quarter period to which such calculation relates, and/or subsequent to the end of such four-quarter period but not later than the date of such calculation; provided that notwithstanding the foregoing, when calculating the Consolidated First Lien Net Leverage Ratio for purposes of (i) determining the applicable percentage of Excess Cash Flow for purposes of Section 2.05(b), (ii) the Applicable Rate, (iii) the Applicable Commitment Fee and (iv) determining actual compliance (and not Pro Forma Compliance or compliance on a Pro Forma Basis) with the Financial Covenant, any Specified Transaction and any related adjustment contemplated in the definition of Pro Forma Basis (and corresponding provisions of the definition of Consolidated EBITDA) that occurred subsequent to the end of the applicable four quarter period shall not be given Pro Forma Effect.

Section 1.12 Calculation of Baskets. If any of the baskets set forth in this Agreement are exceeded solely as a result of fluctuations to Consolidated Net Tangible Assets for the most recently completed fiscal quarter after the last time such baskets were calculated for any purpose under this Agreement, such baskets will not be deemed to have been exceeded solely as a result of such fluctuations.

 

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Section 1.13 Dutch Terms. In this Agreement, where it relates to an entity organized in the Netherlands, a reference to:

(a) a necessary action to authorise where applicable, includes without limitation:

(i) any action required to comply with the Works Councils Act of the Netherlands (Wet op de ondernemingsraden); and

(ii) obtaining an unconditional positive advice (advies) from the competent works council(s);

(b) gross negligence means grove schuld;

(c) a security interest includes any mortgage (hypotheek), pledge (pandrecht), retention of title arrangement (eigendomsvoorbehoud), privilege (voorrecht), right of retention (recht van retentie), right to reclaim goods (recht van reclame) and, in general, any right in rem (beperkt recht) created for the purpose of granting security (goederenrechtelijk zekerheidsrecht);

(d) willful misconduct means opzet;

(e) a winding-up, administration or dissolution (and any of those terms) includes a Dutch entity being declared bankrupt (failliet verklaard) or dissolved (ontbonden);

(f) any step or procedure taken in connection with insolvency proceedings includes a Dutch entity having filed a notice under Section 36 of the Dutch Tax Collection Act (Invorderingswet 1990);

(g) an administrative receiver includes a curator;

(h) an administrator includes a bewindvoerder; and

(i) an attachment includes a beslag.

Section 1.14 Guaranty and Security Principles. The Collateral Documents and each other guaranty and security document delivered or to be delivered under this Agreement and any obligation to enter into such document or obligation by any Non-U.S. Subsidiary shall be subject in all respects to the Guaranty and Security Principles set forth on Schedule 1.14.

Section 1.15 Foreign Guarantor Provisions. This Agreement and all of the other Loan Documents shall be subject in all respects to the Foreign Guarantor Provisions set forth in Schedule 1.15 (as may be supplemented pursuant to Section 10.01 or as otherwise agreed to by the Administrative Agent).

Section 1.16 Borrower Representative. Each Borrower hereby designates the Parent Borrower as its Borrower Representative. The Borrower Representative will be acting as agent on each of the Borrowers behalf for the purposes of issuing notices of Borrowing and notices of conversion/continuation of any Loans pursuant to Section 2.02 or 2.04 or similar notices, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants and certifications) on behalf of any Borrower or the Borrowers under the Loan Documents. The Borrower Representative hereby accepts such appointment. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

 

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ARTICLE II.

The Commitments and Credit Extensions

Section 2.01 The Loans.

(a) The Initial Term Borrowing. Subject to the terms and conditions set forth herein, (i) each Term Lender with an Initial Term B-1 Commitment severally agrees to make a single loan denominated in Dollars (the “Initial Term B-1 Loans”) to the Parent Borrower and Subsidiary Borrower (on a joint and several basis) on the Closing Date in an amount not to exceed such Term Lender’s Initial Term B-1 Commitment, (ii) each Term Lender with an Initial Term B-2 Commitment severally agrees to make a single loan denominated in Dollars (the “Initial Term B-2 Loans”) to the Parent Borrower on the Closing Date in an amount not to exceed such Term Lender’s Initial Term B-2 Commitment and (iii) (subject to Section 2.04(a)(ii)) each Term Lender with an Initial Term B-3 Commitment (if any) severally agrees to make a single loan denominated in RMB (the “Initial Term B-3 Loans”) to the Parent Borrower on the Closing Date in an amount not to exceed such Term Lender’s Initial Term B-3 Commitment (if any). The Initial Term B-1 Borrowing shall consist of Initial Term B-1 Loans made simultaneously by the Term Lenders in accordance with their respective Initial Term B-1 Commitments. The Initial Term B-2 Borrowing shall consist of Initial Term B-2 Loans made simultaneously by the Term Lenders in accordance with their respective Initial Term B-2 Commitments. The Initial Term B-3 Borrowing (if any) shall consist of Initial Term B-3 Loans made simultaneously by the Term Lenders in accordance with their respective Initial Term B-3 Commitments (if any). Amounts borrowed under this Section 2.01(a) and subsequently repaid or prepaid may not be reborrowed (it being understood, however, that prepayments will be taken into account for purposes of any Prepayment-Based Incremental Facility to the extent provided by Section 2.14). Initial Term B-1 Loans and Initial Term B-2 Loans may be Base Rate Loans or Eurocurrency Rate Loans as further provided herein. The Initial Term B-3 Loans shall be Benchmark PBOC Rate Loans.

(b) The Revolving Credit Borrowings. Subject to the terms and conditions set forth herein, each Revolving Credit Lender severally agrees to make loans denominated in Dollars or in one or more Alternative Currencies (each such loan, a “Revolving Credit Loan”) to the Borrowers (on a joint and several basis) from time to time on and after the Closing Date, on any Business Day until and excluding the Business Day preceding the Maturity Date for the Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Revolving Credit Commitment; provided, however, that after giving effect to any Revolving Credit Borrowing, (i) the Total Revolving Credit Outstandings (when aggregated with all Ancillary Outstandings) shall not exceed the Revolving Credit Facility and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lender’s Ancillary Outstandings shall not exceed such Lender’s Revolving Credit Commitment. Within the limits of each Lender’s Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01(b), prepay under Section 2.05, and reborrow under this Section 2.01(b). Revolving Credit Loans may be Base Rate Loans (if denominated in Dollars) or Eurocurrency Rate Loans, as further provided herein. To the extent that any portion of the Revolving Credit Facility has been refinanced with one or more new revolving credit facilities constituting Specified Refinancing Debt, each Revolving Credit Borrowing (including any deemed Revolving Credit Borrowings made pursuant to Section 2.03) shall be allocated pro rata among the Revolving Tranches.

(c) After the Closing Date, subject to and upon the terms and conditions set forth herein, each Lender with a Term Commitment (other than an Initial Term Commitment and a Term B-3 Commitment) with respect to any Tranche of Term Loans (other than Initial Term Loans and Redenomination Term B-3 Loans) severally agrees to make a Term Loan under such Tranche to the Borrowers in an amount not to exceed such Term Lender’s Term Commitment under such Tranche on the date of incurrence thereof, which Term Loans under such Tranche shall be incurred pursuant to a single drawing on the date set forth for such incurrence. Such Term Loans may be Eurocurrency Rate Loans (other than Term B-3 Loans) or Base Rate Loans (other than Term B-3 Loans or other Loans denominated in a currency other than Dollars) as further provided herein. Term B-3 Loans shall be Benchmark PBOC Rate Loans. Once repaid, Term Loans incurred hereunder may not be reborrowed (it being understood, however, that prepayments will be taken into account for purposes of any Prepayment-Based Incremental Facility to the extent provided by Section 2.14).

 

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Section 2.02 Borrowings, Conversions and Continuations of Loans (Other than Term B-3 Loans).

(a) Each Term Borrowing (other than with respect to Term B-3 Loans), each Revolving Credit Borrowing, each conversion of Term Loans (other than with respect to Term B-3 Loans), Specified Refinancing Revolving Loans or Revolving Credit Loans from one Type to another (in each case, other than conversion into or from Benchmark PBOC Rate Loans), and each continuation of Eurocurrency Rate Loans, shall be made upon irrevocable notice by the Borrowers to (i) in the case of any such conversion or continuation of Initial Term B-2 Loans after the Term B-2 Relevant Date so long as the Term B-2 Conversion has not occurred, the Redenomination Term Facilities Administrative Agent or (ii) the Administrative Agent with respect to all other Loans. Each such notice must be in writing and must be received by the Applicable Agent (and in the case of clause (2)(ii) below, with a copy to each Revolving Credit Lender) not later than (1) in the case of a Term Borrowing, other than any Benchmark PBOC Rate Loan, 12:00 p.m. (New York City time) and in the case of a Term Borrowing that is a Benchmark PBOC Rate Loan, 10:00 a.m. (Beijing time), in each case (A) three Business Days prior to the requested date of any Borrowing of, conversion of Base Rate Loans to, or continuation of, Eurocurrency Rate Loans or any Borrowing of Benchmark PBOC Rate Loans (which requested date must be a Business Day for the Applicable Agent and Lenders) and (B) on the requested date of any Borrowing of Base Rate Loans or of any conversion of Eurocurrency Rate Loans to Base Rate Loans and (2) in the case of a Revolving Credit Borrowing, solely in the case of clause (i), 1:00 p.m. (New York City time), and solely in the case of clause (ii), 6:00 a.m. (New York City time) (i) (A) in the case of a Borrowing denominated in Dollars, Euros, Canadian Dollars or Sterling, three Business Days prior to the requested date of any Borrowing of, conversion of Base Rate Loans to, or continuation of, Eurocurrency Rate Loans, (B) in the case of a Borrowing denominated in Swiss Francs, Swedish Krona or Singapore Dollars, four Business Days prior to the requested date of any Borrowing of, conversion of Base Rate Loans to, or continuation of, Eurocurrency Rate Loans and (C) in the case of any Borrowing denominated in Australian Dollars or Japanese Yen, five Business Days prior to the requested date of any Borrowing of, or continuation of, Eurocurrency Rate Loans and (ii) on the requested date of any Borrowing denominated in Dollars of Base Rate Loans or of any conversion of Eurocurrency Rate Loans to Base Rate Loans (which requested date must be a Business Day for the Applicable Agent and Lenders); provided that the initial Borrowing with respect to the Initial Term B-2 Loans shall be made by delivery of a Committed Loan Notice to the Administrative Agent with a copy to the Redenomination Term Facilities Administrative Agent no later than 10:00 a.m. (Beijing time), January 26, 2017. Each notice pursuant to this Section 2.02(a) shall be delivered to the Applicable Agent in the form of a written Committed Loan Notice with respect to Initial Term B-1 Loans or Initial Term B-2 Loans, as applicable, appropriately completed and signed by a Responsible Officer of a Borrower.

Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be (i) in a principal amount of $1,000,000, or (ii) a whole multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(d) and 2.04(c), each Borrowing of, or conversion to, Base Rate Loans shall be (i) in a principal amount of $1,000,000, or (ii) a whole multiple of $500,000 in excess thereof. Each Borrowing of Initial Term Loans must be requested on the basis that (x) the percentage borne by the aggregate Initial Term B-1 Loans to the aggregate Initial Term B-1 Commitments and (y) the percentage borne by the aggregate Initial Term B-2 Loans to the aggregate Initial Term B-2 Commitments must be equal.

Each Committed Loan Notice shall specify (i) whether the Borrowers (or the applicable Borrower) are requesting a Term Borrowing, a Revolving Credit Borrowing, a conversion of a Tranche of Term Loans, Specified Refinancing Revolving Loans or Revolving Credit Loans from one Type to another (in each case, other than conversion into or from Benchmark PBOC Rate Loans), or a continuation of Eurocurrency Rate Loans or CDOR Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Tranche of Term Loans, Specified Refinancing Revolving Loans or Revolving Credit Loans are to be converted and (v) if applicable, the duration of the Interest Period with respect thereto. If, with respect to any Loans denominated in an Alternative Currency (other than RMB), the Borrowers fail to specify a Type of Loan in a Committed Loan Notice or if the Borrowers fail to give a timely notice requesting a conversion or continuation, then the applicable Tranche of Term Loans, Specified Refinancing Revolving Loans, or Revolving Credit Loans shall be made as, or converted to, Eurocurrency Rate Loans (or, in the case of Loan denominated in Canadian Dollars, CDOR Rate Loans) with an Interest Period of 1 month. If, with respect to any Loans denominated in Dollars, the Borrowers (or the applicable Borrower) fail to specify a Type of Loan in a Committed Loan Notice, or if the Borrowers (or the applicable Borrower) fail to give a timely notice requesting a conversion or

 

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continuation of Eurocurrency Rate Loans denominated in Dollars, then such Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion or continuation pursuant to the immediately preceding sentence shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If a Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. If no currency is specified, the requested Borrowing shall be in Dollars.

(b) Following receipt of a Committed Loan Notice, the Applicable Agent shall promptly notify each applicable Lender of the amount of its ratable share of the applicable Tranche of Term Loans, Specified Refinancing Revolving Loans or Revolving Credit Loans, and if no timely notice of a conversion or continuation of Eurocurrency Rate Loan is provided by the Borrowers, the Applicable Agent shall notify each Lender of the details of any automatic conversion to Eurocurrency Rate Loans with an Interest Period of one month as described in Section 2.02(a). In the case of a Term Borrowing (other than with respect to Term B-3 Loans) or a Revolving Credit Borrowing, each Appropriate Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 12:00 p.m. (New York City time) (or 2:00 p.m. (New York City time), in the case of Base Rate Loans) in the case of Loans denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Revolving Credit Loan denominated in an Alternative Currency, in each case, on the Business Day specified in the applicable Committed Loan Notice. Each Lender may, at its option, make any Loan available to the Borrowers (or the applicable Borrower) by causing any foreign or domestic branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement. Upon satisfaction of the applicable conditions set forth in Section 4.03 (or, if such Borrowing is the initial Credit Extension, Section 4.01 and Section 4.02), the Applicable Agent shall make all funds so received available to the Borrowers (or the applicable Borrower) in like funds as received by the Applicable Agent either by (i) crediting the account of the Borrowers (or the applicable Borrower) on the books of the Applicable Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Applicable Agent by the Borrowers (or the applicable Borrower); provided, however, that if, on the date the Committed Loan Notice with respect to such Borrowing is given by the Borrowers, there are L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings, and second, to the Borrowers as provided above.

(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan unless the Borrowers pay the amount due under Section 3.06 in connection therewith. During the existence of an Event of Default, at the election of the Applicable Agent or the Required Lenders, no Loans may be requested as, converted to or continued as Eurocurrency Rate Loans.

(d) The Applicable Agent shall promptly notify the Borrowers and the applicable Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such interest rate. The determination of the Eurocurrency Rate by the Applicable Agent shall be conclusive in the absence of manifest error.

(e) After giving effect to all Term Borrowings, all Revolving Credit Borrowings, all conversions of Term Loans or Revolving Credit Loans from one Type to another, and all continuations of Term Loans or Revolving Credit Loans of the same Type, there shall not be more than ten Interest Periods in effect.

(f) The failure of any Lender to make the Loan 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 Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing, which for the avoidance of doubt does not limit such Lender’s obligations under Section 2.17.

 

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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 (among other things) the agreements of the other Revolving Credit Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of a Borrower or any Restricted Subsidiary (provided that the Borrowers hereby irrevocably agree to reimburse the applicable L/C Issuer for any and all amounts drawn on any Letters of Credit issued for the account of another Borrowers or any Restricted Subsidiary on a joint and several basis with such Restricted Subsidiary and each Borrower hereby acknowledges that the issuance of Letters of Credit for the account of its Restricted Subsidiaries inures to the benefit of the Borrowers, and that the Borrowers’ business derives benefits from the businesses of such Restricted Subsidiaries) and to amend or renew Letters of Credit previously issued by it, in accordance with Section 2.03(c), and (2) to honor drafts under the Letters of Credit and (B) the Revolving Credit Lenders severally agree to participate in Letters of Credit issued for the account of a Borrower or any Restricted Subsidiary and any drawings thereunder; provided that no L/C Issuer shall be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit, if as of the date of such L/C Credit Extension (v) the Total Revolving Credit Outstandings plus the aggregate Ancillary Outstandings would exceed the Revolving Credit Facility, (w) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender plus such Lender’s Ancillary Outstandings, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, would exceed such Lender’s Revolving Credit Commitment and (x) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit; provided further that no L/C Issuer identified in clause (a) of the definition thereof shall have any obligation to make an L/C Credit Extension if, after giving effect thereto, the L/C Obligations in respect of Letters of Credit issued by such L/C Issuer would exceed, in the case of (i) Barclays Bank PLC, $33,750,000, (ii) JPMorgan Chase Bank, N.A., $15,000,000, (iii) Credit Suisse AG, Cayman Islands Branch, $11,250,000, (iv) Citibank N.A., London Branch, $11,250,000 and (v) RBC Europe Limited, $3,750,000. Within the foregoing limits and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers 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 be under any obligation to issue any Letter of Credit (and, in the case of clause (B) and (C), no L/C Issuer shall 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 issuing such 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 such Letter of Credit in particular or shall impose upon such L/C Issuer with respect to such 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 Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which, in each case, such L/C Issuer in good faith deems material to it;

(B) subject to Section 2.03(c)(iii), the expiry date of such requested Letter of Credit would occur more than 12 months after the date of issuance or last renewal, unless the applicable L/C Issuer, in its sole discretion, have approved such expiry date; provided that Credit Suisse AG, Cayman Islands Branch shall not issue Letters of Credit with an expiry date of more than 12 months after the date of issuance or last renewal;

(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless (i) all the Revolving Credit Lenders and the applicable L/C Issuer have approved such expiry date and/or (ii) the applicable L/C Issuer has approved such expiry date and such requested Letter of Credit has been Cash Collateralized by the applicant requesting such Letter of Credit in accordance with Section 2.16 at least three Business Days prior to the Letter of Credit Expiration Date;

(D) the issuance of such Letter of Credit would violate one or more generally applicable policies of such L/C Issuer in place at the time of such request;

 

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(E) such Letter of Credit is in an initial stated amount of less than $5,000 or such lesser amount as is acceptable to the applicable L/C Issuer in its sole discretion;

(F) such Letter of Credit is denominated in a currency other than Dollars or an Alternative Currency;

(G) the L/C Issuer does not as of the issuance date of such requested Letter of Credit issue Letters of Credit in the requested currency;

(H) any Revolving Credit Lender under the applicable Tranche is at that time a Defaulting Lender, unless the applicable L/C Issuer has entered into arrangements, including reallocation of the Defaulting Lender’s Pro Rata Share of the outstanding L/C Obligations pursuant to Section 2.17(a)(iv) or the delivery of Cash Collateral in accordance with Section 2.16 with the Borrowers or such Lender to eliminate such L/C Issuer’s actual or potential Fronting Exposure under such Tranche (after giving effect to Section 2.17(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 under such Tranche.

(iii) 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 such Letter of Credit in its amended form under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(iv) Each L/C Issuer shall act on behalf of the Revolving Credit Lenders under the applicable Tranche 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 Agent in Article IX 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 IX included each L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to each L/C Issuer.

(b) The foregoing benefits and immunities shall not excuse any L/C Issuer from liability to the Borrowers to the extent of any direct damages (as opposed to indirect, special, consequential, punitive or exemplary damages claims which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by the Borrowers that are caused by such the L/C Issuer’s gross negligence, bad faith or willful misconduct as determined by a court of competent jurisdiction in a final and nonappealable judgment.

(c) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrowers delivered to the applicable L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, including agreed-upon draft language for such Letter of Credit reasonably acceptable to the applicable L/C Issuer (it being understood that such draft language for each such Letter of Credit must be in English or, if agreed to in the sole discretion of the applicable L/C issuer, accompanied by an English translation certified by the Borrowers to be a true and correct English translation), appropriately completed and signed by a Responsible Officer of the Borrowers. Such Letter of Credit Application must be received by the applicable L/C Issuer and the Administrative Agent not later than 12:00 p.m. at least five Business Days (or such shorter period as such L/C Issuer and the Administrative Agent 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 reasonably satisfactory to the applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day not later than 30 days prior to the Maturity Date of the Revolving Credit Facility, unless the Administrative Agent and the applicable L/C Issuer otherwise agree); (B) the amount thereof and the currency in which such Letter of Credit is to be denominated; (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 or other documents to be presented by such beneficiary in case of any drawing thereunder; (G) the Person for whose account the requested Letter of Credit is to be issued (which must be a Borrower Party); and (H) such other matters as the applicable L/C Issuer may reasonably request. In the case of a request for an amendment of any outstanding Letter of Credit, such

 

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Letter of Credit Application shall specify in form and detail reasonably satisfactory to the applicable L/C Issuer: (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment and (4) such other matters as the applicable L/C Issuer may reasonably request.

(ii) Promptly following delivery of any Letter of Credit Application to the applicable L/C Issuer, the Parent Borrower will confirm with the Administrative Agent that the Administrative Agent has received a copy of such Letter of Credit Application and, if the Administrative Agent has not received a copy of such Letter of Credit Application, then the Parent Borrower will provide the Administrative Agent with a copy thereof. Upon receipt by such L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, 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 a Borrower or any Restricted Subsidiary (as designated in the Letter of Credit Application) or enter into the applicable amendment, as the case may be. Immediately upon the issuance of each Letter of Credit under any Tranche, each Revolving Credit Lender under such Tranche 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 such Lender’s Pro Rata Share of the applicable Revolving Credit Facility multiplied by the amount of such Letter of Credit.

(iii) If a Borrower on behalf of the applicable Borrower Party so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must permit such L/C Issuer to prevent any such renewal 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 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 Borrowers shall not be required to make a specific request to such L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Revolving Credit Lenders under the applicable Tranche shall be deemed to have authorized (but may not require) the applicable L/C Issuer to permit the renewal of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that such L/C Issuer shall not permit any such renewal if such L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or otherwise).

(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 (A) deliver to the Borrowers, the applicable Borrower Party and the Administrative Agent a true and complete copy of such Letter of Credit or amendment and (B) the Administrative Agent in turn will notify each Revolving Credit Lender of the applicable Tranche of such issuance or amendment and the amount of such Revolving Credit Lender’s Pro Rata Share therein.

(v) Notwithstanding anything to the contrary set forth above, the issuance of any Letters of Credit by any L/C Issuer under this Agreement shall be subject to such reasonable additional letter of credit issuance procedures and requirements as may be required by such L/C Issuer’s internal letter of credit issuance policies and procedures, in its sole discretion, as in effect at the time of such issuance, including requirements with respect to the prior receipt by such L/C Issuer of customary “know your customer” information regarding a prospective account party or applicant that is not a Borrower hereunder, as well as regarding any beneficiaries of a requested Letter of Credit. Additionally, if (a) the beneficiary of a Letter of Credit issued hereunder is an issuer of a letter of credit not governed by this Agreement for the account of any Borrower or any Restricted Subsidiary (an “Other L/C”), and (b) such Letter of Credit is issued to provide credit support for such Other L/C, no amendments may be made to such Other L/C without the consent of the applicable L/C Issuer hereunder.

(d) Drawings and Reimbursements; Funding of Participations. (i) Upon receipt from the beneficiary of any Letter of Credit of any drawing under such Letter of Credit, the applicable L/C Issuer shall notify the Borrowers and the Administrative Agent thereof. Each L/C Issuer shall notify the Borrowers on the date of any payment by such L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), and the Borrowers shall reimburse such L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing no later than on the next succeeding Business Day (and any reimbursement made on such next Business Day shall be

 

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taken into account in computing interest and fees in respect of any such Letter of Credit) after the Borrowers shall have received notice of such payment with interest on the amount so paid or disbursed by such L/C Issuer, to the extent not reimbursed prior to 3:00 p.m. in the case of drawings in Dollars or the Applicable Time in the case of drawings in an Alternative Currency, in each case, on the applicable Honor Date, from and including the date paid or disbursed to but excluding the date such L/C Issuer was reimbursed by the Borrowers therefor at a rate per annum equal to the Base Rate as in effect from time to time plus the Applicable Rate as in effect from time to time for Revolving Credit Loans that are maintained as Base Rate Loans. If the Borrowers fail to so reimburse such L/C Issuer on such next Business Day, the Administrative Agent shall promptly notify each Revolving Credit Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Revolving Credit Lender’s Pro Rata Share thereof. In such event, in the case of an Unreimbursed Amount, the Borrowers shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans in Dollars or the applicable Alternative Currency, as applicable, to be disbursed on such date in an amount equal to the Unreimbursed Amount, in accordance with the requirements of Section 2.02 but without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans or Eurocurrency Rate Loans, as the case may be, but subject to the amount of the unutilized portion of the Revolving Credit Commitments under the applicable Tranche and the conditions set forth in Section 4.03 (other than the delivery of a Committed Loan Notice). Any notice given by an L/C Issuer or the Administrative Agent pursuant to this Section 2.03(d)(i) may be given by telephone if promptly confirmed in writing; provided that the lack of such a prompt confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Revolving Credit Lender (including each Lender acting as an L/C Issuer) shall upon any notice pursuant to Section 2.03(d)(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, at the Administrative Agent’s Office in an amount equal to its applicable Pro Rata Share of the Unreimbursed Amount not later than 3:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(d)(iii), each Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Revolving Credit Loan under the applicable Tranche to the Borrowers in such amount. The Administrative Agent shall promptly remit the funds so received to the applicable L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section 4.03 cannot be satisfied (other than the condition in Section 4.03(c), which shall be deemed to be satisfied) or for any other reason, the Borrowers shall be deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate then applicable to Base Rate Revolving Credit Loans. In such event, each Revolving Credit Lender’s payment to the Administrative Agent for the account of the applicable L/C Issuer pursuant to Section 2.03(d)(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 Revolving Credit Lender under the applicable Tranche funds its Revolving Credit Loan or L/C Advance pursuant to this Section 2.03(d) to reimburse the applicable L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s applicable Pro Rata Share of such amount shall be solely for the account of such L/C Issuer.

(v) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans 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(d), 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, any 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 Revolving Credit Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.03(d) is subject to the conditions set forth in Section 4.03 (other than delivery by the Borrowers of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrowers to reimburse the applicable L/C Issuer for the amount of any payment made by the applicable L/C Issuer under any Letter of Credit, together with interest as provided herein.

 

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(vi) If any Revolving Credit 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(d) by the time specified in Section 2.03(d)(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 from time to time in effect and a rate reasonably determined by such L/C Issuer in accordance with banking industry rules on interbank compensation, plus any reasonable administrative, processing or similar fees customarily charged by such L/C Issuer in connection with the foregoing. If such Lender pays such principal amount, the amount so paid (less interest and fees) shall constitute such Lender’s Loan 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 Revolving Credit Lender (through the Administrative Agent) with respect to any amounts owing under this Section 2.03(d)(vi) shall be conclusive absent manifest error.

(e) Repayment of Participations. (i) If, at any time after an L/C Issuer under any Tranche has made a payment under any Letter of Credit issued by it and has received from any Revolving Credit Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(d), 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 Borrowers or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its applicable Pro Rata Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of an L/C Issuer pursuant to Section 2.03(d)(i) is required to be returned under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by such L/C Issuer in its discretion), each Revolving Credit Lender under the applicable Tranche shall pay to the Administrative Agent for the account of such L/C Issuer its applicable 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.

(f) Obligations Absolute. The obligation of the Borrowers 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 agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrowers or any Subsidiary 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), the applicable 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 transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by the applicable L/C Issuer under such Letter of Credit against presentation of a draft, certificate or other drawing document that does not comply with the terms of such Letter of Credit; or any payment made by the applicable 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, administrator, administrative receiver, judicial manager, 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 any Debtor Relief Law;

 

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(v) any exchange, release or non-perfection of any Collateral, or any release or amendment or waiver of or consent to departure from the Guaranty or any other guarantee, for all or any of the Obligations of the Borrowers in respect of such Letter of Credit; or

(vi) 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 legal or equitable discharge of, or provide a right of setoff against the obligations of the Borrowers or any Subsidiaries hereunder.

The Borrowers shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to them and, in the event of any claim of noncompliance with the instructions of the Borrowers or other irregularity, the Borrowers will promptly notify the applicable L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim against any L/C Issuer and its correspondents unless such notice is given as aforesaid.

(g) Role of L/C Issuer. Each Lender and the Borrowers 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 other 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 applicable L/C Issuer, any Agent-Related Person nor any of the respective correspondents, participants or assignees of the applicable 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 Revolving Credit Lenders or the Required Revolving Lenders, as applicable; (ii) any action taken or omitted in the absence of bad faith, gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and nonappealable judgment or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrowers hereby assume 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 Borrowers from pursuing such rights and remedies as they may have against the beneficiary or transferee at Law or under any other agreement. None of the applicable L/C Issuer, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of such L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(f); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against such L/C Issuer, and such L/C Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to indirect, special, punitive, consequential or exemplary, damages suffered by the Borrowers which a court of competent jurisdiction determines in a final non-appealable judgment were caused by such L/C Issuer’s bad faith, willful misconduct or gross negligence. In furtherance and not in limitation of the foregoing, the applicable L/C Issuer may, in its sole discretion, either accept documents that appear on their face to be in order and make payment upon such documents, without responsibility for further investigation, regardless of any notice or information to the contrary, and such L/C Issuer 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 or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(h) Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent for the account of each Revolving Credit Lender in accordance with its applicable Pro Rata Share, a Letter of Credit fee which shall accrue for each Letter of Credit of each Tranche in an amount equal to the Applicable Rate then in effect for Eurocurrency Rate Loans with respect to the Revolving Credit Facility multiplied by the daily maximum amount then available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit if such maximum amount increases automatically pursuant to the terms of such Letter of Credit); provided, however, that any Letter of Credit fees otherwise 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 shall be payable, to the maximum extent permitted by applicable Law, to the other Revolving Credit Lenders under the applicable Tranche in accordance with the upward

 

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adjustments in their respective applicable Pro Rata Shares allocable to such Letter of Credit pursuant to Section 2.17(a)(iv), with the balance of such fee, if any, payable to the applicable L/C Issuer for its own account. Such Letter of Credit fees shall be computed on a quarterly basis in arrears and shall be due and payable on the last Business Day of each fiscal quarter, in respect of the quarterly period then ending (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, and on the Letter of Credit Expiration Date. If there is any change in the Applicable Rate during any quarter, the daily maximum amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(i) Fronting Fee and Documentary and Processing Charges Payable to an L/C Issuer. The Borrowers shall pay directly to the applicable L/C Issuer for its own account a fronting fee equal to 0.125% of the maximum 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 last Business Day of each fiscal quarter beginning with the first fiscal quarter after the Closing Date in respect of the quarterly period then ending (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, and on the Letter of Credit Expiration Date. For purposes of computing the maximum 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 1.10. In addition, the Borrowers shall pay directly to the applicable L/C Issuer for its own account the customary issuance, presentation, administration, 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 within five Business Days of demand and are nonrefundable.

(j) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.

(k) Reporting. To the extent that any Letters of Credit are issued by an L/C Issuer other than the Administrative Agent, each such L/C Issuer shall furnish to the Administrative Agent a report detailing the daily L/C Obligations outstanding under all Letters of Credit issued by it, such report to be in a form and at reporting intervals as shall be agreed between the Administrative Agent and such L/C Issuer; provided that in no event shall such reports be furnished at intervals greater than 31 days.

(l) Provisions Related to Extended Revolving Credit Commitments. If the Maturity Date in respect of any Tranche of Revolving Credit Commitments occurs prior to the expiration of any Letter of Credit, then (i) if one or more other Tranches of Revolving Credit Commitments in respect of which the Maturity Date shall not have occurred are then in effect, such Letters of Credit shall automatically be deemed to have been issued (including for purposes of the obligations of the Revolving Credit Lenders to purchase participations therein and to make Revolving Credit Loans and payments in respect thereof pursuant to this Section 2.03) under (and ratably participated in by Lenders pursuant to) the Revolving Credit Commitments in respect of such non-terminating Tranches up to an aggregate amount not to exceed the aggregate principal amount of the unutilized Revolving Credit Commitments thereunder at such time (it being understood that no partial face amount of any Letter of Credit may be so reallocated) and to the extent any Letters of Credit are not able to be reallocated pursuant to this clause (l) and there are outstanding Revolving Credit Loans under the non-terminating Tranches, the Borrowers agree to repay all such Revolving Credit Loans (or such lesser amount as is necessary to reallocate all Letters of Credit pursuant to this clause (l)) or (ii) to the extent not reallocated pursuant to immediately preceding clause (i), the Borrowers shall Cash Collateralize any such Letter of Credit in accordance with Section 2.16 but only up to the amount of such Letter of Credit not so reallocated. Except to the extent of reallocations of participations pursuant to clause (i) of the immediately preceding sentence, the occurrence of a Maturity Date with respect to a given tranche of Revolving Credit Commitments shall have no effect upon (and shall not diminish) the percentage participations of the Revolving Credit Lenders in any Letter of Credit issued before such Maturity Date.

 

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Section 2.04 Borrowings of, and Redenominations to, Term B-3 Loans.

(a) Initial Term B-3 Loans.

(i) Provided that the Parent Borrower notifies the Redenomination Term Facilities Administrative Agent that the Closing Date will occur at least five Business Days in advance thereof, the Redenomination Term Facilities Administrative Agent shall, at least four Business Days prior to the Closing Date (as so notified by the Parent Borrower), deliver to the Parent Borrower a RMB Notice (with a copy to the Administrative Agent) stating (i) the amount (in RMB) available to be incurred on the Closing Date as Initial Term B-3 Loan (it being understood that such amount may be zero and the Dollar Amount thereof shall not exceed $500,000,000) and the Initial Term B-3 Commitment of each Term Lender with respect thereto and (ii) the Term B-3 Loans Sub-Tranche applicable to such available amounts (it being understood that the initial Term B-3 Loans Sub-Tranche (which, to the extent incurred on the Closing Date, shall be the Initial Term B-3 Loans) shall be “Term B-3 Loans Sub-Tranche A”). The Parent Borrower may, within one Business Day of receiving such RMB Notice, notify the Redenomination Term Facilities Administrative Agent (with a copy to the Administrative Agent) it intends to borrow (1) Initial Term B-3 Loans on the Closing Date in an amount not to exceed the available amount set forth in such RMB Notice by delivering a RMB Committed Loan Notice and (2) Initial Term B-2 Loans on the Closing Date in an amount not to exceed the aggregate Initial Term B-2 Commitments (calculated without reference to any deduction on account of any Initial Term B-3 Commitment) minus the Dollar Amount of Initial Term B-3 Loans borrowed on the Closing Date, by delivering to the Administrative Agent a Committed Loan Notice pursuant to Section 2.02(a).

(ii) Notwithstanding the foregoing, the Redenomination Term Facilities Administrative Agent may elect on the Closing Date that the Term Lenders will not provide Initial Term B-3 Loans, provided, that, upon the Redenomination Term Facilities Administrative Agent making such election, (i) the Parent Borrower shall borrow, and the applicable Lenders shall lend, Initial Term B-2 Loans on the Closing Date in an aggregate amount of $500,000,000, and (ii) any Committed Loan Notice submitted prior to the Closing Date with respect to Initial Term B-2 Loans shall be deemed to be a Committed Loan Notice requesting Initial Term B-2 Loans in an aggregate principal amount of $500,000,000 unless otherwise specified therein by the Parent Borrower.

(b) Redenominated Term B-3 Loans. From the Closing Date until there are no Initial Term B-2 Loans outstanding, the Redenomination Term Facilities Administrative Agent shall, subject to applicable Laws, use its commercially reasonable efforts to ensure that it or one of its branches in the People’s Republic of China (which, for purposes of the Loan Documents shall exclude Hong Kong, Macau, and Taiwan) (the “PRC”), is able to redenominate outstanding Initial Term B-2 Loans from Dollars to RMB (such redenominated Loans, the “Redenominated Term B-3 Loans” and such redenomination, a “Relevant Redenomination Event”)). The Redenomination Term Facilities Administrative Agent shall regularly, and as soon as reasonably practicable following receipt of request to do so by the Parent Borrower, for so long as any Initial Term B-2 Loans are outstanding, notify the Parent Borrower if a Relevant Redenomination Event is available and, promptly upon the Redenomination Term Facilities Administrative Agent obtaining knowledge that it (or one of its branches in the PRC) can perform a Relevant Redenomination Event, shall deliver to the Parent Borrower (with a copy to the Administrative Agent) a RMB Notice stating (i) the Dollar Amount of Initial Term B-2 Loans that can be redenominated in connection with such Relevant Redenomination Event, (ii) the Term B-3 Loans Sub-Tranche applicable to such Redenominated Term B-3 Loans and (iii) the proposed date of such Relevant Redenomination Event (the “Proposed Redenomination Date” with respect to such Relevant Redenomination Event) (and, at the Parent Borrower’s request, the Redenomination Term Facilities Administrative Agent shall use commercially reasonable efforts to minimize payments owed under Section 3.06 by scheduling such proposed Relevant Redenomination Event on the last day of the Interest Period); provided that such Proposed Redenomination Date must be at least five Business Days after the date of such RMB Notice. The Parent Borrower shall upon receiving a RMB Notice notify the Redenomination Term Facilities Administrative Agent, no later than 10:00 a.m. (Beijing time) on the third Business Day prior to the Proposed Redenomination Date for the applicable Relevant Redenomination Event specified in such RMB Notice, as to whether the Parent Borrower intends to consummate such Relevant Redenomination Event subject to the delivery of a RMB Committed Loan Notice in respect of such Relevant Redenomination Event in accordance with the following (the “RMB Redenomination Selection Notice” with respect to such Relevant Redenomination Event). If the Parent Borrower shall have given a RMB Redenomination Selection Notice with respect to a Relevant Redenomination Event to the effect that it intends to consummate such Relevant Redenomination Event, (A) the Redenomination Term Facilities Administrative Agent shall notify the Parent Borrower no later than 11:00 a.m. (Beijing time) on the Proposed Redenomination Date with respect to (x) the amount in RMB of Redenominated Term B-3 Loans that would result from such Relevant Redenomination Event and (y) the rate of exchange as determined by the BOC Arranger and notified to the Redenomination Term Facilities Administrative Agent to be used to achieve such available amount (the “RMB Redenomination Exchange Rate” in respect of such Relevant Redenomination Event) and (B) the Parent Borrower may no later than 11:00 a.m. (Beijing time) on the Proposed Redenomination Date for such Relevant

 

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Redenomination Event as set forth in such RMB Notice, notify the Redenomination Term Facilities Administrative Agent that it intends to consummate such Redenomination Event by delivering a RMB Committed Loan Notice, provided that (aa) such RMB Committed Loan Notice may be contingent on the BOC Arranger adjusting the RMB Redenomination Exchange Rate (applicable to such Relevant Redenomination Event) so it equals the RMB Alternative Exchange Rate identified by the Parent Borrower in such RMB Committed Loan Notice (including particulars of the institution that is able to offer such RMB Alternative Exchange Rate) and if such RMB Committed Loan Notice is made contingent on such adjustment of such RMB Redenomination Exchange Rate, the BOC Arranger shall use commercially reasonable efforts to adjust the RMB Redenomination Exchange Rate (for such Relevant Redenomination Event) to match such RMB Alternative Exchange Rate, provided, further that, in any case, such Relevant Redenomination Event may only be effected by the BOC Arranger (or an Affiliate of the BOC Arranger specified by the BOC Arranger) irrespective of whether or not the BOC Arranger is able to adjust the RMB Redenomination Exchange Rate (for such Relevant Redenomination Event) or match such RMB Alternative Exchange Rate and (bb) no RMB Committed Loan Notice may be delivered unless the Parent Borrower shall have delivered a RMB Redenomination Selection Notice with respect to such Relevant Redenomination Event in accordance with the foregoing provisions stating that the Parent Borrower intends to consummate such Relevant Redenomination Event. In the event that a Redenomination Event occurs with respect to any Initial Term B-2 Loan that is a Eurocurrency Rate Loan on any day other that the last day of an Interest Period of such Eurocurrency Rate Loan, the Borrowers shall pay to the applicable Lender(s) such amounts as may be required pursuant to Section 3.06. For the avoidance of doubt, any Redenomination Event shall not be construed as a repayment or prepayment of Initial Term Loans for all purposes of this Agreement (including, for the avoidance of doubt for purposes of calculating Excess Cash Flow). Upon the occurrence of a Relevant Redenomination Event, the applicable Initial Term B-2 Loan (or the applicable portion thereof) held by a Term Lender shall be re-denominated, using the RMB Redenomination Exchange Rate in respect of such Relevant Redenomination Event, into and constitute a Redenominated Term B-3 Loan held by such Term Lender (and deemed to be made available by such Term Lender to the Parent Borrower), provided that the aggregate Dollar Amount of Initial Term B-2 Loans so redenominated shall not exceed the amount specified in the applicable RMB Notice.

(c) RMB Committed Loan Notice. Each RMB Committed Loan Notice delivered pursuant to this Section 2.04 shall be irrevocable and appropriately completed and signed by a Responsible Officer of the Parent Borrower and delivered to the Redenomination Term Facilities Administrative Agent (with a copy to the Administrative Agent) by (in the case of any Borrowing) 10:00 a.m. (Beijing time) on the relevant date, which date must be three Business Days (Beijing time) prior to the requested date for such Borrowing or (in the case of any Relevant Redenomination Event) 11:00 a.m. (Beijing time) on the Proposed Redenomination Date for such Relevant Redenomination Event and shall (i) state whether the Parent Borrower is requesting the Borrowing of Initial Term B-3 Loans or New Term Loans denominated in RMB or a Relevant Redenomination Event, (ii) (in the case of a Borrowing) the principal amount (in RMB) of Initial Term B-3 Loans requested (which shall not exceed the aggregate Initial Term B-3 Commitments) or the principal amount of New Term Loans denominated in RMB requested (which shall not exceed the applicable New Term Commitments in respect of such New Term Loans), as applicable, and (in the case of a Relevant Redenomination Event) the Dollar Amount of the aggregate principal amount of Initial Term B-2 Loans to be redenominated (which shall not exceed the amount specified in the applicable RMB Notice), as applicable, (iii) the RMB Alternative Exchange Rate proposed for a Relevant Redenomination Event and whether the consummation of such Relevant Redenomination Event is contingent on such RMB Redenomination Exchange Rate being adjusted to match such RMB Alternative Exchange Rate, if applicable (iv) the applicable Term B-3 Loans Sub-Tranche, and (v) the date for incurring such Initial Term B-3 Loans (which shall be the Closing Date provided that it shall also be a Business Day) or such New Term Loans denominated in RMB (which shall be a Business Day) or consummating such Relevant Redenomination Event (which shall be a Business Day and which shall be the Proposed Redenomination Date in respect of such Relevant Redenomination Event).

Following receipt of an RMB Committed Loan Notice requesting for a Borrowing of Initial Term B-3 Loans or New Term Loans denominated in RMB, the Redenominated Term Facilities Administrative Agent shall promptly notify each applicable Lender of the amount of its ratable share of the applicable Tranche of Initial Term B-3 Loans or New Term Loans, as applicable, and each Appropriate Lender shall make the amount of its Initial Term B-3 Loan or New Term Loan, as applicable, available to the Redenominated Term Facilities Administrative Agent in immediately available funds at the Redenominated Term Facilities Administrative Agent’s Office not later than 11:00 a.m. (Beijing time) on the Business Day specified in the applicable RMB Committed Loan Notice. Upon

 

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satisfaction of the applicable conditions set forth in Section 4.03 (or, if such Borrowing is the initial Credit Extension, Section 4.01 and Section 4.02), the Redenominated Term Facilities Administrative Agent shall make all funds so received available to the Parent Borrower in like funds as received by the Redenominated Term Facilities Administrative Agent either by (i) crediting the account of the Parent Borrower on the books of the Redenominated Term Facilities Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Redenominated Term Facilities Administrative Agent by the Parent Borrower.

(d) Minimum Amounts. Each Borrowing of Initial Term B-3 Loans or Term B-3 Loans subject to a Redenomination Event shall be (in the case of a Borrowing) (x) in a principal amount of RMB100,000,000, or (y) a whole multiple of RMB 10,000,000 in excess thereof or (in the case of a Relevant Redenomination Event) (x) in a principal amount of $10,000,000 or (y) a whole multiple of $10,000,000 in excess thereof; provided that (i) the Borrowing of Initial Term B-3 Loans on the Closing Date may be in the full amount available pursuant to the RMB Notice delivered by the Redenomination Term Facilities Administrative Agent pursuant to Section 2.04(a)(i) and (ii) the amount of Term B-3 Loans subject to a Relevant Redenomination Event may be subject to the full amount available for such Relevant Redenomination Event pursuant to a RMB Notice delivered pursuant to Section 2.04(b).

(e) The Redenominated Term Facilities Administrative Agent shall promptly notify the Parent Borrower and the applicable Lenders of the Benchmark PBOC Rate applicable to any Initial Term B-3 Loan or Redenominated Term B-3 Loan upon determination of such Benchmark PBOC Rate. The determination of the Benchmark PBOC Rate by the Redenominated Term Facilities Administrative Agent shall be conclusive in the absence of manifest error.

(f) The failure of any Lender to make the Loan 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 Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing, which for the avoidance of doubt does not limit such Lender’s obligations under Section 2.17.

(g) Notwithstanding anything herein to the contrary, to the extent any of the Arrangers (other than the BOC Arranger (or an Affiliate thereof)) remains a Lender in respect of the Initial Term B-2 Loans within 10 days after the Closing Date (or such later date as the Administrative Agent and such Arranger may agree in their sole discretion) (the expiry of such 10-day being the “Term B-2 Relevant Date”), such Initial Term B-2 Loans shall be automatically converted into Initial Term B-1 Loans (the “Term B-2 Conversion”); provided that if as at the expiry of the Term B-2 Relevant Date, none of the Arrangers (other than the BOC Arranger or an Affiliate thereof) is a Lender with respect to Initial Term B-2 Loans, then no such Term B-2 Conversion shall occur. Upon such conversion, such converted Term Loans shall be deemed to be “Initial Term B-1 Loans” for all purposes of this Agreement and the other Loan Documents, constituting the same Class and Term Loan Tranche with, and having terms and provisions identical to those applicable to the Initial Term B-1 Loans made pursuant to Section 2.01(a). The converted Term Loans shall be added to (and constitute a part of and be of the same Type as and have, if applicable, the same Interest Period as) each Term Borrowing of outstanding Initial Term B-1 Loans of such Class on a pro rata basis (based on the relative sizes of such Term Borrowings), so that each Lender participates proportionately (relative to all Lenders with outstanding Initial Term B-1 Loans) in each then outstanding Borrowing of Initial Term B-1 Loans. Upon such conversion, the Administrative Agent will record in the Register the converted Term Loans as Initial Term B-1 Term Loans. The Lenders hereby authorize the Administrative Agent to make such amendments to this document as are necessary to effect this clause (g).

Section 2.05 Prepayments.

(a) Optional. (i) The Borrowers may, upon notice by the Borrowers substantially in the form of Exhibit K-1 to the Applicable Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty except as set forth in Section 2.05(a)(iii) below; provided that (1) such notice must be received by the Applicable Agent not later than 2:00 p.m. (A) four (4) Business Days prior to any date of prepayment of Eurocurrency Rate Loans denominated in Euro, (B) three Business Days prior to any date of prepayment of any other Eurocurrency Rate Loan, (C) on the date of prepayment of any Base Rate Loans (or such shorter period as the Applicable Agent shall agree), (D) five (5) Business Days prior to any date of prepayment of

 

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any Benchmark PBOC Rate Loans (or such shorter period as the Redenomination Term Facilities Administrative Agent shall agree); (2) any prepayment of Eurocurrency Rate Loans shall be (x) in a principal amount of $1,000,000 (or the equivalent Dollar Amount), or (y) a whole multiple of $1,000,000 (or the equivalent Dollar Amount) in excess thereof; (3) any prepayment of Base Rate Loans shall be (x) in a principal amount of $1,000,000 (or the equivalent Dollar Amount), or (y) a whole multiple of $500,000 (or the equivalent Dollar Amount) in excess thereof; and (4) any prepayment of Benchmark PBOC Rate Loans shall be (x) in a principal amount of RMB10,000,000, or (y) a whole multiple of RMB1,000,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment, the Tranche of Loans to be prepaid, the Type(s) of Loans to be prepaid and, if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans (except that if the class of Loans to be prepaid includes Base Rate Loans, Eurocurrency Rate Loans and/or Benchmark PBOC Rate Loans, absent direction by the Borrowers, the applicable prepayment shall be applied first to Base Rate Loans and Benchmark PBOC Rate Loans pro rata to the full extent thereof before application to Eurocurrency Rate Loans, in each case in a manner that minimizes the amount payable by the Borrowers in respect of such prepayment pursuant to Section 3.06). The Applicable Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable portion of such prepayment (based on such Lender’s ratable share of the relevant Facility). If such notice is given by the Borrowers, subject to clause (ii) below, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 2.05(a)(iii) and Section 3.06. Each prepayment of the principal of, and interest on, any Revolving Credit Loans denominated in an Alternative Currency shall be made in the relevant Alternative Currency and each prepayment of the principal of, and interest on, any Term B-3 Loan shall be in RMB. Subject to Section 2.17, each prepayment of an outstanding Term Loan Tranche pursuant to this Section 2.05(a) shall be applied to the remaining amortization payments of the applicable Term Loan Tranche (or, if the Borrowers have not made such designation, in direct order of maturity) or otherwise as directed by the Borrowers, but in any event on a pro rata basis to the Lenders within such applicable Term Loan Tranche.

(ii) Notwithstanding anything to the contrary contained in this Agreement, any notice of prepayment under Section 2.05(a)(i) may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrowers (by written notice to the Applicable Agent on or prior to the specified effective date) if such condition is not satisfied.

(iii) If the Borrower, in connection with, or resulting in, any Repricing Event (A) makes a voluntary prepayment of any Initial Term Loans or Redenominated Term B-3 Loans pursuant to Section 2.05(a), (B) makes a repayment of any Initial Term Loans or Redenominated Term B-3 Loans pursuant to Section 2.05(b)(iii) or (C) effects any amendment with respect to the Initial Term Loans or Redenominated Term B-3 Loans which reduces the All-in Yield applicable to the relevant Initial Term Loans or Redenominated Term B-3 Loans, in each case, on or prior to the date that is six months after the Closing Date, the applicable Borrowers shall pay to the Applicable Agent, for the ratable account of the applicable Term Lenders (x) with respect to clauses (A) and (B), a prepayment premium in an amount equal to 1.00% of the principal amount of Term Loans prepaid or repaid and (y) with respect to clause (C), a prepayment premium in an amount equal to 1.00% of the principal amount of the affected Term Loans held by the Term Lenders not consenting to such amendment.

(b) Mandatory. (i) For any Excess Cash Flow Period, within ten Business Days after financial statements have been delivered pursuant to Section 6.01(a) and the related Compliance Certificate has been delivered pursuant to Section 6.02(b) (or, if later, the date on which such financial statements and such Compliance Certificate are required to be delivered), the applicable Borrowers shall prepay an aggregate principal amount of Term Loans in an amount equal to (A) 50% (as may be adjusted pursuant to the proviso below) of Excess Cash Flow for such Excess Cash Flow Period, minus (B) the sum of (1) the aggregate amount of voluntary principal prepayments of the Loans, in each case, made during the period commencing on the first day of the relevant Excess Cash Flow Period and ending on the date immediately prior to the date on which the relevant Excess Cash Flow prepayment is or would be required to be made (including prepayments at a discount to par and open market repurchases, with credit given for the actual amount of the cash payment) (except prepayments of Loans under any Revolving Tranche that are not accompanied by a corresponding permanent commitment reduction of the Revolving Tranches), in each case other than to the extent that any such prepayment is funded with the proceeds of Specified

 

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Refinancing Debt, Refinancing Notes or any other long-term Indebtedness and (2) any amount not required to be applied to such prepayment pursuant to Section 2.05(b)(viii) and (ix); provided that such percentage in respect of any Excess Cash Flow Period shall be reduced to 25% or 0% if the Consolidated First Lien Net Leverage Ratio as of the last day of the fiscal year to which such Excess Cash Flow Period relates was equal to or less than 4.00:1.00 or 3.50:1.00, respectively; provided further that no prepayment shall be required with respect to any Excess Cash Flow Period to the extent Excess Cash Flow for such period is less than $10,000,000.

(ii) If any Asset Sale or Casualty Event (or series of related Asset Sales or Casualty Events) results in the receipt by the Parent Borrower or any Restricted Subsidiary of aggregate Net Cash Proceeds in excess of $20,000,000 (a “Relevant Transaction”), then, except to the extent the applicable Borrowers elect to reinvest all or a portion of such Net Cash Proceeds in accordance with Section 7.04, the applicable Borrowers shall prepay, subject to Section 2.05(b)(viii) and (ix), an aggregate principal amount of Term Loans in an amount equal to 100% (as may be adjusted pursuant to the second proviso below) of the Net Cash Proceeds received from such Relevant Transaction within 15 Business Days of receipt thereof by the Parent Borrower or such Restricted Subsidiary; provided that the applicable Borrowers may use a portion of the Net Cash Proceeds received from such Relevant Transaction to prepay or repurchase any other Indebtedness that is secured by the Collateral on a first lien “equal and ratable” basis with Liens securing the Obligations to the extent such other Indebtedness and the Liens securing the same are permitted hereunder and the documentation governing such other Indebtedness requires such a prepayment or repurchase thereof with the proceeds of such Relevant Transaction, to the extent not deducted in the calculation of Net Cash Proceeds, in each case in an amount not to exceed the product of (1) the amount of such Net Cash Proceeds and (2) a fraction, the numerator of which is the outstanding principal amount of such other Indebtedness (or to the extent such amount is not in Dollars, such equivalent amount of such Indebtedness converted into Dollars as determined in accordance with Section 1.08) and the denominator of which is the aggregate outstanding principal amount of Term Loans and such other Indebtedness (or to the extent such amount is not in Dollars, such equivalent amount of such Indebtedness converted into Dollars as determined in accordance with Article I); provided further that, so long as no Event of Default shall have occurred and be continuing or would result therefrom, such prepayment percentage shall be reduced to 50% or 0% if, on a Pro Forma Basis after giving effect to such Asset Sale or Casualty Event, as the case may be, and the use of proceeds therefrom, the Consolidated First Lien Net Leverage Ratio would be equal to or less than 3.50:1.00 or 3.00:1.00, respectively.

(iii) (A) Upon the incurrence or issuance by the Parent Borrower or any Restricted Subsidiary of any Refinancing Notes, any Specified Refinancing Term Loans or any Indebtedness not expressly permitted to be incurred or issued pursuant to Section 7.01, the applicable Borrowers shall prepay an aggregate principal amount of Term Loan Tranches in an amount equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by the Parent Borrower or such Restricted Subsidiary.

(B) Without duplication, upon the receipt by the Parent Borrower or any Restricted Subsidiary of Net Cash Proceeds of the type described in clause (c) of the definition of “Net Cash Proceeds,” the applicable Borrowers shall immediately apply such proceeds to the prepayment of Term Loan Tranches as set forth in this Section 2.05.

(iv) [Reserved].

(v) If for any reason the sum of the Total Revolving Credit Outstandings and Ancillary Outstandings or the sum of outstanding Specified Refinancing Revolving Loans at any time exceed the sum of the applicable Revolving Tranche in respect thereof (including after giving effect to any reduction in the Revolving Credit Commitments pursuant to Section 2.06), the Borrowers shall immediately prepay the applicable Revolving Tranche and/or Ancillary Outstandings and/or Cash Collateralize the L/C Obligations related thereto in an aggregate amount equal to such excess; provided, however, that the Borrowers shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(v) unless after the prepayment in full of the applicable Revolving Tranche the sum of the Total Revolving Credit Outstandings and Ancillary Outstandings or the outstanding Specified Refinancing Revolving Loans, as the case may be, exceed the aggregate Revolving Credit Commitments or the commitments to make Specified Refinancing Revolving Loans, as the case may be, then in effect.

(vi) Subject to Section 2.17, each prepayment of Term Loans pursuant to this Section 2.05(b) shall be applied to each Term Loan Tranche on a pro rata basis (or, if agreed to in writing by the Majority Lenders of a Term

 

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Loan Tranche, in a manner that provides for more favorable prepayment treatment of other Term Loan Tranches, so long as each other such Term Loan Tranche receives its Pro Rata Share of any amount to be applied more favorably, except to the extent otherwise agreed by the Majority Lenders of each Term Loan Tranche receiving less than such Pro Rata Share) (other than a prepayment of (x) Term Loans or Revolving Credit Loans or Ancillary Outstandings, as applicable, with the proceeds of Indebtedness incurred pursuant to Section 2.18, which shall be applied to the Term Loan Tranche or Revolving Tranche, as applicable, being refinanced pursuant thereto or (y) Term Loans with the proceeds of any Refinancing Notes issued to the extent permitted under Section 7.01(a), which shall be applied to the Term Loan Tranche being refinanced pursuant thereto). Amounts to be applied to a Term Loan Tranche in connection with prepayments made pursuant to this Section 2.05(b) shall be applied to the remaining scheduled installments with respect to such Term Loan Tranche in direct order of maturity. Each prepayment of Term Loans under a Facility (other than a Facility pertaining to Term B-3 Loans) pursuant to this Section 2.05(b) shall be applied on a pro rata basis to the then outstanding Base Rate Loans and Eurocurrency Rate Loans under such Facility; provided that, if there are no Declining Lenders with respect to such prepayment, then the amount thereof shall be applied first to Base Rate Loans (and, with respect to any Term B-3 Loans, the Benchmark PBOC Rate Loans) pro rata under such Facility to the full extent thereof before application to Eurocurrency Rate Loans, in each case in a manner that minimizes the amount payable by the applicable Borrowers in respect of such prepayment pursuant to Section 3.06.

(vii) All prepayments under this Section 2.05 shall be made together with, in the case of any such prepayment of a Eurocurrency Rate Loan on a date other than the last day of an Interest Period therefor, any amounts owing in respect of such Eurocurrency Rate Loan pursuant to Section 3.06 and, to the extent applicable, any additional amounts required pursuant to Section 2.05(a)(iii). Notwithstanding any of the other provisions of this Section 2.05(b), so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurocurrency Rate Loans is required to be made under this Section 2.05(b), other than on the last day of the Interest Period therefor, the applicable Borrowers may, in their sole discretion, deposit the amount of any such prepayment otherwise required to be made thereunder into a Cash Collateral account until the last day of such Interest Period, at which time the Applicable Agent shall be authorized (without any further action by or notice to or from the Borrowers or any other Loan Party) to apply such amount to the prepayment of such Loans in accordance with this Section 2.05(b) (it being agreed, for clarity, that interest shall continue to accrue on the Loans so prepaid until the amount so deposited is actually applied to prepay such Loans). Upon the occurrence and during the continuance of any Event of Default, the Applicable Agent shall also be authorized (without any further action by or notice to or from the Borrowers or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with this Section 2.05(b).

(viii) Notwithstanding any other provisions of this Section 2.05, to the extent that any or all of the Net Cash Proceeds of any Asset Sale by a Non-U.S. Subsidiary (a “Non-U.S. Disposition”) or the Net Cash Proceeds of any Casualty Event from a Non-U.S. Subsidiary (a “Non-U.S. Casualty Event”), in each case giving rise to a prepayment event pursuant to Section 2.05(b)(ii), or Excess Cash Flow giving rise to a prepayment event pursuant to Section 2.05(b)(i) are or is prohibited, restricted or delayed by applicable local law, rule or regulation (including, without limitation, financial assistance and corporate benefit restrictions and fiduciary and statutory duties of any direct or officers of such Subsidiaries) from being repatriated to the applicable Borrowers or so prepaid or such repatriation or prepayment would present a material risk of liability for the applicable Subsidiary or its directors or officers (or gives rise to a material risk of breach of fiduciary or statutory duties by any director or officer), the portion of such Net Cash Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in this Section 2.05 but may be retained by the applicable Non-U.S. Subsidiary.

(ix) Notwithstanding any other provisions of this Section 2.05, to the extent that the Borrowers have determined in good faith that the prepayment of any or all of the Net Cash Proceeds of any Non-U.S. Disposition or any Non-U.S. Casualty Event, in each case giving rise to a prepayment event pursuant to Section 2.05(b)(ii), or Excess Cash Flow giving rise to a prepayment event pursuant to Section 2.05(b)(i) would have an adverse tax cost consequence on any Borrower or any Subsidiary (taking into account any foreign tax credit or benefit actually realized in connection with such prepayment) with respect to such Net Cash Proceeds or Excess Cash Flow, the Net Cash Proceeds or Excess Cash Flow so affected may, following notice thereof to the Administrative Agent (specifying the affected jurisdictions and amounts to be retained), be retained by the applicable Non-U.S. Subsidiary.

 

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(c) Term Lender Opt-Out. With respect to any prepayment of Initial Term Loans or Redenominated Term B-3 Loans and, unless otherwise specified in the documents therefor, other Term Loan Tranches pursuant to Section 2.05(b)(i), (b)(ii) or (b)(iii), any Appropriate Lender, at its option (but solely to the extent the Borrowers elect for this clause (c) to be applicable to a given prepayment, other than in connection with any Refinancing Notes or any Specified Refinancing Term Loans), may elect not to accept such prepayment as provided below. The Borrowers may notify each Applicable Agent of any event giving rise to a prepayment under Section 2.05(b)(i) or (b)(ii) at least five (5) Business Days prior to the date of such prepayment. Each such notice shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount of such prepayment that is required to be made under Section 2.05(b)(i) or (b)(ii) (the “Prepayment Amount”). The Applicable Agent will promptly notify each Appropriate Lender of the contents of any such prepayment notice so received from the Borrowers, including the date on which such prepayment is to be made (the “Prepayment Date”). Any Appropriate Lender may (but solely to the extent the Borrowers elect for this clause (c) to be applicable to a given prepayment) decline to accept all (but not less than all) of its share of any such prepayment (any such Lender, a “Declining Lender”) by providing written notice to the Applicable Agent no later than four Business Days after the date of such Appropriate Lender’s receipt of notice from the Applicable Agent regarding such prepayment. If any Appropriate Lender does not give a notice to the Applicable Agent on or prior to such fourth Business Day informing the Applicable Agent that it declines to accept the applicable prepayment, then such Lender will be deemed to have accepted such prepayment. On any Prepayment Date, an amount equal to the Prepayment Amount minus the portion thereof allocable to Declining Lenders, in each case for such Prepayment Date, shall be paid to the Applicable Agent by the Borrowers and applied by the Applicable Agent ratably to prepay Term Loans under the Term Loan Tranches owing to Appropriate Lenders (other than Declining Lenders) in the manner described in Section 2.05(b) for such prepayment. Any amounts that would otherwise have been applied to prepay Term Loans, New Term Loans or Specified Refinancing Term Loans owing to Declining Lenders shall be retained by the Borrowers (such amounts, “Declined Amounts”).

(d) All Loans shall be repaid, whether pursuant to this Section 2.05 or otherwise, in the currency in which they were made.

Section 2.06 Termination or Reduction of Commitments.

(a) Optional. The Borrowers may, upon written notice by the applicable Borrowers to the Applicable Agent, terminate the unused portions of the Commitments under any Term Loan Tranche, the Letter of Credit Sublimit, or the unused Revolving Credit Commitments under any Revolving Tranche, or from time to time permanently reduce the unused portions of the Commitments under any Term Loan Tranche, the Letter of Credit Sublimit, or the unused Revolving Credit Commitments under any Revolving Tranche; provided that (i) any such notice shall be received by the Applicable Agent three Business Days (or such shorter period as the Applicable Agent shall agree) prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of (or an amount the Dollar Amount of which is equal to) $500,000 or any whole multiple of (or an amount the Dollar Amount of which is equal to) $100,000 in excess thereof and (iii) the Borrowers shall not terminate or reduce (A) the Commitments under any Tranche of the Revolving Credit Facility if, after giving effect thereto and to any concurrent prepayments hereunder, (x) the Total Revolving Credit Outstandings and Ancillary Outstandings would exceed the Revolving Credit Facility or (y) the Total Revolving Credit Outstandings and Ancillary Outstandings with respect to such Tranche would exceed the Revolving Credit Commitments under such Tranche and (B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit. Any such notice of termination or reduction of commitments pursuant to this Section 2.06(a) may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrowers (by written notice to the Applicable Agent on or prior to the specified effective date) if such condition is not satisfied. For the avoidance of doubt, (i) upon termination of the Aggregate Commitments and payment in full of all Obligations in cash and in immediately available funds (other than (A) contingent indemnification obligations as to which no claim has been asserted and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) and the expiration without any pending drawing or termination of all Letters of Credit (other than Letters of Credit which have been Cash Collateralized), this Agreement shall automatically terminate and the Applicable Agent shall comply with Section 9.01(c) and Section 9.11.

 

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(b) Mandatory. (i) The Aggregate Commitments under a Term Loan Tranche shall be automatically and permanently reduced to zero on the date of the initial incurrence of Term Loans under such Term Loan Tranche for the full amount of such Aggregate Commitments, which in the case of the Initial Term Commitments shall be the Closing Date. Upon the occurrence of a Relevant Redenomination Event with respect to any Redenominated Term B-3 Loans, the Term B-3 Commitments of the Term Lenders with respect to such Redenominated Term B-3 Loans shall be automatically and permanently reduced to zero after such conversion into Redenominated Term B-3 Loan is effective.

(ii) Upon the incurrence by the Parent Borrower or any Restricted Subsidiary of any Specified Refinancing Debt constituting revolving credit facilities, the Revolving Credit Commitments of the Lenders under the Tranche of Revolving Credit Loans being refinanced shall be automatically and permanently reduced on a ratable basis by an amount equal to 100% of the Commitments under such revolving credit facilities.

(iii) If after giving effect to any reduction or termination of Revolving Credit Commitments under this Section 2.06, the Letter of Credit Sublimit exceeds the amount of the Revolving Credit Commitments at such time, the Letter of Credit Sublimit shall be automatically reduced by the amount of such excess.

(iv) The aggregate Revolving Credit Commitments with respect to any Tranche of the Revolving Credit Facility shall automatically and permanently be reduced to zero on the Maturity Date with respect to such Tranche of the Revolving Credit Facility.

(c) Application of Commitment Reductions; Payment of Fees. The Applicable Agent will promptly notify the applicable Lenders of the applicable Facility of any termination or reduction of the Commitments under any Term Loan Tranche, the Letter of Credit Sublimit or the Revolving Credit Commitment under this Section 2.06. Upon any reduction of Commitments under a Facility or a Tranche thereof, the Commitment of each Lender under such Facility or Tranche thereof shall be reduced by such Lender’s ratable share of the amount by which such Facility or Tranche thereof is reduced (other than the termination of the Commitment of any Lender as provided in Section 3.08). All commitment fees accrued until the effective date of any termination of the Aggregate Commitments and unpaid, shall be paid on the effective date of such termination.

Section 2.07 Repayment of Loans.

(a) Initial Term B-1 Loans. The Borrowers shall repay to the Administrative Agent for the ratable account of the applicable Term Lenders holding Initial Term B-1 Loans the aggregate principal amount of all Initial Term B-1 Loans outstanding in consecutive quarterly installments as follows (which installments shall, to the extent applicable, be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Sections 2.05 and 2.06, or be increased as a result of any increase in the amount of Initial Term B-1 Loans pursuant to Section 2.14 (such increased amortization payments to be calculated in the same manner (and on the same basis) as the schedule set forth below for the Initial Term B-1 Loans made as of the Closing Date)):

 

Date

  

Amount

The last Business Day of each fiscal quarter ending prior to the Maturity Date for the Initial Term Facilities starting with the fiscal quarter ending on September 30, 2017    0.25% of the aggregate principal amount of the aggregate initial principal amount of the Initial Term B-1 Loans on the Closing Date

provided, however, that the final principal repayment installment of the Initial Term B-1 Loans shall be repaid on the Maturity Date for the Initial Term B-1 Loans and in any event shall be in an amount equal to the aggregate principal amount of all Initial Term B-1 Loans outstanding on such date.

(a) Initial Term B-2 Loans. The Parent Borrower shall repay to the Redenomination Term Facilities Administrative Agent for the ratable account of the applicable Term Lenders holding Initial Term B-2 Loans the aggregate principal amount of all Initial Term B-2 Loans outstanding in consecutive quarterly installments as

 

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follows (which installments shall, to the extent applicable, be (i) reduced as a result of (x) the application of prepayments in accordance with the order of priority set forth in Sections 2.05 and 2.06 or (y) a Redenomination Event of Initial Term B-2 Loans into Redenominated Term B-3 Loans pursuant to Section 2.04 (which reduction shall be applied pro rata to the then remaining installments), or be (ii) increased as a result of any increase in the amount of Initial Term B-2 Loans pursuant to Section 2.14 (such increased amortization payments to be calculated in the same manner (and on the same basis) as the schedule set forth below for the Initial Term B-2 Loans made as of the Closing Date)):

 

Date

  

Amount

The last Business Day of each fiscal quarter ending prior to the Maturity Date for the Initial Term Facilities starting with the fiscal quarter ending on September 30, 2017    0.25% of the aggregate principal amount of the aggregate initial principal amount of the Initial Term B-2 Loans on the Closing Date

provided, however, that the final principal repayment installment of the Initial Term B-2 Loans shall be repaid on the Maturity Date for the Initial Term B-2 Loans and in any event shall be in an amount equal to the aggregate principal amount of all Initial Term B-2 Loans outstanding on such date.

(b) Term B-3 Loans. In respect of each Term B-3 Loans Sub-Tranche, the Parent Borrower shall (or, if so requested by the Redenomination Term Facilities Administrative Agent, shall procure that a Designated PRC Subsidiary on behalf of the Parent Borrower shall) repay to the Redenomination Term Facilities Administrative Agent for the ratable account of the applicable Term Lenders holding Term B-3 Loans under such Term B-3 Loans Sub-Tranche, 1.00% per annum of the aggregate principal amount of the aggregate initial principal amount of the Term B-3 Loans under such Term B-3 Loans Sub-Tranche on (x) in the case of the Initial Term B-3 Loans, on the Closing Date and (y) in the case of any other Term B-3 Loans, the date of the applicable Redenomination Event for such Term B-3 Loan Sub-Tranche, payable in quarterly installments on the last Business Day of each fiscal quarter ending prior to the Maturity Date applicable to such Term B-3 Loans Sub-Tranche (which installments shall, to the extent applicable, be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Sections 2.05 and 2.06, or be increased as a result of any increase in the amount of Term B-3 Loans under such Term B-3 Loans Sub-Tranche pursuant to Section 2.14 (such increased amortization payments to be calculated in the same manner (and on the same basis) as set forth in this clause (c)), starting with, (x) in the case of the Initial Term B-3 Loans, the fiscal quarter ending on September 30, 2017 and (y) in the case of any other Term B-3 Loans, the fiscal quarter ending immediately after the date of the applicable Redenomination Event relating to such other Term B-3 Loans, provided, however, that (in each case) the final principal repayment installment of the Term B-3 Loans under such Term B-3 Loans Sub-Tranche shall be repaid on the Maturity Date applicable to such Term B-3 Loans Sub-Tranche and in any event shall be in an amount equal to the aggregate principal amount of all Term B-3 Loans outstanding on such date under such Term B-3 Loans Sub-Tranche.

(c) Revolving Credit Loans. The Borrowers shall repay to the Administrative Agent for the ratable account of the Appropriate Lenders on the applicable Maturity Date for the Revolving Credit Facilities of a given Tranche the aggregate principal amount of all of its Revolving Credit Loans of such Tranche outstanding on such date.

(d) All Loans shall be repaid, whether pursuant to this Section 2.07 or otherwise, in the currency in which they were made; provided that Term B-3 Loans shall be repaid in RMB.

Section 2.08 Interest.

(a) Subject to the provisions of the following sentence, (i) each Eurocurrency Rate Loan under a Facility shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the sum of (A) the Adjusted Eurocurrency Rate for such Interest Period plus (B) the Applicable Rate for Eurocurrency Rate Loans under such Facility; (ii) each Base Rate Loan under a Facility shall bear interest on the

 

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outstanding principal amount thereof from the applicable borrowing date or conversion date, as the case may be, at a rate per annum equal to the sum of (A) the Base Rate plus (B) the Applicable Rate for Base Rate Loans under such Facility, and (iii) each Benchmark PBOC Rate Loan under a Facility shall bear interest on the outstanding principal amount thereof from the applicable borrowing date, or date of an applicable Redenomination Event, as the case may be, at a rate equal to the Applicable Benchmark PBOC Margin. The applicable Borrowers (or, in the case any Term B-3 Loans or Obligations in respect of any Term B-3 Loans or Term B-3 Loans Sub-Tranche, if so requested by the Redenomination Term Facilities Administrative Agent, the Parent Borrower shall procure that a Designated PRC Subsidiary on behalf of the Parent Borrower) shall pay interest on all overdue Obligations hereunder, which shall include all Obligations following an acceleration pursuant to Section 8.02 (including an automatic acceleration) at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(b) Accrued interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein and shall be paid by the applicable Borrowers (or, in the case of any Term B-3 Loan, if the Redenomination Term Facilities Administrative Agent so requests, the Parent Borrower shall procure that such interest shall be paid by the Designated PRC Subsidiary on behalf of the Parent Borrower); provided that in the event of any repayment or prepayment of any Loan (other than Revolving Credit Loans bearing interest based on the Base Rate that are repaid or prepaid without any corresponding termination or reduction of the Revolving Credit Commitments other than as set forth in Section 2.14(e)), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

(c) Interest on each Loan shall be payable in the currency in which each Loan was made, provided that interest on Term B-3 Loans shall by payable in RMB (and may, with the prior written consent of the Redenomination Term Facilities Administrative Agent (not to be unreasonably withheld, conditions or delayed) at the election of the Parent Borrower, be paid directly to the Redenomination Term Facilities Administrative Agent by a Designated PRC Subsidiary on behalf of the Parent Borrower).

(d) All computations of interest hereunder shall be made in accordance with Section 2.10 of this Agreement.

Section 2.09 Fees. In addition to certain fees described in Sections 2.03(h) and (i):

(a) Commitment Fee. The Borrowers shall pay to the Administrative Agent for the account of each Revolving Credit Lender in accordance with its Pro Rata Share of each Tranche of the Revolving Credit Facility, a commitment fee in Dollars equal to the Applicable Commitment Fee multiplied by the actual daily amount by which the aggregate Revolving Credit Commitments under such Tranche exceed the sum of (A) the Outstanding Amount of Revolving Credit Loans under such Tranche, (B) the Outstanding Amount of L/C Obligations under such Tranche and (C) the Ancillary Outstandings under such Tranche, subject to adjustment as provided in Section 2.17. The commitment fee shall accrue at all times from the Closing Date until the Maturity Date for the Revolving Credit Facility, and shall be due and payable quarterly in arrears on the last Business Day of each fiscal quarter, commencing with the last Business Day of the first full fiscal quarter to end following the Closing Date, and on the Maturity Date for the Revolving Credit Facility.

(b) Other Fees. The applicable Borrowers shall pay to the Lenders, the Arrangers and the Administrative Agent such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.

(c) Ancillary Facilities. The rate and time for payment of interest, commission, fees and other remuneration in respect of each Ancillary Facility shall be determined by agreement between the relevant Ancillary Lender and the borrower of that Ancillary Facility based upon normal market rates and terms.

(d) Term B-3 Upfront Fees. The Parent Borrower (or, if the BOC Arranger so requests, the Parent Borrower shall procure that a Designated PRC Subsidiary) shall pay to the BOC Arranger (for its own account) an upfront fee as set forth in the Fee Letter specified in Clause (B) of such definition, such fee being payable within 15 Business Days after the Closing Date.

 

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(e) Redenomination Fees. The Parent Borrower (or, if the BOC Arranger so requests, the Parent Borrower shall procure that a Designated PRC Subsidiary) shall pay to the BOC Arranger (for its own account) redenomination fees in respect of each Term B-3 Loan and each Redenomination Event with respect thereto (“Redenomination Fees”), in a manner as set forth in the Fee Letter specified in clause (B) of such definition.

Section 2.10 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.

(a) All computations of interest for Base Rate Loans based on clause (b) of the definition of “Base Rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year) or, in the case of interest in respect of Loans denominated in Alternative Currencies (other than RMB) as to which generally accepted market practice differs from the foregoing, in accordance with such generally accepted market practice. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Applicable Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. The Applicable Agent shall, at the request of the Borrower Representative, deliver to the Borrower Representative a statement showing the quotations used by the Applicable Agent in determining any interest rate hereunder.

(b) If, as a result of any restatement of or other adjustment to the financial statements of Holdings or for any other reason, the Parent Borrower or the Lenders determine that (i) the Consolidated First Lien Net Leverage Ratio as calculated by the Parent Borrower as of any applicable date was inaccurate and (ii) a proper calculation of such ratio would have resulted in higher interest and/or fees for any period, the applicable Borrowers shall be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the applicable L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, automatically and with any such demand by the Administrative Agent being excused), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This clause shall not limit the rights of the Administrative Agent, any Lender or the applicable L/C Issuer, as the case may be, under Section 2.03(d)(iii), Section 2.03(h) or (i). Except in any case where a demand is excused as provided above, any additional interest and fees under this Section 2.10(b) shall not be due and payable until a demand is made for such payment by the Administrative Agent and accordingly, any nonpayment of such interest and fees as result of any such inaccuracy shall not constitute a Default (whether retroactively or otherwise), and none of such additional amounts shall be deemed overdue or accrue interest at the Default Rate, in each case at any time prior to the date that is five Business Days following such demand.

(c) For purposes of the Interest Act (Canada), (i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days or 365 days, as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days or 365 days, as the case may be, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365, as the case may be, (ii) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.

Section 2.11 Evidence of Indebtedness.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and evidenced by one or more entries in the Register maintained by the Applicable Agent, acting solely for purposes of Treasury Regulations Section 5f.103-1(c), as a non-fiduciary agent for the applicable Borrowers, in each case in the ordinary course of business. The accounts or records maintained by

 

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the Applicable Agent and each Lender shall be prima facie evidence absent manifest error of the amount of the Credit Extensions made by the Lenders to the applicable Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit the obligation of the applicable Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Applicable Agent in respect of such matters, the accounts and records of the Applicable Agent shall control in the absence of manifest error. Upon the written request of any Lender made through the Applicable Agent, the applicable Borrowers shall promptly execute and deliver to such Lender (through the Applicable Agent) a Note payable to such Lender, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in Section 2.11(a), each Lender and the Applicable Agent shall maintain in accordance with its usual practice accounts or records and, in the case of the Applicable Agent, entries in the Register, evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Applicable Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Applicable Agent shall control in the absence of manifest error.

(c) Entries made in good faith by the Applicable Agent in the Register pursuant to Sections 2.11(a) and (b), and by each Lender in its accounts or records pursuant to Sections 2.11(a) and (b), shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the applicable Borrowers to, in the case of the Register, each Lender and, in the case of such accounts or records, such Lender, under this Agreement and the other Loan Documents, absent manifest error; provided that the failure of the Applicable Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such accounts or records shall not limit the obligations of the applicable Borrowers under this Agreement and the other Loan Documents.

Section 2.12 Payments Generally; Administrative Agents Clawback.

(a) General. All payments to be made by the applicable Borrowers (or the Designated PRC Subsidiary) shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein and except with respect to payments in an Alternative Currency, all payments by the applicable Borrowers (or Designated PRC Subsidiary) hereunder shall be made to the Applicable Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars or the Redenomination Term Facilities Administrative Agent’s Office, in RMB or Dollars, as applicable, and in each case in immediately available funds not later than 2:00 p.m. on the date specified herein (or, with respect to any payment to be made to the Redenomination Term Facilities Administrative Agent, pursuant to such other date and time mechanics as are reasonably agreed between the Redenomination Term Facilities Administrative Agent and the Parent Borrower (with notice to the Administrative Agent); provided that in any case such payment must be made no later than the due date for such payment). Except as otherwise expressly provided herein, all payments by the Borrowers hereunder in an Alternative Currency (other than RMB) shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. If, for any reason, the Borrowers are prohibited by any Law from making any required payment hereunder in an Alternative Currency (other than RMB), the Borrowers shall make such payment in Dollars in the Dollar Amount of the Alternative Currency payment amount. The Applicable Agent will promptly distribute to each Lender its ratable share in respect of the relevant Facility or Tranche thereof (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Applicable Agent after 2:00 p.m. in the case of payments in Dollars or after the Applicable Time specified by the Administrative Agent in the case of payments in an Alternative Currency (other than RMB) or after the time as specified by the Redenomination Term Facilities Administrative Agent in accordance with prior agreements as set forth above, shall, in each case, be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrowers (or the Designated PRC Subsidiary) shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be

 

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reflected in computing interest or fees, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurocurrency Rate Loans to be made in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. An L/C Issuer can elect to receive payments in respect of Letters of Credit in Dollars rather than in an Alternative Currency.

(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurocurrency Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 p.m. on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with and at the time required by Section 2.02(b) and may, in reliance upon such assumption, make available to the applicable Borrowers a corresponding amount. In such event, if any Lender does not in fact make its share of the applicable Borrowing available to the Administrative Agent, then such Lender and the Borrowers severally agree to pay to the Administrative Agent forthwith on demand an amount equal to such applicable share in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrowers by the Administrative Agent to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate reasonably determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any reasonable administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing and (B) in the case of a payment to be made by the Borrowers, the interest rate applicable to Base Rate Loans under the applicable Facility. If both the Borrowers and such Lender pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid (less interest and fees) shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make its share of any Borrowing available to the Administrative Agent.

(ii) Payments by the Borrowers; Presumptions by Applicable Agent. Unless the Applicable Agent shall have received notice from the Borrowers prior to the date on which any payment is due to the Applicable Agent for the account of the Lenders or an L/C Issuer hereunder that the applicable Borrowers (or the Designated PRC Subsidiary) will not make such payment, the Applicable Agent may assume that the applicable Borrowers (or the Designated PRC Subsidiary) have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Appropriate Lenders or the applicable L/C Issuer, as the case may be, the amount due. In such event, if the applicable Borrowers (or the Designated PRC Subsidiary) do not in fact make such payment, then each of the Appropriate Lenders or the applicable L/C Issuer, as the case may be, severally agrees to repay to the Applicable Agent forthwith on demand the amount so distributed to such Lender or such L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed by the Applicable Agent to but excluding the date of payment to the Applicable Agent, at the greater of the Federal Funds Rate and a rate reasonably determined by the Applicable Agent in accordance with banking industry rules on interbank compensation, plus any reasonable administrative, processing or similar fees customarily charged by the Applicable Agent in connection with the foregoing.

A notice of the Applicable Agent to any Lender or the Borrowers with respect to any amount owing under this Section 2.12(b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Applicable Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the applicable Borrowers by the Applicable Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Applicable Agent shall return such funds (in like funds as received from such Lender) to such Lender on demand, without interest.

(d) Obligations of the Lenders Several. The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and to make payments pursuant to Section 9.07 are several and not joint. The failure of any Lender to make any Loan or to fund any such participation or to make any payment under Section 9.07 on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or, to fund its participation or to make its payment under Section 9.07.

 

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(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

(f) Insufficient Funds. If at any time insufficient funds are received by and available to the Applicable Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, toward payment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

(g) Unallocated Funds. If the Applicable Agent receives funds for application to the Obligations of the Loan Parties under or in respect of the Loan Documents under circumstances for which the Loan Documents do not specify the manner in which such funds are to be applied, the Applicable Agent may, but shall not be obligated to, elect to distribute such funds to each of the Lenders in accordance with such Lender’s ratable share of the sum of (a) the Outstanding Amount of all Loans outstanding at such time, (b) the Outstanding Amount of all L/C Obligations outstanding at such time, and (c) the Ancillary Outstandings at such time, in repayment or prepayment of such of the outstanding Loans or other Obligations then owing to such Lender.

Section 2.13 Sharing of Payments. If, other than as expressly provided elsewhere herein (including the application of funds arising from the existence of a Defaulting Lender), any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations held by it, any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Applicable Agent of such fact and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations held by them and/or such participations in the Ancillary Outstandings held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans, such Ancillary Outstandings or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying 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, without further interest thereon. The Borrowers agree that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by Law, exercise all its rights of payment (including the right of setoff, but subject to Section 10.09) with respect to such participation as fully as if such Lender were the direct creditor of each Borrower in the amount of such participation. The Applicable Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section 2.13 and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section 2.13 shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. For the avoidance of doubt, the provisions of this Section shall not be construed to apply to (A) the application of Cash Collateral provided for in Section 2.16, (B) the assignments and participations (including by means of a Dutch Auction and open market debt repurchases) described in Section 10.07, (C) (i) the incurrence of any New Term Loans in accordance with Section 2.14, (ii) the prepayment of Revolving Credit Loans in accordance with Section 2.14(e) in connection with a Revolving Credit Commitment Increase or (iii) any Specified Refinancing Debt in accordance with Section 2.18, (D) any loan modification offer described in Section 10.01, or (E) any applicable circumstances contemplated by Sections 2.05(b), 2.14, 2.16, 2.17 or 3.08.

 

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This Section 2.13 shall not apply to (x) any receipt or recovery by a Lender (or any affiliate thereof) in its capacity as an Ancillary Lender at any time prior to service of notice under Section 8.02 or automatic acceleration or (y) any receipt or recovery that may be constituted by any Redenomination Event. Following service of notice or automatic acceleration under Section 8.02, this Section 2.13 shall apply to all receipts or recoveries by Ancillary Lenders except to the extent that the receipt or recovery represents a reduction of the Designated Gross Amount of a Multi-account Overdraft to or towards an amount equal to its Designated Net Amount.

Section 2.14 Incremental Facilities.

(a) The Borrowers may, from time to time after the Closing Date, upon notice by the Borrowers to the Applicable Agent and the Person appointed by the Borrowers to arrange an incremental Facility (such Person (who (i) may be the Applicable Agent, if it so agrees, or (ii) any other Person appointed by the Borrowers after consultation with the Applicable Agent; provided that such Person may not be an Affiliate of any Borrower), the “Incremental Arranger”) specifying the proposed amount, proposed Borrowers (which shall be a Borrower hereunder) and currency denomination thereof, request (i) an increase in the Commitments under any Revolving Tranche (which shall be on the same terms as, and become part of, the Revolving Tranche proposed to be increased) (a “Revolving Credit Commitment Increase”), (ii) an increase in any Term Loan Tranche then outstanding (which shall be on the same terms as, and become part of, the Term Loan Tranche proposed to be increased hereunder (except as otherwise provided in clause (d) below with respect to amortization)) (each, a “Term Commitment Increase”), (iii) the addition of one or more new revolving credit facilities to the Facilities (each, a “New Revolving Facility” and, any advance made by a Lender thereunder, a “New Revolving Loan”; and the commitments thereof, the “New Revolving Commitment”) and (iv) the addition of one or more new term loan facilities (each, a “New Term Facility”; and any advance made by a Lender thereunder, a “New Term Loan”; and the commitments thereof, the “New Term Commitment” and together with the Revolving Credit Commitment Increase, the New Revolving Commitments and the Term Commitment Increase, the “New Loan Commitments”) by an amount not to exceed the sum of (x) the greater of (1) the Dollar Amount of $295,000,000 and (2) Consolidated EBITDA of the Borrower Parties for the four fiscal quarter period most recently then ended for which financial statements have been delivered pursuant to Section 6.01(a) or (b), as applicable, calculated on a Pro Forma Basis for such period (the “Cash-Capped Incremental Facility”), (y) an unlimited amount (the “Ratio-Based Incremental Facility”) so long as the Maximum First Lien Leverage Requirement is satisfied and (z) an amount equal to all voluntary prepayments of pari passu Term Loans made pursuant to Section 2.05(a) and repurchases of pari passu Term Loans made pursuant to the terms hereof and voluntary prepayments of Revolving Credit Loans made pursuant to Section 2.05(a) to the extent accompanied by a corresponding, permanent reduction in the Revolving Credit Commitments pursuant to Section 2.06(a), in each case, to the extent not funded with the proceeds of long term Indebtedness (other than to the extent funded with the identifiable unused proceeds of a borrowing made pursuant to the Cash-Capped Incremental Facility within three months from the date of incurrence thereof) (the “Prepayment-Based Incremental Facility”) (such sum, at any such time, the “Incremental Amount”); provided that any such request for an increase shall be in a minimum amount of the lesser of (x) $20,000,000 (or equivalent Dollar Amount) and (y) the entire amount of any increase that may be requested under this Section 2.14; provided, further, that for purposes of any New Loan Commitments established pursuant to this Section 2.14 and New Incremental Notes issued pursuant to Section 2.15, (A) the Borrowers shall be deemed to have used amounts under the Prepayment-Based Incremental Facility, if any, prior to utilization of the Cash-Capped Incremental Facility and the Ratio-Based Incremental Facility, and the Borrowers shall be deemed to have used the Ratio-Based Incremental Facility (to the extent permitted by the pro forma calculation of the Consolidated First Lien Net Leverage Ratio) prior to utilization of the Cash-Capped Incremental Facility, (B) New Loan Commitments pursuant to this Section 2.14 and New Incremental Notes pursuant to Section 2.15 may be incurred under the Ratio-Based Incremental Facility (to the extent permitted by the pro forma calculation of the Consolidated First Lien Net Leverage Ratio), the Cash-Capped Incremental Facility and the Prepayment-Based Incremental Facility, and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under the Prepayment-Based Incremental Facility (without inclusion of any amounts utilized pursuant to the Ratio-Based Incremental Facility or the Cash-Capped Incremental Facility), then calculating the incurrence under the Ratio-Based Incremental Facility (without inclusion of any amounts utilized pursuant to the Cash-Capped Incremental Facility) and then calculating the incurrence under the Cash-Capped Incremental Facility and (C) the Borrower may redesignate all or any portion of Indebtedness originally designated as incurred under the Cash-Capped Incremental Facility as having been incurred under the Ratio-Based Incremental Facility so long as, at the time of such redesignation, the Borrower would be permitted to incur the aggregate principal amount of Indebtedness being so redesignated under the Ratio-Based Incremental Facility

 

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(which, for the avoidance of doubt, shall have the effect of increasing the Cash-Capped Incremental Facility by the Dollar Amount of such redesignated Indebtedness). The Borrowers may designate any Incremental Arranger of any New Loan Commitments with such titles under the New Loan Commitments as Borrowers may deem appropriate.

(b) Any Lender approached to participate in any New Loan Commitments may elect or decline, in its sole discretion, to participate in such increase or new facility. The Borrowers may also invite additional Eligible Assignees reasonably satisfactory to the Incremental Arranger and, solely in connection with a Revolving Credit Commitment Increase or New Revolving Facility, with the consent of the Administrative Agent and each L/C Issuer (to the extent the consent of any of the foregoing would be required to assign Revolving Credit Loans to such Eligible Assignee, which consent shall not be unreasonably withheld or delayed) to become Lenders pursuant to a joinder agreement to this Agreement. Neither the Applicable Agent nor the Collateral Agent (in their respective capacities as such) shall be required to execute, accept or acknowledge any joinder agreement pursuant to this Section 2.14 and such execution shall not be required for any such joinder agreement to be effective; provided that, with respect to any New Loan Commitments, the Parent Borrower must provide to the Applicable Agent reasonable prior written notice thereof and the documentation providing for such New Loan Commitments.

(c) If (i) a Revolving Tranche or a Term Loan Tranche is increased in accordance with this Section 2.14 or (ii) a New Term Loan Facility or New Revolving Facility is added in accordance with this Section 2.14, the Incremental Arranger and the Borrowers shall determine the effective date (the “Increase Effective Date”) and the final allocation of such increase, New Term Facility or New Revolving Facility among the applicable Lenders. The Incremental Arranger shall promptly notify the applicable Lenders of the final allocation of such increase, New Term Facility or New Revolving Facility and the Increase Effective Date. In connection with (i) any increase in a Term Loan Tranche or Revolving Tranche or (ii) any addition of a New Term Facility or New Revolving Facility, in each case, pursuant to this Section 2.14, this Agreement and the other Loan Documents may be amended in a writing (which may be executed and delivered by the Borrowers and the Incremental Arranger (and the Lenders hereby authorize any such Incremental Arranger to execute and deliver any such documentation)) in order to establish the New Term Facility or New Revolving Facility or to effectuate the increases to the Term Loan Tranche or Revolving Tranche and to reflect any technical changes necessary or appropriate to give effect to such increase or new facility in accordance with its terms as set forth herein pursuant to an Incremental Facility Agreement. As of the Increase Effective Date, in the case of an increase to an existing Term Loan Tranche, the amortization schedule for the Term Loan Tranche then increased set forth in Section 2.07(a) (or any other applicable amortization schedule for New Term Loans or Specified Refinancing Term Loans) shall be amended in a writing (which may be executed and delivered by the Borrowers and the Incremental Arranger (and the Lenders hereby authorize any such Incremental Arranger to execute and deliver any such documentation)) to increase the then-remaining unpaid installments of principal by an aggregate amount equal to the additional Loans under such Term Loan Tranche being made on such date, such aggregate amount to be applied to increase such installments ratably in accordance with the amounts in effect immediately prior to the Increase Effective Date.

(d) With respect to any Revolving Credit Commitment Increase, Term Commitment Increase or addition of New Term Facility or New Revolving Facility pursuant to this Section 2.14, (i) no Event of Default (subject to Section 1.02(i)) would exist after giving effect to such increase; (ii) (A) in the case of any increase of the Revolving Tranche, (1) the final maturity shall be the same as the Maturity Date applicable to the Revolving Credit Facility, (2) no amortization or mandatory commitment reduction prior to the Maturity Date applicable to the Revolving Credit Facility shall be required and (3) the terms and documentation applicable to the Revolving Credit Facility shall apply, (B) in the case of any New Revolving Facility, (1) the final maturity shall be no earlier than the Maturity Date applicable to the Revolving Credit Facility and (2) no amortization or mandatory commitment reduction prior to the Maturity Date applicable to the Revolving Credit Facility shall be required, (C) in the case of any increase of a Term Loan Tranche, the final maturity of the Term Loans, New Term Loans or Specified Refinancing Term Loans increased pursuant to this Section shall be no earlier than the Latest Maturity Date for, and such additional Loans shall not have a Weighted Average Life to Maturity shorter than the longest remaining Weighted Average Life to Maturity of, any other outstanding Term Loans, New Term Loans or Specified Refinancing Term Loans, as applicable, and (D) in the case of any New Term Facility, such New Term Facility shall have a final maturity no earlier than the then Latest Maturity Date of any Term Loan Tranche and the Weighted Average Life to Maturity of such New Term Facility shall be no shorter than the remaining Weighted Average Life to Maturity of any existing Term Loan Tranche; (iii) except with respect to All-in Yield and as set forth in subclause (D) above with respect to final maturity and Weighted Average Life to Maturity, or otherwise as shall be reasonably

 

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satisfactory to the Incremental Arranger, any such New Term Facility or New Revolving Facility shall have the same terms as the Term Facility or Revolving Credit Facility, respectively; provided, that (x) to the extent such terms are more favorable to the Lenders than comparable terms existing in the Loan Documents, such terms may, in consultation with the Applicable Agent, be incorporated into this Agreement (or any other applicable Loan Document) for the benefit of all existing Lenders (to the extent applicable to such Lender) without further amendment requirements, including, for the avoidance of doubt, at the option of the Borrowers, any increase in the Applicable Rate or Benchmark PBOC Rate, as applicable, relating to any existing Term Facility to bring such Applicable Rate or Benchmark PBOC Rate, as applicable, in line with the New Term Facility to achieve fungibility with such existing Term Facility and (y) otherwise, may be incorporated if reasonably satisfactory to the Administrative Agent, the Incremental Arranger and the Borrowers and (iv) to the extent reasonably requested by the Incremental Arranger, the Incremental Arranger shall have received legal opinions, resolutions, officers’ certificates and/or reaffirmation agreements consistent with those delivered on the Closing Date under Section 4.01 or delivered from time to time pursuant to Section 6.12, Section 6.14 and/or Section 6.16 with respect to Holdings and the Borrowers and each material Subsidiary Guarantor that is organized in a jurisdiction for which counsel to the Applicable Agent in such jurisdiction advises that such deliveries are reasonably necessary to preserve the Collateral in such jurisdiction (other than changes to such legal opinions resulting from a change in Law, change in fact or change to counsel’s form of opinion reasonably satisfactory to the Incremental Arranger). Notwithstanding the foregoing, the conditions precedent to each such increase or New Loan Commitment shall be agreed to by the Lenders providing such increase or New Loan Commitment, as applicable, and the Borrowers.

(e) On the Increase Effective Date with respect to an increase to an existing Revolving Tranche, (x) each Revolving Credit Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Lender providing a portion of the increase to the Revolving Credit Commitments (each, a “Revolving Commitment Increase Lender”), and each such Revolving Commitment Increase Lender will automatically and without further act be deemed to have assumed, a portion of such Revolving Credit Lender’s participations hereunder in outstanding L/C Obligations such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding participations hereunder in L/C Obligations will equal the percentage of the aggregate Revolving Credit Commitments of all Revolving Credit Lenders represented by such Revolving Credit Lender’s Revolving Credit Commitment and (y) if, on the date of such increase, there are any Revolving Credit Loans outstanding, such Revolving Credit Loans shall on or prior to the Increase Effective Date be prepaid from the proceeds of Revolving Credit Loans made hereunder (reflecting such increase in Revolving Credit Commitments), which prepayment shall be accompanied by accrued interest on the Revolving Credit Loans being prepaid and any costs incurred by any Lender in accordance with Section 3.06. The Applicable Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence. The additional Term Loans made under the Term Loan Tranche subject to the increases shall be made by the applicable Lenders participating therein pursuant to the procedures set forth in Sections 2.01 and 2.02 and on the date of the making of such new Term Loans, and notwithstanding anything to the contrary set forth in Sections 2.01 and 2.02, such new Loans shall be added to (and form part of) each Borrowing of outstanding Term Loans under such Term Loan Tranche on a pro rata basis (based on the relative sizes of the various outstanding Borrowings), so that each Lender under such Term Loan Tranche will participate proportionately in each then outstanding Borrowing of Term Loans under the Term Loan Tranche.

(f) (i) Any New Revolving Facility and New Term Facility shall rank pari passu in right of payment with the other Facilities, not be Guaranteed by any Person that is not a Borrower or Guarantor under each of the other Facilities, and be unsecured, secured either on a first lien “equal and ratable” basis with the other Facilities or on a “junior” basis with the other Facilities, in each case over the same (or less) Collateral that secures the Facilities (and in each case, such New Revolving Facility or New Term Facility shall be subject to intercreditor arrangements that are reasonably satisfactory to the Applicable Agent) but if unsecured or secured on a “junior” basis to the other Facilities, such New Revolving Facility or New Term Facility shall be documented in a separate agreement than this Agreement, (ii) the New Term Facility or New Revolving Facility, as applicable, shall, for purposes of prepayments, be treated substantially the same as (and in any event no more favorably than) the Term Facility or Revolving Credit Facility, as the case may be, unless the Borrowers otherwise elect (but in any event no more favorably than the existing Term Loans or Revolving Credit Loans, as applicable), and (iii) with respect to any New Term Facility of like currency with the Initial Term Loans or Redenominated Term B-3 Loans on or prior to the date that is twelve months after the Closing Date, the All-in Yield payable by the Borrowers applicable to such New Term Facility

 

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shall be determined by the Borrowers and the Lenders providing such New Term Facility and shall not be more than 50 basis points higher than the corresponding All-in Yield payable by the Borrowers for the applicable Tranche(s) of the same currency, unless the All-in Yield with respect to such applicable Tranche(s) of the same currency is increased to the amount necessary so that the difference between the All-in Yield with respect to such New Term Facility and the corresponding All-in Yield on such applicable Tranche is equal to 50 basis points.

(g) If the Incremental Arranger is not the Applicable Agent, the actions authorized to be taken by the Incremental Arranger herein shall be done in consultation with the Applicable Agent and, with respect to the preparation of any documentation necessary or appropriate to carry out the provisions of this Section 2.14 (including amendments to this Agreement and the other Loan Documents), any comments to such documentation reasonably requested by the Applicable Agent shall be reflected therein.

(h) To the extent any Guarantee or security granted prior to the date of incurrence under this Section 2.14 to support the Obligations in any jurisdiction requires application, registration or similar steps to be taken in such jurisdiction for any New Revolving Facility, Revolving Credit Commitment Increase, New Term Facility, and/or Term Commitment Increase which the applicable Borrower and the lenders under such facility desire to benefit on a pari passu basis from such Guarantees and/or such security are not obtained prior to such incurrence, such inability to complete such application, registration, filing or equivalent perfection requirements shall not be deemed to adversely impact the pari passu nature of such applicable facility hereunder and the relevant provisions of this Agreement (including, without limitation, Section 2.03 and 8.04) shall be interpreted as if such applicable facility benefits from such Guarantee or security.

Section 2.15 New Incremental Notes.

(a) The Borrowers (or any Borrower) or any Guarantor may from time to time after the Closing Date, upon notice by the Borrowers to the Administrative Agent, specifying in reasonable detail the proposed terms thereof, request to issue one or more series of senior secured, senior unsecured, senior subordinated or subordinated notes (which notes, if secured by the Collateral, are secured on a first lien “equal and ratable” basis with the Liens securing the Obligations or secured on a “junior” basis with the Liens securing the Obligations) and guaranteed only by Loan Parties or entities who become Loan Parties (such notes, collectively, “New Incremental Notes”) in an amount not to exceed the Incremental Amount (at the time of issuance); provided that (i) no Event of Default would exist after giving Pro Forma Effect to any such request, subject to Section 1.02(i), and (ii) any such issuance of New Incremental Notes shall be in a minimum amount of the lesser of (x) $20,000,000 (or equivalent Dollar Amount) and (y) the entire amount that may be requested under this Section 2.15; provided, further, that any New Loan Commitments established pursuant to Section 2.14 and New Incremental Notes issued pursuant to this Section 2.15, (A) will count, first, to reduce the amount available under Prepayment-Based Incremental Facilities, second, to reduce the amount available under the Ratio-Based Incremental Facilities (to the extent permitted by the pro forma calculation of the Consolidated First Lien Net Leverage Ratio required) and, third, to reduce the maximum amount under the Cash-Capped Incremental Facilities, (B) New Incremental Notes pursuant to this Section 2.15 may be incurred under the Ratio-Based Incremental Facility, the Cash-Capped Incremental Facility and the Prepayment-Based Incremental Facility, and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under the Prepayment-Based Incremental Facility (without inclusion of any amounts utilized pursuant to the Ratio-Based Incremental Facility or the Cash-Capped Incremental Facility), then calculating the incurrence under the Ratio-Based Incremental Facility (without inclusion of any amounts utilized pursuant to the Cash-Capped Incremental Facility) and then calculating the incurrence under the Cash-Capped Incremental Facility and (C) the Borrower may redesignate all or any portion of Indebtedness originally designated as incurred under the Cash-Capped Incremental Facility as having been incurred under the Ratio-Based Incremental Facility so long as, at the time of such redesignation, the Borrower would be permitted to incur the aggregate principal amount of Indebtedness being so redesignated under the Ratio-Based Incremental Facility (which, for the avoidance of doubt, shall have the effect of increasing the Cash-Capped Incremental Facility by the Dollar Amount of such redesignated Indebtedness). The Borrowers, after consultation with the Administrative Agent, may appoint any Person that is not an Affiliate of any Borrower as arranger of such New Incremental Notes (such Person (who may be the Administrative Agent, if it so agrees), the “Incremental Notes Arranger”).

 

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(b) As a condition precedent to the issuance of any New Incremental Notes pursuant to this Section 2.15, (i) such New Incremental Notes shall not be Guaranteed by any Person that is not a Loan Party or that does not become a Loan Party and shall not be secured by a lien on any assets of a Loan Party that is not part of the Collateral, (ii) to the extent secured by the Collateral, such New Incremental Notes shall be subject to intercreditor arrangements that are reasonably satisfactory to the Incremental Notes Arranger and, if such Incremental Notes Arranger is not the Administrative Agent, the Administrative Agent, (iii) such New Incremental Notes shall have a final maturity no earlier than the then Latest Maturity Date, (iv) the Weighted Average Life to Maturity of such New Incremental Notes shall not (A) be shorter than the remaining Weighted Average Life to Maturity of any then-existing Term Loan Tranche, or (B) to the extent unsecured, be subject to any amortization prior to the final maturity thereof, or be subject to any mandatory redemption or prepayment provisions or rights (except (x) customary assets sale, event of loss or similar event or change of control provisions and customary acceleration rights after an event of default or (y) so-called “AHYDO” payments), (v) such New Incremental Notes shall not be subject to any mandatory redemption or prepayment provisions or rights (except to the extent any such mandatory redemption or prepayment is required to be applied pro rata to the Term Loans and other Indebtedness that is secured on a pari passu basis with the Obligations) and (vi) the covenants and events of default are no more restrictive (other than the Applicable Rate and optional prepayment and redemption terms), when taken as a whole, than those under the then-existing Facilities, unless such covenants and events of default are applicable only to periods after the Latest Maturity Date or such covenants and events of default are, in consultation with the Administrative Agent, incorporated into this Agreement (or any other applicable Loan Document) for the benefit of all existing Lenders (to the extent applicable to such Lender) without further amendment requirements (it being understood that (x) no New Incremental Notes shall include any financial maintenance covenants (including indirectly by way of a cross-default to this Agreement), but that customary cross-acceleration provisions may be included and (y) any negative covenants with respect to indebtedness, investments, liens or restricted payments shall be incurrence-based) and (vii) subject to clauses (i) through (vi) above, the other terms of such New Incremental Notes are customary for similar debt securities in light of then-prevailing market conditions at the time of issuance (provided that a certificate of a Responsible Officer of the Parent Borrower delivered to the Incremental Notes Arranger in good faith at least five Business Days prior to the incurrence of such New Incremental Notes, together with a reasonably detailed description of the material terms and conditions of such New Incremental Notes or drafts of the documentation relating thereto, stating that the Parent Borrower has determined in good faith that such terms and conditions satisfy the requirement set forth in this clause (b), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Incremental Notes Arranger provides notice to the Parent Borrower of its objection during such five Business Day period (including a reasonable description of the basis upon which it objects) and provided, further, that if the terms of the New Incremental Notes are substantially identical to the Senior Notes, the conditions in this clause (b) shall be deemed to be satisfied). Notwithstanding the foregoing, the conditions precedent to each such increase shall be agreed to by the Lenders providing such increase and the Parent Borrower.

(c) The Lenders hereby authorize the Incremental Notes Arranger (and the Lenders hereby authorize the Incremental Notes Arranger to execute and deliver such amendments) to enter into amendments to this Agreement and the other Loan Documents with the Borrowers as may be necessary in order to secure any New Incremental Notes with the Collateral and/or to make such technical amendments as may be necessary or appropriate in the reasonable opinion of the Incremental Notes Arranger and the Borrowers in connection with the issuance of such New Incremental Notes, in each case on terms consistent with this Section 2.15. If the Incremental Notes Arranger is not the Administrative Agent, the actions authorized to be taken by the Incremental Notes Arranger herein shall be done in consultation with the Administrative Agent and, with respect to applicable documentation (including amendments to this Agreement and the other Loan Documents), any comments to such documentation reasonably requested by the Administrative Agent shall be reflected therein.

Section 2.16 Cash Collateral.

(a) Upon the request of the Administrative Agent or the applicable L/C Issuer under any Revolving Tranche (i) if the applicable L/C Issuer has honored any full or partial drawing request under any Letter of Credit issued under such Tranche and such drawing has resulted in an L/C Borrowing or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding under such Tranche, the Borrowers shall, in each case, promptly deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover 103% of the then Outstanding Amount of all L/C Obligations. At any time that there shall exist a Defaulting Lender, promptly upon the request of the Administrative Agent or the applicable L/C Issuer, the Borrowers shall deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover 103% of all Fronting Exposure of such Defaulting Lender after giving effect to Section 2.17(a)(iv) and any Cash Collateral provided by such Defaulting Lender.

 

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(b) All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, interest bearing deposit accounts at the Administrative Agent or the Collateral Agent (or other financial institution selected by any of them). The Borrowers, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent and the Collateral Agent, for the benefit of the Administrative Agent, the applicable L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.16(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 Fronting Exposure and other obligations secured thereby, the Borrowers and the relevant Defaulting Lender shall, 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) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.16 or Sections 2.03, 2.04, 2.05, 2.06, 2.17, 8.02 or 8.04 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) Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure (after giving effect to such release) 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 10.07(b)(viii))) 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 under Sections 8.01(a), (f) or (g) or an Event of Default (and following application as provided in this Section 2.16 may be otherwise applied in accordance with Section 8.04) 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.

Section 2.17 Defaulting Lenders.

(a) 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, to the extent permitted by applicable Law:

(i) 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 10.01.

(ii) Any payment of principal, interest, fees or other amounts received by the Applicable Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Applicable Agent by that Defaulting Lender pursuant to Section 10.09), shall be applied at such time or times as may be determined by the Applicable Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Applicable Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuers hereunder; third, if so reasonably determined by the Applicable Agent or reasonably requested by the any L/C Issuer, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Letter of Credit; fourth, as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Applicable Agent; fifth, if so determined by the Applicable Agent and the Borrowers, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to

 

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fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders or any L/C Issuer as a result of any non-appealable judgment of a court of competent jurisdiction obtained by any Lender or any L/C Issuer 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 pursuant to Sections 8.01(a), (f) or (g) exists, to the payment of any amounts owing to the Borrowers as a result of any non-appealable judgment of a court of competent jurisdiction obtained by the Borrowers 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 Loans or L/C Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at a time when the conditions set forth in Section 4.02, if during the Certain Funds Period, or Section 4.03, if otherwise, were satisfied or waived, such payment shall be applied solely to pay the Loans 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 Loans 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 2.17(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) That Defaulting Lender (x) shall not be entitled to receive any commitment fee pursuant to Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender) and (y) shall be limited in its right to receive Letter of Credit fees as provided in Section 2.03(h).

(iv) 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 pursuant to Section 2.03, the Pro Rata Share of each Non-Defaulting Lender under a Revolving Tranche shall be determined without giving effect to the Commitment under such Revolving Tranche of that Defaulting Lender; provided that (i) each such reallocation shall be given effect unless an Event of Default exists; and (ii) the aggregate obligation of each Non-Defaulting Lender under a Revolving Tranche to acquire, refinance or fund participations in Letters of Credit issued under such Revolving Tranche shall not exceed the positive difference, if any, of (1) the Commitment under such Revolving Tranche of that Non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Loans and Ancillary Outstandings under such Revolving Tranche of that Revolving Credit Lender.

(b) If the Borrowers, the Applicable Agent and each L/C Issuer agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Applicable 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 that portion of outstanding Loans of the other Lenders or take such other actions as the Applicable Agent may reasonably determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their ratable shares (without giving effect to the application of Section 2.17(a)(iv)) in respect of that Lender, 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 Borrowers 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 having been a Defaulting Lender.

Section 2.18 Specified Refinancing Debt.

(a) The Borrowers (or any Borrower) may, from time to time after the Closing Date, add one or more new term loan facilities and new revolving credit facilities to the Facilities (“Specified Refinancing Debt”; and the commitments in respect of such new term facilities, the “Specified Refinancing Term Commitment” and the commitments in respect of such new revolving credit facilities, the “Specified Refinancing Revolving Credit Commitment”) pursuant to procedures reasonably specified by any Person that is not an Affiliate of any Borrower appointed by the Borrowers, after consultation with the Applicable Agent, as agent under such Specified Refinancing Debt (such Person (who may be the Applicable Agent, if it so agrees), the “Specified Refinancing Agent”) and reasonably acceptable to the Borrowers, to refinance (i) all or any portion of any Term Loan Tranches

 

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then outstanding under this Agreement and (ii) all or any portion of any Revolving Tranches then in effect under this Agreement, in each case pursuant to a Refinancing Amendment; provided that such Specified Refinancing Debt: (i) will rank pari passu in right of payment as the other Loans and Commitments hereunder; (ii) will not have obligors other than the Loan Parties or entities who shall have become Loan Parties (it being understood that the roles of such obligors as Borrowers or guarantors with respect to such obligations may be interchanged); (iii) will be (x) unsecured or (y) secured by the Collateral on a first lien “equal and ratable” basis with the Liens securing the Obligations or on a “junior” basis to the Liens securing the Obligations (in each case pursuant to intercreditor arrangements reasonably satisfactory to the Specified Refinancing Agent and, if the Specified Refinancing Agent is not the Applicable Agent, the Applicable Agent); (iv) will have such pricing and optional prepayment terms as may be agreed by the Borrowers and the applicable Lenders thereof; (v) (x) to the extent constituting revolving credit facilities, will not have a maturity date (or have mandatory commitment reductions or amortization) that is prior to the scheduled Maturity Date of the Revolving Tranche being refinanced and (y) to the extent constituting term loan facilities, will have a maturity date that is not prior to the date that is the scheduled Maturity Date of, and will have a Weighted Average Life to Maturity that is not shorter than the remaining Weighted Average Life to Maturity of, the Term Loans being refinanced; (vi) any Specified Refinancing Term Loans shall share ratably in any prepayments of Term Loans pursuant to Section 2.05 (other than Section 2.05(b)(iii)) (or otherwise provide for more favorable prepayment treatment for the then outstanding Term Loan Tranches than the Specified Refinancing Term Loans); (vii) each Revolving Credit Borrowing (including any deemed Revolving Credit Borrowings made pursuant to Sections 2.03 and 2.04) and participations in Letters of Credit pursuant to Section 2.03 shall be allocated pro rata among the Revolving Tranches; (viii) subject to clauses (iv) and (v) above, will have terms and conditions (other than pricing and optional prepayment and redemption terms) that are substantially identical to, or less favorable, when taken as a whole, to the lenders providing such Specified Refinancing Debt than, the terms and conditions of the Facilities and Loans being refinanced (as reasonably determined by the Borrowers in good faith, which determination shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Specified Refinancing Agent provides notice to the Borrowers of an objection (including a reasonable description of the basis upon which it objects) within five Business Days after being notified of such determination by the Borrowers); and (ix) the Net Cash Proceeds of such Specified Refinancing Debt shall be applied, substantially concurrently with the incurrence thereof, to the pro rata prepayment of outstanding Loans being so refinanced (and, in the case of Revolving Credit Loans, a corresponding amount of Revolving Credit Commitments shall be permanently reduced), in each case pursuant to Section 2.05 and 2.06, as applicable, and the payment of fees, expenses and premiums, if any, payable in connection therewith; provided however, that such Specified Refinancing Debt (x) may provide for any additional or different financial or other covenants or other provisions that (1) are agreed among the Borrowers and the Lenders thereof and applicable only during periods after the then Latest Maturity Date in effect or (2) are, in consultation with the Applicable Agent, incorporated into this Agreement (or any other applicable Loan Document) for the benefit of all existing Lenders (to the extent applicable to such Lender) without further amendment requirement and (y) shall not have a principal or commitment amount (or accreted value) greater than the Loans being refinanced (plus an amount equal to accrued interest, fees, discounts, premiums and expenses). Any Lender approached to provide all or a portion of any Specified Refinancing Debt may elect or decline, in its sole discretion, to provide such Specified Refinancing Debt. To achieve the full amount of a requested issuance of Specified Refinancing Debt, and subject to the approval of the Applicable Agent and each L/C Issuer in the case of Specified Refinancing Revolving Credit Commitments, the Borrowers may also invite additional Eligible Assignees to become Lenders in respect of such Specified Refinancing Debt pursuant to a joinder agreement to this Agreement in form and substance reasonably satisfactory to the Specified Refinancing Agent.

(b) The effectiveness of any Refinancing Amendment shall be subject to conditions as are mutually agreed with the participating Lenders providing such Specified Refinancing Debt and to the extent reasonably requested by the Specified Refinancing Agent, receipt by the Specified Refinancing Agent of legal opinions, board resolutions, officers’ certificates and/or reaffirmation agreements with respect to the Borrowers and the Guarantors, including any supplements or amendments to the Collateral Documents providing for such Specified Refinancing Debt to be secured thereby, consistent with those delivered on the Closing Date under Section 4.01 or delivered from time to time pursuant to Section 6.12, 6.14 and/or Section 6.16 (other than changes to such legal opinions resulting from a change in Law, change in fact or change to counsel’s form of opinion reasonably satisfactory to the Specified Refinancing Agent). The Lenders hereby authorize the Specified Refinancing Agent to enter into amendments to this Agreement and the other Loan Documents with the Borrowers as may be necessary in order to establish new Tranches of Specified Refinancing Debt and to make such technical amendments as may be necessary or appropriate in the reasonable opinion of the Specified Refinancing Agent and the Borrowers in connection with the establishment of such new Tranches, in each case on terms consistent with and/or to effect the provisions of this Section 2.18.

 

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(c) Each class of Specified Refinancing Debt incurred under this Section 2.18 shall be in an aggregate principal amount that is (x) not less than a Dollar Amount of $15,000,000 and (y) an integral multiple of a Dollar Amount of $1,000,000 in excess thereof. Any Refinancing Amendment may provide for the issuance of Letters of Credit for the account of the Borrowers in respect of a Revolving Tranche pursuant to any revolving credit facility established thereby, in each case on terms substantially equivalent to the terms applicable to Letters of Credit under the Revolving Credit Commitments; provided that the L/C Issuer shall have agreed thereto.

(d) The Specified Refinancing Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Specified Refinancing Debt incurred pursuant thereto (including the addition of such Specified Refinancing Debt as separate “Facilities” hereunder and treated in a manner consistent with the Facilities being refinanced, including for purposes of prepayments and voting). Any Refinancing Amendment may, without the consent of any Person other than the Borrowers, the Specified Refinancing Agent and the Lenders providing such Specified Refinancing Debt, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Specified Refinancing Agent and the Borrowers, to effect the provisions of or consistent with this Section 2.18. In addition, if so provided in the relevant Refinancing Amendment and with the consent of each L/C Issuer, participations in Letters of Credit expiring on or after the scheduled Maturity Date in respect of a Revolving Tranche shall be reallocated from Lenders holding Revolving Credit Commitments to Lenders holding extended revolving commitments in accordance with the terms of such Refinancing Amendment; provided, however, that such participation interests shall, upon receipt thereof by the relevant Lenders holding extended revolving commitments, be deemed to be participation interests in respect of such extended revolving commitments and the terms of such participation interests (including the commission applicable thereto) shall be adjusted accordingly. If the Specified Refinancing Agent is not the Applicable Agent, the actions authorized to be taken by the Specified Refinancing Agent herein shall be done in consultation with the Applicable Agent and, with respect to the preparation of any documentation necessary or appropriate to carry out the provisions of this Section 2.18 (including amendments to this Agreement and the other Loan Documents), any comments to such documentation reasonably requested by the Applicable Agent shall be reflected therein.

(e) To the extent any Guarantee or security granted prior to the date of incurrence under this Section 2.18 to support the Obligations in any jurisdiction requires application, registration, filing or equivalent perfection requirements to be taken in such jurisdiction for any Specified Refinancing Debt which the applicable Borrower and the lenders under such facility desire to benefit on a pari passu basis from such Guarantees and/or such security are not obtained prior to such incurrence, such inability to complete such application, registration, filing or equivalent perfection requirements shall not be deemed to adversely impact the pari passu nature of such Specified Refinancing Debt hereunder and the relevant provisions of this Agreement (including, without limitation, Section 2.03 and 8.04) shall be interpreted as if such Specified Refinancing Debt benefit from such Guarantee or security.

Section 2.19 Permitted Debt Exchanges.

(a) Notwithstanding anything to the contrary contained in this Agreement, pursuant to one or more offers (each, a “Permitted Debt Exchange Offer”) made from time to time by the Borrowers, the Borrowers may from time to time following the Closing Date consummate one or more exchanges of Term Loans for Permitted Debt Exchange Notes (each such exchange a “Permitted Debt Exchange”), so long as the following conditions are satisfied: (i) no Event of Default shall have occurred and be continuing at the time the final offering document in respect of a Permitted Debt Exchange Offer is delivered to the relevant Lenders, (ii) the aggregate principal amount (calculated on the face amount thereof) of Term Loans exchanged shall equal no more than the aggregate principal amount (calculated on the face amount thereof) of Permitted Debt Exchange Notes issued in exchange for such Term Loans; provided that the aggregate principal amount of the Permitted Debt Exchange Notes may include accrued interest and premium (if any) under the Term Loans exchanged and underwriting discounts, fees, commissions and expenses in connection with the issuance of such Permitted Debt Exchange Notes, (iii) the aggregate principal amount (calculated on the face amount thereof) of all Term Loans exchanged by the Borrowers pursuant to any Permitted Debt Exchange shall automatically be cancelled and retired by the Borrowers on the date

 

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of the settlement thereof (and, if requested by the Applicable Agent, any applicable exchanging Lender shall execute and deliver to the Applicable Agent an Assignment and Assumption, or such other form as may be reasonably requested by the Applicable Agent, in respect thereof pursuant to which the respective Lender assigns its interest in the Term Loans being exchanged pursuant to the Permitted Debt Exchange to the Borrowers for immediate cancellation), (iv) if the aggregate principal amount of all Term Loans (calculated on the face amount thereof) tendered by Lenders in respect of the relevant Permitted Debt Exchange Offer (with no Lender being permitted to tender a principal amount of Term Loans which exceeds the principal amount thereof actually held by it) shall exceed the maximum aggregate principal amount of such Term Loans offered to be exchanged by the Borrowers pursuant to such Permitted Debt Exchange Offer, then the Borrowers shall exchange Term Loans subject to such Permitted Debt Exchange Offer tendered by such Lenders ratably up to such maximum amount based on the respective principal amounts so tendered, (v) all documentation in respect of such Permitted Debt Exchange shall be consistent with the foregoing, and all written communications generally directed to the Lenders in connection therewith shall be in form and substance consistent with the foregoing and made in consultation with the Borrowers and the Exchange Agent and (vi) any applicable Minimum Tender Condition (as defined below) shall be satisfied.

(b) With respect to all Permitted Debt Exchanges effected by the Borrowers pursuant to this Section 2.19, (i) such Permitted Debt Exchanges (and the cancellation of the exchanged Term Loans in connection therewith) shall not constitute voluntary or mandatory payments or prepayments for purposes of Section 2.05(a) or (b), and (ii) such Permitted Debt Exchange Offer shall be made for not less than $10,000,000 in aggregate principal amount of Term Loans; provided that subject to the foregoing clause (ii) the Borrowers may at its election specify as a condition (a “Minimum Tender Condition”) to consummating any such Permitted Debt Exchange that a minimum amount (to be determined and specified in the relevant Permitted Debt Exchange Offer in the Borrowers’ discretion) of Term Loans of any or all applicable Classes be tendered.

(c) In connection with each Permitted Debt Exchange, the Borrowers and the Exchange Agent shall mutually agree to such procedures as may be necessary or advisable to accomplish the purposes of this Section 2.19 and without conflict with Section 2.19(d); provided that the terms of any Permitted Debt Exchange Offer shall provide that the date by which the relevant Lenders are required to indicate their election to participate in such Permitted Debt Exchange shall be not less than a reasonable period (in the discretion of the Borrowers and the Exchange Agent) of time following the date on which the Permitted Debt Exchange Offer is made.

(d) The Borrowers shall be responsible for compliance with, and hereby agrees to comply with, all applicable securities and other laws and regulations in connection with each Permitted Debt Exchange, it being understood and agreed that (x) none of the Exchange Agent, the Applicable Agent nor any Lender assumes any responsibility in connection with the Borrowers’ compliance with such laws and regulations in connection with any Permitted Debt Exchange and (y) each Lender shall be solely responsible for its compliance with any applicable “insider trading” laws and regulations to which such Lender may be subject under the Securities Exchange Act of 1934, as amended, and/or other applicable securities laws and regulations.

(e) If the Exchange Agent is not the Applicable Agent, the actions authorized to be taken by the Exchange Agent herein shall be done in consultation with the Applicable Agent and, with respect to the preparation of any documentation necessary or appropriate to carry out the provisions of this Section 2.19, any comments to such documentation reasonably requested by the Applicable Agent shall be reflected therein.

Section 2.20 Additional Alternative Currencies.

(a) Any Borrower may from time to time request that Revolving Credit Loans be made and/or Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency”; provided that such requested currency is a lawful currency that is readily available and freely transferable and convertible into Euros or Dollars. In the case of any such request with respect to the making of Revolving Credit Loans, such request shall be subject to the approval of the Administrative Agent and the Revolving Credit Lenders; and, in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and the applicable L/C Issuer.

 

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(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m. fifteen Business Days prior to the date of the desired Borrowing (or such other time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the relevant L/C Issuer, in its or their sole discretion). In the case of any such request pertaining to Revolving Credit Loans, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the relevant L/C Issuer. Each such Revolving Credit Lender (in the case of any such request pertaining to Revolving Credit Loans) or the L/C Issuer (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., ten Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Revolving Credit Loans or the issuance of Letters of Credit, as the case may be, in the requested currency.

Any failure by any Revolving Credit Lender or any L/C Issuer, as the case may be, to respond to such request within the time period specified in the preceding paragraph (b) shall be deemed to be a refusal by such Revolving Credit Lender, L/C Issuer, as the case may be, to permit Revolving Credit Loans to be made or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Revolving Credit Lenders that would be obligated to make Revolving Credit Loans denominated in such requested currency consent to making Revolving Credit Loans in such requested currency, the Administrative Agent shall so notify the Borrower Representative and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Borrowings of Revolving Credit Loans; and if the Administrative Agent and the relevant L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Borrower Representative and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain the requisite consent to any request for an additional currency under this Section 2.20, the Administrative Agent shall promptly so notify the Borrower Representative.

Section 2.21 Ancillary Facilities.

(a) Availability of Ancillary Facilities.

(i) Any Revolving Credit Lender may, upon the agreement of any Borrower and such Revolving Credit Lender, provide, directly or indirectly through one or more of its Affiliates, one or more Ancillary Facilities on a bilateral basis in place of all or a portion of such Lender’s Revolving Credit Commitment as an Ancillary Facility.

(ii) Any Borrower may implement any Ancillary Facility by providing, not less than five Business Days (or such shorter period as the Administrative Agent may agree) prior to the Ancillary Commencement Date with respect thereto, notice to the Administrative Agent that such Ancillary Facility has been established and specifying:

(1) the Ancillary Commencement Date for such Ancillary Facility and the scheduled expiration date thereof;

(2) the type of such Ancillary Facility;

(3) the Ancillary Commitment (including the maximum amount of such Ancillary Facility and the Dollar Amount thereof) and, if such Ancillary Facility is Multi-account Overdraft, its Designated Cross Amount and its Designated Net Amount;

(4) the proposed currency or currencies of such Ancillary Facility;

(5) the identity of the relevant Ancillary Lender(s) (including whether such Ancillary Lender is a Revolving Credit Lender or an Affiliate of a Revolving Credit Lender);

(6) the identity of the proposed Borrower, which, for the avoidance of doubt may be a Restricted Subsidiary (including if it is an Affiliate of a Borrower pursuant to clause (h) of this Section 2.21); and

 

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(7) any other information the Administrative Agent may reasonably request in connection with such Ancillary Facility;

provided that as of the Closing Date, each of the facilities set forth on Schedule 2.21 shall be deemed to be an Ancillary Facility until the expiration or termination thereof in accordance with the terms of such facilities and hereof.

(iii) The Administrative Agent shall promptly notify the Revolving Credit Lender proposing to provide such Ancillary Facility and the other Revolving Credit Lenders of the establishment of any Ancillary Facility and, subject to the satisfaction of the requirements set forth in Section 2.21(b) below, (A) the relevant Lender (or its Affiliate if appointed pursuant to clause (g) of this Section 2.21) will constitute an Ancillary Lender and (B) such Ancillary Facility will be deemed to be made available hereunder, in each case as of the Ancillary Commencement Date.

(iv) Notwithstanding anything to the contrary herein or in any other Loan Document (including Section 10.1 hereof), no amendment or waiver of any term of any Ancillary Facility shall require the consent of any Lender other than the relevant Ancillary Lender except to the extent that such amendment or waiver otherwise gives rise to a matter that would require an amendment of or waiver under this Agreement (including, for the avoidance of doubt, under this Section 2.21), in which case the provisions of Section 10.1 shall apply thereto.

(b) Terms of Ancillary Facilities.

(i) Except as provided below in this Section 2.21, the terms of any Ancillary Facility will be agreed by the relevant Ancillary Lender and the relevant Borrower; provided that such terms (A) may only allow the relevant Borrower to use the Ancillary Facility, (B) may not permit the amount of Ancillary Outstandings to exceed the Ancillary Commitment with respect to such Ancillary Facility, (C) may not allow the Ancillary Commitment of any Ancillary Lender to exceed the Revolving Credit Commitment of such Ancillary Lender (or its Affiliate) before taking into account the effect of the Ancillary Facility on the Revolving Credit Commitments, (D) shall require that the Ancillary Commitment in respect of such Ancillary Facility will be reduced to zero, and that all Ancillary Outstandings will be repaid (or cash collateralized or back-stopped by a letter of credit or otherwise in a manner reasonably satisfactory to the relevant Ancillary Lender, in each case, in an amount equal to 105% of such Ancillary Outstandings or such lesser amount as the applicable Ancillary Lender may agree) on or prior to the Latest Maturity Date for Revolving Credit Loans and (E) shall otherwise be based upon normal commercial terms at the time such Ancillary Facility is entered into (except as varied by this Agreement).

(ii) If there is an inconsistency between any term of any Ancillary Facility and any term of this Agreement, this Agreement shall prevail, except for (A) the sentences of Section 2.10(a) that relate to the computations of fees and interest being made on the basis of a year of a certain number of days, which shall not prevail for purposes of calculating fees, interest, or commission relating to any Ancillary Facility, (B) any Ancillary Facility comprising more than one account, where the terms of the relevant Ancillary Documents shall prevail to the extent required to permit the netting of balances in respect of the relevant accounts and (C) where the relevant term of this Agreement would be contrary to, or inconsistent with, the law governing the relevant Ancillary Document, in which case the relevant term of this Agreement shall be superseded by the terms of the relevant Ancillary Document to the extent necessary to eliminate the subject conflict or inconsistency.

(iii) Notwithstanding anything to the contrary herein, in any other Loan Document or in any Ancillary Document, no breach of any representation, warranty, covenant or other term of (or default or event of default under) any Ancillary Document shall be deemed to constitute, or result in, a breach of any representation, warranty, covenant or other term of, or Default or Event of Default under, this Agreement or any other Loan Document unless such breach, default or event of default is also a breach of any representation, warranty or covenant in, or other term of, this Agreement, or a Default or Event of Default under Section 8.01.

 

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(iv) Interest, commission and fees of Ancillary Facilities are dealt with in Section 2.09(c).

(c) Repayment of Ancillary Facilities.

(i) Subject to Section 2.21(b)(i)(D) above, each Ancillary Commitment shall terminate on the applicable Maturity Date for the Revolving Credit Facilities to which the relevant Ancillary Commitment relates or such earlier date on which its expiry date occurs or in which it is cancelled, in each case, in accordance with the terms of this Agreement.

(ii) Upon the expiration of any Ancillary Facility in accordance with its terms, the Ancillary Commitment of the relevant Ancillary Lender shall be reduced to zero (and the available Revolving Credit Commitment of such Ancillary Lender (or its Affiliates) shall be increased accordingly). Upon the making of one or more Revolving Credit Loans as provided below in an amount sufficient to repay the Ancillary Outstandings under any Ancillary Facility, such Ancillary Facility shall be cancelled upon receipt by the relevant Ancillary Lender of the proceeds thereof.

(iii) No Ancillary Lender may demand repayment, prepayment or cash collateralization of any amounts made available or liabilities incurred by it under any Ancillary Facility (except where the relevant Ancillary Facility is provided on a net limit basis to the extent required to reduce the Gross Oustandings of a Multi-account Overdraft or towards any amount equal to its Net Outstandings) unless (A) (x) the Maturity Date for Revolving Credit Loans has occurred, (y) the Total Revolving Credit Outstandings and Ancillary Outstandings have become immediately due and payable and all Revolving Credit Commitments terminated in accordance with Section 8.01 or (z) the expiration date of the relevant Ancillary Facility occurs, (B) it becomes unlawful in any applicable jurisdiction for the relevant Ancillary Lender to perform its obligations under this Agreement or to fund, issue or maintain its participation in the relevant Ancillary Facility or (C) the Ancillary Outstandings (if any) under the relevant Ancillary Facility may be refinanced in an equivalent amount by a Revolving Loan and the relevant Ancillary Lender (or its relevant Affiliate, if applicable) provides sufficient notice to permit the refinancing of such Ancillary Outstandings with a Revolving Loan and the relevant Borrower submits a Committed Loan Notice.

(iv) Notwithstanding anything to the contrary herein, for the purposes of determining whether or not the Ancillary Outstandings under any Ancillary Facility referenced in clause (c)(iii)(C) above may be refinanced by a Revolving Loan, (A) the available Revolving Credit Commitment of the relevant Ancillary Lender will be increased by the amount of its Ancillary Commitment in respect of such Ancillary Facility and (B) unless the circumstances described in clauses (c)(iii)(A)(x) or (y) then exist, each Revolving Credit Lender shall be obligated to make a Revolving Loan to the Borrower or Borrowers of such Ancillary Facility for the purpose of refinancing the relevant Ancillary Outstandings on a pro rata basis in accordance with its pro rata share of the Revolving Credit Commitments whether or not a Default or Event of Default exists or any other applicable condition precedent is not satisfied and irrespective of whether any Borrower has delivered a borrowing notice.

(d) Ancillary Outstandings. Each Borrower and each Ancillary Lender agrees with and for the benefit of each Revolving Credit Lender that (i) the Ancillary Outstandings under any Ancillary Facility provided by such Ancillary Lender shall not exceed the Ancillary Commitment applicable to such Ancillary Facility, (ii) where such Ancillary Facility is a Multi-account Overdraft, (x) the Ancillary Outstandings under such Ancillary Facility shall not exceed the Designated Net Amount applicable to such Multi-account Overdraft and (y) the Gross Outstandings shall not exceed the Designated Gross Amount applicable to such Ancillary Facility and (iii) with respect to any Ancillary Facility that comprises an overdraft facility in which a Designated Net Amount has been established, for the purposes of calculating compliance with the Designated Net Amount, the Ancillary Lender providing such Ancillary Facility shall only be obligated to take into account the credit balances which it is permitted to take into account by then applicable law and regulations relating to its reporting of exposures to applicable regulatory authorities as netted for capital adequacy purposes. Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its Revolving Credit Commitment is not less than its Ancillary Commitment (or the Ancillary Commitment of its Affiliates).

 

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(e) Adjustment for Ancillary Facilities upon Acceleration.

(i) Prior to the application of the provisions of clause (ii) below, an Ancillary Lender that has provided a Multi-account Overdraft shall set-off any Available Credit Balance on any account comprised in that Multi-account Overdraft.

(ii) If the Administrative Agent takes any action under Section 8.02 or any event described in Section 8.01(f) or (g) occurs or upon any automatic acceleration under Section 8.02, each Revolving Credit Lender (including each Ancillary Lender) shall promptly adjust (by making or receiving (as the case may be) corresponding transfers of rights and obligations under the Loan Documents relating to their Total Revolving Credit Outstandings and Ancillary Outstandings) their claims in respect of amounts outstanding to them under the Revolving Credit Facility and each Ancillary Facility to the extent necessary to ensure that after such transfers, the claims relating to the Total Revolving Credit Outstandings and Ancillary Outstandings of each Revolving Credit Lender bear the same proportion to the Total Revolving Credit Outstandings and Ancillary Outstandings as such Revolving Credit Lender’s pro rata share of the total Revolving Credit Commitments for all Lenders, each as at the date on which the Administrative Agent takes any action under Section 8.02 or any event described in Section 8.01(f) or (g) occurs or upon any automatic acceleration under Section 8.02.

(iii) If an amount outstanding under an Ancillary Facility is a contingent liability and that contingent liability becomes an actual liability or is reduced to zero after the original adjustment is made under paragraph (ii) above, then each Revolving Credit Lender (including each Ancillary Lender) will make a further adjustment (by making or receiving (as the case may be) corresponding transfers of rights and obligations under the Loan Documents relating to their Total Revolving Credit Outstandings and Ancillary Outstandings to the extent necessary) to put themselves in the position they would have been in had the original adjustment been determined by reference to the actual liability or, as the case may be, zero liability and not the contingent liability.

(iv) Any transfer of rights and obligations relating to Total Revolving Credit Outstandings and Ancillary Outstandings made pursuant to this Section 2.21(e) shall be made for a purchase price in cash, payable at the time of transfer, in an amount equal to such Total Revolving Credit Outstandings and Ancillary Outstandings.

(v) All calculations to be made pursuant to this Section 2.21(e) shall be made by the Administrative Agent based upon information provided to it by the Revolving Credit Lenders (including Ancillary Lenders) and the Exchange Rate.

(vi) This Section 2.21 shall not oblige any Lender to accept the transfer of a claim relating to an amount outstanding under an Ancillary Facility which is not denominated (pursuant to the relevant Loan Document) in either in Dollars, a currency which has been an Alternative Currency or in another currency which is acceptable to that Lender.

(f) Information. Each Borrower and each Ancillary Lender shall, promptly upon the request of the Administrative Agent, provide the Administrative Agent with any information relating to the operation of such Ancillary Facility (including the amount of Ancillary Outstandings) as the Administrative Agent may from time to time reasonably request (which information shall be subject to compliance with Section 10.15).

(g) Affiliates of Lenders as Ancillary Lenders.

(i) Subject to the terms of this Agreement, an Affiliate of any Revolving Credit Lender may become an Ancillary Lender, in which case such Revolving Credit Lender and such Affiliate shall be treated as a single Revolving Credit Lender whose Revolving Credit Commitment is as set forth in Schedule 2.01 or in the Assignment and Assumption pursuant to which such Revolving Credit Lender assumed its Revolving Credit Commitment; it being understood that the relevant Revolving Credit Lender’s available Revolving Credit Commitment will be reduced to the extent of the Ancillary Commitment of such Affiliate.

 

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(ii) To the extent that this Agreement or any other Loan Document imposes any obligation on any Ancillary Lender and such Ancillary Lender is an Affiliate of a Revolving Credit Lender and not a party thereto, the relevant Revolving Credit Lender shall ensure that such obligation is performed by such Affiliate in compliance with the terms hereof or such other Loan Document.

(iii) Each Ancillary Lender, in its capacity as such, hereby appoints the Administrative Agent as its agent for purposes of the Loan Documents.

(h) Affiliates of Borrowers as Ancillary Borrowers.

(i) Subject to the terms of this Agreement, an Affiliate of a Borrower (other than any Excluded Subsidiary) may with the approval of the relevant Ancillary Lender become a borrower with respect to an Ancillary Facility.

(ii) If any Borrower ceases to be a Borrower under this Agreement, its Affiliates shall cease to have any rights under this Agreement or any Ancillary Document unless such Affiliate is an Affiliate of another Borrower under this Agreement at such time.

(iii) Where this Agreement or any other Loan Document imposes an obligation on a borrower under an Ancillary Facility and the relevant borrower is an Affiliate of a Borrower which is not a party to such document, the relevant Borrower shall ensure that the obligation is performed by its Affiliate.

(iv) Any reference in this Agreement or any other Loan Document to a Borrower being under no obligations (whether actual or contingent) as a Borrower under such Loan Document shall be construed to include a reference to any Affiliate of a Borrower being under no obligations under any Loan Document or Ancillary Document.

ARTICLE III.

Taxes, Increased Costs Protection and Illegality

Section 3.01 Taxes.

(a) Any and all payments by or on account of any obligation of any of the Borrowers or any other Loan Party (or any payments made by a Designated PRC Subsidiary on behalf of Parent Borrower) hereunder or under any other Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from or in respect of any such payment, then the Borrowers, the other applicable Loan Party, Applicable Agent or other applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such Tax is an Indemnified Tax, the sum payable by the applicable Borrower (or a Designated PRC Subsidiary on behalf of Parent Borrower), or other applicable Loan Party shall be increased as necessary so that after all such deductions or withholdings have been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b) A payment by the German Borrower shall not be increased pursuant to Section 3.01(a) by reason of a withholding or deduction for, or on account of, Taxes imposed by Germany if on the date on which the payment falls due (i) the payment could have been made to the Lender without a withholding or deduction if the Lender had been a German Qualifying Lender, but on that date that Lender is not or has ceased to be a German Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or German Treaty, or any published practice or published

 

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concession of any relevant taxing authority, provided that this clause (i) shall not apply to any payment that is not a payment under the Revolving Credit Facility or (ii) the relevant Lender is a German Treaty Lender and the Loan Party making the payment is able to demonstrate that the payment could have been made to the Lender, without the withholding or deduction had that Lender complied with its obligations under Section 3.01(h) below.

(c) In addition but without duplication, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Applicable Agent timely reimburse it for the payment of, any Other Taxes.

(d) The Loan Parties shall jointly and severally indemnify each Recipient, within 30 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Any Recipient claiming indemnity pursuant to this clause (c) shall notify the Loan Parties of the imposition of the relevant Indemnified Taxes as soon as practicable after the Recipient becomes aware of such imposition. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender (with a copy to the Applicable Agent), or by the Applicable Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Within 30 days after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 3.01, such Loan Party shall deliver to the Applicable Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such Payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Applicable Agent.

(f) If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes as to which it has been indemnified pursuant to this Section 3.01 (including by the payment of additional amounts pursuant to this Section 3.01), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.01 with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall promptly repay to such indemnified party the amount paid over pursuant to this clause (e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (e), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (e) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This clause (e) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(g) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 3.01(a) or (d) with respect to such Lender it will, if requested by the Borrowers, use commercially reasonable efforts (subject to such Lender’s overall internal policies of general application and legal and regulatory restrictions) to avoid or reduce to the greatest extent possible any indemnification or additional amounts being due under this Section 3.01, including to designate another Lending Office for any Loan or Letter of Credit affected by such event; provided that such efforts are made on terms that, in the reasonable judgment of such Lender, cause such Lender and its Lending Office(s) to suffer no material economic, legal or regulatory disadvantage; and provided further that nothing in this Section 3.01(g) shall affect or postpone any of the Obligations of the Borrowers or the rights of such Lender pursuant to Sections 3.01(a) and (d). The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender as a result of a request by the Borrowers under this Section 3.01(g).

 

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(h) (i) Any Recipient that is entitled to an exemption from or reduction of withholding Tax with respect to any payments made under any Loan Document shall deliver to the applicable Borrowers and the Applicable Agent, at the time or times reasonably requested by the Borrowers or the Applicable Agent, such properly completed and executed documentation reasonably requested by the Borrowers or the Applicable Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Recipient, if reasonably requested by the Borrowers or the Applicable Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrowers or the Applicable Agent as will enable the Borrowers or the Applicable Agent to determine whether or not such Recipient is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(h)(ii)(A), (ii)(B), (ii)(D) and (ii)(E) below) shall not be required if in the Recipient’s reasonable judgment such completion, execution or submission would subject such Recipient to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Recipient.

(ii) Without limiting the generality of the foregoing,

(A) any Recipient that is a U.S. Person shall deliver to the applicable Borrowers and the Applicable Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Recipient becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the applicable Borrowers or the Applicable Agent) executed originals of IRS Form W-9 (or any successor form) certifying that such Recipient is exempt from U.S. federal backup withholding;

(B) any Non-U.S. Lender shall deliver to the applicable Borrowers and the Applicable Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the applicable Borrowers or the Applicable Agent), whichever of the following is applicable:

(a) in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party, (i) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (ii) with respect to any other applicable payments under any Loan Document, executed originals of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such treaty;

(b) executed originals of IRS Form W-8ECI (or any successor form);

(c) in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Non-U.S. Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code, a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and that no payments in connection with any Loan Document are effectively connected with such Lender’s conduct of a U.S. trade or business (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form); or

(d) to the extent a Non-U.S. Lender is not the beneficial owner (e.g., where the Non-U.S. Lender is a partnership or a participating Lender), executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender shall provide a certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;

 

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(C) any Non-U.S. Lender shall deliver to the applicable Borrowers or the Applicable Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Applicable Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrowers or the Applicable Agent to determine the withholding or deduction required to be made;

(D) if a payment made to a Recipient under any Loan Document would be subject to Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the applicable Borrowers and the Applicable Agent at the time or times prescribed by Law and at such time or times reasonably requested by the applicable Borrowers or the Applicable Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the applicable Borrowers or the Applicable Agent as may be necessary for the Borrowers and the Applicable Agent to comply with their obligations under FATCA to determine whether such Recipient has complied with such Recipient’s obligations under FATCA and, if necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement; and

(E) Other than with respect to the Initial Term B-2 Loans or Term B-3 Loans, the Administrative Agent shall deliver to the Borrowers (in such number of copies as shall be requested by the recipient) on or prior to the date on which the Administrative Agent becomes the administrative agent hereunder or under any other Loan Document (and from time to time thereafter upon the reasonable request of the Borrowers) executed originals of either (a) IRS Form W-9 (or any successor form) or (b) a duly executed U.S. branch withholding certificate on IRS Form W-8IMY (or any successor form) evidencing its agreement with the Subsidiary Borrower to be treated as a U.S. Person with respect to amounts received on account of any Lender under such Term Loans and IRS Form W-8ECI (with respect to amounts received on its own account for such Term Loans), with the effect that, in either case, the Borrowers will be entitled to make payments hereunder to the Administrative Agent without withholding or deduction on account of U.S. federal withholding tax.

Each Recipient agrees that if any documentation it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall promptly update and deliver such form or certification to the applicable Borrowers and the Applicable Agent or promptly notify the applicable Borrowers and the Applicable Agent in writing of its legal ineligibility to do so.

Notwithstanding any other provision of this Section 3.01(h), a Lender shall not be required to deliver any documentation that such Lender is not legally eligible to deliver.

(i) Each Lender shall severally indemnify the Applicable Agent, within 30 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Applicable Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.07(m) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Applicable Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Applicable Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Applicable Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Applicable Agent to the Lender from any other source against any amount due to the Applicable Agent under this paragraph (i).

(j) Each Lender (with respect to the Revolving Credit Facility) which becomes a party to this Agreement after the Closing Date (a “New Lender”) shall indicate in the Assignment and Assumption, Affiliate Assignment and Assumption, Refinancing Amendment or any documentation providing for New Loan

 

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Commitments pursuant to which such Lender will became a party hereto, which of the following categories it falls in in relation to a German Borrower (a) not a German Qualifying Lender, (b) a German Qualifying Lender (other than a German Treaty Lender), or (c) a German Treaty Lender. If a New Lender fails to indicate its status in accordance with this Section 3.01(j) then such New Lender shall be treated for the purposes of this Agreement as if it was not a German Qualifying Lender until such time as it notifies the Administrative Agent which category applies (and the Administrative Agent upon receipt of such notification, shall inform the Borrowers). For the avoidance of doubt, an Assignment and Assumption, Affiliate Assignment and Assumption, Refinancing Amendment or any documentation providing for New Loan Commitments shall not be invalidated by any failure of a Lender to comply with this Section 3.01(j).

(k) The agreements in this Section 3.01 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

(l) For the avoidance of doubt, the term “Lender” shall, for purposes of this Section 3.01, include any L/C Issuer.

Section 3.02 [Reserved].

Section 3.03 Illegality. If any Lender reasonably determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurocurrency Rate (whether denominated in Dollars or an Alternative Currency), or to determine or charge interest rates based upon the Adjusted Eurocurrency Rate (whether denominated in Dollars or an Alternative Currency), or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable interbank market, then, on notice thereof by such Lender to the applicable Borrowers through the Applicable Agent, (i) any obligation of such Lender to make or continue Eurocurrency Rate Loans in the affected currency or currencies or to convert Base Rate Loans to Eurocurrency Rate Loans shall be suspended and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans, the interest rate on which is determined by reference to the Adjusted Eurocurrency Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender, shall, if necessary to avoid such illegality, be determined by the Applicable Agent without reference to the Eurocurrency Rate component of the Base Rate, in each case until such Lender notifies the Applicable Agent and the applicable Borrowers that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the applicable Borrowers shall, upon demand from such Lender (with a copy to the Applicable Agent), (A) if applicable and such loans are denominated in Dollars, convert all of such Lender’s Eurocurrency Rate Loans to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Applicable Agent without reference to the Adjusted Eurocurrency Rate component of the Base Rate) or (B) if applicable and such loans are denominated in an Alternative Currency, the interest rate with respect to such Loans shall be determined by an alternative rate mutually acceptable to the Borrowers and the Lenders, in each case, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or promptly after such demand, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Loans. Upon any such prepayment or conversion, the applicable Borrowers shall also pay accrued interest on the amount so prepaid or converted and all amounts due, if any, in connection with such prepayment or conversion under Section 3.06. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

Section 3.04 Inability to Determine Rates. If the Required Lenders reasonably determine that for any reason, adequate and reasonable means do not exist for determining the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan, or that the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, or that deposits are not being offered to banks in the relevant interbank market for the applicable amount and the Interest Period of such Eurocurrency Rate Loan, the Administrative Agent will promptly so notify the Borrowers and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in the affected currency or currencies shall be suspended and (y) in the event of a determination described in the preceding sentence with respect to the Eurocurrency Rate component of the Base

 

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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 Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein, and the Borrowers shall not have to pay any amounts that would otherwise be due under Section 3.06 with respect to such revocation or conversion (or, in the case of a pending request for a Loan denominated in an Alternative Currency, the Borrowers, the Administrative Agent and the Lenders may establish a mutually acceptable alternative rate).

Section 3.05 Increased Cost and Reduced Return; Capital Adequacy and Liquidity Requirements.

(a) If any Lender reasonably determines that as a result of the introduction of or any change in or in the interpretation of any Law, in each case after the date hereof, or such Lender’s compliance therewith, there shall be any material increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Loan the interest on which is determined by reference to the Eurocurrency Rate or (as the case may be) issuing or participating in Letters of Credit, or a material reduction in the amount received or receivable by such Lender in connection with any of the foregoing (including Taxes on or in respect of its loans, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, but excluding for purposes of this Section 3.05(a) any such increased costs or reduction in amount resulting from (i) Indemnified Taxes indemnifiable under Section 3.01, (ii) Taxes described in clauses (b) through (d) in the definition of Excluded Taxes, (iii) Connection Income Taxes and (iv) reserve requirements reflected in the Eurocurrency Rate, then within 15 days after demand of such Lender setting forth in reasonable detail such increased costs (with a copy of such demand to the Applicable Agent given in accordance with Section 3.06), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.

(b) If any Lender reasonably determines that the introduction of or any change in or in the interpretation any Law regarding capital adequacy and liquidity requirements or any change therein or in the interpretation thereof, in each case after the date hereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of materially reducing the rate of return on the capital of such Lender or any corporation Controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital as of the Closing Date or the date it becomes a Lender hereunder), then within 15 days after demand of such Lender setting forth in reasonable detail the charge and the calculation of such reduced rate of return (with a copy of such demand to the Applicable Agent given in accordance with Section 3.06), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

(c) The Borrowers shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves or liquidity with respect to liabilities or assets consisting of or including Eurocurrency Rate funds or deposits, additional interest on the unpaid principal amount of each Eurocurrency Rate Loan equal to the actual costs of such reserves or liquidity allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive in the absence of manifest error), and (ii) as long as such Lender shall be required to comply with any liquidity requirement, reserve ratio requirement or analogous requirement of any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error) which in each case shall be due and payable on each date on which interest is payable on such Loan; provided the Borrowers shall have received at least 15 days’ prior written notice (with a copy to the Applicable Agent) of such additional interest or cost from such Lender. If a Lender fails to give written notice fifteen days prior to the relevant Interest Payment Date, such additional interest or cost shall be due and payable 15 days from receipt of such written notice.

(d) For purposes of this Section 3.05, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (other than foreign regulatory authorities in Switzerland), in each case pursuant to Basel III, shall, in each case, be deemed to have gone into effect after the date hereof, regardless of the date enacted, adopted or issued.

 

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Section 3.06 Funding Losses. Upon written demand of any Lender (with a copy to the Applicable Agent) from time to time, setting forth in reasonable detail the basis for calculating such compensation, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Eurocurrency Rate Loan or the occurrence of a Redenomination Event with respect to a Eurocurrency Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrowers (for a reason other than the failure of such Lender to make a Loan or pursuant to a conditional notice) to prepay, borrow, continue or convert any Eurocurrency Rate Loan or to achieve a Redenomination Event with respect to a Eurocurrency Rate Loan on the date or in the amount notified by the Borrowers;

(c) any failure by the Borrowers to make payment of any Loan or drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment of any Loan or drawing under any Letter of Credit (or interest due thereon) in a different currency from such Loan or Letter of Credit drawing; or

(d) any mandatory assignment of such Lender’s Eurocurrency Rate Loans pursuant to Section 3.08 on a day other than the last day of the Interest Period for such Loans,

including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained (but excluding anticipated profits). For the purposes of calculating the amounts payable under this Section 3.06, any “floor” requirement reflected in the Adjusted Eurocurrency Rate shall be disregarded. The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

Section 3.07 Matters Applicable to All Requests for Compensation.

(a) A certificate of any Agent or any Lender claiming compensation under this Article III and setting forth in reasonable detail a calculation of the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Agent or such Lender may use any reasonable averaging and attribution methods. With respect to any Lender’s claim for compensation under Section 3.03, 3.04 or 3.05, the Loan Parties shall not be required to compensate such Lender for any amount incurred more than 180 days prior to the date that such Lender notifies the Borrowers of the event that gives rise to such claim; provided that, if the circumstance giving rise to such claim is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(b) If any Lender requests compensation under Section 3.05, or the Borrowers are required to pay any additional amount to any Lender, any L/C Issuer, or any Governmental Authority for the account of any Lender or any L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.03, then such Lender or the L/C Issuer, as applicable, will, if requested by the Borrowers and at the Borrowers’ expense, use commercially reasonable efforts to designate another Lending Office for any Loan or Letter of Credit affected by such event; provided that such efforts (i) would eliminate or reduce amounts payable pursuant to Section 3.01, 3.03 or 3.05, as applicable, in the future and (ii) would not, in the judgment of such Lender or such L/C Issuer, as applicable, be inconsistent with the internal policies of, or otherwise be disadvantageous in any material legal, economic or regulatory respect to such Lender or its Lending Office or such L/C Issuer. The provisions of this clause (b) shall not affect or postpone any Obligations of the Borrowers or rights of such Lender pursuant to Section 3.05.

 

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(c) If any Lender requests compensation by the Borrowers under Section 3.05, the Borrowers may, by notice to such Lender (with a copy to the Applicable Agent), suspend the obligation of such Lender to make or continue from one Interest Period to another Eurocurrency Rate Loans, or to convert Base Rate Loans into Eurocurrency Rate Loans, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 3.07(e) shall be applicable); provided that such suspension shall not affect the right of such Lender to receive the compensation so requested for any amounts so accrued prior to such suspension.

(d) If the obligation of any Lender to make or continue from one Interest Period to another any Eurocurrency Rate Loan, or to convert Base Rate Loans into Eurocurrency Rate Loans shall be suspended pursuant to Section 3.07(c) hereof, such Lender’s Eurocurrency Rate Loans shall be automatically converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for such Eurocurrency Rate Loans (or, in the case of an immediate conversion required by Section 3.03, on such earlier date as required by Law) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 3.03, 3.04 or 3.05 hereof that gave rise to such conversion no longer exist:

(i) to the extent that such Lender’s Eurocurrency Rate Loans have been so converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s Eurocurrency Rate Loans shall be applied instead to its Base Rate Loans; and

(ii) all Loans that would otherwise be made or continued from one Interest Period to another by such Lender as Eurocurrency Rate Loans shall be made or continued instead as Base Rate Loans, and all Base Rate Loans of such Lender that would otherwise be converted into Eurocurrency Rate Loans shall remain as Base Rate Loans.

(e) If any Lender gives notice to the Borrowers (with a copy to the Applicable Agent) that the circumstances specified in Section 3.03, 3.04 or 3.05 hereof that gave rise to the conversion of such Lender’s Eurocurrency Rate Loans pursuant to Section 3.07(d) no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurocurrency Rate Loans made by other Lenders are outstanding, such Lender’s Base Rate Loans shall be automatically converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurocurrency Rate Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding Eurocurrency Rate Loans and by such Lender are held pro rata (as to principal amounts, interest rate basis, and Interest Periods) in accordance with their respective Commitments.

(f) A Lender shall not be entitled to any compensation pursuant to the foregoing sections to the extent such Lender is not imposing such charges or requesting such compensation from borrowers (similarly situated to the Borrowers hereunder) under comparable syndicated credit facilities.

Section 3.08 Replacement of Lenders under Certain Circumstances.

(a) If at any time (i) the Borrowers become obligated to pay additional amounts or indemnity payments described in Section 3.01 or 3.05 (other than with respect to Other Taxes) as a result of any condition described in such Sections or any Lender ceases to make Eurocurrency Rate Loans as a result of any condition described in Section 3.03 or 3.04, (ii) any Lender becomes a Defaulting Lender or (iii) any Lender becomes a Non-Consenting Lender (as defined below in this Section 3.08) (collectively, a “Replaceable Lender”), then the Borrowers may, on one Business Day’s prior written notice from the Borrowers to the Administrative Agent and such Lender (for the avoidance of doubt, such notice shall be deemed provided on the same day that an amendment or waiver is posted to Lenders for consent), either (x) replace such Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 10.07(b) (with the assignment fee to be paid by the Borrowers in such instance unless waived by the Administrative Agent) all of its rights and obligations under this Agreement (or, in the case of a Non-Consenting Lender, all of its rights and obligations under this Agreement with respect to the Facility or Facilities for which its consent is required) to one or more Eligible Assignees; provided that none of the Administrative Agent, the Redenomination Term Facilities Administrative Agent or any Lender shall have any obligation to the Borrowers to find a replacement Lender or other such Person or (y) so long as no Default or Event of Default shall have occurred and be continuing, terminate the Commitment of such Lender or L/C Issuer or prepay the Loans, as the case may be, and (1) in the case of a Lender (other than an L/C Issuer), repay all

 

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Obligations of the Borrowers owing (and the amount of all accrued interest and fees in respect thereof) to such Lender relating to the Loans and participations held by such Lender as of such termination date and (2) in the case of an L/C Issuer, repay all obligations of the Borrowers owing to such L/C Issuer relating to the Loans and participations held by such L/C Issuer as of such termination date and cancel or backstop on terms satisfactory to such L/C Issuer any Letters of Credit issued by it; provided that (i) in the case of any such replacement of, or termination of Commitments with respect to a Non-Consenting Lender such replacement or termination shall be sufficient (together with all other consenting Lenders including any other replacement Lender) to cause the adoption of the applicable modification, waiver or amendment of the Loan Documents and (ii) in the case of any such replacement as a result of Borrowers having become obligated to pay amounts described in Section 3.01 or 3.05, such replacement would eliminate or reduce payments pursuant to Section 3.01 or 3.05, as applicable, in the future. Any Lender being replaced pursuant to this Section 3.08(a) shall (i) execute and deliver an Assignment and Assumption with respect to such Lender’s Commitment and outstanding Loans and participations in L/C Obligations and (ii) subject to clause (C) below, deliver any Notes evidencing such Loans to the Borrowers or the Administrative Agent (for return to the Borrowers). Pursuant to such Assignment and Assumption, (A) the assignee Lender shall acquire all or a portion, as the case may be, of the assigning Lender’s Commitment and outstanding Loans and participations in L/C Obligations, (B) all Obligations relating to the Loans and participations (and the amount of all accrued interest, fees and premiums in respect thereof) so assigned shall be paid in full by the assignee Lender to such assigning Lender concurrently with such assignment and assumption and (C) upon such payment and, if so requested by the assignee Lender, the assigning Lender shall deliver to the assignee Lender the applicable Note or Notes executed by the Borrowers, the assignee Lender shall become a Lender hereunder and the assigning Lender shall cease to constitute a Lender hereunder with respect to such assigned Loans, Commitments and participations, except with respect to indemnification provisions under this Agreement, which shall survive as to such assigning Lender. In connection with any such replacement, if any such Replaceable Lender does not execute and deliver to the Administrative Agent a duly executed Assignment and Assumption reflecting such replacement within two Business Days of the date on which the assignee Lender executes and delivers such Assignment and Assumption to such Replaceable Lender, then such Replaceable Lender shall be deemed to have executed and delivered such Assignment and Assumption without any action on the part of the Replaceable Lender. In connection with the replacement of any Lender pursuant to this Section 3.08(a), the Borrowers shall pay to such Lender such amounts as may be required pursuant to Section 3.06.

(b) Notwithstanding anything to the contrary contained above, (i) any Lender that acts as an L/C Issuer may not be replaced hereunder at any time that it has any Letter of Credit outstanding hereunder unless Cash Collateral has been deposited into a cash collateral account in amounts and pursuant to arrangements consistent with the requirements of Section 2.16 or other arrangements satisfactory to such L/C Issuer (including the furnishing of a back-up standby letter of credit in form and substance, and issued by an issuer reasonably satisfactory to such L/C Issuer) have been made with respect to such outstanding Letter of Credit and (ii) the Lender that acts as the Administrative Agent or the Redenominated Term Facilities Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.09.

(c) In the event that (i) a Borrower or the Administrative Agent has requested the Lenders to consent to a waiver of any provisions of the Loan Documents or to agree to any amendment or other modification thereto, (ii) the waiver, amendment or modification in question requires the agreement of all affected Lenders in accordance with the terms of Section 10.01 or all the Lenders with respect to a certain class of the Loans and (iii) the Required Lenders have agreed to such waiver, amendment or modification, then any Lender who does not agree to such waiver, amendment or modification, in each case, shall be deemed a “Non-Consenting Lender”; provided, that the term “Non-Consenting Lender” shall also include any Lender that rejects (or is deemed to reject) (x) a loan modification offer under Section 10.01, which loan modification has been accepted by at least the Majority Lenders of the respective Tranche of Loans whose Loans and/or Commitments are to be extended pursuant to such loan modification and (y) any Lender that does not elect to become a lender in respect of any Specified Refinancing Debt pursuant to Section 2.18. For the avoidance of doubt, if any applicable Lender shall be deemed a Non-Consenting Lender and is required to assign all or any portion of its Initial Term Loans or Redenominated Term B-3 Loans or its Initial Term Loans or Redenominated Term B-3 Loans are prepaid by the Borrowers, pursuant to Section 3.08(a), on or prior to the date that is six months after the Closing Date in connection with any such waiver, amendment or modification constituting a Repricing Event pursuant to clause (ii) of the definition thereof, the Borrowers shall pay such Non-Consenting Lender a fee equal to 1.00% of the principal amount of the Initial Term Loans or Redenominated Term B-3 Loans, as applicable, so assigned or prepaid.

 

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(d) Survival. All of the Loan Parties’ obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder, any assignment by or replacement of a Lender and any resignation or removal of the Administrative Agent.

ARTICLE IV.

Conditions Precedent to Credit Extensions

Section 4.01 Conditions to the Initial Credit Extension on the Closing Date. The obligation of each Lender to make its initial Credit Extension hereunder on the Closing Date is subject to satisfaction (in the case of paragraphs (b), (c), (d), (e) and (f) only, in form and substance satisfactory to the Administrative Agent (acting reasonably)) or due waiver in accordance with Section 10.01 of each of the following conditions precedent:

(a) The Administrative Agent shall have received all of the following, each of which shall be originals or facsimiles or “pdf” files (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated on or prior to the Closing Date, and each accompanied by their respective required schedules and other attachments (and set forth thereon shall be all required information with respect to Holdings and the Borrowers):

(i) executed counterparts of (A) this Agreement from Holdings and each Borrower, (B) the New York Law Guaranty from Holdings and (C) the Intercompany Subordination Agreement from Holdings and each Borrower;

(ii) the U.S. Security Agreement, duly executed by the Parent Borrower and the Subsidiary Borrower, together with copies of proper financing statements, filed or duly prepared for filing under the Uniform Commercial Code in all jurisdictions that the Administrative Agent may deem reasonably necessary in order to perfect and protect the Liens on assets of each such Loan Party created under the U.S. Security Agreement, covering the Collateral described in the U.S. Security Agreement;

(iii) the Dutch Security Agreement, duly executed by Holdings and the Parent Borrower, together with copies of the filings and registrations that the Administrative Agent may deem reasonably necessary in order to perfect and protect the Liens on assets of Holdings and the Parent Borrower created under the Dutch Security Agreement, covering the Collateral described in the Dutch Security Agreement; and

(iv) all other documents and instruments (including any relevant notices, stock transfer forms executed in blank and share certificates and documents of title) required to create the Administrative Agent’s first priority security interest in the Collateral granted by Holdings, the Parent Borrower and the Subsidiary Borrower shall have been executed and delivered and, if applicable, be in proper form for filing.

(b) The Administrative Agent shall have received such documents and certifications (including, with respect to Holdings and the Borrowers, the certificate of incorporation or deed of incorporation (oprichtingsakte), as applicable, the bylaws or articles of association (statuten), as applicable, and, with respect to Holdings and the Parent Borrower, an extract from the Trade Register (Handelsregister)).

(c) The Administrative Agent shall have received a copy of a resolution of the Board of Directors, if required by applicable Law, of Holdings and each Borrower: (i) approving the terms of, and the transactions contemplated by, the Loan Documents to which it is a party and resolving that it execute, deliver and perform the Loan Documents to which it is a party; (ii) authorizing a specified person or persons to execute the Loan Documents and any related documents to which it is a party on its behalf; and (iii) authorizing a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices (including, if relevant, any Committed Loan Notice or other relevant notice) to be signed and/or dispatched by it under or in connection with the Loan Documents to which it is a party.

 

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(d) The Administrative Agent shall have received (A) a copy of the shareholders register of the Parent Borrower and (B) if required by applicable Law, a copy of a resolution signed by all the holders of the issued shares in Holdings and the Borrowers approving the terms of, and the transactions contemplated by, the Loan Documents to which Holdings and the Borrowers are a party.

(e) The Administrative Agent shall have received, if applicable, a copy of (i) the request for advice from each works council (ondernemingsraad) or central or European works council with jurisdiction over the transactions contemplated by the Loan Documents and (ii) the unconditional positive advice from such works council.

(f) The Administrative Agent shall have received a certificate of a Responsible Officer of Holdings and the Borrowers (i) confirming that borrowing or guaranteeing or securing, as appropriate, the Commitments would not cause any borrowing, guarantee, security or similar limit binding on any of Holdings or the Borrowers to be exceeded; (ii) certifying that each copy document relating to it specified in this Article IV, is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Agreement; and (iii) containing a specimen of the signature of each person authorized by the resolution referred to in paragraph (c) above in relation to the Loan Documents and related documents to the extent such person is executing any Loan Documents.

(g) The Administrative Agent shall have received an opinion of (A) Latham & Watkins LLP, special New York counsel to Holdings and the Borrowers, and (B) Loyens & Loeff, Dutch counsel to the Administrative Agent with respect to Holdings and the Parent Borrower, in each case, addressed to the Administrative Agent and the Lenders (in each case, where, and as, consistent with generally accepted market practice).

(h) The Administrative Agent shall have received (A) the Sponsor Model, (B) the Reports and (C) a copy of the post-closing group structure chart of Holdings and its Subsidiaries.

(i) The Administrative Agent shall have received a final funds flow memorandum (deemed to be satisfied if substantially consistent with the Tax Structuring Memorandum or otherwise where any discrepancy is not materially adverse to the interests of the Lenders (it being understood and agreed that the funds flow memorandum does not contain every payment required to be made on the Closing Date)) (the “Funds Flow Memorandum”).

(j) The Acquisition shall have been consummated, or shall be consummated substantially simultaneously with the initial Credit Extension on the Closing Date, in all material respects in accordance with the terms of the Acquisition Agreement, without giving effect to any modifications, amendments, consents or waivers thereto that, when taken together, are materially adverse to the Lenders or Arrangers, unless such change, modification, amendment, consent or waiver has been consented to in writing by the Arrangers (such consent not to be unreasonably withheld, delayed or conditioned) (it being hereby understood and agreed that any change in the purchase price payable in connection with the Acquisition shall not be deemed to be material and adverse to the interests of the Lenders and the Arrangers; provided, that (A) any reduction in the purchase price so payable is allocated (x) first, to reduce the Equity Contribution to an amount that is equal to 30% of the total pro forma consolidated net debt and equity capitalization of the Borrowers and their respective Subsidiaries on the Closing Date (excluding any Letters of Credit issued on the Closing Date, amounts funded under the Revolving Credit Facility on the Closing Date to fund working capital and amounts funded under the Facilities or the Senior Notes or any other debt to fund upfront fees or original issue discount) after giving effect to the Transaction, and (y) second, (I) 70% to reduce any amounts to be issued under the Senior Notes Indenture and (II) 30% to the Equity Contribution and (B) any increase in purchase price shall be funded by an increase in the Equity Contribution. The Parent Borrower shall have delivered a certificate of a Responsible Officer of Holdings (on behalf of itself and the Borrowers), dated as of the Closing Date, certifying that (i) all of the closing conditions under the Acquisition Agreement have been satisfied (save for payment of the purchase price, which shall be satisfied immediately following the initial Credit Extension) or waived (provided that any such waiver shall not be materially adverse to the Lenders or Arrangers, unless such waiver has been consented to in writing by the Arrangers (such consent not to be unreasonably withheld, delayed or conditioned)) and (ii) the items referred to in clause (k) and Section 4.02 below have been, or will be on the Closing Date, satisfied and the Equity Contribution shall have been made.

(k) The Equity Contribution shall have been or, substantially concurrently with the initial Credit Extension on the Closing Date shall be, made in at least the amount not less than that contemplated by the definition of Equity Contribution (or such lesser amount permitted by clause (A) of the proviso to Section 4.01(j)(i)) and not

 

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less than 50.1% of such proceeds shall have been contributed by the Sponsor) and applied in accordance with the Funds Flow Memorandum and the Tax Structuring Memorandum; and (B) the Refinancing shall have been, or shall concurrently with the initial funding of the Facilities be, consummated and all liens or security interests related thereto shall have been terminated or released or customary arrangements with respect to such release shall have been entered into, in each case on terms reasonably satisfactory to the Administrative Agent.

(l) All fees required to be paid on the Closing Date pursuant to this Agreement and any Fee Letter and reasonable out-of-pocket expenses required to be paid on the Closing Date pursuant to this Agreement and any Fee Letter, to the extent invoiced at least five Business Days prior to the Closing Date (or such later date as the Borrower Representative may reasonably agree) shall have been paid (which amounts may be offset against the proceeds of the Facilities).

(m) The Arrangers shall have received copies of audited consolidated annual financial statements of the Target for the last three fiscal years of the Target. The Arrangers hereby acknowledge receipt of such financial statements in the foregoing sentence.

(n) The Lenders shall have received at least three business days prior to the Closing Date all documentation and other information about Holdings and the Borrower as has been reasonably requested in writing at least ten days prior to the Closing Date by such Lenders that they reasonably determine is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act.

(o) The Applicable Agent and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof.

Section 4.02 Certain Funds Period. During the Certain Funds Period, the obligation of each Lender to make the Credit Extension to be made by it is subject only to the following conditions precedent, unless otherwise waived by all Initial Lenders in their sole discretion:

(a) All of the conditions in Section 4.01 shall have been satisfied and the Applicable Agent shall have received a Request for Credit Extension in accordance with the requirements hereof.

(b) At the time of and immediately after giving effect to the Credit Extensions, no Major Default shall have occurred and be continuing.

(c) It is not illegal for a Lender to make, maintain or fund a Loan (in the case of any Loan other than a Term B-3 Loan, in accordance with Section 3.03) (but, in each case, without prejudice to the obligations of such Section 3.03).

Each Request for a Credit Extension submitted by the Borrowers during the Certain Funds Period shall be deemed to be a representation and warranty that the conditions specified in Section 4.02(b) have been satisfied (unless waived) on and as of the date of the applicable Credit Extension.

Section 4.03 Conditions to All Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension after the end of the Certain Funds Period (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate Loans or a RMB Committed Loan Notice) is subject to the following conditions precedent:

(a) Subject in the case of any Borrowing in connection with a New Loan Commitment to the provisions in Section 1.02(i), the representations and warranties of the Borrowers and each other Loan Party contained in Article V or any other Loan Document shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality) as of such earlier date.

 

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(b) Subject in the case of any Borrowing in connection with a New Loan Commitment to the provisions in Section 1.02(i), no Default or Event of Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds therefrom.

(c) The Applicable Agent and, if applicable, the applicable L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for a Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurocurrency Rate Loans) submitted by the Borrowers other than during the Certain Funds Period shall be deemed to be a representation and warranty that the conditions specified in Sections 4.03(a) and (b) have been satisfied (unless waived) on and as of the date of the applicable Credit Extension.

ARTICLE V.

Representations and Warranties

Each of Holdings (with respect to Sections 5.01, 5.02, 5.03, 5.04, 5.08, 5.12, 5.13, 5.14, 5.19, 5.20 and 5.21) and the Borrowers represents and warrants to the Administrative Agent, the Redenomination Term Facilities Administrative Agent and the Lenders that (after giving effect to the Transactions):

Section 5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party and each of the Restricted Subsidiaries (subject, in the case of clause (c), to the Legal Reservations and Section 5.03) (a) is a Person duly organized, formed or incorporated, validly existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is authorized to do business and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification and (d) has all requisite governmental licenses, authorizations, consents and approvals to operate its business as currently conducted; except in each case referred to in clause (a) (other than with respect to the Borrowers), (b)(i), (b)(ii) (other than with respect to the Borrowers), (c) and (d), to the extent that any failure to be so or to have such would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is or is to be a party, are within such Loan Party’s corporate or other powers, have been duly authorized by all necessary corporate or other organizational action and do not (a) contravene the terms of any of such Person’s Organization Documents or (b) violate any Law; except to the extent that such violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery, performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the consummation of the Transactions, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents or (c) the perfection or maintenance of the Liens created under the Collateral Documents, except for (w) (1) with respect to the U.S. Loan Parties, filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties or any Restricted Subsidiary in favor of the Secured Parties consisting of UCC financing statements, filings in the United States Patent and Trademark Office and the United States Copyright Office and Mortgages and (2) with respect to the non-U.S. Loan Parties, the filings, registrations, approvals, consents and other actions listed on Schedule 5.03 or other Perfection Requirements, (x) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect, (y) those approvals, consents, exemptions, authorizations or other actions, notices or filings set out in the Collateral Documents and (z) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 5.04 Binding Effect. This Agreement and each other Loan Document has been duly executed and delivered by each Loan Party (subject, in each case, to the Legal Reservations and Section 5.03) that is party thereto. Subject to the Legal Reservations, this Agreement and each other Loan Document constitutes, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.

Section 5.05 Financial Statements; No Material Adverse Effect.

(a) The audited consolidated financial statements of Holdings (or of any Subsidiary allowed to be delivered pursuant to the terms hereof) and its Subsidiaries most recently delivered pursuant to Section 6.01(a) or 4.01(m) fairly present in all material respects the consolidated financial condition of Holdings and its Subsidiaries as of the dates thereof and their results of operations for the period covered thereby in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

(b) The unaudited consolidated financial statements of Holdings (or of any Subsidiary allowed to be delivered pursuant to the terms hereof) and its Subsidiaries most recently delivered pursuant to Section 6.01(b) (i) were prepared in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the consolidated financial condition of Holdings and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject to the absence of footnotes and to normal and recurring year-end audit adjustments.

(c) Since the Closing Date, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.

(d) The consolidated forecasted balance sheets, statements of income and statements of cash flows of Holdings (or of any Subsidiary allowed to be delivered pursuant to the terms hereof) and its Subsidiaries most recently delivered pursuant to Section 6.01(c) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were reasonable in light of the conditions existing at the time of delivery of such forecasts; it being understood that no assurance can be given that any particular projections will be realized, actual results may vary from such forecasts and that such variations may be material.

Section 5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, against any Borrower or any Restricted Subsidiary, or against any of their properties or revenues that would reasonably be expected to have a Material Adverse Effect.

Section 5.07 Use of Proceeds. The Borrowers (a) will only use the proceeds of the Initial Term Loans to finance the Transactions and pay Transaction Costs (including paying any fees, commissions and expenses associated therewith) and/or to repay or refinance any interim advances under the interim facility referenced in the Commitment Letter; and (b) will only use the proceeds of the Revolving Credit Loans incurred on the Closing Date to (1)(A) finance any upfront fees or original issue discount required to be funded on the Closing Date with respect to the Facilities, and (B) fund an additional aggregate amount of up to $30,000,000 to finance the working capital needs of the Borrowers and the Subsidiaries and for general corporate purposes of the Borrowers and their Restricted Subsidiaries (including acquisitions and other Investments permitted hereunder) and/or to repay or refinance any interim advances under the interim facility referenced in the Commitment Letter, and (2) issue Letters of Credit in replacement of, or as a backstop for, letters of credit of the Borrowers or their Subsidiaries outstanding on the Closing Date; and (c) will use the proceeds of all other Borrowings after the Closing Date to finance the working capital needs of the Borrowers and their Subsidiaries, for general corporate purposes of the Borrowers and their Subsidiaries (including acquisitions and other Investments permitted hereunder) and/or to repay or refinance any interim advances under the interim facility referenced in the Commitment Letter.

 

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Section 5.08 Ownership of Property; Liens.

(a) Each Loan Party and each of the Restricted Subsidiaries has fee simple or other comparable valid title to, or leasehold interests in, all real property necessary in the ordinary conduct of its business, free and clear of all Liens except for minor defects in title that do not materially interfere with its ability to conduct its business or to utilize such assets for their intended purposes and Liens permitted by Section 7.02, except where the failure to have such title or interests would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the use or operation of any Material Real Property or any real property necessary for the ordinary conduct of the Borrowers’ business, taken as a whole.

(b) Set forth on Schedule 5.08(b) hereto is a complete and accurate list, in all material respects, of all Material Real Property owned by any Loan Party as of the Closing Date, showing as of the Closing Date, the street address (to the extent available), county or other relevant jurisdiction, state and record owner; and as of the Closing Date, no Loan Party owns any Material Real Property except as listed on Schedule 5.08(b).

Section 5.09 Environmental Compliance. Except as would not reasonably be expected to have a Material Adverse Effect:

(a) The Borrowers and the Restricted Subsidiaries and their respective operations and properties are in compliance with all applicable Environmental Laws and Environmental Permits and none of the Borrowers or the Restricted Subsidiaries are subject to any Environmental Liability.

(b) (i) None of the properties currently or formerly owned or operated by the Borrowers or any Restricted Subsidiary is listed or, to the knowledge of the Borrowers, proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property, (ii) there is no asbestos or asbestos-containing material on any property currently owned or operated by the Borrowers or any of the Restricted Subsidiaries requiring investigation, remediation, mitigation, removal, or assessment, or other response, remedial or corrective action, pursuant to any Environmental Law and (iii) Hazardous Materials have not been released, discharged or disposed of on any property currently or, to the knowledge of the Borrowers, formerly owned or operated by the Borrowers or any of the Restricted Subsidiaries, except for such releases, discharges and disposals that were in compliance with, or would not reasonably be expected to give rise to liability under, Environmental Laws.

(c) None of the Borrowers or any of the Restricted Subsidiaries is undertaking, and none has completed, either individually or together with other potentially responsible parties, any investigation, remediation, mitigation, removal, assessment or remedial, response or corrective action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law.

(d) All Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or, to the knowledge of the Borrowers, formerly owned or operated by the Borrowers or any of the Restricted Subsidiaries have been disposed of in a manner not reasonably expected to result in liability to the Borrowers or any of the Restricted Subsidiaries.

Section 5.10 Taxes. The Borrowers and each of the Restricted Subsidiaries have filed or have caused to be filed all Tax returns and reports required to be filed, and have paid all Taxes (including in its capacity as a withholding agent) levied or imposed upon them or their properties, income or assets otherwise due and payable, except those (a) which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with IFRS or (b) with respect to which the failure to make such filing or payment would not, individually or in the aggregate, reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

Section 5.11 Employee Benefits Plans.

(a) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) each Plan is in compliance with the applicable provisions of ERISA, the Code and other applicable federal and state laws and (ii) each Plan that is intended to be a qualified plan under Section 401(a) of the Code may rely upon an opinion letter for a prototype plan or has received a favorable determination letter from the

 

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IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter will be submitted to the IRS within the applicable required time period with respect thereto or is currently being processed by the IRS, and to the knowledge of any Loan Party, nothing has occurred that would prevent, or cause the loss of, such tax-qualified status.

(b) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) each Non-U.S. Plan is in compliance with all requirements of Law applicable thereto and the respective requirements of the governing documents for such plan and (ii) with respect to each Non-U.S. Plan, none of the Borrowers or any of their Subsidiaries or any of their respective directors, officers, employees or agents has engaged in a transaction that could subject any Borrower or any Restricted Subsidiary, directly or indirectly, to any tax or civil penalty.

(c) There are no pending or, to the knowledge of any Loan Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect. There has been no “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 or 407 of ERISA (and not otherwise exempt under Section 408 of ERISA) with respect to any Plan that would reasonably be expected to result in a Material Adverse Effect.

(d) (i) No ERISA Event has occurred and neither any Loan Party nor, to the knowledge of any Loan Party, any ERISA Affiliate is aware of any fact, event or circumstance that would reasonably be expected to constitute or result in an ERISA Event with respect to any Plan or Multiemployer Plan, (ii) each Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Plan, and no waiver of the minimum funding standards under such Pension Funding Rules has been applied for or obtained, (iii) there exists no Unfunded Pension Liability, (iv) as of the most recent valuation date for any Plan, the present value of all accrued benefits under such Plan (based on the actuarial assumptions used to fund such Plan) did not exceed the value of the assets of such Plan allocable to such accrued benefits, (v) neither any Loan Party nor, to the knowledge of any Loan Party, any ERISA Affiliate knows of any facts or circumstances that would reasonably be expected to cause the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) for any Plan, if applicable, to drop below 80% as of the most recent valuation date, (vi) neither any Loan Party nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, (vii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA and (viii) no Plan has been terminated by the plan administrator thereof or by the PBGC and no event or circumstance has occurred or exists that would reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan or Multiemployer Plan, except with respect to each of the foregoing clauses (i) through (viii) of this Section 5.11(d), as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

(e) (i) With respect to each Non-U.S. Plan, reserves have been established in the financial statements furnished to Lenders in respect of any unfunded liabilities in accordance with applicable Law and, where required, in accordance with ordinary accounting practices in the jurisdiction in which such Non-U.S. Plan is maintained, (ii) except as disclosed or reflected in such financial statements, there are no aggregate unfunded liabilities with respect to Non-U.S. Plans and the present value of the aggregate accumulated benefit liabilities of all Non-U.S. Plans did not, as of the last annual valuation date applicable thereto, exceed the assets of all such Non-U.S. Plans, except with respect to each of the foregoing clauses (i) and (ii) of this Section 5.11(e), as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

Section 5.12 Subsidiaries; Capital Stock. As of the Closing Date, after giving effect to the Transactions, there are no Unrestricted Subsidiaries other than those specifically disclosed in Schedule 5.12, and all of the outstanding Capital Stock in each Restricted Subsidiary that is owned by a Loan Party has been validly issued, is fully paid and non-assessable (other than for those Restricted Subsidiaries that are limited liability companies and limited partnerships and to the extent such concepts are not applicable in the relevant jurisdiction) and are owned free and clear of all Liens except (i) those created under the Collateral Documents and (ii) any nonconsensual Lien that is permitted under Section 7.02.

 

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Section 5.13 Margin Regulations; Investment Company Act.

(a) Each of the Loan Parties is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of any Borrowings or drawings under any Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Credit Extension hereunder nor the use of proceeds thereof will violate any regulations of the FRB, including the provisions of Regulations T, U or X of the FRB.

(b) None of the Loan Parties is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

Section 5.14 Disclosure. As of the Closing Date, no report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party (other than projected financial information, pro forma financial information and information of a general economic or industry nature) to any Agent or any Lender in connection with the Transactions and the negotiation of this Agreement or delivered hereunder or any other Loan Document (as modified or supplemented by other information so furnished), when taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein (when taken as a whole), in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected and pro forma financial information, Holdings and the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation and delivery; it being understood that actual results may vary from such forecasts and that such variances may be material.

Section 5.15 Compliance with Laws. Each Borrower and each Restricted Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

Section 5.16 Intellectual Property; Licenses, Etc. To the knowledge of the Borrowers, the Borrowers and each Subsidiary Guarantor owns, licenses or possesses the right to use, all of the trademarks, service marks, trade names, copyrights, patents, licenses and other intellectual property rights (collectively, “IP Rights”) that are necessary for the operation of its respective business, as currently conducted, except to the extent such failure to own, license or possess, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect and provided that the foregoing shall not deem to constitute a representation that Borrowers and the Subsidiary Guarantors do not infringe or violate the IP Rights held by any other Person. Set forth on Schedule 5.16 is a complete and accurate list of all material registrations, or applications for registration, in the United States Patent and Trademark Office or the United States Copyright Office of patents, trademarks, and copyrights owned or, in the case of copyrights, exclusively licensed by the Borrowers and Subsidiary Guarantors as of the Closing Date. To the knowledge of the Borrowers, the conduct of the business of the Borrowers or Subsidiary Guarantors as currently conducted does not infringe upon or violate any IP Rights held by any other Person, except for such infringements and violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of any Borrower, threatened in writing, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

Section 5.17 Solvency. On the Closing Date, after giving effect to the Transactions, the Borrowers and their Subsidiaries, on a consolidated basis, are Solvent.

Section 5.18 Perfection, Etc. Subject to the Legal Reservations and Section 5.03, each Collateral Document delivered pursuant to this Agreement will, upon execution and delivery thereof, be effective to create (to the extent described therein and subject to the Guaranty and Security Principles) in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby, except as to enforcement, as may be limited by

 

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applicable domestic or foreign bankruptcy, winding-up, insolvency, fraudulent conveyance, reorganization (by way of voluntary arrangement, schemes of arrangements or otherwise), moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and (a) when financing statements and other filings in appropriate form are filed or registered, as applicable, in the offices of the Secretary of State (or a comparable office in any applicable non-U.S. jurisdiction) of each Loan Party’s jurisdiction of organization or formation and applicable documents are filed and recorded as applicable in the United States Copyright Office or the United States Patent and Trademark Office and other applicable Perfection Requirements are completed and (b) upon the taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the applicable Collateral Document) the Liens created by the Collateral Documents shall constitute fully perfected first priority Liens so far as possible under relevant law on, and security interests in (to the extent intended to be created thereby and required to be perfected under the Loan Documents), all right, title and interest of the grantors in such Collateral in each case free and clear of any Liens other than Liens permitted hereunder.

Section 5.19 Anti-Terrorism Laws; OFAC.

(a) Anti-Terrorism Laws. Each of Holdings, the Borrowers and each of their respective Subsidiaries is in compliance, in all material respects, with the Sanctions Laws and Regulations. No Borrowing or Letter of Credit, or use of proceeds, will violate or result in the violation of any Sanctions Laws and Regulations applicable to any party hereto.

(b) OFAC. None of (I) Holdings, the Borrowers or any other Loan Party and (II) in any material respect, the Restricted Subsidiaries that are not Loan Parties or any director, manager, officer or, to the knowledge of Holdings and the Borrowers, any director, manager, officer, agent or employee of Holdings, the Borrowers or any of their respective Restricted Subsidiaries, in each case, (i) is a person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of the Executive Order, (ii) engages in any dealings or transactions prohibited by Section 2 of the Executive Order, or is otherwise associated with any such person in any manner that violates Section 2 of the Executive Order, (iii) is a Sanctioned Person, (iv) engages in any dealings in a Sanctioned Country or with a Sanctioned Person, unless authorized by the cognizant government authority, or (v) has exported, re-exported, transferred, or retransferred, directly or indirectly, any goods, software, technology, or services in violation of any applicable export control or economic sanctions laws, regulations, or orders, including those administered by OFAC, U.S. State Department, or the U.S. Commerce Department.

Section 5.20 Anti-Corruption Laws. No part of the proceeds of any Loan will be used for any improper payments, directly or indirectly, to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, or any other party (if applicable) in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, the United Kingdom Bribery Act of 2010, as amended, the Corruption of Foreign Public Officials Act (Canada), as amended and any similar laws, rules or regulations issued, administered or enforced by any Governmental Authority having jurisdiction over the Borrowers (collectively, the “Anti-Corruption Laws”). The Borrowers have implemented and maintain in effect policies and procedures designed to ensure compliance by the Borrowers, their Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws, and the Borrowers, their Subsidiaries and their respective officers, directors and, to the knowledge of the Borrowers, their respective employees and agents are in compliance with Anti-Corruption Laws.

Section 5.21 COMI Regulation. For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the “COMI Regulation”), each Loan Party incorporated or organized under the laws of a country that is a member of the European Union has its (after giving effect to the Transactions) center of main interest (as that term is used in Article 3(1) of the COMI Regulation) situated in its jurisdiction of incorporation and it has no “establishment” (as such term is used in Article 2(h) of the COMI Regulation) in any other jurisdiction.

 

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ARTICLE VI.

Affirmative Covenants

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other than contingent indemnification obligations as to which no claim has been asserted and obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) hereunder or under any Loan Document shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than Letters of Credit which have been Cash Collateralized), the Borrowers shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02 and 6.03) cause each Restricted Subsidiary to:

Section 6.01 Financial Statements. Deliver to the Administrative Agent for further distribution to each Lender:

(a) within 90 days (or, with respect to the fiscal year ended December 31, 2016, not later than May 31, 2017) after the end of each fiscal year of Holdings, a consolidated balance sheet of Holdings and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with IFRS, audited and accompanied by a report and opinion of KPMG or any other independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification, exception or explanatory paragraph or any qualification, exception or explanatory paragraph as to the scope of such audit (other than any such qualification, exception or explanatory paragraph that is expressly solely with respect to, or expressly resulting solely from, (i) an upcoming maturity date under the Facilities that is scheduled to occur within one year from the time such report and opinion are delivered or (ii) any potential inability to satisfy a financial maintenance covenant, including the Financial Covenant, on a future date or in a future period), together with a customary management’s discussion and analysis of financial information in a form consistent with that provided to Sponsor;

(b) within 45 days (or 105 days with respect to the first fiscal quarter ended after the Closing Date and 90 days for the next two fiscal quarters ended after the Closing Date) after the end of each of the first three fiscal quarters of each fiscal year of Holdings, a consolidated balance sheet of Holdings and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Parent Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of Holdings and its Subsidiaries in accordance with IFRS, subject only to normal year-end audit adjustments and the absence of footnotes, together with a customary management’s discussion and analysis of financial information in a form consistent with that provided to Sponsor;

(c) as soon as available, but in any event no later than 90 days (or, with respect to the fiscal year ending December 31, 2016, not later than the later of (I) 90 days after the Closing Date and (II) May 31, 2017) after the end of each fiscal year, reasonably detailed segment-level forecasts along with written assumptions prepared by management of the Borrowers (including projected consolidated balance sheets, income statements, Consolidated EBITDA and cash flow statements of Holdings and its Subsidiaries) on a quarterly basis for the fiscal year following such fiscal year then ended, which forecasts shall be prepared in good faith on the basis of assumptions believed to be reasonable at the time of preparation thereof; provided that delivery of such forecasts pursuant to this Section 6.01(c) shall only be required hereunder prior to an initial public offering of the Capital Stock of Holdings or any Parent Holding Company; and

(d) concurrently with the delivery of any financial statements pursuant to Sections 6.01(a) and (b) above, the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements.

 

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After the date of the delivery of the annual financial information required pursuant to Section 6.01(a), the Borrowers will hold a conference call or teleconference at a time selected by the Borrowers and reasonably acceptable to the Administrative Agent, with all of the Lenders that choose to participate, to review the financial results of the previous fiscal year of Holdings and its Subsidiaries.

Notwithstanding the foregoing, (A) the obligations in clauses (a), (b) and (c) of this Section 6.01 may be satisfied by furnishing, at the option of the Borrowers, the applicable financial statements or, as applicable, forecasts of (I) any successor of Holdings, (II) any Wholly Owned Restricted Subsidiary of Holdings that, together with its consolidated Restricted Subsidiaries, constitutes substantially all of the assets of the Borrowers and their consolidated Subsidiaries (a “Qualified Reporting Subsidiary”) or (III) any Parent Holding Company; provided that to the extent such information relates to a Qualified Reporting Subsidiary or a Parent Holding Company, such information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such Qualified Reporting Subsidiary or any Parent Holding Company, on the one hand, and the information relating to Holdings and the Restricted Subsidiaries on a standalone basis, on the other hand, and (B) (i) in the event that the Parent Borrower delivers to the Administrative Agent an Annual Report on Form 10-K for any fiscal year (or similar filing in the applicable jurisdiction), as filed with the SEC or in such form as would have been suitable for filing with the SEC (or similar governing body in the applicable jurisdiction, in each case), within the time frames set forth in clause (a) above, such Form 10-K shall satisfy all requirements of clause (a) of this Section 6.01 with respect to such fiscal year to the extent that it does not contain any “going concern” or like qualification, exception or explanatory paragraph or any qualification, exception or explanatory paragraph as to the scope of audit (other than any such qualification, exception or explanatory paragraph expressly permitted to be contained therein under clause (a) of this Section 6.01) and (ii) in the event that the Borrowers deliver to the Administrative Agent a Quarterly Report on Form 10-Q for any fiscal quarter (or similar filing in the applicable jurisdiction), as filed with the SEC or in such form as would have been suitable for filing with the SEC (or similar governing body in the applicable jurisdiction, in each case), within the time frames set forth in clause (b) above, such Form 10-Q shall satisfy all requirements of clause (b) of this Section 6.01 with respect to such fiscal quarter, in each case to the extent that information contained in such Form 10-K or Form 10-Q (or similar filings in the applicable jurisdiction) satisfies the requirements of clauses (a) or (b) of this Section 6.01, as the case may be.

Section 6.02 Certificates; Other Information. Deliver to the Administrative Agent for further distribution to each Lender:

(a) no later than five days after the delivery of (i) the financial statements referred to in Section 6.01(a) or (ii) an Annual Report on Form 10-K (delivered pursuant to the last paragraph of Section 6.01), but only to the extent permitted by accounting industry policies generally followed by independent certified public accountants, a certificate of Holdings’ independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Event of Default arising from a breach of the Financial Covenant (to the extent then applicable) or, if any such Event of Default shall exist, stating the nature and status of such event;

(b) no later than five days after the delivery of (i) the financial statements referred to in Sections 6.01(a) and (b) or (ii) an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q (in either case, delivered pursuant to the last paragraph of Section 6.01), a duly completed Compliance Certificate signed by a Responsible Officer of the Parent Borrower (which delivery may, unless the Administrative Agent or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

(c) promptly after the same are available, copies of all reports on Form 8-K, Form S-3 and Form S-4 (or any other forms that may be substituted therefor) which Holdings or the Parent Borrower may file or be required to file with the SEC or with any Governmental Authority that may be substituted therefor, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(d) promptly after the furnishing thereof, copies of any notices received by any Loan Party (other than in the ordinary course of business) and copies of any statement or report furnished to any holder of debt securities or loans of any Loan Party or of any of its Subsidiaries (other than any immaterial

 

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correspondence in the ordinary course of business or any regularly required quarterly or annual certificates), in each case pursuant to the terms of the Senior Notes or any Junior Financing in a principal amount greater than $50,000,000 and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 6.02;

(e) promptly after the receipt thereof by any Loan Party or any of its Subsidiaries, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any material investigation or other material inquiry by such agency regarding financial or other operational results of any Loan Party or any of its Subsidiaries;

(f) promptly after the assertion or occurrence thereof, notice of any action arising under any Environmental Law against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that would reasonably be expected to have a Material Adverse Effect;

(g) together with the delivery of each Compliance Certificate pursuant to Section 6.02(b), a report supplementing Schedule 5.12 hereto to the extent necessary so that the related representation and warranty would be true and correct if made as of the date of such Compliance Certificate; and

(h) promptly, such additional information regarding the business, legal, financial or corporate affairs of any Loan Party or any Restricted Subsidiary thereof as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a), (b), (c) or (d) or Section 6.02(c) or (d) (or to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are posted on the Parent Borrower’s behalf on the Platform or another relevant internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) upon written request by the Administrative Agent, the Borrowers shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrowers shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents described in this paragraph and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents to the extent requested by the Administrative Agent. The Administrative Agent shall have no obligation to request the delivery of or to maintain or deliver to Lenders paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrowers with any such request for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.

The Parent Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf of the Borrowers hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks/IntraAgency, Syndtrak or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information (within the meaning of United States federal and state securities laws) with respect to Holdings or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrowers hereby agree that they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC SIDE” which, at a minimum, shall mean that the word “PUBLIC SIDE” or “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC SIDE” or “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuers and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to Holdings or its Affiliates, or their respective 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

 

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treated as set forth in Section 10.08); (y) all Borrower Materials marked “PUBLIC SIDE” or “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information” and (z) any Borrower Materials that are not marked “PUBLIC SIDE” or “PUBLIC” shall be deemed to contain material non-public information (within the meaning of United States federal and state securities laws) and shall not be suitable for posting on a portion of the Platform designated “Public Side Information.” Notwithstanding anything herein to the contrary, financial statements delivered pursuant to Sections 6.01(a) and (b) and Compliance Certificates delivered pursuant to Section 6.02(b) shall be deemed to be suitable for posting on a portion of the Platform designated “Public Side Information.”

Section 6.03 Notices. Promptly, after a Responsible Officer of any Borrower or any Guarantor has obtained knowledge thereof, notify the Administrative Agent:

(a) of the occurrence of any Default;

(b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect;

(c) of the institution of any material litigation not previously disclosed by any Borrower to the Administrative Agent, or any material development in any material litigation that is reasonably likely to be adversely determined, and would, in either case, if adversely determined be reasonably expected to have a Material Adverse Effect;

(d) of the occurrence of any ERISA Event, where there is any reasonable likelihood of the imposition of liability on any Loan Party as a result thereof that would be reasonably expected to have a Material Adverse Effect; and

(e) of the occurrence of any Non-U.S. Benefit Event, where there is any reasonable likelihood of the imposition of liability on any Loan Party as a result thereof that would be reasonably expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Parent Borrower setting forth details of the occurrence referred to therein and stating what action the Borrowers have taken and propose to take with respect thereto.

Section 6.04 Payment of Taxes. Pay, discharge or otherwise satisfy as the same shall become due and payable, all Taxes (including in its capacity as withholding agent) imposed upon it or its income, profits, properties or other assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with IFRS (or, with respect to any Non-U.S. Subsidiaries, in conformity with generally accepted accounting principles that are applicable in their respective jurisdiction of organization) are being maintained by a Borrower or such Restricted Subsidiary; except to the extent the failure to pay, discharge or satisfy the same would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

Section 6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.03 or 7.04, (b) take all reasonable action to maintain all rights, privileges (including its good standing, if such concept is applicable in its jurisdiction of organization), permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect or as otherwise permitted hereunder, and (c) use commercially reasonable efforts to preserve or renew all of its registered copyrights, patents, trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect or as otherwise permitted hereunder, provided that nothing in this Section 6.05 shall require the preservation, renewal or maintenance of, or prevent the abandonment by, any Borrower or Restricted Subsidiary of any registered copyrights, patents, trademarks, trade names and service marks that such Borrower or Restricted Subsidiary reasonably determines is not useful to its business or no longer commercially desirable.

 

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Section 6.06 Maintenance of Properties. Except if the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, maintain, preserve and protect all of its tangible properties and equipment that are necessary in the operation of its business in good working order, repair and condition, ordinary wear and tear excepted and casualty or condemnation excepted.

Section 6.07 Maintenance of Insurance. Except if the failure to do so would not reasonably be expected to have a Material Adverse Effect, maintain in full force and effect, with insurance companies that the Parent Borrower believes (in the good faith judgment of the management of the Parent Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Parent Borrower believes (in the good faith judgment of management of the Parent Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as are usually insured against in the same general area by companies engaged in businesses similar to those engaged by the Borrowers and the Restricted Subsidiaries. Subject to Section 6.16, the Borrowers shall use commercially reasonable efforts to ensure that at all times the Collateral Agent, for the benefit of the Secured Parties, shall be named as an additional insured with respect to liability policies (other than directors and officers policies and workers compensation) maintained by the Borrowers and each Subsidiary Guarantor and the Collateral Agent, for the benefit of the Secured Parties, shall be named as loss payee and mortgagee with respect to the property insurance maintained by the Borrowers and each Subsidiary Guarantor; provided that, unless an Event of Default shall have occurred and be continuing, (A) all proceeds from insurance policies shall be paid to the Borrowers or the applicable Subsidiary Guarantor, (B) to the extent the Collateral Agent receives any proceeds, the Collateral Agent shall turn over to the Borrowers any amounts received by it as an additional insured or loss payee under any property insurance maintained by the Borrowers and their Subsidiaries, and (C) the Collateral Agent agrees that the Borrowers and/or their applicable Subsidiaries shall have the sole right to adjust or settle any claims under such insurance. Notwithstanding anything to the contrary herein, with respect to Non-U.S. Subsidiaries and Collateral located outside of the United States, the requirements of this Section 6.07 shall be deemed satisfied if the Parent Borrower obtains insurance policies that are customary and appropriate for the applicable jurisdiction.

Section 6.08 Compliance with Laws. Comply with the requirements of all applicable Laws (including, without limitation, ERISA and the PATRIOT Act, Anti-Corruption Laws and Sanctions Laws and Regulations) and all orders, writs, injunctions and decrees of any Governmental Authority applicable to it or to its business or property, except if the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

Section 6.09 Books and Records. Maintain proper books of record and account, in a manner to allow financial statements to be prepared in all material respects in conformity with IFRS consistently applied in respect of all financial transactions and matters involving the assets and business of the Borrowers or, if applicable, Holdings or such Restricted Subsidiary, as the case may be (it being understood and agreed that Non-U.S. Subsidiaries may maintain individual books and records in conformity with generally accepted accounting principles that are applicable in their respective jurisdiction of organization).

Section 6.10 Inspection Rights. Permit representatives of the Administrative Agent and, during the continuance of any Event of Default, of each Lender to visit and inspect any of its properties (subject to the rights of lessees or sublessees thereof and subject to any restrictions or limitations in the applicable lease, sublease or other written occupancy arrangement pursuant to which such Borrower or such Restricted Subsidiary is a party), to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, managers, officers, and independent public accountants (subject to such accountants’ customary policies and procedures), all at the reasonable expense of the Borrowers and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance written notice to the Borrowers; provided that, excluding any such visits and inspections during the continuation of an Event of Default, (i) only the Administrative Agent on behalf of the Lenders may exercise rights under this Section 6.10, (ii) the Administrative Agent shall not exercise such rights more often than one time during any calendar year and (iii) such exercise shall be at the Borrowers’ expense; provided, further, that when an Event of Default is continuing the Administrative Agent (or any of its respective representatives) may do any of the foregoing at the expense of the Borrowers at any time and from time to time during normal business hours and upon reasonable advance written notice. The Administrative Agent and the Lenders shall give the Borrowers the

 

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opportunity to participate in any discussions with the Borrowers’ accountants. Notwithstanding anything to the contrary in this Section 6.10, none of the Borrowers nor any Restricted Subsidiary will be required to disclose or permit the inspection or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law or any binding agreement or (iii) that is subject to attorney client or similar privilege or constitutes attorney work product.

Section 6.11 Use of Proceeds. The Borrowers will use the Letters of Credit and the proceeds of the Loans only as provided in Sections 5.07, 5.13(a), 5.19 and 5.20.

Section 6.12 Covenant to Guarantee Obligations and Give Security.

(a) Upon the formation or acquisition of any new Subsidiary by any Loan Party (provided that each of (i) any Subsidiary redesignation resulting in an Unrestricted Subsidiary becoming a Restricted Subsidiary and (ii) any Excluded Subsidiary ceasing to be an Excluded Subsidiary but remaining a Restricted Subsidiary (including a Controlled Foreign Subsidiary ceasing to be a Controlled Foreign Subsidiary or a FSHCO ceasing to be a FSHCO) shall be deemed to constitute the acquisition of a Restricted Subsidiary for all purposes of this Section 6.12), and upon the acquisition of any property (other than Excluded Property and real property that is not Material Real Property) by any Loan Party, which property, in the reasonable judgment of the Administrative Agent, is not already subject to a perfected Lien in favor of the Collateral Agent for the benefit of the Secured Parties (and where such a perfected Lien would be required in accordance with the terms of the Collateral Documents or other Loan Documents), the Borrowers shall, at the Borrowers’ expense but, in each case, subject, in the case of any Loan Party that is not a U.S. Subsidiary, to the Guaranty and Security Principles:

(i) in connection with the formation or acquisition of a Subsidiary, within the later of (x) 90 days (or, with respect to a new Subsidiary of a Non-U.S. Subsidiary, 120 days) after such formation or acquisition and (y) 45 days after the last day of the fiscal quarter in which such formation or acquisition occurred or, in each case, such longer period as the Collateral Agent may agree in its reasonable discretion, (A) cause each such Subsidiary that is not an Excluded Subsidiary to duly execute and deliver to the Collateral Agent a guaranty or guaranty supplement, in form and substance reasonably satisfactory to the Collateral Agent, guaranteeing the Obligations and a joinder or supplement to the applicable Collateral Documents (or, as applicable, new Collateral Documents) and (B) (if not already so delivered) deliver certificates (or the foreign equivalent thereof, as applicable) representing the Pledged Interests of each such Subsidiary (if any) (other than any Unrestricted Subsidiary) held by the applicable Loan Party accompanied by undated stock powers or other appropriate instruments of transfer executed in blank and instruments evidencing the Pledged Debt owing by such Subsidiary to any Loan Party indorsed in blank to the Collateral Agent, together with, if requested by the Collateral Agent, supplements to the Security Agreement (or, as applicable, new Collateral Documents); provided, that any Excluded Property shall not be required to be pledged as Collateral,

(ii) within the later of (x) 90 days (or, with respect to property owned by a Non-U.S. Subsidiary, 120 days) after the acquisition of any such property and (y) 45 days after the last day of the fiscal quarter in which such acquisition occurred (or, in each case, such longer period, as the Collateral Agent may agree in its reasonable discretion) duly execute and deliver, and cause each such Subsidiary that is not an Excluded Subsidiary to duly execute and deliver, to the Collateral Agent one or more Mortgages (and other documentation and instruments referred to in Section 6.14) (with respect to Material Real Properties only), Security Agreement Supplements, Intellectual Property Security Agreement Supplements, Collateral Documents as specified by and in form and substance reasonably satisfactory to the Collateral Agent (consistent, to the extent applicable, with the Security Agreement, the Intellectual Property Security Agreement, the Mortgages and the other Collateral Documents (and Section 6.14)), securing payment of all the Obligations (provided, that to the extent any property to be subject to a Mortgage is located in a jurisdiction which imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the relevant Mortgage shall not secure an amount in excess of the Fair Market Value of such property subject thereto, nor shall the mortgages secure the Obligations in respect of Letters of Credit or the Revolving Credit Facility in those states that impose a mortgage tax on paydowns or re-advances applicable thereto) of the applicable Loan Party or such Subsidiary, as the case may be, under the Loan Documents and establishing Liens on all such properties or property; provided that such properties or property shall not be required to be pledged as Collateral, and no Security Agreement Supplements, Intellectual Property Security Agreement Supplements shall be required to be delivered in respect thereof, to the extent that any such properties or property constitute Excluded Property or, in the case of any Loan Party that is not a U.S. Subsidiary, would be excluded by the Guaranty and Security Principles,

 

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(iii) within the later of (x) 90 days (or, with respect to property owned by a Non-U.S. Subsidiary, 120 days) after such formation or acquisition and (y) 45 days after the last day of the fiscal quarter in which such formation or acquisition occurred (or, in each case, such longer period, as the Collateral Agent may agree in its reasonable discretion) take, and cause such Subsidiary that is not an Excluded Subsidiary and each applicable Loan Party to take, whatever action (including the recording of Mortgages (with respect to Material Real Properties only), the filing of UCC financing statements, the giving of notices and delivery of stock and membership interest certificates or foreign equivalents representing the applicable Capital Stock) as may be necessary or advisable in the reasonable opinion of the Collateral Agent to vest in the Collateral Agent (or in any representative of the Collateral Agent designated by it), subject to the Legal Reservations and Section 5.03, valid and subsisting Liens on the properties purported to be subject to the Mortgages, Security Agreement Supplements, Intellectual Property Security Agreement Supplements, supplements to other Collateral Documents, security agreements and new Collateral Documents delivered pursuant to this Section 6.12, in each case to the extent required under the Loan Documents and subject to the Perfection Exceptions and, in the case of any Loan Party that is not a U.S. Subsidiary, the Guaranty and Security Principles, enforceable against all third parties in accordance with their terms,

(iv) within the later of (x) 90 days (or, with respect to Non-U.S. Subsidiaries, 120 days) after the request of the Collateral Agent and (y) 45 days after the last day of the fiscal quarter in which the request of the Collateral Agent occurred (or, in each case, such longer period as the Collateral Agent may agree in its reasonable discretion) deliver to the Collateral Agent, Organization Documents, resolutions and a signed copy of one or more opinions, addressed to the Collateral Agent and the other Secured Parties, of counsel for the Loan Parties (or the Collateral Agent, as applicable) reasonably acceptable to the Collateral Agent as to such matters as the Collateral Agent may reasonably request (limited, in the case of any opinions of local counsel to Loan Parties constituting material Subsidiary Guarantors in jurisdictions in which any Mortgaged Property is located, to opinions relating to Material Real Property (and any other Mortgaged Properties located in the same jurisdiction as any such Material Real Property)),

(v) within the later of (x) 90 days (or, with respect to non-U.S. Loan Parties, 120 days) after the request of the Collateral Agent and (y) 45 days after the last day of the fiscal quarter in which the request of the Collateral Agent occurred or, in each case, such longer period as the Collateral Agent may agree in its reasonable discretion, deliver to the Collateral Agent with respect to each Material Real Property that is the subject of such request, title reports in scope, form and substance reasonably satisfactory to the Collateral Agent (but only to the extent such reports exist and are in the possession of the relevant Loan Party or can reasonably be obtained), fully paid American Land Title Association Lender’s title insurance policies or the equivalent or other form available in the applicable jurisdiction in form and substance, with endorsements as provided in Section 6.14 and in amounts, reasonably acceptable to the Collateral Agent (not to exceed the value of the Material Real Properties covered thereby and subject to any tie-in coverage available) but only to the extent such Material Real Property is located in the United States, and

(vi) at any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as the Collateral Agent in its reasonable judgment may deem necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, Mortgages, Security Agreement Supplements, Intellectual Property Security Agreement Supplements, Collateral Documents and security agreements.

Section 6.13 Compliance with Environmental Laws. Except, in each case, to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect, comply, and make all reasonable efforts to cause all lessees and other Persons operating or occupying its properties to comply, with all Environmental Laws and Environmental Permits; obtain, maintain and renew all applicable Environmental Permits necessary for its operations and properties; and, to the extent required under Environmental Laws, conduct any investigation, mitigation, study, sampling and testing, and undertake any cleanup, removal or remedial, corrective or other action necessary to respond to and remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that no Borrower or any Restricted Subsidiary shall be required to undertake any such cleanup, removal, remedial, corrective or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with IFRS.

 

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Section 6.14 Further Assurances. Promptly upon request by the Administrative Agent, or the Collateral Agent or any Lender through the Administrative Agent, and subject to the limitations described in Section 6.12 and the Guaranty and Security Principles, (i) correct any material defect or error that may be discovered in any Loan Document or other document or instrument relating to any Collateral or in the execution, acknowledgment, filing or recordation thereof and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or the Collateral Agent or any Lender through the Administrative Agent, may reasonably require from time to time in order to grant, preserve, protect and continue the validity, perfection and priority of the security interests created or intended to be created by the Collateral Documents. By the date that is 120 days after the Closing Date, as such time period may be extended in the Collateral Agent’s reasonable discretion, the Borrowers shall, and shall cause each Restricted Subsidiary to, deliver to the Collateral Agent, subject, in the case of any Loan Party that is not a U.S. Subsidiary, to the Guaranty and Security Principles:

(i) a Mortgage with respect to each Mortgaged Property, together with evidence each such Mortgage has been duly executed, acknowledged and delivered by a duly authorized officer of each party thereto on or before such date in a form suitable for filing and recording in all appropriate local filing or recording offices that the Collateral Agent may deem reasonably necessary or desirable in order to create a valid and subsisting perfected Lien on the property described therein in favor of the Collateral Agent for the benefit of the Secured Parties, subject only to Permitted Liens, and that all filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably satisfactory to the Collateral Agent, provided, that to the extent any property to be subject to a Mortgage is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the relevant Mortgage shall not secure an amount in excess of the Fair Market Value of such property subject thereto and shall not secure the Obligations in respect of Letters of Credit or the Revolving Credit Facility in those states that impose a mortgage tax on paydowns or re-advances applicable thereto;

(ii) fully paid American Land Title Association or equivalent Lender’s title insurance policies or marked up unconditional binder for such insurance (the “Mortgage Policies”) in form and substance reasonably requested by Collateral Agent, with endorsements reasonably requested by Collateral Agent, in amounts reasonably acceptable to the Collateral Agent (not to exceed the Fair Market Value of the Material Real Properties covered thereby and subject to any tie-in coverage available), issued, coinsured and reinsured by title insurers reasonably acceptable to the Collateral Agent in connection with any Material Real Property located in the United States;

(iii) American Land Title Association/American Congress on Surveying and Mapping form surveys, for which all necessary fees (where applicable) have been paid, certified to the Collateral Agent and the issuer of the Mortgage Policies in a manner reasonably satisfactory to the Collateral Agent by a land surveyor duly registered and licensed in the States in which the property described in such surveys is located and reasonably acceptable to the Collateral Agent; provided that new or updated surveys will not be required if an existing survey, ExpressMap or other similar documentation is available and survey coverage is available for the Mortgage Policies without the need for such new or updated surveys and provided further this foregoing requirement shall only be in connection with any Material Real Property located in the United States;

(iv) in each case with respect to any Material Real Property (and any other Mortgaged Properties located in the same state as any such Material Real Property), customary opinions of local counsel to the Loan Parties in jurisdictions in which the Mortgaged Property is located, with respect to the enforceability and perfection of the Mortgages and, if applicable any related fixture filings, in form and substance reasonably satisfactory to the Collateral Agent;

(v) customary opinions of counsel to the Loan Parties in the states in which the Loan Parties party to the Mortgages are organized or formed, with respect to the valid existence, corporate power and authority of such Loan Parties in the granting of the Mortgages, in form and substance reasonably satisfactory to the Administrative Agent;

 

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(vi) with respect to each improved Mortgaged Property, a “Life-of Loan” Federal Emergency Management Agency Standard Flood Hazard Determination;

(vii) evidence that all other actions reasonably requested by the Administrative Agent, that are necessary in order to create valid and subsisting Liens on the property described in the Mortgage, have been taken; and

(viii) evidence that all documented and invoiced fees, costs and expenses have been paid in connection with the preparation, execution, filing and recordation of the Mortgages, including reasonable attorneys’ fees, filing and recording fees, title insurance company coordination fees, documentary stamp, mortgage and intangible taxes and title search charges and other charges incurred in connection with the recordation of the Mortgages and the other matters described in this Section 6.14 and as otherwise required to be paid in connection therewith under Section 10.04.

Section 6.15 Maintenance of Ratings. Use commercially reasonable efforts to obtain and maintain (but not obtain or maintain a specific rating) (i) a public corporate family rating of the Parent Borrower and a rating of the Facilities, in each case from Moody’s and (ii) a public corporate credit rating of the Parent Borrower and a rating of the Facilities, in each case from S&P (it being understood and agreed that “commercially reasonable efforts” shall in any event include the payment by the Parent Borrower of customary rating agency fees and cooperation with information and data requests by Moody’s and S&P, as applicable, in connection with their ratings process).

Section 6.16 Post-Closing Undertakings. Within the time periods specified on Schedule 6.16 hereto (as each may be extended by the Administrative Agent in its reasonable discretion), provide such Collateral Documents and complete such undertakings as are set forth on Schedule 6.16 hereto.

Section 6.17 No Change in Line of Business. Continue to engage in substantially similar lines of business as those lines of business conducted by the Borrowers and the Restricted Subsidiaries on the date hereof including any business reasonably related, complementary, synergistic or ancillary thereto or reasonable extensions thereof.

Section 6.18 Transactions with Affiliates.

(a) The Borrowers will not, and will not permit their Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of any Borrower involving aggregate consideration in excess of $30,000,000 (each of the foregoing, an “Affiliate Transaction”), unless:

(i) such Affiliate Transaction is on terms that are not materially less favorable to the relevant Borrower or the relevant Restricted Subsidiary than those that could have been obtained in a comparable transaction by the relevant Borrower or such Restricted Subsidiary with an unrelated Person on an arm’s length basis (as determined in good faith by the senior management or the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower); and

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $40,000,000, the Parent Borrower delivers to the Administrative Agent a resolution adopted in good faith by the majority of the Board of Directors of any Borrower, Holdings or any Parent Holding Company, approving such Affiliate Transaction, together with a certificate signed by a Responsible Officer of the Parent Borrower certifying that the Board of Directors of such Borrower, Holdings or such Parent Holding Company determined or resolved that such Affiliate Transaction complies with Section 6.18(a)(i).

(b) The foregoing provisions of Section 6.18(a) shall not apply to the following:

 

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(1) (a) transactions between or among the Loan Parties and/or any of their Restricted Subsidiaries (or an entity that becomes a Restricted Subsidiary as a result of such transaction) and (b) any merger, amalgamation or consolidation of any Borrower and Holdings or any Parent Holding Company; provided that Holdings or such parent entity shall have no material liabilities and no material assets (other than cash, Cash Equivalents and the Capital Stock of a Borrower) and such merger, amalgamation or consolidation is otherwise in compliance with the terms of this Agreement and effected for a bona fide business purpose;

(2) (a) Restricted Payments permitted by Section 7.05 and (b) Permitted Investments (other than Permitted Investments under clause (13) of the definition thereof);

(3) transactions in which any Borrower or any Restricted Subsidiary, as the case may be, delivers to the Administrative Agent a letter from an Independent Financial Advisor stating that such transaction is fair to such Borrower or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 6.18(a);

(4) payments, loans, advances or guarantees (or cancellation of loans, advances or guarantees) to employees, officers, directors, managers, consultants or independent contractors for bona fide business purposes or in the ordinary course of business;

(5) any agreement or arrangement as in effect as of the Closing Date (other than the Management Agreement) or as thereafter amended, supplemented or replaced (so long as such amendment, supplement or replacement agreement is not materially disadvantageous (as determined in good faith by the senior management of the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower) to the Lenders when taken as a whole as compared to the original agreement or arrangement as in effect on the Closing Date) or any transaction or payments contemplated thereby;

(6) the Management Agreement or any transaction or payments (including reimbursement of out-of-pocket expenses or payments under any indemnity obligations) contemplated thereby;

(7) the existence of, or the performance by any Borrower or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders or similar agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party entered into in connection with the Transactions or similar transactions, arrangements or agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by any Borrower or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing transaction, arrangement or agreement or under any similar transaction, arrangement or agreement entered into after the Closing Date shall only be permitted by this clause (7) to the extent that the terms of any such existing transaction, arrangement or agreement, together with all amendments thereto, taken as a whole, or new transaction, arrangement or agreement are not otherwise disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower) to the Lenders, in any material respect when taken as a whole as compared with the original transaction, arrangement or agreement as in effect on the Closing Date;

(8) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case, in the ordinary course of business and otherwise in compliance with the terms of this Agreement, which are fair to the Borrowers and their Restricted Subsidiaries or are on terms at least as favorable (as determined in good faith by the senior management of the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower) as might reasonably have been obtained at such time from an unaffiliated party;

(9) any transaction effected as part of a Qualified Receivables Financing;

(10) the sale, issuance or transfer of Equity Interests (other than Disqualified Stock) of a Borrower;

 

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(11) payments by any Borrower or any of its Restricted Subsidiaries to or on behalf of the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are (x) made pursuant to agreements with the Sponsor or (y) approved by a majority of the Board of Directors of any Borrower, Holdings or any Parent Holding Company in good faith or a majority of the disinterested members of the Board of Directors of any Borrower, Holdings or any Parent Holding Company in good faith;

(12) any contribution to the capital of a Borrower (other than Disqualified Stock) or any investments by the Sponsor or a direct or indirect parent of a Borrower in Equity Interests (other than Disqualified Stock) of a Borrower (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of a Borrower in connection therewith);

(13) any transaction with a Person (other than an Unrestricted Subsidiary) that would constitute an Affiliate Transaction solely because a Borrower or a Restricted Subsidiary owns an Equity Interest in or otherwise controls such Person; provided that no Affiliate of any Borrower or any of its Subsidiaries (other than a Borrower or a Restricted Subsidiary) shall have a beneficial interest or otherwise participate in such Person;

(14) transactions between any Borrower or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate solely because such Person is a director or such Person has a director which is also a director of any Borrower or any direct or indirect parent of any Borrower; provided, however, that such director abstains from voting as a director of such Borrower or such direct or indirect parent of any Borrower, as the case may be, on any matter involving such other Person;

(15) the entering into of any tax sharing agreement or arrangement and any payments permitted by clause (12), (13)(a) or (13)(e) of the second paragraph under Section 7.05;

(16) transactions to effect the Transactions and the payment of all transaction, underwriting, commitment and other fees and expenses related to the Transactions (including the Transaction Costs);

(17) pledges of Equity Interests of Unrestricted Subsidiaries;

(18) the issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans or similar employee benefit plans approved by the board of directors of a Borrower, Holdings or any Parent Holding Company or of a Restricted Subsidiary, as appropriate, in good faith;

(19) (i) any employment, consulting, service or termination agreement, or customary indemnification arrangements, entered into by any Borrower or any of its Restricted Subsidiaries with current, former or future officers, directors, employees, managers, consultants and independent contractors of any Borrower or any of its Restricted Subsidiaries (or of any direct or indirect parent of such Borrower to the extent such agreements or arrangements are in respect of services performed for such Borrower or any of the Restricted Subsidiaries), (ii) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with current, former or future officers, directors, employees, managers, consultants and independent contractors of any Borrower or any of its Restricted Subsidiaries or of any direct or indirect parent of such Borrower and (iii) any payment of compensation or other employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers officers, directors, employees, managers, consultants and independent contractors of any Borrower or any of its Restricted Subsidiaries or any direct or indirect parent of such Borrower (including amounts paid pursuant to any management equity plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, stock option or similar plans and any successor plan thereto and any supplemental executive retirement benefit plans or arrangements), in each case in the ordinary course of business or as otherwise approved in good faith by the board of directors of a Borrower, Holdings or any Parent Holding Company or of a Restricted Subsidiary or a direct or indirect parent of any Borrower, as appropriate;

 

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(20) investments by Affiliates in Indebtedness or preferred Equity Interests of any Borrower or any of its Subsidiaries, so long as non-Affiliates were also offered the opportunity to invest in such Indebtedness or preferred Equity Interests, and transactions with Affiliates solely in their capacity as holders of Indebtedness or preferred Equity Interests of any Borrower or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally;

(21) the existence of, or the performance by any Borrower or any of its Restricted Subsidiaries of their obligations under the terms of, any registration rights agreement to which they are a party or become a party in the future;

(22) investments by the Sponsor or a direct or indirect parent of any Borrower in securities of any Borrower or any Restricted Subsidiary or debt securities or Preferred Stock of any Restricted Subsidiary (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of such Borrower in connection therewith);

(23) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business;

(24) any lease entered into between any Borrower or any Restricted Subsidiary, as lessee, and any Affiliate of any Borrower, as lessor, in the ordinary course of business;

(25) (i) intellectual property licenses in the ordinary course of business and (ii) intercompany intellectual property licenses and research and development agreements;

(26) transactions pursuant to, and complying with, Section 7.01 (to the extent such transaction complies with Section 6.18(a) or Section 7.03; or

(27) intercompany transactions undertaken in good faith for the purpose of improving the consolidated tax efficiency of the Borrowers and their Restricted Subsidiaries and not for the purpose of circumventing any covenant set forth herein.

Section 6.19 COMI Regulation. With respect to each Loan Party subject to the COMI Regulation, not change its “center of main interest” (as that term is used in Article 3(1) of the COMI Regulation) or cause it to have an establishment (as that term is used in Article 2(h) of the COMI Regulation) unless:

(a) it is changing to a center of main interest located in the same country as the original center of main interest; or

(b) any proposed change of center of main interest to any other jurisdiction (i) is being made primarily for tax purposes and (ii) would not be materially adverse to the interests of the Administrative Agent or the Lenders in respect of the Loan Documents (including in relation to the Liens on the Collateral granted by any such Loan Party or over the shares of such Loan Party).

Section 6.20 People with Significant Control Regime. Each Loan Party shall (and Holdings shall ensure that each Restricted Subsidiary will) within the relevant timeframe, comply with any notice it receives pursuant to Part 21A of the Companies Act 2006 from any UK PSC Loan Party.

 

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ARTICLE VII.

Negative Covenants

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other than contingent indemnification obligations as to which no claim has been asserted and obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) hereunder or under any Loan Document shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than Letters of Credit which have been Cash Collateralized), (A) except with respect to Section 7.09, the Borrowers shall not, nor shall they permit any other Restricted Subsidiary to, directly or indirectly and (B) with respect to Section 7.09, Holdings shall not:

Section 7.01 Indebtedness. Directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock, and the Parent Borrower will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided however, that the Parent Borrower and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio for the Parent Borrower and its Restricted Subsidiaries as of the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued would have been 2.00 to 1.00 or greater (“Ratio Debt”); provided, further, that the aggregate amount of Indebtedness (including Acquired Indebtedness) Incurred and Disqualified Stock or Preferred Stock that may be issued pursuant to the foregoing by Non-Loan Parties (together with the aggregate amount of Indebtedness (including Acquired Indebtedness) Incurred and Disqualified Stock or Preferred Stock that may be issued pursuant to clause (o) of the second paragraph of this Section 7.01 by Non-Loan Parties) shall not exceed the greater of (x) $135,000,000 and (y) 12.25% of Consolidated Net Tangible Assets, at any one time outstanding.

The foregoing limitations will not apply to (collectively, “Permitted Debt”):

(a) (x) Indebtedness arising under the Loan Documents including any refinancing thereof in accordance with Section 2.18, (y) Indebtedness of the Loan Parties evidenced by Refinancing Notes and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof) and (z) Indebtedness of the Loan Parties evidenced by New Incremental Notes and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

(b) the Incurrence by the Borrowers and the Guarantors of Indebtedness represented by the Senior Notes and the Guarantees thereof, as applicable;

(c) Indebtedness and Disqualified Stock of the Parent Borrower and its Restricted Subsidiaries and Preferred Stock of its existing on the Closing Date (excluding Indebtedness described in clause (a) or (b) above) and listed on Schedule 7.01 and, for the avoidance of doubt, all Capitalized Lease Obligations (after giving effect to IFRS 16) existing on the Closing Date (whether or not listed on such Schedule) and Permitted Refinancings thereof;

(d) Indebtedness (including, without limitation, Capitalized Lease Obligations and mortgage financings as purchase money obligations) Incurred by the Parent Borrower or any of its Restricted Subsidiaries, Disqualified Stock issued by the Parent Borrower or any of its Restricted Subsidiaries and Preferred Stock issued by any Restricted Subsidiaries to finance all or any part of the purchase, lease, construction, installation, repair or improvement of property (real or personal), plant or equipment or other fixed or capital assets (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) and Indebtedness, Disqualified Stock or Preferred Stock arising from the conversion of the obligations of the Parent Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of the Parent Borrower or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference, including all Indebtedness Incurred and Disqualified Stock or Preferred Stock issued to renew, refund, refinance, replace, defease or discharge any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (d), not to exceed the greater of (x) $75,000,000 and (y) 6.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock

 

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permitted under this clause (d) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness, Disqualified Stock or Preferred Stock Incurred pursuant to this clause (d) shall cease to be deemed Incurred or outstanding pursuant to this clause (d) but shall be deemed Incurred and outstanding as Ratio Debt from and after the first date on which the Parent Borrower or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Parent Borrower or any of its Restricted Subsidiaries are able to Incur any Liens related thereto as Permitted Liens after such reclassification);

(e) Indebtedness Incurred or Disqualified Stock issued by the Parent Borrower or any of its Restricted Subsidiaries and Preferred Stock issued by any Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments issued in the ordinary course of business, including, without limitation, (i) letters of credit or performance or surety bonds in respect of workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance and (ii) guarantees of Indebtedness Incurred by customers in connection with the purchase or other acquisition of equipment or supplies in the ordinary course of business;

(f) Incurrence of Indebtedness, Disqualified Stock or Preferred Stock arising from agreements of the Restricted Subsidiaries providing for indemnification, earn-outs, adjustment of purchase or acquisition price or similar obligations, in each case, Incurred in connection with the Transactions or with the acquisition or disposition of any business, assets or a Subsidiary of the Parent Borrower in accordance with this Agreement, other than guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

(g) Indebtedness or Disqualified Stock of the Parent Borrower to a Restricted Subsidiary; provided that (x) such Indebtedness or Disqualified Stock owing to a Non-Loan Party shall be subordinated in right of payment to the Parent Borrower’s Obligations with respect to this Agreement pursuant to the Intercompany Subordination Agreement and (y) any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to the Parent Borrower or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness or issuance of such Disqualified Stock not permitted by this clause (g);

(h) shares of Preferred Stock of a Restricted Subsidiary issued to the Parent Borrower or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Parent Borrower or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock not permitted by this clause (h);

(i) Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary or the Parent Borrower owing to the Parent Borrower or another Restricted Subsidiary; provided that (x) if the Parent Borrower or a Loan Party Incurs such Indebtedness, Disqualified Stock or Preferred Stock owing to a Non-Loan Party, such Indebtedness, Disqualified Stock or Preferred Stock is subordinated in right of payment to the Parent Borrower’s Obligations or Guarantee of such Loan Party, as applicable, pursuant to the Intercompany Subordination Agreement and (y) any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary lending such Indebtedness, Disqualified Stock or Preferred Stock ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness, Disqualified Stock or Preferred Stock (except to the Parent Borrower or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock not permitted by this clause (i);

 

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(j) Swap Contracts and cash management services Incurred, other than for speculative purposes;

(k) obligations (including reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments) in respect of customs, self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by the Parent Borrower or any Restricted Subsidiary;

(l) Indebtedness or Disqualified Stock of the Parent Borrower or any of its Restricted Subsidiaries and Preferred Stock of any of its Restricted Subsidiaries in an aggregate principal amount or liquidation preference that, when aggregated with the principal amount or liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and Incurred pursuant to this clause (l), does not exceed the greater of (x) $175,000,000 and (y) 15.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (l) or any portion thereof, the aggregate amount of accrued and unpaid interest, original issue discount, premiums (including tender premiums), underwriting discounts, defeasance costs and fees and expenses in connection therewith incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (l) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (l) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Parent Borrower or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Parent Borrower or any of its Restricted Subsidiaries are able to Incur any Liens related thereto as Permitted Liens after such reclassification);

(m) any guarantee by the Parent Borrower or a Restricted Subsidiary of Indebtedness, Disqualified Stock, Preferred Stock or other obligations of the Parent Borrower or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness, Disqualified Stock, Preferred Stock or other obligations by the Parent Borrower or such Restricted Subsidiary is permitted under the terms of this Agreement;

(n) the Incurrence by the Parent Borrower or any of its Restricted Subsidiaries of Indebtedness or Disqualified Stock or the issuance of Preferred Stock of a Restricted Subsidiary that serves to refund, refinance, replace, redeem, repurchase, retire or defease, and is in an aggregate principal amount (or if issued with original issue discount an aggregate issue price) that is equal to or less than, Indebtedness incurred or Disqualified Stock or Preferred Stock issued as Ratio Debt or permitted under clause (b), clause (c), this clause (n), clause (o) or clause (r) of this Section 7.01 or subclause (y) of clauses (d), (l), (t), (cc) or (dd) of this Section 7.01 (provided that any amounts incurred under this clause (n) as Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to subclause (y) of these clauses shall reduce the amount available under such subclause (y) of such clauses so long as such Refinancing Indebtedness remains outstanding or any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to so refund, replace, refinance, redeem, repurchase, retire or defease such Indebtedness, Disqualified Stock or Preferred Stock remains outstanding), plus any additional Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to pay accrued and unpaid interest and the aggregate amount of original issue discount, premiums (including reasonable tender premiums), underwriting discounts, defeasance costs and fees and expenses in connection therewith (subject to the following proviso, “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness:

(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred that is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded, refinanced, replaced, redeemed, repurchased or retired;

(2) in the case of any revolving Indebtedness, has a Stated Maturity that is no earlier than the Stated Maturity of the Indebtedness being refunded, refinanced, replaced, redeemed, repurchased or retired;

 

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(3) to the extent that such Refinancing Indebtedness refinances (i) Subordinated Indebtedness, such Refinancing Indebtedness is Subordinated Indebtedness or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness is Disqualified Stock or Preferred Stock, respectively;

(4) shall not include (x) Indebtedness, Disqualified Stock or Preferred Stock of a Non-Loan Party that refinances Indebtedness, Disqualified Stock or Preferred Stock of a Borrower or a Guarantor, or (y) Indebtedness or Disqualified Stock of a Borrower or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary; and

(5) to the extent such Refinancing Indebtedness is secured, the Liens securing such Refinancing Indebtedness have a Lien priority equal to or junior to the Indebtedness being refunded, refinanced, replaced, redeemed, repurchased or retired;

provided that subclauses (1) and (2) will not apply to any refunding or refinancing of any secured Indebtedness;

(o) (1) Indebtedness, Disqualified Stock or Preferred Stock (i) of the Parent Borrower or any of its Restricted Subsidiaries Incurred or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person and (ii) of any Person that is acquired by the Parent Borrower or any of its Restricted Subsidiaries or merged into or consolidated or amalgamated with the Parent Borrower or a Restricted Subsidiary in accordance with the terms of this Agreement and (2) Indebtedness Incurred or Disqualified Stock or Preferred Stock issued or, in each case, assumed in anticipation of, or in connection with, an acquisition of any assets, business or Person; provided, however, that after giving effect to such acquisition, merger, consolidation or amalgamation and the Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock, either:

(i) the Parent Borrower would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt; or

(ii) the Fixed Charge Coverage Ratio of the Parent Borrower is equal to or greater than such ratio immediately prior to such acquisition, merger, consolidation or amalgamation;

provided, further, that the aggregate amount of Indebtedness Incurred and Disqualified Stock or Preferred Stock issued by Non-Loan Parties pursuant to this clause (o) (together with the aggregate amount of Indebtedness (including Acquired Indebtedness) that may be Incurred and Disqualified Stock or Preferred Stock that may be issued pursuant to the first paragraph of this Section 7.01 by Non-Loan Parties) shall not exceed the greater of (x) $135,000,000 and (y) 12.25% of Consolidated Net Tangible Assets, at any one time outstanding;

(p) Indebtedness, Disqualified Stock or Preferred Stock arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;

(q) Indebtedness, Disqualified Stock or Preferred Stock of the Parent Borrower or any Restricted Subsidiary supported by a letter of credit or bank guarantee issued pursuant to any credit facility permitted hereunder, so long as such letter of credit has not been terminated and is in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee;

(r) Contribution Indebtedness;

(s) Indebtedness, Disqualified Stock or Preferred Stock of the Parent Borrower or any Restricted Subsidiary consisting of (x) the financing of insurance premiums or (y) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

 

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(t) Indebtedness, Disqualified Stock or Preferred Stock of Non-Loan Parties in an aggregate principal amount or liquidation preference, as applicable, not to exceed the greater of (x) $120,000,000 and (y) 10.75% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (t) or any portion thereof, the aggregate amount of accrued and unpaid interest, original issue discount, premiums (including tender premiums), and underwriting discounts, defeasance costs and fees and expenses Incurred in connection with such refinancing, outstanding at any one time (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (t) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (t) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which such Non-Loan Party could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Parent Borrower or any of its Restricted Subsidiaries are able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(u) Indebtedness, Disqualified Stock or Preferred Stock of a joint venture to the Parent Borrower or a Restricted Subsidiary and to the other holders of Equity Interests or participants of such joint venture, so long as the percentage of the aggregate amount of such Indebtedness, Disqualified Stock or Preferred Stock of such joint venture owed to such holders of its Equity Interests or participants of such joint venture does not exceed the percentage of the aggregate outstanding amount of the Equity Interests of such joint venture held by such holders or such participant’s participation in such joint venture;

(v) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse to the Parent Borrower or any Restricted Subsidiary other than a Receivables Subsidiary (except for Standard Securitization Undertakings);

(w) Indebtedness owed or Disqualified Stock or Preferred Stock issued on a short-term basis to banks and other financial institutions in the ordinary course of business of the Parent Borrower and the Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements, including cash management, cash pooling arrangements and related activities to manage cash balances of the Parent Borrower and its Subsidiaries and joint ventures including treasury, depository, overdraft, credit, purchasing or debit card, electronic funds transfer and other cash management arrangements and Indebtedness in respect of netting services, overdraft protection, credit card programs, automatic clearinghouse arrangements and similar arrangements;

(x) Indebtedness, Disqualified Stock or Preferred Stock consisting of Indebtedness, Disqualified Stock or Preferred Stock issued by the Parent Borrower or any Restricted Subsidiary to future, current or former officers, directors, managers, employees, consultants and independent contractors thereof or any direct or indirect parent thereof, their respective estates, heirs, family members, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower to the extent permitted under Section 7.05;

(y) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business;

(z) Indebtedness Incurred or Disqualified Stock issued by the Parent Borrower or a Restricted Subsidiary or Preferred Stock issued by any of the Parent Borrower’s Restricted Subsidiaries in connection with bankers’ acceptances, discounted bills of exchange, warehouse receipts or similar facilities or the discounting or factoring of receivables for credit management purposes, in each case Incurred or undertaken in the ordinary course of business;

(aa) Indebtedness or Disqualified Stock incurred by the Parent Borrower or any Restricted Subsidiary or Preferred Stock issued by any of its Restricted Subsidiaries, in each case, on terms consistent with clause (n) and to the extent that the net proceeds thereof are promptly deposited with the applicable trustee to satisfy and discharge the Senior Notes in accordance with the Senior Notes Indenture;

 

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(bb) (i) guarantees Incurred in the ordinary course of business in respect of obligations to suppliers, customers, franchisees, lessors, licensees, sub-licensees and distribution partners and (ii) Indebtedness Incurred by the Parent Borrower or a Restricted Subsidiary as a result of leases entered into by the Parent Borrower or such Restricted Subsidiary or any Permitted Parent in the ordinary course of business;

(cc) the incurrence by the Parent Borrower or any Restricted Subsidiary of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued on behalf, or representing guarantees of Indebtedness incurred or Disqualified Stock or Preferred Stock issued by, joint ventures; provided that the aggregate principal amount or liquidation preference, as applicable, of Indebtedness Incurred or guaranteed or Disqualified Stock or Preferred Stock issued or guaranteed pursuant to this clause (cc) does not at any one time outstanding exceed the greater of (x) $30,000,000 and (y) 2.75% of Consolidated Net Tangible Assets at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (cc) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (cc) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (cc) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Parent Borrower or such Restricted Subsidiary could have Incurred or guaranteed such Indebtedness or issued or guaranteed such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Parent Borrower or any of its Restricted Subsidiaries are able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(dd) Indebtedness, Disqualified Stock or Preferred Stock of the Parent Borrower or a Restricted Subsidiary Incurred to finance or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person in an aggregate principal amount or liquidation preference that does not exceed the greater of (x) $100,000,000 and (y) 9.00% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (dd) or any portion thereof, the aggregate amount of fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection with such refinancing (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (dd) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (dd) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Parent Borrower or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Parent Borrower or any of its Restricted Subsidiaries are able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(ee) Indebtedness, Disqualified Stock or Preferred Stock consisting of obligations of the Parent Borrower or any Restricted Subsidiary under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions or any Permitted Investment;

(ff) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent that they are permitted to remain unfunded under applicable law;

(gg) Indebtedness, Disqualified Stock or Preferred Stock arising as a result of (the establishment of) a Dutch law fiscal unity for corporate income tax or turnover tax purposes (fiscale eenheid) of which any Restricted Subsidiary is a member;

(hh) Indebtedness, Disqualified Stock or Preferred Stock pursuant to a declaration of joint and several liability used for the purpose of Section 2:403 of the Dutch Civil Code (and any residual liability under such declaration arising pursuant to section 2:404(2) of the Dutch Civil Code); and

(ii) Reimbursement obligations of the Borrower Parties with respect to cash management arrangements referred to in clause (49) of the definition of Permitted Liens.

 

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For purposes of determining compliance with this covenant, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt or is entitled to be Incurred or issued as Ratio Debt, the Parent Borrower shall, in its sole discretion, at the time of incurrence or issuance, divide, classify or reclassify, or at any later time divide, classify or reclassify, such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) in any manner that complies with this covenant; provided that all Indebtedness under this Agreement incurred on the Closing Date shall be deemed to have been Incurred pursuant to Section 7.01(a) and the Parent Borrower shall not be permitted to reclassify all or any portion of Indebtedness Incurred on the Closing Date pursuant to Section 7.01(a). Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest or dividends in the form of additional Indebtedness with the same terms, the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of Disqualified Stock or Preferred Stock of the same class, the accretion of liquidation preference and increases in the amount of Indebtedness, Disqualified Stock or Preferred Stock outstanding solely as a result of fluctuations in the exchange rate of currencies will not be deemed to be an Incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for purposes of this covenant. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this covenant.

Additionally, for purposes of complying with this covenant, any obligation, including any lease, concession or license of property (or guarantee thereof), that would not constitute a Capitalized Lease Obligation under IFRS as in effect as of the Closing Date (which for the avoidance of doubt would not give effect to the application of IFRS 16) will be “Permitted Debt”.

For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness or the issuance of Disqualified Stock or Preferred Stock, the U.S. dollar-equivalent principal amount or liquidation preference, as applicable of Indebtedness, Disqualified Stock or Preferred Stock denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term debt, or first committed or first Incurred (whichever yields the lower U.S. dollar-equivalent), in the case of revolving credit debt or first issued in the case of Disqualified Stock or Preferred Stock; provided that if such Indebtedness, Disqualified Stock or Preferred Stock is Incurred to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount or liquidation preference, as applicable, of such Refinancing Indebtedness does not exceed the principal amount or liquidation preference, as applicable, of such Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, being refinanced (plus unpaid accrued interest and the aggregate amount of premiums (including tender premiums) and underwriting discounts, defeasance costs and fees, discounts and expenses in connection therewith).

The principal amount or liquidation preference, as applicable, of any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, if Incurred or issued in a different currency from the Indebtedness, Disqualified Stock or Preferred Stock being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness, Disqualified Stock or Preferred Stock is denominated that is in effect on the date of such refinancing.

Notwithstanding anything herein or the Collateral Documents to the contrary, in no event shall the aggregate amount of Consolidated Funded Indebtedness of the Designated Taiwan Subsidiaries (other than guarantees of Indebtedness Incurred under Section 7.01(a) and (b)), exceed at any time the greater of (x) $30,000,000 and (y) 2.75% of Consolidated Net Tangible Assets of the Parent Borrower and its Restricted Subsidiaries.

 

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Section 7.02 Limitations on Liens.

Permit any Borrower or any of the Subsidiary Guarantors to, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of any Borrower or any Subsidiary Guarantor, whether now owned or hereafter acquired (each, a “Subject Lien”) that secures obligations under any Indebtedness, except:

(a) in the case of Subject Liens on any Collateral, such Subject Lien is a Permitted Lien; and

(b) in the case of any other asset, right or property, any Subject Lien if (i) the Obligations are equally and ratably secured with (or on a senior basis to, in the case such Subject Lien secures any Junior Financing) the obligations secured by such Subject Lien or (ii) such Subject Lien is a Permitted Lien.

Any Lien created for the benefit of the Secured Parties pursuant to the preceding clause (b) shall provide by its terms that such Lien shall be automatically and unconditionally be released and discharged upon the release and discharge of the Subject Lien that gave rise to the obligation to so secure the Obligations.

Notwithstanding anything herein or the Loan Documents to the contrary, in no event shall the aggregate amount of Consolidated Funded Indebtedness of the PRC Subsidiaries that is secured by a Lien on assets or property of the PRC Subsidiaries that do not constitute “Collateral” exceed at any time the greater of (x) $150,000,000 and (y) 13.50% of Consolidated Net Tangible Assets of the Parent Borrower and its Restricted Subsidiaries unless the Obligations under the Loan Documents are concurrently equally and ratably secured by such Lien.

Section 7.03 Fundamental Changes. Merge, dissolve, liquidate, amalgamate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, (other than in the case of clause (e)) so long as no Event of Default would result therefrom:

(a) any Restricted Subsidiary (other than the Subsidiary Borrower) may merge, amalgamate or consolidate with (i) any Borrower (including a merger, the purpose of which is to reorganize any Borrower into a new jurisdiction); provided that such Borrower shall (x) in the case of the Subsidiary Borrower, be a corporation (or entity classified and treated as association taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia and (y) in the case of the Parent Borrower shall be a person organized under the laws of the Netherlands, the United Kingdom or Luxembourg and, in each case, the applicable Borrower shall be the continuing or surviving Person or the surviving Person shall expressly assume the obligations of such Borrower pursuant to documents reasonably acceptable to the Administrative Agent, or (ii) any one or more other Restricted Subsidiaries; provided that (x) any Restricted Subsidiary that is not a Controlled Foreign Subsidiary or a FSHCO may not merge with any Restricted Subsidiary that is a Controlled Foreign Subsidiary or a FSHCO if such Controlled Foreign Subsidiary or such FSHCO shall be the continuing or surviving Person and (y) when any Guarantor is merging with another Restricted Subsidiary that is not a Loan Party (A) the Guarantor shall be the continuing or surviving Person, (B) to the extent constituting an Investment, such Investment must be a Permitted Investment or Indebtedness of a Restricted Subsidiary which is not a Loan Party in accordance with Section 7.01, respectively and (C) to the extent constituting a Disposition, such Disposition must be permitted hereunder;

(b) (i) any Restricted Subsidiary that is not a Loan Party may merge, amalgamate or consolidate with or into any other Restricted Subsidiary that is not a Loan Party and (ii) any Restricted Subsidiary (other than the Subsidiary Borrower) may liquidate or dissolve, or any Borrower or any Restricted Subsidiary may (if the validity, perfection and priority of the Liens securing the Obligations is not adversely affected thereby) change its legal form if the Parent Borrower determines in good faith that such action is in the best interest of Holdings and its Subsidiaries and is not disadvantageous to the Lenders in any material respect (it being understood that in the case of any dissolution of a Restricted Subsidiary that is a Guarantor, such Subsidiary shall at or before the time of such dissolution transfer its assets to another Restricted Subsidiary that is a Guarantor in the same jurisdiction or a different jurisdiction reasonably satisfactory to the Administrative Agent unless such Disposition of assets is permitted hereunder; and in the case of any change in legal form, a Restricted Subsidiary that is a Guarantor will remain a Guarantor unless such Guarantor is otherwise permitted to cease being a Guarantor hereunder);

 

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(c) any Restricted Subsidiary (other than the Subsidiary Borrower) may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to any Borrower or to any Restricted Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then (i) the transferee must either be a Borrower or a Guarantor in the same jurisdiction or a different jurisdiction reasonably satisfactory to the Administrative Agent and (ii) to the extent constituting an Investment, such Investment must be a Permitted Investment or Indebtedness of a Restricted Subsidiary which is not a Loan Party in accordance with Section 7.01, respectively; provided, further, that the Borrowers may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to any U.S. Loan Party or a Guarantor in the same jurisdiction as the disposing party or in another jurisdiction reasonably acceptable to the Administrative Agent;

(d) any Restricted Subsidiary (other than the Subsidiary Borrower) may merge, amalgamate or consolidate with, or dissolve into, any other Person in order to effect Permitted Investment; provided that (i) the continuing or surviving Person shall, to the extent subject to the terms hereof, have complied with the requirements of Section 6.12 and (ii) to the extent constituting an Investment, such Investment must be a Permitted Investment and (iii) to the extent constituting a Disposition, such Disposition must be permitted hereunder;

(e) the Parent Borrower and the other Restricted Subsidiaries may consummate the Transactions;

(f) any Restricted Subsidiary (other than the Subsidiary Borrower) may merge, dissolve, liquidate, amalgamate, consolidate with or into another Person in order to effect a Disposition permitted pursuant to Section 7.04 (other than Dispositions permitted by Section 7.03); and

(g) any Permitted Investment may be structured as a merger, consolidation or amalgamation.

Section 7.04 Asset Sales. Cause or make an Asset Sale, unless:

(1) the Parent Borrower or any of its Restricted Subsidiaries, as the case may be, receives consideration (including by way of relief from, or by any other person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Sale at least equal to the Fair Market Value (as determined at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of; and

(2) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Parent Borrower or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents or Replacement Assets; provided, that the amount of:

(a) any liabilities (as shown on the Parent Borrower’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto for which internal financial statements are available immediately preceding such date or, if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Parent Borrower’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet in the good faith determination of the Parent Borrower) of the Parent Borrower or such Restricted Subsidiary other than liabilities that are by their terms subordinated to the Obligations or are otherwise extinguished in connection with the transactions relating to such Asset Sale, or that are assumed by the transferee of any such assets or Equity Interests, in each case, pursuant to an agreement that releases or indemnifies the Parent Borrower or such Restricted Subsidiary, as the case may be, from further liability;

(b) any notes or other obligations or other securities or assets received by the Parent Borrower or such Restricted Subsidiary from such transferee that are converted by the Parent Borrower or such Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within 180 days of the receipt thereof; and

 

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(c) any Designated Non-Cash Consideration received by the Parent Borrower or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non- Cash Consideration received pursuant to this subclause (c) that is at that time outstanding, not to exceed the greater of (x) $125,000,000 and (y) 11.25% of Consolidated Net Tangible Assets, calculated at the time of the receipt of such Designated Non- Cash Consideration (with the Fair Market Value of each item of Designated Non- Cash Consideration being measured at the time received and without giving effect to subsequent changes in value);

shall each be deemed to be Cash Equivalents for the purposes of this clause (2).

Within 455 days after the Parent Borrower’s or any Restricted Subsidiary’s receipt of the Net Cash Proceeds of any Asset Sale or Casualty Event, the Parent Borrower or such Restricted Subsidiary shall apply an amount equal to the Net Cash Proceeds from such Asset Sale or Casualty Event, at its option:

(3) to prepay Loans and other Permitted Debt in accordance with Section 2.05(b)(ii).

(4) to make an investment in any one or more businesses, assets (other than working capital assets), or property or capital expenditures, in each case used or useful in a Similar Business; provided that if such investment is in the form of the acquisition of Capital Stock of a Person, such acquisition results in such Person becoming a Restricted Subsidiary;

(5) to make an investment in any one or more businesses, properties (other than working capital assets) or assets (other than working capital assets) that replace the businesses, properties and/or assets that are the subject of such Asset Sale or Casualty Event; provided that if such investment is in the form of the acquisition of Capital Stock of a Person, such acquisition results in such Person becoming a Restricted Subsidiary; or

(6) any combination of the foregoing;

provided that the Parent Borrower and its Restricted Subsidiaries will be deemed to have complied with the provisions described in clause (4) or (5) of this paragraph if and to the extent that, within 455 days after the Asset Sale that generated the Net Cash Proceeds, the Parent Borrower or such Restricted Subsidiary, as applicable, has entered into and not abandoned or rejected a binding agreement to make an investment in compliance with the provision described in clause (4) or (5) of this paragraph, and that investment is thereafter completed within 180 days after the end of such 455 day period.

Pending the final application of any such amount of Net Cash Proceeds pursuant to Section 2.05(b)(ii) and this Section 7.04, the Parent Borrower or such Restricted Subsidiary may temporarily reduce Indebtedness under the Revolving Credit Facility, or otherwise invest or utilize such Net Cash Proceeds in any manner not prohibited by this Agreement.

Section 7.05 Restricted Payments. Directly or indirectly:

(1) declare or pay any dividend or make any payment or distribution on account of the Parent Borrower’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment made in connection with any merger, amalgamation or consolidation involving any Borrower (other than (A) dividends or distributions by the Parent Borrower payable solely in Equity Interests (other than Disqualified Stock) of the Parent Borrower; or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, a Borrower or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities);

 

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(2) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower, including in connection with any merger, amalgamation or consolidation;

(3) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any (i) Subordinated Indebtedness of any Borrower or any Guarantor (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness of any Borrower or any Guarantor in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under Section 7.01(g) or (i)) or (ii) any Indebtedness that is secured by a security interest in the Collateral that is expressly junior to the Liens securing the Obligations (clauses (i) and (ii), “Junior Financing”); or

(4) make any Restricted Investment;

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(b) immediately after giving effect to such transaction on a Pro Forma Basis, the Parent Borrower could Incur $1.00 of additional Indebtedness as Ratio Debt; and

(c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Parent Borrower and its Restricted Subsidiaries after the Closing Date (including Restricted Payments permitted by clause (1) of the next succeeding paragraph, but excluding all other Restricted Payments permitted by the next succeeding paragraph), is less than the sum of, without duplication,

(i) (A) $75,000,000 plus (B) 50% of the Consolidated Net Income of the Parent Borrower for the period (taken as one accounting period) beginning on January 1, 2017 to the end of the Parent Borrower’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case that such Consolidated Net Income for such period is a deficit, minus 100% of such deficit, plus

(ii) 100% of the aggregate net proceeds, including cash and the Fair Market Value of assets (other than cash), received by the Parent Borrower after the Closing Date from the issue or sale of Equity Interests of the Parent Borrower (other than Excluded Equity), including such Equity Interests issued upon exercise of warrants or options, plus

(iii) 100% of the aggregate amount of contributions to the capital of the Parent Borrower received in cash and the Fair Market Value of assets (other than cash) after the Closing Date (other than Excluded Equity), plus

(iv) the principal amount of any Indebtedness, or the liquidation preference or Maximum Fixed Repurchase Price, as the case may be, of any Disqualified Stock, in each case, of the Parent Borrower or any Restricted Subsidiary thereof issued after the Closing Date (other than Indebtedness or Disqualified Stock issued to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Parent Borrower or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Parent Borrower or any Restricted Subsidiary)) that, in each case, has been converted into or exchanged for Equity Interests in the Parent Borrower or any direct or indirect parent of the Parent Borrower (other than Excluded Equity), plus

 

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(v) 100% of the aggregate amount received by the Parent Borrower or any Restricted Subsidiary in cash and the Fair Market Value of assets (other than cash) received by the Parent Borrower or any Restricted Subsidiary from:

(A) the sale or other disposition (other than to the Parent Borrower or a Restricted Subsidiary of the Parent Borrower) of Restricted Investments made by the Parent Borrower and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Parent Borrower and its Restricted Subsidiaries by any Person (other than the Parent Borrower or any of its Restricted Subsidiaries) and from repayments of loans or advances that constituted Restricted Investments made after the Closing Date,

(B) the sale (other than to the Parent Borrower or a Restricted Subsidiary or an employee stock ownership plan or trust established by the Parent Borrower or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Parent Borrower or any Restricted Subsidiary)) of the Capital Stock of an Unrestricted Subsidiary, or

(C) any distribution or dividend from an Unrestricted Subsidiary, plus

(vi) in the event any Unrestricted Subsidiary has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Parent Borrower or a Restricted Subsidiary, in each case after the Closing Date, the Fair Market Value of the Investment of the Parent Borrower in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to clause (10) or (19) of the next succeeding paragraph or constituted a Permitted Investment, plus

(vii) the aggregate amount of Declined Amounts since the Closing Date.

Section 7.05 will not prohibit:

(1) the payment of any dividend or distribution or consummation of any redemption within 60 days after the date of declaration thereof or the giving of a redemption notice related thereto, if at the date of declaration or notice such payment would have complied with the provisions of this Agreement;

(2)

(a) the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) of the Parent Borrower or any direct or indirect parent of the Parent Borrower, or Junior Financing of the Parent Borrower or any Subsidiary Guarantor, in exchange for, or out of the proceeds of the issuance or sale of, Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower or contributions to the equity capital of the Parent Borrower (other than Excluded Equity) (collectively, including any such contributions, “Refunding Capital Stock”);

(b) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the issuance or sale (other than to a Restricted Subsidiary of the Parent Borrower or to an employee stock ownership plan or any trust established by the Parent Borrower or any of its Restricted Subsidiaries) of Refunding Capital Stock; and

 

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(c) if immediately prior to the retirement of the Retired Capital Stock, the declaration and payment of dividends thereon was permitted pursuant to this covenant and has not been made as of such time (the “Unpaid Amount”), the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower) in an aggregate amount no greater than the Unpaid Amount;

(3) the prepayment, redemption, defeasance, repurchase or other acquisition or retirement of Junior Financing of the Parent Borrower or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the Incurrence of, Refinancing Indebtedness thereof;

(4) the purchase, retirement, redemption or other acquisition (or Restricted Payments to the Parent Borrower or any direct or indirect parent of the Parent Borrower to finance any such purchase, retirement, redemption or other acquisition) for value of Equity Interests (including related stock appreciation rights or similar securities) of the Parent Borrower or any direct or indirect parent of the Parent Borrower held directly or indirectly by any future, present or former employee, officer, director, manager, consultant or independent contractor of the Parent Borrower or any direct or indirect parent of the Parent Borrower or any Subsidiary of the Parent Borrower or their estates, heirs, family members, spouses or former spouses or permitted transferees (including for all purposes of this clause (4), Equity Interests held by any entity whose Equity Interests are held by any such future, present or former employee, officer, director, manager, consultant or independent contractor or their estates, heirs, family members, spouses or former spouses or permitted transferees) pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement or any stock subscription or shareholder or similar agreement; provided, however, that the aggregate amounts paid under this clause (4) shall not exceed (x) $20,000,000 in any calendar year or (y) subsequent to the consummation of an underwritten Qualified IPO of common stock of the Parent Borrower or any direct or indirect parent of the Parent Borrower, $30,000,000 in any calendar year (in each case, with unused amounts in any calendar year being permitted to be carried over for the next two succeeding calendar years); provided further, however, that such amount in any calendar year may be increased by an amount not to exceed:

(a) the cash proceeds received by the Parent Borrower from the issuance or sale of Equity Interests (other than Disqualified Stock) of the Parent Borrower or any direct or indirect parent of the Parent Borrower (to the extent contributed to the Parent Borrower), in each case, to any future, present or former employees, officers, directors, managers, consultants or independent contractors of the Parent Borrower or its Restricted Subsidiaries or any direct or indirect parent of the Parent Borrower that occurs on or after the Closing Date, other than in connection with, or pursuant to, the Equity Contribution; provided that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend will not increase the amount available for Restricted Payments under clause (c) of the immediately preceding paragraph; plus

(b) the cash proceeds of key man life insurance policies received by the Parent Borrower or its Restricted Subsidiaries or any direct or indirect parent of the Parent Borrower (to the extent contributed to the Parent Borrower) after the Closing Date; plus

(c) the amount of any cash bonuses otherwise payable to employees, officers, directors, managers, consultants or independent contractors of the Parent Borrower or its Restricted Subsidiaries or any direct or indirect parent of the Parent Borrower that are foregone in return for the receipt of Equity Interests; less

(d) the amount of cash proceeds described in clause (a), (b) or (c) of this clause (4) previously used to make Restricted Payments pursuant to this clause (4); (provided that the Parent Borrower may elect to apply all or any portion of the aggregate increase contemplated by clauses (a), (b) and (c) above in any calendar year);

 

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provided, further, that cancellation of Indebtedness owing to the Parent Borrower or any Restricted Subsidiary from any future, current or former officer, director, employee, manager, consultant or independent contractor (or any permitted transferees thereof) of the Parent Borrower or any of its Restricted Subsidiaries or any direct or indirect parent of the Parent Borrower, in connection with a repurchase of Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower from such Persons will not be deemed to constitute a Restricted Payment for purposes of this Section 7.05 or any other provisions of this Agreement;

(5) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Parent Borrower or any of its Restricted Subsidiaries and any class or series of Preferred Stock of any Restricted Subsidiaries issued or Incurred in accordance with the covenant described in Section 7.01;

(6) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) and the declaration and payment of dividends to the Parent Borrower or any direct or indirect parent of the Parent Borrower, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of the Parent Borrower or any direct or indirect parent of the Parent Borrower issued after the Closing Date; provided, however, that (A) for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, the Fixed Charge Coverage Ratio of the Parent Borrower is 2.00 to 1.00 or greater and (B) the aggregate amount of dividends declared and paid pursuant to this clause (6) does not exceed the net cash proceeds actually received by the Parent Borrower from the sale (or the contribution of the net cash proceeds from the sale) of Designated Preferred Stock;

(7) any Restricted Payments made (A) in connection with the consummation of the Transactions or as contemplated by the Acquisition Agreement, including any dividends, payments or loans made to the Parent Borrower or any direct or indirect parent of the Parent Borrower to enable it to make any such payments and (B) on or after the date that is six (6) months after the Closing Date, any Restricted Payments made to pay dividends or distributions to holders of Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower, in an aggregate amount not to exceed, in the case of this clause 7(B), in the aggregate, the Specified Sponsor Overfunding Amount;

(8) the declaration and payment of dividends on the Parent Borrower’s common stock (or the payment of dividends to any direct or indirect parent of the Parent Borrower to fund the payment by any direct or indirect parent of the Parent Borrower of dividends on such entity’s Equity Interests) of up to 6.0% per annum of the cash proceeds, net of any underwriting spread, received by the Parent Borrower from any public offering of common Equity Interests or contributed to the Parent Borrower by any direct or indirect parent of the Parent Borrower from any public offering of common Equity Interests, other than public offerings with respect to the Parent Borrower’s common stock registered on Form S-4 or S-8 or successor form thereto and other than any public sale constituting Excluded Contributions;

(9) Restricted Payments that are made with Excluded Contributions;

(10) Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (10) not to exceed the greater of (x) $125,000,000 and (y) 11.25% of Consolidated Net Tangible Assets;

(11) [reserved];

(12) for so long as the Parent Borrower or any of its Subsidiaries are members of a group filing a consolidated, combined, affiliated or unitary income (or franchise in lieu of income) tax return with Holdings or any other direct or indirect parent of the Parent Borrower, Restricted Payments to Holdings or such other direct or indirect parent of the Parent Borrower in amounts required for Holdings or such other parent entity to pay federal, national, foreign, state and local income taxes (and franchise taxes) imposed on such entity to the extent such income taxes (and franchise taxes) are attributable to the income of the Parent Borrower and its Subsidiaries; provided, however, that the amount of such payments in respect of any tax

 

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year does not, in the aggregate, exceed the amount that the Parent Borrower and its Subsidiaries that are members of such consolidated, combined, affiliated or unitary group would have been required to pay in respect of federal, national, foreign, state and local income taxes and/or franchise taxes (as the case may be) in respect of such year if the Parent Borrower and its Subsidiaries paid such income (and franchise) taxes directly on a separate company basis or as a stand-alone consolidated, combined, affiliated or unitary income (or franchise in lieu of income) tax group (reduced by any such taxes paid directly by the Parent Borrower or any Subsidiary);

(13) the declaration and payment of dividends, other distributions or other amounts to, or the making of loans to any Holdings Entity or any other direct or indirect parent of the Parent Borrower, in the amount required for such entity to, if applicable:

(a) pay amounts equal to the amounts required for any Holdings Entity or any other direct or indirect parent of the Parent Borrower to pay fees and expenses (including Related Taxes), customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, employees, directors, managers, consultants or independent contractors of any such Holdings Entity or any other direct or indirect parent of the Parent Borrower, if applicable, and general corporate operating (including, without limitation, expenses related to auditing and other accounting matters) and overhead costs and expenses of the Parent Borrower or any direct or indirect parent of the Parent Borrower, if applicable, in each case to the extent such fees, expenses, salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of the Parent Borrower and its Subsidiaries;

(b) pay, if applicable, amounts equal to amounts required for any Holdings Entity or any other direct or indirect parent of the Parent Borrower to pay interest and/or principal on Indebtedness the proceeds of which have been contributed to the Parent Borrower (other than as Excluded Equity) and that has been guaranteed by, and is otherwise considered Indebtedness of, the Parent Borrower or any Restricted Subsidiary Incurred in accordance with the Section 7.01 (except to the extent any such payments have otherwise been made by any such guarantor);

(c) pay fees and expenses incurred by any Holdings Entity or any other direct or indirect parent of the Parent Borrower related to (i) the maintenance of such parent entity of its corporate or other entity existence and performance of its obligations under this Agreement and similar obligations under the Senior Notes, (ii) any unsuccessful equity or debt offering of such parent entity (or any debt or equity offering from which such parent does not receive any proceeds) and (iii) any equity or debt issuance, incurrence or offering, any disposition or acquisition or any investment transaction by the Parent Borrower or any of its Restricted Subsidiaries (or any acquisition of or investment in any business, assets or property that will be contributed to the Parent Borrower or any of its Restricted Subsidiaries as part of the same or a related transaction) permitted by this Agreement;

(d) make payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial advisory, financing, underwriting or placement services or in respect of other investment banking activities including, without limitation, in connection with acquisitions or divestitures, including in connection with the consummation of the Transactions, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) approved in respect of such activities by a majority of the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower in good faith;

(e) pay franchise and excise taxes, and other fees, taxes (including Related Taxes) and expenses in connection with any ownership of the Parent Borrower or any of its Subsidiaries or required to maintain their organizational existences;

(f) make payments for the benefit of the Parent Borrower or any of its Restricted Subsidiaries to the extent such payments could have been made by the Parent Borrower or any of its Restricted Subsidiaries because such payments (x) would not otherwise be Restricted Payments and (y) would be permitted by Section 6.18; and

 

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(g) Restricted Payments to any direct or indirect parent of the Parent Borrower to finance, or to any direct or indirect parent of the Parent Borrower for the purpose of paying to any other direct or indirect parent of the Parent Borrower to finance, any Investment that, if consummated by the Parent Borrower or any of its Restricted Subsidiaries, would be a Permitted Investment; provided that (a) such Restricted Payment is made substantially concurrently with the closing of such Investment and (b) promptly following the closing thereof, such direct or indirect parent of the Parent Borrower causes (i) all property acquired (whether assets or Equity Interests) to be contributed to the Parent Borrower or any Restricted Subsidiary or (ii) the merger, consolidation or amalgamation (to the extent permitted by Section 7.03) of the Person formed or acquired into the Parent Borrower or any Restricted Subsidiary in order to consummate such acquisition or Investment, in each case, in accordance with the requirements of Section 6.12;

(14) (i) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants, (ii) payments made or expected to be made by the Parent Borrower or any Restricted Subsidiary in respect of withholding or similar taxes payable or expected to be payable by any future, present or former director, officer, employee, manager, consultant or independent contractor of the Parent Borrower or any direct or indirect parent of the Parent Borrower or any Subsidiary of the Parent Borrower (or their respective Affiliates, estates or immediate family members) in connection with the exercise of stock options or the grant, vesting or delivery of Equity Interests and (iii) loans or advances to officers, directors, employees, managers, consultants and independent contractors of the Parent Borrower or any direct or indirect parent of the Parent Borrower or any Subsidiary of the Parent Borrower in connection with such Person’s purchase of Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower; provided that no cash is actually advanced pursuant to this clause (iii) other than to pay taxes due in connection with such purchase, unless immediately repaid;

(15) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing and the payment or distribution of Receivables Fees;

(16) payments or distributions to satisfy dissenters’ rights, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of assets that complies with the provisions of this Agreement;

(17) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Parent Borrower or a Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Cash Equivalents);

(18) the payment of cash in lieu of the issuance of fractional shares of Equity Interests in connection with any merger, consolidation, amalgamation or other business combination, or in connection with any dividend, distribution or split of or upon exercise, conversion or exchange of Equity Interests, warrants, options or other securities exercisable or convertible into, Equity Interests of the Parent Borrower or any direct or indirect parent of the Parent Borrower;

(19) Investments in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (19) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, Cash Equivalents or marketable securities, not to exceed the greater of $100,000,000 and 9.00% of Consolidated Net Tangible Assets (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(20) the making of payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures (including the Transactions), which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) are approved in respect of such activities by a majority of the Board of Directors of the Parent Borrower or any direct or indirect parent of the Parent Borrower in good faith;

 

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(21) any Restricted Payment so long as immediately after giving effect to the making of such Restricted Payment on a Pro Forma Basis, the Parent Borrower’s Consolidated Total Net Leverage Ratio does not exceed 4.50 to 1.00; and

(22) any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (7)(B), (10) and (21), no Event of Default shall have occurred and be continuing or would occur as a consequence thereof. For purposes of clauses (12) and (13) above, taxes and Related Taxes shall include all interest and penalties with respect thereto and all additions thereto.

The Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, amend, modify or change any term or condition of any Junior Financing Documentation equal to or greater than the Threshold Amount in any manner that is, taken as a whole, materially adverse to the interests of the Administrative Agent or the Lenders.

As of the Closing Date, all of the Parent Borrower’s Subsidiaries will be Restricted Subsidiaries. The Parent Borrower will not permit any Restricted Subsidiary to become an Unrestricted Subsidiary except pursuant to the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Parent Borrower and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments or Permitted Investments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation will only be permitted if a Restricted Payment or Permitted Investment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Agreement.

For purposes of this Section 7.05, if any Investment or Restricted Payment (or a portion thereof) would be permitted pursuant to one or more provisions described above and/or one or more of the exceptions contained in the definition of “Permitted Investments,” the Parent Borrower may divide and classify such Investment or Restricted Payment (or a portion thereof) in any manner that complies with this Section 7.05 and may later divide and reclassify any such Investment or Restricted Payment so long as the Investment or Restricted Payment (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception as of the date of such reclassification; provided that any Restricted Payment made in reliance on clause (7)(B) above shall not be permitted to be reclassified as made pursuant to any other provision described above and shall be deemed at all times to have been made in reliance on such clause (7(B)).

Section 7.06 Burdensome Agreements.

Permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(a) (i) pay dividends or make any other distributions to the Parent Borrower or any of its Restricted Subsidiaries on its Capital Stock; or (ii) pay any Indebtedness owed to the Parent Borrower or any of its Restricted Subsidiaries;

(b) make loans or advances to the Parent Borrower or any of its Restricted Subsidiaries;

(c) create, incur, assume or suffer to exist Liens on the Collateral of such Person for the benefit of the Lenders with respect to the Facilities and the Obligations or under the Loan Documents; or

 

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(d) sell, lease or transfer any of its properties or assets to the Parent Borrower or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions of the Parent Borrower or any of its Restricted Subsidiaries in effect on the Closing Date, including pursuant to this Agreement and the other Loan Documents, related Swap Contracts and Indebtedness permitted pursuant to Section 7.01(c);

(2) the Senior Notes Indenture, the Senior Notes and related Guarantees and other documents relating to the Senior Notes Indenture and the Senior Notes;

(3) applicable law or any applicable rule, regulation or order;

(4) any agreement or other instrument of a Person acquired by or merged, amalgamated or consolidated with or into the Parent Borrower or any Restricted Subsidiary or an Unrestricted Subsidiary that is designated a Restricted Subsidiary that was in existence at the time of such acquisition (or at the time it merges with or into the Parent Borrower or any Restricted Subsidiary or assumed in connection with the acquisition of assets from such Person (but, in each case, not created in contemplation thereof)), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired or designated; provided that in connection with a merger, amalgamation or consolidation under this clause (4), if a Person other than the Parent Borrower or such Restricted Subsidiary is the successor company with respect to such merger, amalgamation or consolidation, any agreement or instrument of such Person or any Subsidiary of such Person, shall be deemed acquired or assumed, as the case may be, by the Parent Borrower or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;

(5) customary encumbrances or restrictions contained in contracts or agreements for the sale of assets applicable to such assets pending consummation of such sale, including customary restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Restricted Subsidiary;

(6) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(7) customary provisions in operating or other similar agreements, asset sale agreements and stock sale agreements entered into in connection with the entering into of such transaction, which limitation is applicable only to the assets that are the subject of those agreements;

(8) purchase money obligations for property acquired and Capitalized Lease Obligations, to the extent such obligations impose restrictions of the nature discussed in clauses (c) or (d) in the first paragraph of this Section 7.06 on the property so acquired;

(9) customary provisions contained in leases, sub-leases, licenses, sublicenses, contracts and other similar agreements entered into in the ordinary course of business to the extent such obligations impose restrictions of the type described in clauses (c) or (d) in the first paragraph of this Section 7.06 on the property subject to such lease;

(10) any encumbrance or restriction effected in connection with a Qualified Receivables Financing that, in the good faith determination of the Parent Borrower, are necessary or advisable to effect such Qualified Receivables Financing;

 

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(11) any encumbrance or restriction contained in other Indebtedness, Disqualified Stock or Preferred Stock of the Parent Borrower or any Restricted Subsidiary that is incurred subsequent to the Closing Date pursuant to Section 7.01, provided that (i) such encumbrances and restrictions contained in any agreement or instrument will not materially affect the Parent Borrower’s ability to make anticipated principal or interest payments under this Agreement (as determined by the Parent Borrower in good faith) or (ii) such encumbrances and restrictions contained in any agreement or instrument taken as a whole are not materially less favorable to the Lenders than the encumbrances and restrictions contained in this Agreement (as determined by the Parent Borrower in good faith);

(12) any encumbrance or restriction contained in secured Indebtedness otherwise permitted to be incurred pursuant to Sections 7.01 and 7.02 to the extent limiting the right of the debtor to dispose of the assets securing such Indebtedness;

(13) any encumbrance or restriction arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, (x) detract from the value of the property or assets of the Parent Borrower or any Restricted Subsidiary in any manner material to the Parent Borrower or any Restricted Subsidiary or (y) materially affect the Parent Borrower’s ability to make future principal or interest payments under this Agreement, in each case, as determined by the Parent Borrower in good faith;

(14) customary provisions in joint venture agreements or arrangements and other similar agreements or arrangements relating solely to the applicable joint venture; and

(15) any encumbrances or restrictions of the type referred to in Section 7.06(a), (b), (c) and (d) imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in Section 7.06(1) through (14); provided that such encumbrances and restrictions contained in any such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing are, in the good faith judgment of the Parent Borrower, not materially more restrictive, taken as a whole, than the encumbrances and restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

For purposes of determining compliance with this Section 7.06, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Parent Borrower or a Restricted Subsidiary to other Indebtedness Incurred by the Parent Borrower or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

Section 7.07 Accounting Changes. Make any change in fiscal year; provided, however, that any Borrower or Holdings may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Borrowers and the Administrative Agent will, and are hereby authorized by the Lenders to, make any amendments to this Agreement that are necessary, in the judgment of the Administrative Agent and the Borrowers or Holdings, as applicable, to reflect such change in fiscal year.

Section 7.08 Financial Covenant. As of the end of each fiscal quarter of the Parent Borrower (commencing with the third full fiscal quarter ending after the Closing Date) and so long as the aggregate amount of Revolving Credit Loans outstanding as of the end of such fiscal quarter ((i) excluding (a) all Letters of Credit, (b) any amounts used to fund OID or upfront fees as a result of any flex provisions exercised under the Fee Letter referred to in clause (A) of the definition thereof and (c) amounts outstanding pursuant to Ancillary Facilities used in the ordinary course of business and (ii) reduced by any Specified Sponsor Overfunding Amount not applied pursuant to Section 7.05(7)(B)) and remaining in cash on the Borrower’s balance sheet) exceeds 35% of the aggregate amount of all Revolving Credit Commitments in effect as of such date, permit the Consolidated First Lien Net Leverage Ratio as of the end of such fiscal quarter of the Parent Borrower set forth below to be greater than 7.30:1.00 (the “Financial Covenant”):

 

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Section 7.09 Holding Company. Holdings shall not conduct, transact or otherwise engage in any material business or operations; provided, that the following shall be permitted in any event: (i) its ownership of the Capital Stock of the Parent Borrower and the Restricted Subsidiaries and any Subsidiary of Holdings (that is not a Borrower or a Subsidiary of a Borrower) which is formed solely for purposes of acting as a co-obligor with respect to any Qualified Holding Company Indebtedness and which does not conduct, transact or otherwise engage in any material business or operation, and, in each case, activities incidental thereto; (ii) the entry into, and the performance of its obligations with respect to the Loan Documents (including any Specified Refinancing Debt or any New Term Facility), any Refinancing Notes, any New Incremental Notes, any Junior Financing Document, any Ratio Debt documentation, any documentation relating to any Permitted Refinancing of the foregoing or documentation relating to the Indebtedness otherwise permitted by the last sentence in this Section 7.09 and the Guarantees permitted by clause (iv) below; (iii) the consummation of the Transactions; (iv) performing of activities (including without limitation, cash management activities) and the entry into documentation with respect thereto, in each case, permitted by this Agreement for Holdings to enter into and perform, (v) the payment of dividends and distributions (and other activities in lieu thereof permitted by this Agreement), the making of contributions to the capital of its Subsidiaries and Guarantees of Indebtedness permitted to be incurred hereunder by the Parent Borrower or any of the Restricted Subsidiaries and Guarantees of other obligations not constituting Indebtedness; (vi) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance and performance of activities relating to its officers, directors, managers and employees and those of its Subsidiaries); (vii) the performing of activities in preparation for and consummating any public offering of its common stock or any other issuance or sale of its Capital Stock (other than Disqualified Stock) including converting into another type of legal entity; (viii) the participation in tax, accounting and other administrative matters as a member of the consolidated group of Holdings and the Borrowers, including compliance with applicable Laws and legal, tax and accounting matters related thereto and activities relating to its officers, directors, managers and employees; (ix) the holding of any cash and Cash Equivalents (but not operating any property); (x) the entry into and performance of its obligations with respect to contracts and other arrangements, including the providing of indemnification to officers, managers, directors and employees and (xi) any activities incidental to the foregoing. Holdings shall not create, incur, assume or suffer to exist any Lien on any Capital Stock of any Borrower or any Restricted Subsidiary (other than Liens pursuant to any Loan Document, non-consensual Liens arising solely by operation of Law and Liens pursuant to documentation relating to other secured Indebtedness permitted to be Incurred hereunder and any Permitted Liens) and shall not incur any Indebtedness (other than in respect of Disqualified Stock, Qualified Holding Company Indebtedness or Guarantees permitted by clause (iv) above and liabilities imposed by Law, including Tax liabilities).

ARTICLE VIII.

Events of Default and Remedies

Section 8.01 Events of Default. Any of the following shall constitute an “Event of Default”:

(a) Non-Payment. Any Borrower or any other Loan Party fails to pay in the currency required hereunder (i) when due and as required to be paid herein, any amount of principal of any Loan, or (ii) within five Business Days after the same becomes due and payable, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or any other amount payable hereunder or with respect to any other Loan Document; or

(b) Specific Covenants. Any Borrower or any other Loan Party fails to perform or observe any term, covenant or agreement contained in any of Sections 6.03(a), 6.05(a) (solely with respect to the Borrowers), 6.11 or in any Section of Article VII (subject to, in the case of the Financial Covenant, the cure rights contained in Section 8.03 and the proviso at the end of this clause (b)), or Holdings fails to perform or observe any term, covenant or agreement contained in Section 7.09; provided, that a Default by the Borrowers under Section 7.08 (a “Financial Covenant Event of Default”) shall not constitute an Event of Default with respect to the Term Facilities, any New Term Facility or any Specified Refinancing Debt (unless refinancing the Revolving Credit Facility) unless and until the Required Revolving Lenders shall have terminated their Revolving Credit Commitments and declared all amounts outstanding under the Revolving Credit Facility to be due and payable; or

 

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(c) Other Defaults. Any Loan Party fails to perform or observe any covenant or agreement (other than those specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after notice thereof by the Administrative Agent to any Borrower; or

(d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower or any other Loan Party herein, in any other Loan Document, or in any document required to be delivered in connection herewith or therewith shall be incorrect or misleading in any material respect (or in any respect if any such representation or warranty is already qualified by materiality) when made or deemed made; or

(e) Cross-Default. Any Loan Party or any Restricted Subsidiary (A) fails to make any payment beyond the applicable grace period with respect thereto, if any (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness hereunder and intercompany Indebtedness) having an aggregate outstanding principal amount equal to or greater than the Threshold Amount or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) after the expiration of any applicable grace or cure period therefor to cause, with the giving of notice if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in each case, prior to its stated maturity; provided that this clause (e)(B) shall not apply to (x) secured Indebtedness that becomes due as a result of the sale or transfer or other Disposition (including a Casualty Event) of the property or assets securing such Indebtedness permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such Indebtedness, (y) events of default, termination events or any other similar event under the documents governing Swap Contracts for so long as such event of default, termination event or other similar event does not result in the occurrence of an early termination date or any acceleration or prepayment of any amounts or other Indebtedness payable thereunder or (z) Indebtedness that upon the happening of any such default or event automatically converts into Equity Interests (other than Disqualified Stock or, in the case of a Restricted Subsidiary, Disqualified Stock or Preferred Stock) in accordance with its terms; provided further, that such failure is unremedied and is not validly waived by the holders of such Indebtedness in accordance with the terms of the documents governing such Indebtedness prior to any termination of the Revolving Credit Commitments or acceleration of the Loans pursuant to Section 8.02; or

(f) Insolvency Proceedings, Etc. (i) Any Loan Party or any Restricted Subsidiary (other than any Immaterial Subsidiary) institutes, or consents to the institution of any proceeding under any Debtor Relief Law, a winding-up, an administration, a dissolution, or a composition or makes an assignment for the benefit of creditors or any other action is commenced (by way of voluntary arrangement, scheme of arrangement or otherwise); or appoints, applies for or consents to the appointment of any receiver, administrator, administrative receiver, trustee, custodian, conservator, liquidator, rehabilitator, judicial manager, provisional liquidator, administrator, receiver and manager, controller, monitor or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, judicial manager, provisional liquidator, administrator, administrative receiver, receiver and manager, controller, monitor or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 days; or any proceeding under any Debtor Relief Law (including, without limitation, for the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, judicial manager, provisional liquidator, administrator, administrative receiver, receiver and manager, controller, monitor or similar officer) relating to any such Person or to all or substantially all of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 days, or an order for relief is entered in any such proceeding or (ii) any Loan Party or Restricted Subsidiary has filed (a) for surseance van betaling or voorlopige surseance van betaling, (b) any notice under section 36 of the Tax Collection Act of the Netherlands (Invorderingswet 1990) or section 60 paragraphs 2 and/or 3 of the Social Insurance Financing Act of the Netherlands (Wet Financiering Sociale Verzekeringen) in conjunction with section 36 of the Tax Collection Act or (c) an out-of-court restructuring plan (buitengerechtelijk schuldeisersakkoord) and such event or condition, together with all other such events or conditions, if any, could, in the case of this clause (ii), reasonably be expected to result in a Material Adverse Effect; or

 

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(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Restricted Subsidiary (other than any Immaterial Subsidiary) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due or suspends making payments or enters into a moratorium or standstill arrangement in relation to its Indebtedness or is taken to have failed to comply with a statutory demand (or otherwise be presumed to be insolvent by applicable Law) or (ii) any writ or warrant of attachment or execution or similar process is issued, commenced or levied against all or substantially all of the property of any such Person and is not released, vacated or fully bonded within 60 days after its issue, commencement or levy, or any analogous procedure or step is taken in any jurisdiction; or

(h) Judgments. There is entered against any Loan Party or any Restricted Subsidiary a final judgment or order for the payment of money in an aggregate amount (as to all such judgments and orders) equal to or greater than the Threshold Amount (to the extent not paid and not covered by (i) independent third-party insurance as to which the insurer has been notified of such judgment or order and does not deny coverage or (ii) an enforceable indemnity to the extent that such Loan Party or Restricted Subsidiary shall have made a claim for indemnification and the applicable indemnifying party shall not have disputed such claim) and there is a period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal, bond or otherwise, is not in effect; or

(i) ERISA. (i) One or more ERISA Events occur or there is or arises an Unfunded Pension Liability (taking into account only Plans with positive Unfunded Pension Liability) which event or events or unfunded liability or unfunded liabilities results or would reasonably be expected to result in liability of any Loan Party in an aggregate amount which would reasonably be expected to result in a Material Adverse Effect, (ii) any Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA which has resulted or would reasonably be expected to result in liability of any Loan Party in an aggregate amount which would reasonably be expected to result in a Material Adverse Effect or (iii) with respect to a Non-U.S. Plan, a termination, withdrawal, imposition of a Lien or noncompliance with applicable Law or plan terms that would reasonably be expected to result in a Material Adverse Effect; or

(j) Invalidity of Certain Loan Documents. Any material provision of this Agreement, any Collateral Document, any Guaranty, the Intercompany Subordination Agreement and/or any intercreditor agreement required to be entered into pursuant to the terms of this Agreement (in each case, subject to the Legal Reservations, Perfection Requirements and the Perfection Exceptions), at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder (including as a result of a transaction permitted under Section 7.03 or Section 7.04) or satisfaction in full of all the Obligations in cash and in immediately available funds (other than contingent indemnification obligations as to which no claim has been asserted, obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements, and Letters of Credit which have been Cash Collateralized) ceases to be in full force and effect (except that any such failure to be in full force and effect with respect to the documents referred to in clause (vii) of the definition of Loan Documents shall constitute an Event of Default only if the Borrowers receive notice thereof and the Borrowers fail to remedy the relevant failure in all material respects within 15 days of receiving said notice); or any Loan Party contests in writing the validity or enforceability of any provision of this Agreement, any Collateral Document, any Guaranty, the Intercompany Subordination Agreement and any intercreditor agreement required to be entered into pursuant to the terms of this Agreement; or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document (other than as a result of repayment in full of the Obligations in cash and in immediately available funds (other than contingent indemnification obligations as to which no claim has been asserted and obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements, and Letters of Credit which have been Cash Collateralized) and termination of the Aggregate Commitments), or purports in writing to revoke or rescind any Loan Document or the perfected first priority Liens created thereby (except as otherwise expressly provided in this Agreement or the Collateral Documents); or

 

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(k) Change of Control. There occurs any Change of Control.

Notwithstanding the foregoing, from the Closing Date until the date which is 90 days after the Closing Date (the “Clean-Up Period”), a breach of any representation or warranty in Article V or any covenant in Articles VI or VII existing by reason of circumstances existing on the Closing Date and relating solely to the business or operations of the Target and its Subsidiaries (or any obligation to procure or ensure in relation thereto) (in each case, a “Clean-Up Default”) shall not constitute a Default or Event of Default during the Clean-Up Period if and for so long as the circumstances giving rise to such breach:

(i) are capable of being cured during the Clean-Up Period and Holdings and its Subsidiaries are using reasonable efforts to cure such breach (it being understood for the avoidance of doubt that untrue disclosure or financial statements cannot be cured by amending, supplementing or restating such disclosure or financial statements);

(ii) have not been approved or procured by a Borrower or Holdings; and

(iii) have not had, and would not reasonably be expected to have, a Material Adverse Effect;

provided that (a) the Borrower Representative shall give the Lenders notice of such breach upon obtaining knowledge thereof by Holdings or any of its Subsidiaries and the steps it is taking to cure such steps and (b) if the relevant circumstances are continuing at the end of the Clean-Up Period, the Default or Event of Default, as applicable, shall be deemed to occur immediately at the end of the Clean-Up Period and all rights and remedies which would apply with regard thereto but for the application of this paragraph shall arise and be exercisable.

The paragraph above shall not apply with respect to any Clean-Up Default to the extent that the Clean-Up Default relates to Sections 8.01(a) (to the extent that the Default relates to an amount of principal or interest), (f), (g) or (k).

Section 8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing (including any Event of Default arising by virtue of the termination and declaration contemplated by the proviso to Section 8.01(b) but subject, solely with respect to the Certain Funds Period, to the last paragraph in this Section 8.02), the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders (and, (i) if a Financial Covenant Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Revolving Lenders only, and in such case, without limiting the proviso to Section 8.01(b), only with respect to the Revolving Credit Facility and any Letters of Credit, L/C Credit Extensions and L/C Obligations and (ii) shall automatically, in the case of any event described in Section 8.01(f) with respect to a U.S. Loan Party only), take any or all of the following actions (each, an “Enforcement Event”):

(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

(c) require that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof);

(d) exercise on behalf of itself, the L/C Issuers and the Lenders all rights and remedies available to it, the L/C Issuers and the Lenders under the Loan Documents, under any document evidencing Indebtedness in respect of which the Facilities have been designated as “Designated Senior Debt” (or any comparable term) and/or under applicable Law;

 

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(e) declare all or any part of the amounts (or cash cover in relation to those amounts) outstanding under the Ancillary Facilities to be immediately due and payable, at which time they shall become immediately due and payable; and/or

(f) declare that all or any part of the amounts (or cash cover in relation to those amounts) outstanding under the Ancillary Facilities be payable on demand, at which time they shall immediately become payable on demand by the Administrative Agent on the instructions of the Required Lenders;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under any Debtor Relief Law, the obligation of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

During the Certain Funds Period, if the conditions in Section 4.02(b) and Section 4.02(c) are not satisfied, then the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any of the actions set out in paragraphs (a) through (d) (inclusive) above. Notwithstanding anything to the contrary in this Agreement, during the Certain Funds Period, the Administrative Agent and the Lenders shall not, except as provided in the immediately preceding sentence, (A) have the right to cancel, rescind or terminate the Commitments hereunder if the effect of such cancellation, rescission or termination would prevent or limit the making of any of the Loans during the Certain Funds Period, (B) make or enforce any claims they may have under this Agreement if the effect of such claim or enforcement would prevent or limit the making or borrowing of the Loans during the Certain Funds Period, (C) otherwise exercise any right of set-off or similar right or remedy which it may have in relation to the Loans, (D) rescind, terminate or cancel this Agreement or any of the Facilities or exercise any similar right or remedy or make or enforce any claim under the Loan Documents it may have to the extent to do so would prevent or limit the making of any of the Loans during the Certain Funds Period or (E) cause repayment or prepayment of any amounts arising under this Agreement or under any other Loan Document to the extent to do so would prevent or limit the making of the Loans during the Certain Funds Period; and all provisions in the Loan Document shall be interpreted and construed accordingly. During the Certain Funds Period, subject to Section 4.02 of this Agreement, the Administrative Agent and the Lenders shall not otherwise refuse to make available the Loans. After the Certain Funds Period, all of the rights, remedies and entitlements of the Administrative Agent and the Lenders shall be available notwithstanding that certain rights, remedies and entitlements were not exercised or available during the Certain Funds Period.

Section 8.03 Right to Cure.

(a) Notwithstanding anything to the contrary contained in Section 8.01 or 8.02, in the event that the Borrowers fail to comply with the requirements of the Financial Covenant at any time when the Borrowers are required to comply with such Financial Covenant, pursuant to the terms thereof, then from the end of the most recently ended fiscal quarter of the Parent Borrower until the expiration of the tenth Business Day subsequent to the date the relevant Compliance Certificate is required to be delivered pursuant to Section 6.02(b) (the last day of such period being the “Anticipated Cure Deadline”), Holdings shall have the right (the “Cure Right”) to issue common Capital Stock (or preferred equity and/or convertible preferred equity reasonably acceptable to the Administrative Agent) for cash and contribute the proceeds therefrom in the form of common Capital Stock or in another form reasonably acceptable to the Administrative Agent to the Parent Borrower or obtain a contribution to its equity (which shall be in the form of common equity or otherwise in a form reasonably acceptable to the Administrative Agent) (“Cure Equity”), and upon the receipt by the Parent Borrower of such cash (the “Cure Amount”), pursuant to the exercise by the Borrowers of such Cure Right, the calculation of Consolidated EBITDA as used in the Financial Covenant shall be recalculated giving effect to the following pro forma adjustments:

(i) Consolidated EBITDA for such fiscal quarter (and for any subsequent period that includes such fiscal quarter) shall be increased, solely for the purpose of measuring the Financial Covenant and not for any other purpose under this Agreement (including but not limited to determining the availability or amount of any covenant baskets or carve-outs (including the determination of amounts available under Section 7.05) or determining the Applicable Commitment Fee or Applicable Rate, provided that, in determining the Applicable Commitment Fee or

 

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the Applicable Rate, effect shall be given to the relevant Cure Amount for purposes of clause (y) in the respective definitions thereof, such that no Event of Default shall be deemed to have occurred and be continuing), by an amount equal to the Cure Amount; provided that (1) the receipt by the Parent Borrower of the Cure Amount pursuant to the Cure Right shall be deemed to have no other effect whatsoever under this Agreement (including but not limited to determining the availability or amount of any covenant baskets or carve-outs or determining the Applicable Commitment Fee or Applicable Rate, provided that, in determining the Applicable Commitment Fee or the Applicable Rate, effect shall be given to the relevant Cure Amount for purposes of clause (y) in the respective definitions thereof, such that no Event of Default shall be deemed to have occurred and be continuing) and (2) no Cure Amount shall reduce Indebtedness on a Pro Forma Basis for the applicable period for purposes of calculating the Financial Covenant or calculating the Consolidated First Lien Net Leverage Ratio, or the Consolidated Total Net Leverage Ratio, nor shall any Cure Amount held by any Borrower Party qualify as “unrestricted cash or Cash Equivalents of the Borrower Parties” for the purposes of calculating any net obligations or liabilities under the terms of this Agreement; and

(ii) if, after giving effect to the foregoing recalculations, the Borrowers shall then be in compliance with the requirements of the Financial Covenant, the Borrowers shall be deemed to have satisfied the requirements of the Financial Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Covenant that had occurred (and any other Default as a result thereof, including the failure to meet any condition requiring no Default or Event of Default based solely on the basis of any actual or purported Event of Default under the Financial Covenant) shall be deemed cured for the purposes of this Agreement; and

(iii) upon receipt by the Administrative Agent of written notice, on or prior to the Anticipated Cure Deadline, that the Borrowers intend to exercise the Cure Right in respect of a fiscal quarter, the Lenders (i) shall not be permitted to accelerate Loans held by them, to terminate the Revolving Credit Commitments held by them or to exercise remedies against the Collateral on the basis of a failure to comply with the requirements of the Financial Covenant, unless such failure is not cured pursuant to the exercise of the Cure Right on or prior to the Anticipated Cure Deadline and (ii) shall not be obligated to make any Credit Extension under the Revolving Credit Facility.

(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal-quarter period there shall be at least two fiscal quarters in respect of which the Cure Right is not exercised, (ii) there can be no more than five fiscal quarters in respect of which the Cure Right is exercised during the term of the Facilities and (iii) for purposes of this Section 8.03, the Cure Amount utilized shall be no greater than the minimum amount required to remedy the applicable failure to comply with the Financial Covenant.

Section 8.04 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after an actual or deemed entry of an order for relief with respect to any Borrower under any Debtor Relief Law), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.16 and 2.17, be applied by the Administrative Agent in the following order:

(a) first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, disbursements and other charges of counsel payable under Section 10.04 and amounts payable under Article III and amounts owing in respect of (x) the preservation of Collateral or the Collateral Agent’s security interest in the Collateral or (y) with respect to enforcing the rights of the Secured Parties under the Loan Documents) payable to the Administrative Agent, the Redenominated Term Facilities Administrative Agent and the Collateral Agent in their respective capacity as such;

(b) second, to payment in full of Unfunded Advances/Participations (the amounts so applied to be distributed between or among, as applicable, the Administrative Agent and the L/C Issuers pro rata in accordance with the amounts of Unfunded Advances/Participations owed to them on the date of any such distribution);

(c) third, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal, interest and Letter of Credit fees) payable to the Lenders and the L/C Issuers (including fees, disbursements and other charges of counsel payable under Sections 10.04 and 10.05) arising under the Loan Documents and amounts payable under Article III, ratably among them in proportion to the respective amounts described in this clause (c) held by them;

 

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(d) fourth, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit fees and interest on the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuers in proportion to the respective amounts described in this clause (d) held by them;

(e) fifth, (i) to payment of that portion of the Obligations constituting unpaid principal of the Loans, the L/C Borrowings and obligations of the Loan Parties then owing under Secured Hedge Agreements and the Secured Cash Management Agreements and (ii) to Cash Collateralize that portion of L/C Obligations comprising the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrowers pursuant to Sections 2.03 and 2.16, ratably among the Lenders, the L/C Issuers, the Hedge Banks party to such Secured Hedge Agreements and the Cash Management Banks party to such Secured Cash Management Agreements in proportion to the respective amounts described in this clause (e) held by them; provided that (x) any such amounts applied pursuant to the foregoing clause (ii) shall be paid to the Administrative Agent for the ratable account of the applicable L/C Issuers to Cash Collateralize such L/C Obligations, (y) subject to Sections 2.03(d) and 2.16, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to this clause (e) shall be applied to satisfy drawings under such Letters of Credit as they occur and (z) upon the expiration of any Letter of Credit without any pending drawing, the pro rata share of Cash Collateral attributable to such expired Letter of Credit shall be applied by the Administrative Agent in accordance with the priority of payments set forth in this Section 8.04;

(f) sixth, to the payment of all other Obligations of the Loan Parties owing under or in respect of the Loan Documents that are then due and payable to the Administrative Agent and the other Secured Parties, ratably based upon the respective aggregate amounts of all such Obligations then owing to the Administrative Agent and the other Secured Parties; and

(g) last, after all of the Obligations have been paid in full (other than contingent indemnification obligations not yet due and owing), to the Borrowers or as otherwise required by Law;

provided that (A) no amounts received from any Guarantor shall be applied to Excluded Swap Obligations of such Guarantor. (B) in the case of any amounts to be applied by the Administrative Agent towards payment in respect of any Initial Term B-3 Loan or Redenominated Term B-3 Loan or (at any time after the Term B-2 Relevant Date so long as the Term B-2 Conversion has not occurred) any Initial Term B-2 Loan in accordance with the foregoing, such amounts may be paid (in accordance with the order specified in clauses (a) to (g) above) by the Administrative Agent to the Redenominated Term Facilities Administrative Agent for the purposes of such application and (C) in the case of any amounts received by the Redenominated Term Facilities Administrative Agent that are required to be applied towards any payment (other than payment in respect of any Initial Term B-3 Loan or Redenominated Term B-3 Loan or (at any time after the Term B-2 Relevant Date so long as the Term B-2 Conversion has not occurred) any Initial Term B-2 Loan) in accordance with the foregoing, such amounts may be paid (in accordance with the order specified in clauses (a) to (g) above) by the Redenominated Term Facilities Administrative Agent to the Administrative Agent for the purposes of such application.

If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired without any pending drawing, such remaining amount shall be applied to the other Obligations, if any, in accordance with the priority of payments set forth above. Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application of payments described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may reasonably request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX for itself and its Affiliates as if a “Lender” party hereto.

 

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It is understood and agreed by each Loan Party and each Secured Party that none of the Administrative Agent, the Redenominated Term Facilities Administrative Agent and Collateral Agent shall have any liability for any determinations made by it in this Section 8.04, in each case except to the extent resulting from the gross negligence, bad faith or willful misconduct of or material breach of the Loan Documents by the Administrative Agent, the Redenominated Term Facilities Administrative Agent or the Collateral Agent, as applicable (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Loan Party and each Secured Party also agrees that the Administrative Agent, Redenominated Term Facilities Administrative Agent and the Collateral Agent may (but shall not be required to), at any time and in its sole discretion, and with no liability resulting therefrom, petition a court of competent jurisdiction regarding any application of Collateral in accordance with the requirements hereof, and the Administrative Agent, the Redenominated Term Facilities Administrative Agent and the Collateral Agent shall be entitled to wait for, and may conclusively rely on, any such determination.

ARTICLE IX.

Administrative Agent and Other Agents

Section 9.01 Appointment and Authorization of Agents.

(a) Each Lender and L/C Issuer hereby irrevocably appoints Barclays Bank PLC to act on its behalf as Administrative Agent hereunder and under the other Loan Documents (subject to the provisions in Section 9.09), and designates and authorizes the Administrative Agent to take such actions on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement or any other Loan Document, together with such actions and powers as are reasonably incidental thereto. Each Lender holding an Initial Term B-2 Commitment, an Initial Term B-3 Commitment or Term B-3 Commitment or any Initial Term B-2 Loan, Initial Term B-3 Loan or Redenominated Term B-3 Loan hereby irrevocably appoints Bank of China Limited, Shanghai Branch to act on its behalf as Redenomination Term Facilities Administrative Agent hereunder and under the other Loan Documents (subject to the provisions in Section 9.09), and designates and authorizes the Redenomination Term Facilities Administrative Agent to take such actions on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to the Redenomination Term Facilities Administrative Agent by the terms of this Agreement or any other Loan Document, together with such actions and powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, no Agent shall have any duties or responsibilities, except those expressly set forth herein, nor shall any Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent. Regardless of whether a Default has occurred and is continuing and without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with reference to any 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 merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The Redenomination Term Facilities Administrative Agent will promptly provide the Administrative Agent with information with respect to the Initial Term B-2 Loans, Initial Term B-3 Loan and Redenominated Term B-3 Loans (including with respect to interest rates, outstanding principal amount and the Redenomination Term Facilities Administrative Agent’s Register) as the Administrative Agent may from time to time reasonably request. Each of the Administrative Agent, the Redenomination Term Facilities Administrative Agent and the Collateral Agent shall from time to time promptly provide each other with such information (held by it in its capacity as such Agent) as any such Agent may reasonably request for the purposes of performing its role as Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent.

(b) 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 such L/C Issuer shall have all of the benefits and immunities (i) provided to the Agents in this Article IX 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 the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Agent” as used in this Article IX and in the definition of “Agent-Related Person” included such L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to such L/C Issuer.

 

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(c) The Administrative Agent shall also act as the Collateral Agent under the Loan Documents, and each of the Lenders (including in its capacities as a Lender, L/C Issuer (if applicable) and a potential Cash Management Bank party to a Secured Cash Management Agreement and/or a potential Hedge Bank party to a Secured Hedge Agreement) and the Redenomination Term Facilities Administrative Agent hereby irrevocably appoints and authorizes the Administrative Agent as Collateral Agent to act as the agent of (and to hold any security interest created by the Collateral Documents for and on behalf of or in trust for) such Lender and Redenomination Term Facilities Administrative Agent for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent as Collateral Agent (and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.02 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX (including Section 9.07, as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Loan Documents) and Section 10.04 as if set forth in full herein with respect thereto and all references to Administrative Agent in this Article IX shall, where applicable, be read as including a reference to the Collateral Agent. Without limiting the generality of the foregoing, the Lenders and the Redenomination Term Facilities Administrative Agent hereby expressly authorize the Administrative Agent as Collateral Agent to execute any and all documents (including releases, payoff letters and similar documents) with respect to the termination of this Agreement and the Collateral and the rights of the Secured Parties with respect thereto (including any intercreditor agreement), as contemplated by and in accordance with the provisions of this Agreement and the Collateral Documents and acknowledge and agree that any such action by any Agent shall bind the Lenders (including in its capacities as a Lender, L/C Issuer (if applicable) and a potential Cash Management Bank party to a Secured Cash Management Agreement and/or a potential Hedge Bank party to a Secured Hedge Agreement).

Section 9.02 Delegation of Duties. The Administrative Agent and the Redenomination Term Facilities Administrative Agent may execute any of its duties and exercise its rights and powers under this Agreement or any other Loan Document (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents or of exercising any rights and remedies thereunder) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent, the Redenomination Term Facilities 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 Agent-Related Persons. The Administrative Agent and Redenomination Term Facilities Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence, bad faith, willful misconduct or material breach of the Loan Documents by the Administrative Agent or the Redenomination Term Facilities Administrative Agent, as applicable, as determined by a final non-appealable judgment by a court of competent jurisdiction. The exculpatory provisions of this Article IX shall apply to any such sub agent and to the Agent-Related Persons of the Administrative Agent or Redenomination Term Facilities Administrative Agent, as applicable, 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 and Redenomination Term Facilities Administrative Agent, as applicable.

Section 9.03 Liability of Agents.

(a) No Agent-Related Person shall be (i) liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence, bad faith, willful misconduct or material breach of the Loan Documents in connection with its duties expressly set forth herein, to the extent determined in a final, non-appealable judgment by a court of competent jurisdiction), (ii) liable for any action taken or not taken by it (A) 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 Applicable Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (B) in the absence of its own gross negligence, bad faith, willful misconduct or material breach of the Loan Documents as determined by the final, non-appealable judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein, (iii) responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or

 

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in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Applicable Agent under or in connection with, this Agreement or any other Loan Document, (iv) responsible for or have any duty to ascertain or inquire into the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien, or security interest created or purported to be created under the Collateral Documents, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder, (v) responsible for or have any duty to ascertain or inquire into the value or the sufficiency of any Collateral or (vi) responsible for or have any duty to ascertain or inquire into the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Applicable Agent. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof.

(b) No Agent shall have any duty to (i) take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such 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 no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Law; or (ii) disclose, except as expressly set forth herein and in the other Loan Documents, or be liable for the failure to disclose, any information relating to the Borrowers or any of their Affiliates that is communicated to or obtained by any Person serving as an Agent or any of its Affiliates in any capacity.

(c) Any assignor of a Loan or seller of a participation hereunder shall be entitled to rely conclusively on a representation of the assignee Lender or Participant in the relevant Assignment and Assumption or participation agreement, as applicable, that such assignee or purchaser is not a Disqualified Institution. No Agent shall have any responsibility or liability for monitoring the list or identities of, or enforcing provisions relating to, Disqualified Institutions.

Section 9.04 Reliance by Agents.

(a) Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, request, consent, certificate, instrument, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, Internet or intranet website posting or other distribution statement or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons. Each 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 a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with, and rely upon (and be fully protected in relying upon), advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by such Agent. Each Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders, against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

(b) For purposes of determining compliance with the conditions specified in Sections 4.02 and 4.03, each Lender that has signed this Agreement 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 a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date, specifying its objection thereto.

 

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Section 9.05 Notice of Default. No Agent shall be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to that Agent for the account of the applicable Lenders, unless that Agent shall have received written notice from a Lender or any Borrower referring to this Agreement, describing such Default and stating that such notice is a “notice of default.” The Applicable Agent will notify the Lenders of its receipt of any such notice. The Applicable Agent shall take such action with respect to any Event of Default as may be directed by the Required Lenders or the Required Revolving Lenders, as applicable, in accordance with Article VIII; provided, however, that unless and until the Applicable Agent has received any such direction, the Applicable Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable or in the best interest of the Lenders.

Section 9.06 Credit Decision; Disclosure of Information by Agents. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by any Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to each Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers and the other Loan Parties hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by any Agent herein, such Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person.

Section 9.07 Indemnification of Agents. Whether or not the transactions contemplated hereby are consummated, each Lender shall, on a ratable basis based on such Lender’s Pro Rata Share of all the Facilities, indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), and hold harmless each Agent-Related Person in each case from and against any and all Indemnified Liabilities incurred by such Agent-Related Person (including, for the avoidance of doubt, any such Agent-Related Person in its capacity as L/C Issuer); provided, however, that no Lender shall be liable for any Indemnified Liabilities incurred by an Agent-Related Person to the extent such Indemnified Liabilities are determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Agent-Related Person’s own gross negligence, bad faith or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders (or such other number or percentage of the Lenders as shall be required by the Loan Documents) shall be deemed to constitute gross negligence, bad faith or willful misconduct for purposes of this Section 9.07; provided, further, that to the extent any L/C Issuer is entitled to indemnification under this Section 9.07 solely in its capacity and role as an L/C Issuer, only the Revolving Credit Lenders shall be required to indemnify such L/C Issuer under this Section 9.07 (which indemnity shall be provided by such Lenders based upon their respective Pro Rata Share of the Revolving Credit Facility). In the case of any investigation, litigation or proceeding giving rise to any Indemnified Liabilities, this Section 9.07 shall apply whether or not any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limiting the foregoing, each Lender shall reimburse the Applicable Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including the fees, disbursements and other charges of counsel) incurred by the Applicable Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal

 

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advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Applicable Agent is not reimbursed for such expenses by or on behalf of the Borrowers; provided that such reimbursement by the Lenders shall not affect the Borrowers’ continuing reimbursement obligations with respect thereto; provided further, that failure of any Lender to indemnify or reimburse the Applicable Agent shall not relieve any other Lender of its obligation in respect thereof. The undertaking in this Section 9.07 shall survive termination of the Aggregate Commitments, the payment of all other Obligations and the resignation or removal of the Applicable Agent.

Section 9.08 Agents in their Individual Capacities. Any Agent and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire Capital Stock in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though it were not an Agent or an L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, an Agent or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that such Agent shall be under no obligation to provide such information to them. With respect to its Loans, such Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not an Agent or an L/C Issuer, and the terms “Lender” and “Lenders” include such Agent in its individual capacity (unless otherwise expressly indicated or unless the context otherwise requires).

Section 9.09 Successor Agents.

(a) The Administrative Agent, Collateral Agent and Redenomination Term Facilities Administrative Agent may resign as the Administrative Agent, Collateral Agent or Redenomination Term Facilities Administrative Agent, as applicable, upon 30 days’ written notice to the Borrowers and the Lenders. If the Administrative Agent, Collateral Agent, Redenomination Term Facilities Administrative Agent or a Controlling Affiliate of the Administrative Agent, the Collateral Agent or Redenomination Term Facilities Administrative Agent is subject to an Agent-Related Distress Event, the Borrowers may remove such Agent from such role upon ten (10) days’ written notice to the Lenders. Upon receipt of any such notice of resignation or removal, the Required Lenders (or, in the case of the Redenomination Term Facilities Administrative Agent, the required Lenders in respect of the Initial Term B-2 Loans (as reduced pursuant to Section 2.04(b)) and the Term B-3 Loans, as if those Loans constituted all of the Total Outstandings and Commitments under the Loan Documents) shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be consented to by the Borrowers at all times other than during the existence of an Event of Default under Section 8.01(a), (f), or (g) (which consent of the Borrowers shall not be unreasonably withheld or delayed). If no successor agent is appointed prior to the effective date of the resignation or removal, as applicable, of the Administrative Agent, Collateral Agent or Redenomination Term Facilities Administrative Agent, as applicable, the Administrative Agent, Collateral Agent or Redenomination Term Facilities Administrative Agent (other than to the extent subject to an Agent-Related Distress Event or if the Administrative Agent is being removed as a result of it being a Disqualified Lender), as applicable, may appoint, after consulting with the Lenders and the Borrowers, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, the Person acting as such successor agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable, and the term “Administrative Agent”, “Redenomination Term Facilities Administrative Agent” or “Collateral Agent,” as applicable, shall mean such successor administrative agent, such successor redenomination term facilities administrative agent or such successor collateral agent, as applicable, and the retiring Administrative Agent’s, Redenomination Term Facilities Administrative Agent’s or Collateral Agent’s appointment, powers and duties as the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable, shall be terminated. After the retiring Administrative Agent’s, Redenomination Term Facilities Administrative Agent’s or Collateral Agent’s resignation or removal hereunder as the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall continue in effect for its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent under this Agreement. If no successor agent has accepted appointment as the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent (as applicable) by the date which is 30 days following the retiring Administrative Agent’s, Redenomination Term Facilities Administrative Agent’s or Collateral Agent’s (as applicable) notice of resignation or removal, the

 

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retiring Administrative Agent’s, Redenomination Term Facilities Administrative Agent’s or Collateral Agent’s resignation or removal shall nevertheless thereupon become effective and (i) the retiring Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable, shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent or Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security as bailee, trustee or other applicable capacity until such time as a successor of such Agent is appointed), (ii) all payments, communications and determinations provided to be made by, to or through the Applicable Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders (or, in the case of the Redenomination Term Facilities Administrative Agent, the required Lenders in respect of the Initial Term B-2 Loans (as reduced pursuant to Section 2.04(b)) and the Term B-3 Loans, as if those Loans constituted all of the Total Outstandings and Commitments under the Loan Documents) appoint a successor Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent (as applicable) as provided for above in this Section 9.09 and (iii) the Lenders shall perform all of the duties of the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable, hereunder until such time, if any, as the Required Lenders (or, in the case of the Redenomination Term Facilities Administrative Agent, the required Lenders in respect of the Initial Term B-2 Loans (as reduced pursuant to Section 2.04(b)) and the Term B-3 Loans, as if those Loans constituted all of the Total Outstandings and Commitments under the Loan Documents) appoint a successor Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent (as applicable) as provided for above. Upon the acceptance of any appointment as the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent hereunder by a successor and upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages and the other Collateral Documents, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders (or, in the case of the Redenomination Term Facilities Administrative Agent, the required Lenders in respect of the Initial Term B-2 Loans (as reduced pursuant to Section 2.04(b)) and the Term B-3 Loans, as if those Loans constituted all of the Total Outstandings and Commitments under the Loan Documents) may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, the successor Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable, shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges, and duties of the retiring Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent. Upon the acceptance of any appointment as the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent hereunder by a successor or upon the expiration of the 30-day period following the retiring Administrative Agent’s, Redenomination Term Facilities Administrative Agent’s or Collateral Agent’s notice of resignation or removal without a successor having been appointed, the retiring Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable, shall be discharged from its duties and obligations hereunder and under the other Loan Documents other than as specifically set forth in clause (i) above of this Section 9.09(a) but the provisions of this Article IX and Sections 10.04 and 10.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Agent-Related Persons in respect of any actions taken or omitted to be taken by any of them solely in respect of the Loan Documents or Obligations, as applicable, while the retiring Agent was acting as Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent, as applicable. At any time the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent (as applicable) may be removed as the Administrative Agent, Redenomination Term Facilities Administrative Agent or Collateral Agent (as applicable) hereunder at the request of the Borrowers and the Required Lenders (or, in the case of the Redenomination Term Facilities Administrative Agent, the required Lenders in respect of the Initial Term B-2 Loans (as reduced pursuant to Section 2.04(b)) and the Term B-3 Loans, as if those Loans constituted all of the Total Outstandings and Commitments under the Loan Documents).

(b) Any resignation by or removal of Barclays Bank PLC as Administrative Agent or Collateral Agent pursuant to this Section 9.09 shall also constitute its resignation or removal as an L/C Issuer, in which case the resigning or removed L/C Issuer (x) shall not be required to issue any further Letters of Credit hereunder and (y) shall maintain all of its rights as L/C Issuer with respect to any Letters of Credit issued by it prior to the date of such resignation or removal. Upon the acceptance of a successor’s appointment as Administrative Agent or Collateral Agent hereunder or upon the expiration of the 30-day period following the retiring Administrative Agent or Collateral Agent’s notice of resignation or removal without a successor agent having been appointed, (i) such

 

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successor (if any) shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents and (iii) the successor L/C Issuer (if any) shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make (or the Borrowers shall enter into) other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

Section 9.10 Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, administrative receivership, judicial management, insolvency, liquidation, bankruptcy, reorganization (by way of voluntary arrangement, schemes of arrangement or otherwise), arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan 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 Borrowers) 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 Loans, 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 and the Agents (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Agents and their respective agents and counsel to the extent provided for herein and all other amounts due to the Lenders and the Agents under Sections 2.03(h) and (i), 2.09 and 10.04) 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 administrator, administrative receiver, custodian, receiver, assignee, trustee, judicial manager, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each Agent 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, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agents and their respective agents and counsel, and any other amounts, in each case, due to the Agents under Sections 2.09 and 10.04.

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 other Agent any plan of reorganization (by way of voluntary arrangement, schemes of arrangement or otherwise), arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any other Agent or to authorize the Administrative Agent to vote in respect of the claim of any Lender or any other Agent in any such proceeding.

Section 9.11 Collateral and Guaranty Matters. Each of the Lenders (including in their capacities as potential or actual Hedge Banks party to a Secured Hedge Agreement and potential or actual Cash Management Banks party to a Secured Cash Management Agreement), the Redenomination Term Facilities Administrative Agent and each L/C Issuer irrevocably authorize the Administrative Agent and the Collateral Agent, and each of the Administrative Agent and the Collateral Agent shall to the extent requested by the Borrowers or, solely in the case of clause (d) below, to the extent provided for under this Agreement,

(a) release any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations in cash and in immediately available funds (other than (A) contingent indemnification obligations as to which no claim has been asserted and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) and the expiration without any pending drawing or termination of all Letters of Credit (other than Letters of Credit which have been Cash Collateralized), (ii) that is sold, disposed of or distributed or to be sold, disposed of or distributed as part of or in connection with any transaction permitted hereunder or under any other Loan Document, in each case to a Person that is not a Loan Party, (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the Required Lenders, (iv) that constitutes Excluded Property as a result of an occurrence not prohibited hereunder or (v) owned by a Subsidiary Guarantor upon release of such Subsidiary Guarantor from its obligations under its Guaranty pursuant to clause (c) below;

 

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(b) release or subordinate any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Loan Document to the holder of any Permitted Lien on such property that is permitted by clauses (1), (4), (5), (6) (only with regard to Section 7.01(d)), (9), (11) (solely with respect to cash deposits), (16), (17) (other than with respect to self-insurance arrangements), (18) (solely to the extent constituting Excluded Property), (21), (23) (solely to the extent relating to a lien of the type allowed pursuant to clause (9)), (25) (solely to the extent the Lien of the Collateral Agent on such property is not released and is not, pursuant to such agreements, required or permitted to be senior to or pari passu with such Liens), (26), (29) (solely with respect to cash deposits), (34), (39) (only for so long as required to be secured for such letter of intent or investment), (45), (46), (48) and (49) (only for so long as required to be secured for purposes of such cash management arrangements) of the definition thereof;

(c) release any Guarantor from its obligations under the applicable Guaranty if in the case of any Subsidiary, such Person ceases to be a Restricted Subsidiary or otherwise becomes an Excluded Subsidiary as a result of a transaction or designation permitted hereunder; provided that no such release shall occur if such Guarantor continues to be a guarantor in respect of any Specified Refinancing Debt, any Refinancing Notes, the Senior Notes, any New Incremental Notes or, to the extent incurred by a Loan Party (other than Holdings), any other Indebtedness, in each case, with an aggregate outstanding principal amount in excess of $50,000,000; and

(d) establish intercreditor arrangements as contemplated by this Agreement.

Upon request by the Administrative Agent at any time, the Required Lenders will promptly confirm in writing the Administrative Agent’s and the Collateral Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.11. In each case as specified in this Section 9.11, the Applicable Agent will (and each Lender irrevocably authorizes the Applicable Agent to), at the Borrowers’ expense, promptly execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release or subordination of such item of Collateral from the assignment and security interest granted under the Collateral Documents, or to evidence the release of such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.11; provided that, if reasonably requested by the Administrative Agent, the Parent Borrower shall have delivered to the Administrative Agent a certificate of an Responsible Officer certifying that the release or subordination of such Collateral is permitted under the Loan Documents. Additionally, the Administrative Agent and Collateral Agent shall return any possessory collateral to the Borrowers.

Under laws of Taiwan applicable to secured transactions, the Collateral Agent’s security interest in any assets of a Subsidiary Guarantor organized under the laws of Taiwan granted pursuant to the Collateral Documents will cease to be effective and be released immediately upon the Collateral Agent no longer being a creditor who is owed debt by a Designated Taiwan Subsidiary under this Agreement. On the Closing Date, Barclays Bank PLC is a Lender and will act as a joint and several creditor on behalf of the Secured Parties. Upon entering into the relevant Collateral Documents with respect to Designated Taiwan Subsidiaries (the “Taiwan Collateral Documents”), Barclays Bank PLC will have a legal, valid and enforceable Lien and security interest (subject to the Legal Reservations and Section 5.03) in the Collateral described in such Taiwan Collateral Documents. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, (1) Barclays Bank PLC (in its capacity as a Lender, Administrative Agent, Collateral Agent or otherwise) will have no duty, responsibility or liability with respect to any Secured Party to remain a Lender and/or the joint and several creditor on behalf of the Secured Parties under this Agreement and the other Loan Documents and (2) the Secured Parties acknowledge and agree that there are shall be no restrictions on the ability of Barclays Bank PLC (in its capacity as a Lender, Administrative Agent, Collateral Agent or otherwise but subject in all respects to Sections 9.09, 9.14 and 10.07) to assign or sell any of its Loans or Commitments under this Agreement, notwithstanding that as a result of such assignment, the security interests of the Secured Parties created pursuant to the Taiwan Collateral Documents shall be released and cease to provide an effective Lien and security interest in the Collateral described therein (unless another Lender agrees to act in the same capacity with respect to the Taiwan Collateral Documents).

 

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Section 9.12 Other Agents; Arranger and Managers. None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “joint lead arranger,” or “joint bookrunner” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such; provided that each Arranger shall be entitled to any express rights given to that Arranger under any Loan Document (including without limitation its rights to receive fees pursuant to the Fee Letters). Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

Section 9.13 Secured Cash Management Agreements and Secured Hedge Agreements. No Cash Management Bank or Hedge Bank that obtains the benefits of Section 8.04, any Guaranty or any Collateral by virtue of the provisions hereof or of any Guaranty or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.

Section 9.14 Appointment of Supplemental Agents, Incremental Arrangers, Incremental Notes Arrangers and Specified Refinancing Agents.

(a) It is the purpose of this Agreement and the other Loan Documents that there shall be no violation of any Law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as agent or trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or any of the other Loan Documents, and in particular in case of the enforcement of any of the Loan Documents, or in case the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent deems that by reason of any present or future Law of any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or in any of the other Loan Documents or take any other action which may be desirable or necessary in connection therewith, the Administrative Agent, the Redenomination Term Facilities Administrative Agent and the Collateral Agent are hereby authorized, to appoint an additional individual or institution selected by them in their sole discretion as a separate trustee, co-trustee, administrative agent, collateral agent, administrative sub-agent or administrative co-agent, as applicable (any such additional individual or institution being referred to herein individually as a “Supplemental Agent” and collectively as “Supplemental Agents”).

(b) In the event that the Administrative Agent or the Collateral Agent appoints a Supplemental Agent with respect to any Collateral, (i) each and every right, power, privilege or duty expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to the Administrative Agent or the Collateral Agent with respect to such Collateral shall be exercisable by and vest in such Supplemental Agent to the extent, and only to the extent, necessary to enable such Supplemental Agent to exercise such rights, powers and privileges with respect to such Collateral and to perform such duties with respect to such Collateral, and every covenant and obligation contained in the Loan Documents and necessary to the exercise or performance thereof by such Supplemental Agent shall run to and be enforceable by either the Administrative Agent and the Collateral Agent or such Supplemental Agent, and (ii) the provisions of this Article IX and of Sections 10.04 and 10.05 (obligating the Borrowers to pay the Administrative Agent’s and the Collateral Agent’s expenses and to indemnify the Administrative Agent and the Collateral Agent) that refer to the Administrative Agent and/or the Collateral Agent shall inure to the benefit of such Supplemental Agent and all references therein to the Administrative Agent and/or Collateral Agent shall be deemed to be references to the Administrative Agent and/or Collateral Agent and/or such Supplemental Agent, as the context may require.

(c) Should any instrument in writing from the Borrowers, Holdings or any other Loan Party be required by any Supplemental Agent so appointed by the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent for more fully and certainly vesting in and confirming to him or it such

 

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rights, powers, privileges and duties, the Borrowers or Holdings, as applicable, shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent. In case any Supplemental Agent, or a successor thereto, shall die, become incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Agent, to the extent permitted by Law, shall vest in and be exercised by the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent, as applicable, until the appointment of a new applicable Supplemental Agent.

(d) In the event that the Borrowers appoint or designate any Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent pursuant to Sections 2.14, 2.15 and 2.18, as applicable, (i) each and every right, power, privilege or duty expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to an agent or arranger with respect to New Loan Commitments, New Incremental Notes or Specified Refinancing Debt, as applicable, shall be exercisable by and vest in such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent to the extent, and only to the extent, necessary to enable such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent to exercise such rights, powers and privileges with respect to the New Loan Commitments, New Incremental Notes or Specified Refinancing Debt, as applicable, and to perform such duties with respect to such New Loan Commitments, New Incremental Notes or Specified Refinancing Debt, and every covenant and obligation contained in the Loan Documents and necessary to the exercise or performance thereof by such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent shall run to and be enforceable by either the Administrative Agent or such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent, and (ii) the provisions of this Article IX and of Sections 10.04 and 10.05 (obligating the Borrowers to pay the Administrative Agent’s and the Collateral Agent’s expenses and to indemnify the Administrative Agent and the Collateral Agent) that refer to the Administrative Agent and/or the Collateral Agent shall inure to the benefit of such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent and all references therein to the Administrative Agent and/or Collateral Agent shall be deemed to be references to the Administrative Agent and/or Collateral Agent and/or such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent, as the context may require. Each Lender and L/C Issuer hereby irrevocably appoints any Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent to act on its behalf hereunder and under the other Loan Documents pursuant to Sections 2.14, 2.15 and 2.18, as applicable, and designates and authorizes such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent to take such actions on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to such Incremental Arranger, Incremental Notes Arranger or Specified Refinancing Agent by the terms of this Agreement or any other Loan Document, together with such actions and powers as are reasonably incidental thereto.

Section 9.15 Intercreditor Agreement. The Administrative Agent, Redenomination Term Facilities Administrative Agent and the Collateral Agent are authorized by the Lenders and each other Secured Party to, to the extent required by the terms of the Loan Documents, (i) enter into any intercreditor agreement contemplated by this Agreement, (ii) enter into any Collateral Document, or (iii) make or consent to any filings or take any other actions in connection therewith (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements in connection with the incurrence by any Loan Party of any Indebtedness of such Loan Party that is permitted to be secured pursuant to Sections 7.01 and 7.02 of this Agreement, in order to permit such Indebtedness to be secured by a valid, perfected lien on the Collateral (with such priority as may be designated by such Loan Party, to the extent such priority is permitted by the Loan Documents)), and the parties hereto acknowledge that any intercreditor agreement, Collateral Document, consent, filing or other action will be binding upon them. Each Lender and each other Secured Party (a) hereby agrees that it will be bound by and will take no actions contrary to the provisions of any intercreditor agreement (if entered into) and (b) hereby authorizes and instructs the Administrative Agent, Redenomination Term Facilities Administrative Agent and the Collateral Agent to enter into any intercreditor agreement contemplated by this Agreement or Collateral Document (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements in connection with the incurrence by any Loan Party of any Indebtedness of such Loan Party that is permitted to be secured pursuant to Sections 7.01 and 7.02 of this Agreement, in order to permit such Indebtedness to be secured by a valid, perfected lien on the Collateral (with such priority as may be designated by such Loan Party, to the extent such priority is permitted by the Loan Documents)), and to subject the Liens on the Collateral securing the Obligations to the provisions thereof.

 

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ARTICLE X.

Miscellaneous

Section 10.01 Amendments, Etc. Except as otherwise expressly set forth in this Agreement or the applicable Loan Document, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrowers or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent (other than with respect to any amendment or waiver contemplated in clause (h) below, which shall only require the consent of the Required Revolving Lenders), and each such amendment, 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) extend or increase the Commitment of any Lender, or reinstate the Commitment of any Lender after the termination of such Commitment pursuant to Section 8.02, in each case without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Sections 4.02 or 4.03 or the waiver of (or amendment to the terms of) any Default or Event of Default or Major Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender);

(b) postpone any date scheduled for, or reduce the amount of, any payment of principal of, or interest on, any Loan or L/C Borrowing or any fees or other amounts payable hereunder, without the written consent of each Lender directly and adversely affected thereby (and subject to such further requirements as may be applicable thereto under the last two paragraphs of this Section 10.01), it being understood that the waiver of any obligation to pay interest at the Default Rate, or the amendment or waiver of any mandatory prepayment of Loans under the Term Facilities shall not constitute a postponement of any date scheduled for the payment of principal, interest or fees;

(c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing (it being understood that a waiver of any Default or Event of Default or mandatory prepayment shall not constitute a reduction or forgiveness of principal), or (subject to clause (iii) of the proviso following clause (h) below) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby, it being understood that any change to the definition of Consolidated First Lien Net Leverage Ratio or in the component definitions thereof shall not constitute a reduction in any rate of interest or any fees based thereon; provided, however, that only the consent of (x) the majority percentage in interest of the Lenders (calculated by reference to the Outstanding Amount attributable to the applicable Tranche) with respect to any applicable Tranche shall be necessary to amend the definition of “Default Rate” as applicable to such Tranche and (y) the majority percentage in interest of the Lenders (calculated by reference to the Outstanding Amount attributable to the applicable Tranche) with respect to any applicable Tranche shall be necessary to waive any obligation of the Borrowers to pay interest at the Default Rate with respect to such applicable Tranche;

(d) change the currency in which any Loan is denominated without the written consent of the Lender holding such Loans (it being understood that a Redenomination Event constitutes consent by such Lender) or change the provisions relating to re-denomination of any Loan without the written consent of the Lender holding such Loan;

(e) change (i) any provision of this Section 10.01 (other than the last two paragraphs of this Section), or the definition of “Required Lenders”, or any other provision hereof specifying the number or percentage of Lenders or portion of the Loans or Commitments required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder (other than the definition specified in clause (ii) of this Section 10.01(e) or modifications in connection with repurchases of Term Loans, amendments with respect to New Loan Commitments and amendments with respect to extensions of maturity), without the written consent of each Lender or (ii) the definition of “Required Revolving Lenders,” without the written consent of each Lender under the Revolving Credit Facility;

 

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(f) other than in a transaction permitted under Section 7.03 or Section 7.04, release all or substantially all of the Liens on the Collateral in any transaction or series of related transactions, without the written consent of each Lender;

(g) other than in a transaction permitted under Section 7.03 or Section 7.04, release all or substantially all of the aggregate value of the Guaranty, or all or substantially all of the Guarantors, without the written consent of each Lender; or

(h) (i) amend or otherwise modify Section 7.08 (or for the purposes of determining compliance with the Financial Covenant, any defined terms used therein), or (ii) waive or consent to any Default or Event of Default resulting from a breach of the Financial Covenant or (iii) alter the rights or remedies of the Required Revolving Lenders arising pursuant to Article VIII as a result of a breach of Section 7.08, in each case, without the written consent of the Required Revolving Lenders; provided, however, that the amendments, modifications, waivers and consents described in this clause (h) shall not require the consent of any Lenders other than the Required Revolving Lenders;

and provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by an L/C Issuer in addition to the Borrowers and the Lenders required above, affect the rights or duties of such L/C Issuer, in its capacity as such, under this Agreement or any Letter of Credit Application or other 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 relevant Ancillary Lenders, affect the rights or duties of such Ancillary Lender in its capacity as such under this Agreement or any of the Loan Documents, (iii) no amendment, waiver or consent shall, unless in writing and signed by the Applicable Agent or, solely with respect to provisions set forth in the Fee Letter referenced in clause (B) of the definition thereof (and the provision of this Agreement related thereto), the BOC Arranger, in their respective capacities as such, in addition to the Borrowers and the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, the Applicable Agent or the BOC Arranger, as applicable, under this Agreement or any other Loan Document; (iv) Section 10.07(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification and (v) any Fee Letter may be amended, or the rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, any amendment, modification, waiver or other action which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders or Affiliate Lenders (other than Debt Fund Affiliates), except that (x) no amendment, waiver or consent relating to Section 10.01(a), (b) or (c) may be effected, in each case without the consent of such Defaulting Lender or Affiliate Lender and (y) any amendment, modification, waiver or other action that by its terms adversely affects any Defaulting Lender or Affiliate Lender in its capacity as a Lender in a manner that differs in any material respect from, and is more adverse to such Defaulting Lender or Affiliate Lender than it is to, other affected Lenders shall require the consent of such Defaulting Lender or Affiliate Lender. Notwithstanding anything to the contrary herein, any waiver, amendment, modification or consent in respect of this Agreement or any other Loan Document that by its terms affects the rights or duties under this Agreement or any other Loan Document of Lenders holding Loans or Commitments of a particular Tranche (but not the Lenders holding Loans or Commitments of any other Tranche), including, without limitation, those transactions described in clauses (a) through (d) of Section 10.01, shall be effected by an agreement or agreements in writing entered into by the Borrowers and the requisite percentage in interest of the Lenders with respect to such Tranche that would be required to consent thereto under this Section 10.01 if such Lenders were the only Lenders hereunder at the time.

No amendment or waiver of a term of any Ancillary Facility shall require the consent of any other Lender or other Secured Party other than the relevant Ancillary Lender and the applicable parties to such Ancillary Facilities unless such amendment or waiver itself relates to or gives rise to a matter which would require an amendment of or under this Agreement. In such a case, this Section 10.01 will apply.

This Section 10.01 shall be subject to any contrary provision of Section 2.14 or Section 2.18. In addition, notwithstanding anything else to the contrary contained in this Section 10.01, (a) amendments and modifications in connection with the transactions provided for by Section 2.14 or Section 2.18 that benefit existing Lenders may be effected without such Lenders’ consent, (b) if the Administrative Agent and the Borrowers shall have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the Loan

 

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Documents, then the Administrative Agent and the Borrowers shall be permitted to amend such provision and (c) the Administrative Agent and the Borrowers shall be permitted to amend any provision of any Collateral Document, the Guaranty, or enter into any new agreement or instrument, to better implement the intentions of this Agreement and the other Loan Documents or as required by local law to give effect to any guaranty, or to give effect to or to protect any security interest for the benefit of the Secured Parties, in any property so that the security interests comply with applicable Law, and in each case, such amendments, documents and agreements shall become effective without any further action or consent of any other party to any Loan Document if in the case of amendments contemplated by clause (b) the same is not objected to in writing by the Required Lenders within five Business Days following receipt of notice thereof.

Notwithstanding anything to the contrary herein, in connection with any amendment, modification, waiver or other action requiring the consent or approval of Required Lenders, Lenders that are Debt Fund Affiliates shall not be permitted, in the aggregate, to account for more than 49.9% of the amounts actually included in determining whether the threshold in the definition of Required Lenders has been satisfied. The voting power of each Lender that is a Debt Fund Affiliate shall be reduced, pro rata, to the extent necessary in order to comply with the immediately preceding sentence.

Notwithstanding anything to the contrary herein, at any time and from time to time, upon notice to the Administrative Agent (who shall promptly notify the applicable Lenders) specifying in reasonable detail the proposed terms thereof, the Borrowers may make one or more loan modification offers to (i) all the Lenders of any Facility that would, if and to the extent accepted by any such Lender, (a) extend the scheduled Maturity Date and any amortization of the Loans and Commitments under such Facility and/or change the Applicable Rate and/or fees payable with respect to the Loans and Commitments under such Facility (in each case solely with respect to the Loans and Commitments of accepting Lenders in respect of which an acceptance is delivered) and (b) treat the Loans and Commitments so modified as a new “Facility” for all purposes under this Agreement; provided that (x) such loan modification offer is made to each Lender under the applicable Facility on the same terms and subject to the same procedures as are applicable to all other Lenders under such Facility (which procedures in any case shall be reasonably satisfactory to the Administrative Agent) and (y) no loan modification shall affect the rights or duties of, or any fees or other amounts payable to, any Agent or any L/C Issuer, without its prior written consent or (ii) the specified Lenders of any Facility that would, if and to the extent accepted by any such Lender (the “Accepting Lender”), (a) extend the scheduled Maturity Date and any amortization of the Loans and Commitments under such Facility and, if applicable, change the Applicable Rate and/or fees payable with respect to the Loans and Commitments under such Facility (in each case solely with respect to the Loans and Commitments of Accepting Lenders in respect of which an acceptance is delivered) and (b) treat the Loans and Commitments so modified as a new “Facility” for all purposes under this Agreement; provided that (v) to the extent any loan modification offer is made (and becomes effective) pursuant to this clause (ii), (A) the Borrower shall (subject to clause (y) below) offer to any Lender or L/C Issuer that is not provided with the opportunity to extend their Revolving Credit Commitments in such loan modification the right to terminate the Commitments and Ancillary Outstandings of such Lender (or Affiliate, if applicable) or L/C Issuer, as the case may be, and/or (B) the Borrower may terminate the Revolving Credit Commitment and Ancillary Outstandings of all Lenders (or Affiliate, if applicable) or L/C Issuer, as the case may be, who are not provided with the opportunity to extend their Revolving Credit Commitments in such loan modification, and in either case (1) in the case of a Lender (other than an L/C Issuer), repay all Obligations of the Borrowers owing (and the amount of all accrued interest and fees in respect thereof) to such Lender relating to the Loans and participations held by such Lender as of such termination date and (2) in the case of an L/C Issuer, repay all obligations of the Borrowers owing to such L/C Issuer relating to the Loans and participations held by such L/C Issuer as of such termination date and cancel or backstop on terms satisfactory to such L/C Issuer any Letters of Credit issued by it, (w) in no event shall such extended Loans and Commitments (1) have covenants that are more restrictive to the Borrower than the terms applicable to the non-extended Loans and Commitments of the original Facility from which such Loans and Commitments are extended (the “Non-Extended Loans and Commitments”), (2) have a higher Applicable Rate and/or fees than the Non-Extended Loans and Commitments or (3) receive a greater than ratable share of any optional or mandatory prepayments than such Non-Extended Loans and Commitments, in each case, prior to the final maturity date of such Non-Extended Loans and Commitments applicable at the time of such loan modification or the termination of such Non-Extended Loans and Commitments as set forth above, (x) such loan modification offer is made to the Accepting Lenders under the applicable Facility on the same terms and subject to the same procedures as are applicable to all other Accepting Lenders under such Facility (which procedures in any case shall be reasonably satisfactory to the Administrative Agent), (y) if the aggregate principal

 

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amount of Revolving Credit Commitments or Term Loans in respect of which Lenders shall have accepted the relevant loan modification offer shall exceed the maximum aggregate principal amount of Revolving Credit Commitments or Term Loans of such Accepting Lenders, as applicable, subject to the loan modification offer, then the Revolving Credit Commitments or Term Loans, as applicable, of the Lenders of the applicable Facility who were not provided with the opportunity to extend their Revolving Credit Commitments or Term Loans may have their Revolving Credit Commitments terminated or Term Loans repaid on a non-ratable basis up to such maximum amount based on the respective principal amounts with respect to which the Accepting Lenders have accepted such loan modification offer and (z) no loan modification shall affect the rights or duties of, or any fees or other amounts payable to, any Agent or any L/C Issuer, without its prior written consent.

In connection with any such loan modification offer, the Borrowers and each accepting Lender shall execute and deliver to the Administrative Agent such agreements and other documentation as the Administrative Agent shall reasonably specify to evidence the acceptance of the applicable loan modification offer and the terms and conditions thereof, and this Agreement and the other Loan Documents shall be amended in a writing (which may be executed and delivered by the Borrowers and the Administrative Agent and shall be effective only with respect to the applicable Loans and Commitments of Lenders that shall have accepted the relevant loan modification offer (and only with respect to Loans and Commitments as to which any such Lender has accepted the loan modification offer)) to the extent necessary or appropriate, in the judgment of the Administrative Agent, to reflect the existence of, and to give effect to the terms and conditions of, the applicable loan modification (including the addition of such modified Loans and/or Commitments as a “Facility” hereunder). No Lender shall have any obligation whatsoever to accept any loan modification offer, and may reject any such offer in its sole discretion. On the effective date of any loan modification applicable to the Revolving Credit Facility, the Borrowers shall prepay any Revolving Credit Loans, Ancillary Outstandings or L/C Advances (to the extent participated to Revolving Credit Lenders) outstanding on such effective date (and pay any additional amounts required pursuant to Section 3.06) to the extent necessary to keep the outstanding Revolving Credit Loans or L/C Advances (to the extent participated to Revolving Credit Lenders), as the case may be, ratable with any revised Pro Rata Share of a Revolving Credit Lender in respect of the Revolving Credit Facility arising from any non-ratable loan modification to the Revolving Credit Commitments under this Section 10.01. Notwithstanding the foregoing, no modification referred to above shall become effective unless the Administrative Agent, to the extent reasonably requested by the Administrative Agent, shall have received legal opinions, board resolutions, officers’ certificates and/or reaffirmation agreements consistent with those delivered on the Closing Date under Section 4.01 or delivered from time to time pursuant to Section 6.12, Section 6.14 and/or Section 6.16 with respect to Holdings and the Borrowers, all material Subsidiary Guarantors and each other Subsidiary Guarantor that is organized in a jurisdiction for which local counsel to the Administrative Agent in such jurisdiction advises that such deliveries are reasonably necessary to preserve the Collateral in such jurisdiction.

Section 10.02 Notices; Electronic Communications.

(a) General. Unless otherwise expressly provided herein, 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 Holdings, the Borrowers, the Administrative Agent, the Redenomination Term Facilities Administrative Agent, the Collateral Agent or an L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02 or to such other address, telecopier number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties hereto, as provided in Section 10.02(d); and

(ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications 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 and other communications delivered through electronic communications to the extent provided in clause (b) below shall be effective as provided in such clause (b).

 

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(b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Applicable 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 Applicable Agent that it is incapable of receiving, or is unwilling to receive, notices under Article II by electronic communication. The Applicable Agent or any Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Applicable Agent otherwise prescribes (with the Borrowers’ consent), (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment 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-RELATED PERSONS 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-RELATED PERSON IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall any Agent-Related Person have any liability to any Loan Party or any of their respective Subsidiaries, 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 any Borrower’s or the Applicable 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 non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of or material breach of the Loan Documents by such Agent-Related Person; provided, however, that in no event shall any Agent-Related Person have any liability to any Loan Party or any of their respective Subsidiaries, 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 Holdings, the Borrowers, the Guarantors, the Administrative Agent, the Redenomination Term Facilities Administrative Agent, the Collateral Agent and each L/C Issuer may change its address, telecopier, telephone number or electronic mail address for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier, telephone number or electronic mail address for notices and other communications hereunder by notice to the Borrowers, the Applicable Agent and each L/C Issuer. In addition, each Lender agrees to notify the Applicable Agent from time to time to ensure that the Applicable 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 Borrowers or their securities for purposes of United States federal or state securities laws.

 

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(e) Reliance by Administrative Agent, Redenomination Term Facilities Administrative Agent, Collateral Agent, L/C Issuer and Lenders. The Administrative Agent, the Redenomination Term Facilities Administrative Agent, the Collateral Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of any of the Borrowers 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 except to the extent such reliance is deemed to be gross negligence, bad faith or willful misconduct of or material breach of the Loan Documents by the Administrative Agent, Redenomination Term Facilities Administrative Agent, Collateral Agent, L/C Issuer or Lender (as applicable) in a final non-appealable judgment of a court of competent jurisdiction. The Borrowers shall indemnify the Administrative Agent, the Redenomination Term Facilities Administrative Agent, the Collateral 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 purportedly given by or on behalf of any Borrower to the extent required by Section 10.05. All telephonic notices to and other telephonic communications with the Applicable Agent may be recorded by the Applicable Agent, and each of the parties hereto hereby consents to such recording.

Section 10.03 No Waiver; Cumulative Remedies; Enforcement.

(a) No failure by any Lender, any L/C Issuer or any Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided hereunder and under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.

(b) 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 or the Collateral Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuers; provided, however, that the foregoing shall not prohibit (i) the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as the Administrative Agent, the Redenomination Term Facilities Administrative Agent or the Collateral Agent) hereunder and under the other Loan Documents, (ii) each L/C Issuer from exercising the rights and remedies that inure to its benefit (solely in its capacity as an L/C Issuer) hereunder and under the other Loan Documents, or (iii) any Lender from exercising setoff rights in accordance with Section 10.09 (subject to the terms of Section 2.13); and provided further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (x) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (y) in addition to the matters set forth in clauses (ii) and (iii) of the preceding proviso and subject to Section 2.13, 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. In the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale, the Administrative Agent, the Collateral Agent or any Lender (or any person nominated by them) may be the purchaser of any or all of such Collateral at any such sale and the Administrative Agent, as agent for and representative of the Lenders (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing), shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold in any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Administrative Agent at such sale.

Section 10.04 Costs and Expenses. The Borrowers agree (a) to pay or reimburse the Administrative Agent and the other Agents for all reasonable, documented out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, syndication and execution of this Agreement and the other Loan Documents (including reasonable expenses incurred in connection with due diligence and travel, courier, reproduction, printing and delivery expenses), and any amendment, waiver, consent or other modification of the provisions hereof and thereof, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees, disbursements and other charges of counsel (limited to the reasonable, documented out-of-

 

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pocket fees, disbursements and other charges of one primary counsel to the Agents and, if necessary, one local counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and special counsel for each relevant specialty, in each case, in jurisdictions material to the interests of the Lenders, and (b) to pay or reimburse the Administrative Agent, the other Agents and each Lender (including, for the avoidance of doubt, each L/C Issuer) for all reasonable, documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any legal proceeding, any proceeding under any Debtor Relief Law or in connection with any workout or restructuring), including the fees, disbursements and other charges of counsel (limited to the reasonable fees, disbursements and other charges of one counsel to the Administrative Agent, the other Agents and the Lenders taken as a whole, and, if necessary, of one local counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and of special counsel for each relevant specialty, in each case, in jurisdictions material to the interests of the Lenders, and, in the event of any actual or perceived conflict of interest, one additional counsel in each relevant jurisdiction for each Lender or group of similarly affected Lenders or Agents subject to such conflict with the consent of the Borrowers). The foregoing costs and expenses shall include all reasonable search, filing, recording, title insurance and appraisal charges and fees, and other out-of-pocket expenses incurred by any Agent. All amounts due under this Section 10.04 shall be paid within 30 days after invoiced or demand therefor (with a reasonably detailed invoice with respect thereto) (except for any such costs and expenses incurred prior to the Closing Date, which shall be paid on the Closing Date to the extent invoiced at least 5 Business Days prior to the Closing Date). The agreements in this Section 10.04 shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. If any Loan Party (or Designated PRC Subsidiary) fails to pay when due any costs, expenses or other amounts payable by it hereunder or under any Loan Document, such amount may be paid on behalf of such Loan Party by the Administrative Agent after any applicable grace periods have expired, in its sole discretion and the Borrowers shall immediately reimburse the Administrative Agent, as applicable. This Section 10.04 shall not apply with respect to Taxes other than any Taxes that directly relate to any non-Tax cost or expense described above.

Section 10.05 Indemnification by the Borrowers. The Borrowers shall indemnify and hold harmless each Arranger, each Agent-Related Person, each Lender, each L/C Issuer, each of their respective Affiliates and each partner, director, officer, employee, counsel, agent and representative of the foregoing and, in the case of any funds, trustees and advisors and attorneys-in-fact (collectively, the “Indemnitees”) from and against (and will reimburse each Indemnitee, as and when incurred, for) any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs (including settlement costs), disbursements, and reasonable and documented or invoiced out-of-pocket fees and expenses (including the reasonable, documented out-of-pocket fees, disbursements and other charges of (i) one counsel to the Indemnitees taken as a whole, (ii) in the case of an actual or perceived conflict of interest, where the Indemnitee affected by such conflict obtains the consent of the Borrowers and thereafter retains its own counsel, of another firm of counsel for each such affected Indemnitee in each relevant jurisdiction material to the interests of the Lenders, and (iii) if necessary, one local counsel in each jurisdiction material to the interests of the Indemnitees (which may include a single special counsel acting in multiple jurisdictions) and special counsel for each relevant specialty) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted or awarded against any such Indemnitee in any way relating to or arising out of or in connection with or by reason of (x) any actual or prospective claim, litigation, investigation or proceeding in any way relating to, arising out of, in connection with or by reason of any of the following, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding): (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby or (b) any Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (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); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, disbursements, fees or expenses are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from (A) the bad faith, gross negligence or willful misconduct of such Indemnitee or any of its Affiliates or controlling persons or any of the officers, directors, employees, agents, advisors, or members of any of the foregoing or (B) any dispute that is among Indemnitees (other than any dispute involving claims against the Administrative Agent, any Arranger or any other Agent or any L/C Issuer, in each case in their respective capacities as such) that a court of competent jurisdiction has

 

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determined in a final and non-appealable judgment did not involve actions or omissions of any direct or indirect parent or controlling person of the Borrowers or their Subsidiaries; or (y) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by Holdings or any of its Subsidiaries, or any Environmental Liability related in any way to Holdings or any of its Subsidiaries ((x) and (y), collectively, the “Indemnified Liabilities”) and, in all cases, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through the Platform or other information transmission systems (including electronic telecommunications) in connection with this Agreement unless determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee, nor shall any Indemnitee or any Loan Party have any liability for any special, punitive, indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date); provided that such waiver of special, punitive, indirect or consequential damages shall not limit the indemnification obligations of the Loan Parties under this Section 10.05. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 10.05 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnitee or any other Person, and whether or not any Indemnitee is otherwise a party thereto. Should any investigation, litigation or proceeding be settled, or if there is a judgment in any such investigation, litigation or proceeding, the Borrowers shall indemnify and hold harmless each Indemnitee in the manner set forth above; provided that the Borrowers shall not be liable for any settlement effected without the Borrowers’ prior written consent (such consent not to be unreasonably withheld, delayed or conditioned). All amounts due under this Section 10.05 shall be payable within 30 days after demand therefor. The agreements in this Section 10.05 shall survive the resignation of any Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations. This Section 10.05 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. that arise from any non-Tax claim described above.

Section 10.06 Payments Set Aside. To the extent that any payment by or on behalf of any Borrower is made to any Agent, to any L/C Issuer or any Lender, in each case in their capacities as such, or any Agent, any L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent, such L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and each L/C Issuer severally agrees to pay to the Applicable Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuers under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

Section 10.07 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee (other than to any Disqualified Institution or natural person) in accordance with the provisions of Section 10.07(b), (ii) by way of participation in accordance with the provisions of Section 10.07(d), (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.07(f) or (iv) to an SPC in accordance with the provisions of Section 10.07(g) (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 Section 10.07(d) and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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(b) Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this Section 10.07(b), participations in L/C Obligations) at the time owing to it); provided that:

(i) (A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment under any Facility and the Loans at the time owing to it under such Facility, no minimum amount shall need be assigned, and (B) in any case not described in clause (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the outstanding principal balance of the Loans 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 Applicable Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 (or equivalent) or integral multiples of $1,000,000 (or equivalent) in excess thereof (or, in each case, such lesser amount as is acceptable to the Applicable Agent and the Parent Borrower), in the case of any assignment in respect of the Revolving Credit Facility, or $1,000,000 or integral multiples of $100,000 in excess thereof (or, in each case, such lesser amount as is acceptable to the Applicable Agent and the Borrowers), in the case of any assignment in respect of a Term Facility, in each case unless each of the Applicable Agent and, so long as no Event of Default under Section 8.01(a), (f) or (g) has occurred and is continuing, the Borrowers otherwise consent (such consent not to be unreasonably withheld, conditioned 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) 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 Loans or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Facilities (or Tranches of any Facility) on a non-pro rata basis;

(iii) no consent shall be required for any assignment except to the extent required by clause (b)(i)(B) of this Section and, in addition (A) the consent of the Borrowers (such consent not to be unreasonably withheld, conditioned or delayed) shall be required for any assignment unless (1) an Event of Default under Section 8.01(a), (f) or (g) has occurred and is continuing at the time of such assignment, (2) such assignment is in respect of a Term Facility and is to a Lender, an Affiliate of a Lender or an Approved Fund (other than any Disqualified Institution) holding Term Loans, in each case, under the same Term Loan Tranche being assigned, (3) such assignment is in respect of the Revolving Credit Facility and is to a Revolving Credit Lender or an Affiliate of a Revolving Credit Lender (other than any Disqualified Institution) or (4) such assignment is in respect of the Initial Term B-2 Commitments and/or the Initial Term B-2 Loans to the BOC Arranger (or an Affiliate of the BOC Arranger); provided that (1) the Borrowers shall be deemed to have consented to any assignment unless the Borrowers object thereto by written notice to the Applicable Agent within ten Business Days after having received notice thereof and (2) during the 60-day period following the Closing Date, the Borrowers shall be deemed to have consented to an assignment to any Lender if such Lender was previously identified and approved in the initial allocations of the Loans provided by the Arrangers to the Borrowers, (B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) and, solely with respect to any assignment in respect of any Initial Term B-2 Loan, Initial Term B-2 Commitment or any Term B-3 Loans Sub-Tranche, the Redenomination Term Facilities Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for any assignment unless (1) such assignment is in respect of a Term Facility and to a Lender, an Affiliate of a Lender or an Approved Fund holding Term Loans, in each case, under the same Term Loan Tranche being assigned, (2) such assignment is in respect of the Revolving Credit Facility and is to a Revolving Credit Lender, an Affiliate of a Revolving Credit Lender or an Approved Fund related thereto (provided that in each case the Administrative Agent shall acknowledge any such assignment), (3) such assignment is made in respect of the Initial Term B-2 Commitments and/or Initial Term B-2 Loans to the BOC Arranger (or an Affiliate of the BOC Arranger), in which case no consent of the Administrative Agent shall be required, or (4) such assignment is made in respect of the Initial Term B-2 Loans after the Term B-2 Conversion has occurred, in which case no consent of the Redenomination Term Facilities Administrative Agent shall be required and (C) the consent of each L/C Issuer (such consent not to be unreasonably withheld, conditioned or delayed) shall be required for any assignment in respect of the Revolving Credit Facility; provided, however, that the consent of each L/C Issuer shall not be required for any assignment of a Term Loan;

 

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(iv) the parties to each assignment shall execute and deliver to the Redenomination Term Facilities Administrative Agent (in the case of any assignment in respect of (A) any Initial Term B-2 Loan or Initial Term B-2 Commitment at any time after the Term B-2 Relevant Date (so long as the Term B-2 Conversion has not occurred) or (B) any Term B-3 Loans Sub-Tranche) or the Administrative Agent (in any other case) an Assignment and Assumption via an electronic settlement system acceptable to the Applicable Agent (or, if previously agreed with the Applicable Agent, manually), together with a processing and recordation fee of $3,500 (except, (x) in the case of assignments in connection with the initial syndication of the facilities, (y) in the case of contemporaneous assignments by any Lender to one or more Approved Funds, assignments among Approved Funds or among any Lender and any of its Approved Funds, in each case, only a single processing and recording fee shall be payable for such assignments and (z) the Applicable Agent, in its sole discretion, may elect to waive such processing and recording fee in the case of any assignment). Each Eligible Assignee that is not an existing Lender shall deliver to the Applicable Agent an Administrative Questionnaire;

(v) no such assignment shall be made (A) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this subclause (A), (B) to any natural person, (C) to any Disqualified Institution, (D) to Holdings, the Borrowers or any of its Subsidiaries except as permitted under Section 10.07(j) below or (E) to any Affiliate Lender except as permitted under Section 10.07(i);

(vi) no Revolving Credit Commitments or Revolving Credit Loans may be assigned to any Affiliate Lender;

(vii) the assigning Lender shall deliver any Notes or, in lieu thereof, a lost note affidavit and indemnity reasonably acceptable to the Borrowers evidencing such Loans to the Borrowers or the Applicable Agent;

(viii) in connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Applicable 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 Borrowers and the Applicable Agent, the applicable Pro Rata Share of Loans 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 any Agent or any L/C Issuer or Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full Pro Rata share of all Loans and participations in Letters of Credit in accordance with its Pro Rata Share; provided that 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 clause, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that Applicable Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Disqualified Institution or (y) have any liability with respect to or arising out of any assignment or participation of loans, or disclosure of confidential information, to, or the restrictions on any exercise of rights or remedies of, any Disqualified Institution;

(ix) no Lender may assign its Initial Term B-2 Loans or Initial Term B-2 Commitment unless (A) an Event of Default under Section 8.01(a), (f) or (g) has occurred and is continuing at the time of such assignment or (B) such assignment is in favour of an Affiliate of such Lender that can extend loans in RMB; provided that to the extent the Term B-2 Conversion has occurred, Initial Term B-2 Loans shall be treated as Initial Term B-1 Loans for all purposes of this Section 10.07. For the avoidance of doubt, any Lender holding both a Term B-2 Loan and a Term B-3 Loan shall not be required to make assignments on a pro rata basis as between such Term B-2 Loans and Term B-3 Loans; and

 

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(x) (for the avoidance of doubt) notwithstanding any assignment by any BOC Arranger or any Affiliate thereof in accordance with the specific terms hereof (in its capacity as Lender) of any rights or obligations in respect of any Term B-3 Loans Sub-Tranche, BOC Arranger shall remain entitled to the fees set forth in Sections 2.09(d) and (e).

Subject to acceptance and recording thereof by the Applicable Agent pursuant to Section 10.07(c), from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, 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 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment, and subject to the obligations set forth in Section 10.08). Upon request, and the surrender by the assigning Lender of its Note, each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender; provided, to the extent that the assigning Lender shall have lost the Note provided to it, such Lender shall execute a customary loss affidavit and provide customary indemnities with respect to the same. Any assignment or transfer by a Lender of rights or obligations under this Agreement (other than any purported assignment or transfer to a Disqualified Institution) that does not comply with this clause (b) shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.07(d).

(c) The Administrative Agent (other than with respect to Initial Term B-2 Loans or Term B-3 Loans) and Redenomination Term Facilities Administrative Agent (solely with respect to Initial Term B-2 Loans and Term B-3 Loans), acting solely for this purpose as a non-fiduciary agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office and Redenomination Term Facilities Administrative Agent’s Office, as applicable, a copy of each Assignment and Assumption delivered to it and a register in which it shall record the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans, L/C Obligations (specifying the Unreimbursed Amounts), L/C Borrowings and amounts due under Section 2.03, owing to, each Lender pursuant to the terms hereof from time to time (each such register maintained by the Applicable Agent, a “Register”). The entries in the applicable Register shall be conclusive with respect to the applicable entries in such Register, absent manifest error, and the Borrowers, the Agents and the Lenders shall treat each Person whose name is recorded in each Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Applicable Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as Defaulting Lender. The Registers shall be available for inspection by the Borrowers, any Agent and any Lender (but only to entries with respect to itself), at any reasonable time and from time to time upon reasonable prior notice. This Section 10.07(c) and Section 2.11 shall be construed so that all Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or of such Treasury regulations).

(d) Any Lender may at any time, without the consent of, or notice to the any Loan Party, the Applicable Agent or the L/C Issuers, sell participations to any Person (other than a natural person, an Affiliate Lender (other than a Debt Fund Affiliate), a Person that the Applicable Agent has identified in a notice to the Lenders as a Defaulting Lender or a Disqualified Institution) (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 Loans (including such Lender’s participations in L/C Obligations) 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, (iii) the Borrowers, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (iv) prior to selling any participation in any Revolving Credit Commitments, such Lender shall have used commercially reasonable efforts to provide the Parent Borrower with not less than five Business Days’ advance notice of such sale; provided that a failure to provide such notice shall not, however, render such participation invalid or ineffective. 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 the other Loan

 

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Documents and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document; 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 10.01 that disproportionately and adversely affects such Participant. Subject to Section 10.07(e), the Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 (subject to the requirements and the limitations of such Sections (it being understood that the documentation required under Section 3.01(h) shall be delivered to the participating Lender) and Section 3.08) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.07(b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender; provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.

(e) A Participant shall not be entitled to receive any greater payment under Section 3.01, 3.04 or 3.05 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, except to the extent that a Participant’s right to a greater payment results from a change in any Law after the Participant becomes a Participant.

(f) 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, if any) (other than to a Disqualified Institution) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender; 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) Notwithstanding anything to the contrary herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Applicable Agent and the Borrowers (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Applicable Agent as is required under Section 2.12(b)(ii). Each party hereto hereby agrees that an SPC shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 (subject to the requirements and the limitations of such Sections and Section 3.08); provided that neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrowers under this Agreement (including under Section 3.01, 3.04 or 3.05), except to the extent that the SPC’s right to a greater payment results from a change in any Law after the grant to the SPC takes place. Each party hereto further agrees that (i) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (ii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the Lender of record hereunder. Other than as expressly provided in this Section 10.07(g), (A) such Granting Lender’s obligations under this Agreement shall remain unchanged, (B) such Granting Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrowers, the Agents and the other Lenders shall continue to deal solely and directly with such Granting Lender in connection with such Granting Lender’s rights and obligations under this Agreement. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not, other than in respect of matters unrelated to this Agreement or the transactions contemplated hereby, institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrowers and the Applicable Agent and with the payment of a processing fee of $3,500, assign all or any portion of its rights hereunder with respect to any Loan to the Granting Lender and (ii) subject to Section 10.08, disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.

 

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(h) Notwithstanding anything to the contrary herein, any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities; provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 10.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents, and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

(i) Notwithstanding anything to the contrary herein, any Lender may assign all or any portion of its Term Loans, Specified Refinancing Term Loans and New Term Loans hereunder to any Affiliate Lender (including any Debt Fund Affiliate), but only if:

(i) the assigning Lender and Affiliate Lender purchasing such Lender’s Term Loans, Specified Refinancing Term Loans or New Term Loans, as applicable, shall execute and deliver to the Applicable Agent an assignment agreement substantially in the form of Exhibit E-2 hereto (an “Affiliate Lender Assignment and Assumption”) in lieu of an Assignment and Assumption;

(ii) after giving effect to such assignment, Affiliate Lenders (other than Debt Fund Affiliates) shall not, in the aggregate, own or hold Term Loans, Specified Refinancing Term Loans and New Term Loans with an aggregate principal amount in excess of 25% of the principal amount of all Term Loans, Specified Refinancing Term Loans and New Term Loans then outstanding (calculated as of the date of such purchase); and

(iii) such Affiliate Lender (other than Debt Fund Affiliates) shall at all times be subject to the voting restrictions specified in Section 10.01.

(j) Notwithstanding anything to the contrary herein, so long as no Default or Event of Default pursuant to Sections 8.01(a), (f) or (g) exists, any Lender may assign all or any portion of its Term Loans, Specified Refinancing Term Loans and New Term Loans hereunder to Holdings or any of its Subsidiaries, but only if:

(i) (A) such assignment is made pursuant to a Dutch Auction open to all Term Lenders, Specified Refinancing Term Loan lenders or New Term Loan lenders on a pro rata basis or (B) such assignment is made as an open market purchase;

(ii) [reserved];

(iii) any such Term Loans shall be automatically and permanently cancelled immediately upon acquisition thereof by Holdings or any of its Subsidiaries; and

(iv) Holdings and its Subsidiaries do not use the proceeds of the Revolving Credit Facility (whether or not the Revolving Credit Facility has been increased pursuant to Section 2.14 or refinanced pursuant to Section 2.18) to acquire such Term Loan.

(k) Notwithstanding anything to the contrary herein, (i) Affiliate Lenders (other than Debt Fund Affiliates) shall not have any right to attend (including by telephone) any meeting or discussions (or portion thereof) among any Agent or any other Lender to which representatives of the Borrowers are not then present, (ii) Affiliate Lenders (other than Debt Fund Affiliates) shall not have any right to receive any information or material prepared by any Agent or any other Lender or any communication by or among any Agent and one or more other Lenders, except to the extent such information or materials have been made available to the Borrowers or their representatives, (iii) no assignments in respect of the Revolving Credit Facility may be made to the Sponsor or any Affiliate of the Sponsor and (iv) neither the Sponsor nor any Affiliate of the Sponsor (other than Debt Fund Affiliates) may be entitled to receive advice of counsel to the Agents or other Lenders and none of them shall challenge any assertion of attorney-client privilege by any Agent or other Lender. Each of the Borrowers and each Affiliate Lender (other than any Debt Fund Affiliates) hereby agrees that if a case under Title 11 of the Bankruptcy

 

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Code is commenced against any Borrower, such Affiliate Lenders, with respect to any plan of reorganization that does not adversely affect any Affiliate Lender in any material respect as compared to other Lenders, shall be deemed to have voted in the same proportion as the Lenders that are not Affiliate Lenders voting on such matter; and each Affiliate Lender (other than any Debt Fund Affiliates) hereby acknowledges, agrees and consents that if, for any reason, its vote to accept or reject any plan pursuant to the Bankruptcy Code is not deemed to have been so voted, then such vote will be “designated” pursuant to Section 1126(e) of the Bankruptcy Code such that the vote is not counted in determining whether the applicable class has accepted or rejected such plan in accordance with Section 1126(c) of the Bankruptcy Code.

(l) Notwithstanding anything to the contrary herein, any L/C Issuer may, upon 30 days’ notice to the Borrowers and the Lenders, resign as L/C Issuer; provided that on or prior to the expiration of such 30-day period with respect to such resignation, the relevant L/C Issuer shall have identified a successor L/C Issuer willing to accept its appointment as successor L/C Issuer, and the effectiveness of such resignation shall be conditioned upon such successor assuming the rights and duties of the L/C Issuer. If an L/C Issuer resigns as L/C Issuer, it shall retain all the rights and obligations of an L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(d)). Upon the appointment of a successor L/C Issuer, (A) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, 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 the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

(m) The applicable Lender, acting solely for this purpose as a non-fiduciary agent of the Borrowers (solely for tax purposes), shall maintain a register on which it enters the name and address of (i) each SPC (other than any SPC that is treated as a disregarded entity of the Granting Lender for U.S. federal income tax purposes) that has exercised its option pursuant to Section 10.07(g) and (ii) each Participant, and the amount of each such SPC’s and Participant’s interest in such Lender’s rights and/or obligations under this Agreement or any Loan Document complying with the requirements of Sections 163(f), 871(h) and 881(c)(2) of the Code and the United States Treasury Regulations (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 the Borrowers and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of the applicable rights and/or obligations of such Lender under this Agreement, notwithstanding notice to the contrary.

(n) In the event that a transfer by any of the Secured Parties of its rights and/or obligations under this Agreement (and/or any relevant Loan Document) occurred or was deemed to occur by way of novation, the Borrowers and any other Loan Parties explicitly agree that all securities and guarantees created under any Loan Documents shall be preserved for the benefit of the new Lender and the other Secured Parties.

(o) With respect to each assignment under Section 10.07(b) or 10.07(i), as applicable, or any other assignment of the Loans hereunder, each Lender agrees to execute and deliver to the Administrative Agent an acknowledgement and confirmation of the relevant assignment substantially in the form of Annex 2 to Exhibit E-1 or Exhibit E-2, as applicable, and each Borrower and each Lender agrees to execute such documents as may be required in connection with such transfer or assignment to assure that the Secured Obligations will constitute joint and several claims of the Secured Parties under Article 283 of Taiwan Civil Code, in each case in accordance with the Guaranty and Security Principles and Section 6.14 of this Agreement. Each Lender hereby expressly and irrevocably authorizes the Administrative Agent to execute such acknowledgement and confirmation on its behalf and such acknowledgement and confirmation, once executed by the Administrative Agent, shall be binding on all the Lenders. The Borrowers agrees to acknowledge and confirm such assignments in each Compliance Certificate delivered pursuant to Section 6.02(b) confirming that the list of Lenders who assigned their Loans during the applicable period (which list is provided by the Applicable Agent to the Borrowers) constitute joint and several creditors (as referred to in the applicable Taiwan Collateral Documents) at the time such Persons were Lenders.

 

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(p) With respect to each appointment of a successor L/C Issuer pursuant to Section 10.07(l), each Lender and each Borrower shall execute and deliver to the Administrative Agent an acknowledgement and confirmation of the relevant appointment of successor L/C Issuer substantially in the form of Annex 3 to Exhibit E-1 hereto and each Borrower and each Lender agrees to execute such documents as may be required in connection with such transfer or assignment to assure that the Secured Obligations will constitute joint and several claims of the Secured Parties under Article 283 of Taiwan Civil Code, in each case in accordance with the Guaranty and Security Principles and Section 6.14 of this Agreement. Each Lender hereby expressly and irrevocably authorizes the Administrative Agent to execute such acknowledgement and confirmation on its behalf and such acknowledgement and confirmation, once executed by the Administrative Agent, shall be binding on all the Lenders.

Section 10.08 Confidentiality. Each of the Agents and the Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its Affiliates and to its and its Affiliate’s respective partners, directors, officers, employees, trustees, representatives and agents, including accountants, legal counsel and other advisors and service providers on a need to know basis (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 in accordance with customary practices); (b) to the extent requested by any regulatory authority having jurisdiction over such Agent, Lender or its respective Affiliates or in connection with any pledge or assignment permitted under Section 10.07(f); (c) in any legal, judicial, administrative proceeding or other compulsory process or otherwise as required by applicable Laws or regulations or by any subpoena or similar legal process, in each case based upon the reasonable advice of the disclosing Agent’s or Lender’s legal counsel (in which case the disclosing Agent or Lender, as applicable, agrees (except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority), to the extent not prohibited by applicable Law, to promptly notify the Borrowers prior to such disclosure); (d) to any other party to this Agreement; (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 (or at least as restrictive) as those of this Section 10.08 (or as may otherwise be reasonably acceptable to the Borrowers), to any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement; provided, that no such disclosure shall be made by such Lender or such Agent or any of their respective Affiliates to any such Person that is a Disqualified Institution; (g) with the written consent of Holdings; (h) to the extent such Information becomes publicly available other than as a result of a breach of this Section 10.08; (i) to any state, federal or foreign authority or examiner (including the National Association of Insurance Commissioners or any other similar organization) regulating any Lender; (j) to any rating agency when required by it (it being understood that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Information relating to the Loan Parties received by it from such Lender); (k) to any contractual counterparty in any swap, hedge, or similar agreement or to any such contractual counterparty’s professional advisor (other than a Disqualified Institution), or (l) in connection with establishing a “due diligence” defense in connection with any legal, judicial, administrative proceeding or other process. In addition, the Agents and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Commitments, and the Credit Extensions; provided that such Person is advised and agrees to be bound by the provisions of this Section 10.08.

For the purposes of this Section 10.08, “Information” means all information received from any Loan Party or any Subsidiary thereof relating to any Loan Party or any Subsidiary thereof or their respective businesses, other than any such information that is publicly available to any Agent or any Lender prior to disclosure by any Loan Party other than as a result of a breach of this Section 10.08 by such Lender or Agent. Any Person required to maintain the confidentiality of Information as provided in this Section 10.08 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 Lenders and each L/C Issuer acknowledges that (i) the Information may include material non-public information concerning Holdings or any of its Subsidiaries, (ii) it has developed compliance procedures regarding the use of material non-public information and (iii) it will handle such material non-public information in accordance with applicable Law, including United States federal and state securities Laws.

 

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Section 10.09 Setoff. In addition to any rights and remedies of the Lenders provided by Law, upon the occurrence and during the continuance of any Event of Default, each Secured Party is authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent, without prior notice to the Borrowers or any other Loan Party, any such notice being waived by each Borrower (on its own behalf and on behalf of each Loan Party) 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, in any currency), other than deposits in fiduciary accounts as to which a Loan Party is acting as fiduciary for another Person who is not a Loan Party and other than payroll or trust fund accounts, at any time held by, and other Indebtedness (in any currency) at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Secured Party hereunder or under any other Loan Document (or other Secured Agreement (as defined in the Security Agreement)), now or hereafter existing, irrespective of whether or not such Agent or such Lender shall have made demand under this Agreement or any other Loan Document (or other Secured Agreement (as defined in the U.S. Security Agreement)) and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness; 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 2.17 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 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 Secured Party agrees promptly to notify the Borrowers and the Administrative Agent after any such set-off and application made by such Secured Party; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Administrative Agent and each Secured Party under this Section 10.09 are in addition to other rights and remedies (including other rights of setoff) that the Administrative Agent and such Secured Party may have.

Section 10.10 Interest Rate Limitation. Notwithstanding anything to the contrary 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 any 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 Loans or, if it exceeds such unpaid principal, refunded to any Borrower. In determining whether the interest contracted for, charged, or received by an Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by 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.

Any credit balances taken into account by an Ancillary Lender when operating a net limit in respect of any overdraft under an Ancillary Facility shall on enforcement of the Loan Documents be applied first in reduction of the overdraft provided under that Ancillary Facility in accordance with its terms.

Section 10.11 Counterparts. This Agreement and each other Loan Document may be executed in one or more counterparts (and by different parties hereto in different counterparts), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or other electronic transmission of an executed counterpart of a signature page to this Agreement and each other Loan Document shall be effective as delivery of an original executed counterpart of this Agreement and such other Loan Document. The Agents may also require that any such documents and signatures delivered by telecopier or other electronic transmission be confirmed by a manually-signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by telecopier or other electronic transmission.

 

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Section 10.12 Integration; Effectiveness. This Agreement and the other Loan Documents, and those provisions of the Commitment Letter, the Backstop Commitment Letter and the Fee Letters that, by its terms, survive the termination or expiration of the Commitment Letter, the Backstop Commitment Letter or the Closing Date, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. It is expressly agreed and confirmed by the parties hereto that the provisions of the Fee Letters shall survive the execution and delivery of this Agreement, the occurrence of the Closing Date, and shall continue in effect thereafter in accordance with their terms. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Agents or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.

Section 10.13 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 each Agent and each Lender, regardless of any investigation made by any Agent or any Lender or on their behalf and notwithstanding that any Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation (other than contingent indemnification or other obligations and obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements) hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding (other than Letters of Credit which have been Cash Collateralized).

Section 10.14 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 10.14, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws then such provisions shall be deemed to be in effect only to the extent not so limited.

Section 10.15 Governing Law; Jurisdiction; Etc.

(a) Governing Law. THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN WITH RESPECT TO ANY LOAN DOCUMENTS TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE THEREIN) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) Submission to Jurisdiction. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN WITH RESPECT TO ANY COLLATERAL DOCUMENT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE THEREIN), OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH

 

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ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. 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 OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) Waiver of Venue. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SECTION 10.15(B). EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

Section 10.16 Service of Process. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. WITHOUT LIMITING THE OTHER PROVISIONS OF THIS SECTION 10.16 AND IN ADDITION TO THE SERVICE OF PROCESS PROVIDED FOR HEREIN, THE PARENT BORROWER AND HOLDINGS HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE SUBSIDIARY BORROWER (AND THE SUBSIDIARY BORROWER HEREBY IRREVOCABLY ACCEPTS SUCH APPOINTMENT), AS ITS AUTHORIZED DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON THE SUBSIDIARY BORROWER SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE PARENT BORROWER AND HOLDINGS AGREES TO PROMPTLY DESIGNATE A NEW AUTHORIZED DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT.

Section 10.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.17 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 10.18 Binding Effect. When this Agreement shall have become effective in accordance with Section 10.12, it shall thereafter shall be binding upon and inure to the benefit of Holdings, the Borrowers, each Agent and each Lender and their respective successors and permitted assigns, except that no Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders, except as permitted by Section 7.03.

 

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Section 10.19 No Advisory or Fiduciary Responsibility. 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 Borrower and Holdings acknowledges and agrees, and each of them acknowledges and agrees that it has informed its other Affiliates, that: (i) (A) no fiduciary, advisory or agency relationship between any of Holdings and its Subsidiaries and any Agent or any Arranger is intended to be or has been created in respect of any of the transactions contemplated hereby and by the other Loan Documents, irrespective of whether any Agent or any Arranger has advised or is advising Holdings and its Subsidiaries on other matters, (B) the arranging and other services regarding this Agreement provided by the Agents and the Arrangers are arm’s-length commercial transactions between Holdings and its Subsidiaries, on the one hand, and the Agents and the Arrangers, on the other hand, (C) each Borrower and Holdings has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (D) each Borrower and Holdings 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 Agent and Arranger is and has been acting solely as a principal and, except as may otherwise be 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 Holdings or the Borrowers or any of their respective Affiliates, or any other Person and (B) neither any Agent nor any Arranger has any obligation to Holdings or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Agents and the Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of Holdings, the Borrowers and their respective Affiliates, and neither any Agent nor any Arranger has any obligation to disclose any of such interests and transactions to Holdings, the Borrowers or their respective Affiliates. To the fullest extent permitted by law, each Borrower and Holdings hereby waives and releases any claims that it may have against the Agents, the Arrangers, and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

Section 10.20 Affiliate Activities. Each Borrower and Holdings acknowledge that each Agent and each Arranger (and their respective Affiliates) is a full service securities firm engaged, either directly or through affiliates, in various activities, including securities trading, investment banking and financial advisory, investment management, principal investment, hedging, financing and brokerage activities and financial planning and benefits counseling for both companies and individuals. In the ordinary course of these activities, any of them may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and/or financial instruments (including bank loans) for their own account and for the accounts of customers and may at any time hold long and short positions in such securities and/or instruments. Such investment and other activities may involve securities and instruments of Holdings and its Affiliates, as well as of other entities and persons and their Affiliates which may (i) be involved in transactions arising from or relating to the engagement contemplated hereby and by the other Loan Documents, (ii) be customers or competitors of Holdings and its Affiliates or (iii) have other relationships with Holdings and its Affiliates. In addition, it may provide investment banking, underwriting and financial advisory services to such other entities and persons. It may also co-invest with, make direct investments in, and invest or co-invest client monies in or with funds or other investment vehicles managed by other parties, and such funds or other investment vehicles may trade or make investments in securities of Holdings and its Affiliates or such other entities. The transactions contemplated hereby and by the other Loan Documents may have a direct or indirect impact on the investments, securities or instruments referred to in this clause.

Section 10.21 Electronic Execution of Assignments and Certain Other Documents. The words “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, any Assignment and Assumption or in any amendments or other modification of Loan Documents, Committed Loan Notices, RMB Committed Loan Notices, waivers and consents) shall be deemed to include electronic signatures 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.

 

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Section 10.22 USA PATRIOT Act. Each Lender that is subject to the PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001, as amended from time to time)) (the “PATRIOT Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the PATRIOT Act. Each Loan Party 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 PATRIOT Act.

Section 10.23 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Applicable Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of any Borrower (or Designated PRC Subsidiary) in respect of any such sum due from it to the Applicable Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Applicable Agent of any sum adjudged to be so due in the Judgment Currency, the Applicable Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Agent from the applicable Borrower (or Designated PRC Subsidiary) in the Agreement Currency, the Borrowers agree, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Applicable Agent in such currency, the Applicable Agent agrees to return the amount of any excess to the applicable Borrower (or to any other Person who may be entitled thereto under applicable Law).

Section 10.24 Joint and Several Liability. Other than with respect to the Initial Term B-2 Commitment, the Initial Term B-3 Commitment, the Term B-3 Commitment, the Initial Term B-2 Loans, the Term B-3 Loans and any New Term Facility or Specified Refinancing Debt that does not have a co-borrower structure, each Borrower agrees that it is jointly and severally liable for the obligations of the other Borrower hereunder, including with respect to the payment of principal of and interest on all Loans and the payment of fees and indemnities and reimbursement of costs and expenses. This shall not prejudice the obligations of any Borrower (solely in its capacity as a Guarantor) in respect of any of the Initial Term B-2 Commitment, the Initial Term B-3 Commitment, the Term B-3 Commitment, the Initial Term B-2 Loans, the Term B-3 Loans and any New Term Facility or Specified Refinancing Debt that does not have a co-borrower structure.

Section 10.25 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 and accepts that any liability of any 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: (a) the exercise of any Write-Down and Conversion Powers; (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 entity, 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 cancellation of any such liability and (c) a variation of the terms of any Loan Document to the extent necessary to give effect to any Write-Down and Conversion Powers.

Section 10.26 Parallel Liability.

(a) Each Loan Party irrevocably and unconditionally undertakes to pay to the Administrative Agent in its capacity as Collateral Agent an amount equal to the aggregate amount of its Corresponding Liabilities (as these may exist from time to time).

 

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(b) The Agents, each Lender (including L/C Issuer) and each Loan Party agree that: (i) each Loan Party’s Parallel Liability is due and payable at the same time, in the same amount and in the same currency as its Corresponding Liabilities; (ii) each Loan Party’s Parallel Liability is decreased to the extent that its Corresponding Liabilities have been irrevocably paid or discharged and its Corresponding Liabilities are decreased to the extent that its Parallel Liability has been irrevocably paid or discharged; (iii) each Loan Party’s Parallel Liability is independent and separate from, and without prejudice to, its Corresponding Liabilities, and constitutes a single obligation of a Loan Party to the Administrative Agent, in its capacity as collateral agent (even though such Loan Party may owe more than one Corresponding Liability to the Secured Parties under the Loan Documents) and an independent and separate claim of the Administrative Agent, in its capacity as Collateral Agent, to receive payment of that Parallel Liability (in its capacity as the independent and separate creditor of that Parallel Liability and not as a co-creditor in respect of the Corresponding Liabilities); and (iv) for purposes under this Section 10.26, the Barclays Bank PLC, in its capacity as Collateral Agent, acts in its own name and not as agent, representative or trustee of the Secured Parties and accordingly holds neither its claim resulting from a Parallel Liability nor any securing a Dutch Parallel Liability on trust.

Section 10.27 Waiver of Sovereign Immunity.

Each Loan Party that is incorporated outside the United States, in respect of itself, its Subsidiaries, its process agents, and its properties and revenues, hereby irrevocably agrees that, to the extent that such Loan Party or its respective Subsidiaries or any of its or its respective Subsidiaries’ properties has or may hereafter acquire any right of immunity, whether characterized as sovereign immunity or otherwise, from any legal proceedings, whether in the United States or elsewhere, to enforce or collect upon the Loans or any Loan Document or any other liability or obligation of such Loan Party or any of their respective Subsidiaries related to or arising from the transactions contemplated by any of the Loan Documents, including, without limitation, immunity from suit, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, such Loan Party, for itself and on behalf of its Subsidiaries, hereby expressly waives, to the fullest extent permissible under applicable law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the United States or elsewhere. Without limiting the generality of the foregoing, each Loan Party further agrees that the waivers set forth in this Section 10.25 shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

Section 10.28 Lender Affiliates and Facility Office

(a) In respect of a Revolving Credit Loans or Letters of Credit to a particular Borrower (“Designated Loans”) a Revolving Credit Lender (a “Designating Lender”) may at any time and from time to time designate (by written notice to the Administrative Agent and the Parent Borrower):

(i) a substitute Lending Office from which it will make Designated Loans (a “Substitute Lending Office”); or

(ii) nominate an Affiliate to act as the Lender of Designated Loans (a “Substitute Affiliate Lender”).

(b) A notice to nominate a Substitute Affiliate Lender must be in the form set out in Exhibit L and be countersigned by the relevant Substitute Affiliate Lender confirming it will be bound as a Lender under this Agreement in respect of the Designated Loans in respect of which it acts as Lender.

(c) The Designating Lender will act as the representative of any Substitute Affiliate Lender it nominates for all administrative purposes under this Agreement. The Loan Parties, the Administrative Agent, the Collateral Agent and the other Secured Parties will be entitled to deal only with the Designating Lender, except that payments will be made in respect of Designated Loans to the Lending Office of the Substitute Affiliate Lender. In particular the Commitments of the Designating Lender will not be treated as reduced by the introduction of the Substitute Affiliate Lender for voting purposes under this Agreement or the other Loan Documents.

 

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(d) Save as mentioned in clause (c) above, a Substitute Affiliate Lender will be treated as a Lender for all purposes under the Loan Documents and having a Revolving Credit Commitment equal to the principal amount of all Designated Loans in which it is participating if and for so long as it continues to be a Substitute Affiliate Lender under this Agreement.

(e) A Designating Lender may revoke its designation of an Affiliate as a Substitute Affiliate Lender by notice in writing to the Administrative Agent and the Parent Borrower; provided that such notice may only take effect when there are no Designated Loans outstanding to the Substitute Affiliate Lender. Upon such Substitute Affiliate Lender ceasing to be a Substitute Affiliate Lender the Designating Lender will automatically assume (and be deemed to assume without further action by any Party) all rights and obligations previously vested in the Substitute Affiliate Lender.

(f) If a Designating Lender designates a Substitute Lending Office or Substitute Affiliate Lender in accordance with this clause:

(i) any Substitute Affiliate Lender shall be treated for the purposes of Section 3.01 as having become a Lender on the date of this Agreement; and

(ii) the provisions of Section 10.07(e) shall not apply to or in respect of any Substitute Lending Office or Substitute Affiliate Lender.

[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.

 

ALPHA 3 B.V.,

as Parent Borrower

By:  

/s/ Richard van Dijk

Name:   Richard van Dijk
Title:   Director
By:  

/s/ Andrew Howlett-Bolton

Name:   Andrew Howlett-Bolton
Title:   Director

ALPHA US BIDCO, INC.,

as Subsidiary Borrower

By:  

/s/ Martin Sumner

Name:   Martin Sumner
Title:   Secretary

ALPHA 2 B.V.,

as Holdings

By:  

/s/ Richard van Dijk

Name:   Richard van Dijk
Title:   Director
By:  

/s/ Andrew Howlett-Bolton

Name:   Andrew Howlett-Bolton
Title:   Director

[Signature Page to Credit Agreement]


ATOTECH S.E.A. PTE LTD., as a Borrower,
By:  

/s/ Dr. Roland Hagemeister

Name:   Dr. Roland Hagemeister
Title:   Authorized Signatory
By:  

/s/ Gregor Frank

Name:   Dr. Gregor Frank
Title:   Authorized Signatory
ATOTECH DEUTSCHLAND GMBH, as a Borrower,
By:  

/s/ Stephan Lösch

Name:   Dr. Stephan Lösch
Title:   Authorized Signatory

[Signature Page to Credit Agreement]


BARCLAYS BANK PLC, as Administrative Agent,

Collateral Agent and a Lender

By:  

/s/ Filippo Crosara

Name:   Filippo Crosara
Title:   Director
BARCLAYS BANK PLC, as an L/C Issuer
By:  

/s/ Filippo Crosara

Name:   Filippo Crosara
Title:   Director

[Signature Page to Credit Agreement]


JPMORGAN CHASE BANK, N.A., as a Lender and an L/C Issuer
By:  

/s/ Christopher Bolland

Name:   Christopher Bolland
Title:   Vice President

[Signature Page to Credit Agreement]


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender and an L/C Issuer
By:  

/s/ Robert Hetu

Name:   Robert Hetu
Title:   Authorized Signatory
By:  

/s/ Whitney Gaston

Name:   Whitney Gaston
Title:   Authorized Signatory

[Signature Page to Credit Agreement]


CITIBANK N.A., LONDON BRANCH, as a Lender and an L/C Issuer
By:  

/s/ Camilo Mori

Name:   Camilo mori
Title:   Managing Director

[Signature Page to Credit Agreement]


HSBC BANK plc, as a Lender
By:  

/s/ Sandeep Bose-Mallick

Name:   Sandeep Bose-Mallick
Title:   Director

[Signature Page to Credit Agreement]


NOMURA BANK INTERNATIONAL plc, as a Lender
By:  

/s/ Sebastien Ihuilier

Name:   Sebastien Ihuilier
Title:   Managing Director

[Signature Page to Credit Agreement]


RBC EUROPE LIMITED, as a Lender and an L/C Issuer
By:  

/s/ Michael Santana-Mondo

Name:   Michael Santana-Mondo
Title:   Vice President

[Signature Page to Credit Agreement]


BANK OF CHINA LIMITED, SHANGHAI BRANCH, as Redenomination Term Facilities Administrative Agent, BOC Arranger and a Lender
By:  

/s/ Zhou Hehua

Name:   Zhou Hehua
Title:   Deputy General Director

[Signature Page to Credit Agreement]

EX-10.2

Exhibit 10.2

Execution Version

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This Amendment No. 1, dated as of May 30, 2018 (this “Amendment”), to that certain Credit Agreement, dated as of January 31, 2017 (as amended, restated, supplemented or otherwise modified from time to time immediately prior to the effectiveness of this Amendment, the “Credit Agreement”; the Credit Agreement, after giving effect to the effectiveness of this Amendment, the “Amended Credit Agreement”), by and among ALPHA 3 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of The Netherlands, with corporate seat in De Meern and registered with the Dutch trade register under number 66940532 (the “Parent Borrower”), ALPHA US BIDCO, INC., a Delaware corporation (the “Subsidiary Borrower”, and together with the Parent Borrower, the “Incremental Borrowers” or “you”), ATOTECH DEUTSCHLAND GMBH, a company organized and existing under the laws of Germany with principal offices located at Erasmusstrasse 20, Berlin, Germany 10553 (the “German Borrower”), ATOTECH S.E.A. PTE LTD, a private company limited by shares incorporated under the laws of Singapore with company registration no. 198904489 (the “Singapore Borrower” and together with the German Borrower and the Incremental Borrowers, the “Borrowers”), ALPHA 2 B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, with corporate seat in De Meern and registered with the Dutch trade register under number 66937442 (“Holdings”), each lender from time to time party thereto, the other financial institutions from time to time party thereto, BARCLAYS BANK PLC, as administrative agent and collateral agent (the “Administrative Agent” and BANK OF CHINA LIMITED, SHANGHAI BRANCH, as Redenomination Term Facilities Administrative Agent, is entered into by and among the Borrowers, Holdings, the Subsidiary Guarantors party hereto, the Administrative Agent, and the Incremental Term Lender (as defined below).

W I T N E S S E T H:

WHEREAS, pursuant to Section 2.14 of the Credit Agreement, the Borrowers may obtain a Term Commitment Increase (as defined in the Credit Agreement) in an aggregate amount of $200,000,000 (the Term Loans made under the 2018 Term Commitment Increase (as defined below), the “2018 Term Loans”) by, among other things, entering into this Amendment in accordance with the terms and conditions of the Credit Agreement in order to fund a one-time special cash dividend payment to Holdings (to permit Holdings to make a one-time special cash dividend to holders of Capital Stock of Holdings), on or promptly following the First Amendment Effective Date, in an aggregate principal amount not to exceed $200,000,000 (the “2018 Special Dividend”);

WHEREAS, the Borrowers have requested that the Incremental Term Lender (as defined below) provide, and the Incremental Term Lender has agreed to provide, the 2018 Term Commitment Increase in the amounts indicated on Annex I hereto;

WHEREAS, on or around the First Amendment Effective Date, Holdings will issue $300,000,000 in aggregate principal amount of Senior PIK Toggle Notes due 2023 (the “Holdco PIK Notes”);

WHEREAS, in connection with the foregoing, it is intended that (a) the Incremental Borrowers will obtain such 2018 Term Loans, (b) the proceeds of the Borrowings under such 2018 Term Loans will be used (i) to finance, in part, the 2018 Special Dividend and (ii) to pay certain fees, costs and expenses related thereto and in connection with this Amendment and (c) Holdings will issue the Holdco PIK Notes and make a dividend to Holdings’ equity holders and pay certain fees, commissions and expenses related to the Holdco PIK Notes (collectively, the “Transactions”);

 


NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. DEFINED TERMS; INTERPRETATION, ETC.

Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. This Amendment is an “Incremental Facility Agreement” and a “Loan Document”, each as defined in the Credit Agreement.

SECTION 2. 2018 TERM COMMITMENT INCREASE.

2.1 2018 Term Commitment Increase. On and as of the First Amendment Effective Date, the party hereto providing the 2018 Term Commitment Increase as indicated on Annex I hereto (the “Incremental Term Lender”) hereby agrees to make a 2018 Term Loan to the Incremental Borrowers in an aggregate principal amount equal to the amount set forth opposite the Incremental Term Lender’s name on Annex I hereto (the “2018 Term Commitment Increase”), on the terms set forth herein and in the Credit Agreement, and subject to the conditions set forth in Section 4 below. The 2018 Term Loans shall be deemed to be “Term Loans” and “Initial Term B-1 Loans” for all purposes of the Credit Agreement and the other Loan Documents, constituting the same Class, Tranche and Term Loan Tranche with, and having terms and provisions identical to those applicable to the Initial Term B-1 Loans made pursuant to Section 2.01(a) of the Credit Agreement. The 2018 Term Loans shall be incurred pursuant to the Ratio-Based Incremental Facility under the Credit Agreement. The 2018 Term Commitment Increase shall be provided in accordance with, and be subject to all of the terms and conditions set forth in, the Credit Agreement (including, without limitation, Section 2.14 thereof). The 2018 Term Commitment Increase shall terminate upon funding of the 2018 Term Loans.

2.2 The Incremental Term Lender hereby: (i) confirms that a copy of the Credit Agreement and the other applicable Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment and make a 2018 Term Loan has been made available to the Incremental Term Lender by the Administrative Agent; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or agent 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 Credit Agreement or the other applicable Loan Documents, including this Amendment; (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) acknowledges and agrees that upon the First Amendment Effective Date the Incremental Term Lender shall be a “Lender”, under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.

2.3 The 2018 Term Loans shall be allocated to each outstanding Initial Term B-1 Borrowing that is a Eurocurrency Rate Borrowing of the same Class on a pro rata basis, even though as a result thereof such 2018 Incremental Term Loans will have a shorter Interest Period than the Initial Term B-1 Loans included in the Borrowing of which they are a part (it being acknowledged that Section 2.14(c) of the Credit Agreement permits such Interest Periods).

 

2


SECTION 3. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to satisfaction (or waiver) of the conditions set forth in Section 4 hereof, on the First Amendment Effective Date, the Credit Agreement is hereby amended as follows:

(i) Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions in proper alphabetical sequence:

2018 Term Loans” means the “2018 Term Loans” as defined in the First Amendment.

First Amendment” means Amendment No. 1 to the Credit Agreement, dated as of May 30, 2018, among Holdings, the Borrowers, the other Loan Parties party thereto, the Administrative Agent, the Collateral Agent and the Lenders and other financial institutions party thereto.

First Amendment Effective Date” has the meaning specified in the First Amendment.

(ii) Each of the following defined terms in Section 1.01 of the Credit Agreement are hereby amended and restated in its entirety to read as follows:

Initial Term B-1 Loan” has the meaning specified in Section 2.01(a) and on and after the First Amendment Effective Date shall include the 2018 Term Loans incurred under the First Amendment. The aggregate principal amount of Initial Term B-1 Loans after giving effect to the 2018 Term Loans incurred and funded on the First Amendment Effective Date is $1,093,250,000.

Term Loan Tranche” means the respective facility and commitments utilized in making (or, where applicable, conversion of) Term Loans hereunder, with there being up to three tranches on the Closing Date (i.e. (i) Initial Term B-1 Loans and Initial Term B-1 Commitments, (ii) Initial Term B-2 Loans and Initial Term B-2 Commitments, and/or (iii) Initial Term B-3 Loans and Initial Term B-3 Commitments) and on and after the First Amendment Effective Date, the Initial Term B-1 Loans shall be considered part of the same Term Loan Tranche as the 2018 Term Loans made on such date. Additional Term Loan Tranches may be added after the Closing Date, i.e., New Term Loans (including New Term Loans denominated in RMB), Specified Refinancing Term Loans, New Term Commitments, Specified Refinancing Term Commitments and each Term B-3 Loans Sub-Tranche.

(iii) Section 2.07(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(a) Initial Term B-1 Loans. The Borrowers shall repay to the Administrative Agent for the ratable account of the applicable Term Lenders holding Initial Term B-1 Loans the aggregate principal amount of all Initial Term B-1 Loans outstanding in consecutive quarterly installments as follows (which installments shall, to the extent applicable, be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Sections 2.05 and 2.06, or be increased as a result of any increase in the amount of Initial Term B-1 Loans pursuant to Section 2.14 (such increased amortization payments to be calculated in the same manner (and on the same basis) as the schedule set forth below for the Initial Term B-1 Loans made as of the Closing Date)):

 

3


Date

  

Amount

The last Business Day of each fiscal quarter starting with the fiscal quarter ended September 30, 2017 and ending with the fiscal quarter ended March 31, 2018.    0.25% of the aggregate initial principal amount of the Initial Term B-1 Loans on the Closing Date.
The last Business Day of each fiscal quarter starting with the fiscal quarter ended June 30, 2018 and ending with the fiscal quarter most recently ended prior to the Maturity Date for the Initial Term Facilities.    $2,753,778.34

provided, however, that the final principal repayment installment of the Initial Term B-1 Loans shall be repaid on the Maturity Date for the Initial Term B-1 Loans and in any event shall be in an amount equal to the aggregate principal amount of all Initial Term B-1 Loans outstanding on such date.

SECTION 4. CONDITIONS PRECEDENT.

This Amendment shall become effective as of the date (the “First Amendment Effective Date”) on which each of the following conditions precedent shall have been satisfied (or duly waived by the Administrative Agent):

4.1 Certain Documents. The Administrative Agent shall have received each of the following, in form and substance reasonably satisfactory to the Administrative Agent:

(i) a counterpart of this Amendment, duly executed by each Loan Party, the Administrative Agent and the Incremental Term Lender;

(ii) a solvency certificate signed by the chief financial officer or similar officer, director or authorized signatory of the Parent Borrower, substantially in the form attached as Exhibit A to this Amendment (with such changes as may be agreed by the Parent Borrower and the Administrative Agent);

(iii) such customary resolutions or other action of Holdings and each Incremental Borrower as the Administrative Agent may reasonably require evidencing the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and such documents and certifications (including, without limitation, incumbency certificates, Organization Documents and, if applicable, good standing certificates) as the Administrative Agent may reasonably require to evidence that each of Holdings and the Incremental Borrowers is duly organized or formed, and that each of Holdings and the Incremental Borrowers is validly existing and, if applicable, in good standing;

(iv) an executed legal opinion of (A) Latham & Watkins LLP, special New York counsel to the Loan Parties and (B) Loyens & Loeff N.V., Dutch counsel to the Administrative Agent, in each case, addressed to the Administrative Agent and the Lenders and in form and substance reasonably acceptable to the Administrative Agent; and

 

4


(v) a Committed Loan Notice from the Borrowers with respect to the 2018 Term Commitment Increase for a single Term Borrowing of a Eurocurrency Rate Loan with an Interest Period ending June 29, 2018.

4.2 Fees and Expenses. All fees and reimbursable expenses that, in case of reimbursable expenses, have been invoiced in reasonable detail at least three Business Days prior to the First Amendment Effective Date, in each case that are due and payable to any Person on the First Amendment Effective Date under any engagement letter entered into in connection with this First Amendment shall have been paid in full in immediately available funds.

4.3 Representations and Warranties; No Defaults and Pro Forma Compliance. Immediately after giving effect to this Amendment (including the funding of the 2018 Term Loans), (A) the representations and warranties of the Borrowers and each other Loan Party contained in Article V of the Credit Agreement, Section 5 hereof and each other Loan Document are true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality) on and as of the First Amendment Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality) as of such earlier date and except that for purposes of this Section 4.3, the representations and warranties contained in Section 5.14 of the Credit Agreement shall refer to the Amendment Effective Date rather than the Closing Date for the purposes of this Section 4.3, (B) no Default or Event of Default shall exist, and (C) the Borrowers are in pro forma compliance with the Maximum First Lien Leverage Requirement. A Responsible Officer of either Incremental Borrower shall have delivered a certificate certifying as to the matters set forth in clauses (A), (B) and (C).

4.4 PATRIOT Act. The Term Lenders and the Revolving Credit Lenders shall have received from Holdings and the Borrowers documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, to the extent such documentation or other information has been reasonably requested in writing at least three Business Days prior to the First Amendment Effective Date. Any Incremental Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Borrower to the Administrative Agent prior to the Closing Date.

SECTION 5. REPRESENTATIONS AND WARRANTIES

In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, each Loan Party party hereto represents and warrants to the Administrative Agent, Collateral Agent and the Lenders as of the date of this Amendment that:

5.1 Existence, Qualification and Power; Compliance with Laws. Each Loan Party and each of the Restricted Subsidiaries (subject, in the case of clause (c), to the Legal Reservations and Section 5.3) (a) is a Person duly organized, formed or incorporated, validly existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under this Amendment and the Credit Agreement (after giving effect to this Amendment), (c) is duly qualified and is authorized to do business and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification and (d) has all requisite governmental licenses, authorizations, consents and approvals to operate its business as currently conducted; except in each case referred to in clause (a) (other than with respect to the Borrowers), (b)(i), (b)(ii) (other than with respect to the Borrowers), (c) and (d), to the extent that any failure to be so or to have such would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5


5.2 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of this Amendment are within such Loan Party’s corporate or other powers, have been duly authorized by all necessary corporate or other organizational action and do not (a) contravene the terms of any of such Person’s Organization Documents or (b) violate any Law; except to the extent that such violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.3 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required by Law in connection with (a) the execution, delivery, performance by, or enforcement against, any Loan Party of this Amendment or any other Loan Document, or for the consummation of the Transactions, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents or (c) the perfection or maintenance of the Liens created under the Collateral Documents, except in each case for (w) (1) with respect to the U.S. Loan Parties, filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties or any Restricted Subsidiary in favor of the Secured Parties consisting of UCC financing statements, filings in the United States Patent and Trademark Office and the United States Copyright Office and Mortgages, (2) with respect to the non-U.S. Loan Parties, the filings, registrations, approvals, consents and other actions listed on Schedule 5.03 to the Credit Agreement or other Perfection Requirements and (3) notices as legally required pursuant to para. 1280 German Civil Code (BGB), (x) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect, (y) those approvals, consents, exemptions, authorizations or other actions, notices or filings set out in the Collateral Documents and (z) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.4 Binding Effect. This Amendment has been duly executed and delivered by each Loan Party (subject, in each case, to the Legal Reservations and Section 5.3). Subject to the Legal Reservations, this Amendment and the Amended Credit Agreement constitutes, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party in accordance with its terms.

5.5 Use of Proceeds. The proceeds of the 2018 Term Loans shall be used solely to (i) pay the 2018 Special Dividend and (ii) pay or reimburse fees and expenses in connection with this Amendment and the transactions contemplated hereby. Immediately after giving effect to the consummation of the Transactions, the Borrowers shall be in compliance with Section 7.05 of the Credit Agreement.

5.6 Beneficial Ownership.As of the Closing Date, the information included in the Beneficial Ownership Certification delivered pursuant to Section 4.4 of this Amendment is true and correct in all material respects. As used herein, “Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation and “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

SECTION 6. CONDITIONS SUBSEQUENT

Within ninety (90) days after the First Amendment Effective Date, unless waived or extended by the Collateral Agent in its reasonable discretion, the Collateral Agent shall have received such items, or the Incremental Borrowers shall have completed such undertakings, as applicable, as specified on Annex II hereto.

 

6


SECTION 7. MISCELLANEOUS

7.1 Reference to and Effect on the Loan Documents.

(a) As of the First Amendment Effective Date, each reference in the Amended Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder”, “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as amended by this Amendment.

(b) Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Administrative Agent, any Lender or any L/C Issuer under the Credit Agreement or any Loan Document, or constitute a waiver or amendment of any other provision of the Credit Agreement or any Loan Document (as amended hereby) except as and to the extent expressly set forth herein.

7.2 Costs and Expenses. The Borrowers agree to reimburse the Administrative Agent for its costs and expenses in connection with this Amendment (and the other Loan Documents delivered in connection herewith) solely to the extent provided in Section 10.04 of the Credit Agreement.

7.3 Reaffirmation. Subject to Annex II hereto, each Loan Party hereto expressly acknowledges the terms of this Amendment and reaffirms, as of the First Amendment Effective Date, that its guarantee of the Obligations under the applicable Guaranty and its grant of Liens on the Collateral to secure the Obligations pursuant to each Collateral Document to which it is a party, in each case, continues in full force and effect and extends to the obligations of the Loan Parties under the Loan Documents (including the Amended Credit Agreement and including the obligations of the Loan Parties in respect of the 2018 Term Loans) subject to any limitations set out in the Amended Credit Agreement and any other Loan Document applicable to that Loan Party. Subject to Annex II hereto, neither the execution, delivery, performance or effectiveness of this Amendment nor the modification of the Credit Agreement effected pursuant hereto: (i) impairs the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document, and such Liens continue unimpaired with the same priority to secure repayment of all Obligations, whether heretofore or hereafter incurred; or (ii) is intended to or will create a registerable Lien or requires that any new filings be made or other action be taken to perfect or to maintain the perfection of such Liens.

7.4 Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Receipt by the Administrative Agent of a facsimile copy of an executed signature page hereof shall constitute receipt by the Administrative Agent of an executed counterpart of this Amendment.

7.5 Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AMENDMENT (OTHER THAN TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE HEREIN) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

7


7.6 Loan Document and Integration. This Amendment is a Loan Document, and together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

7.7 Headings. Section headings contained in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purposes.

7.8 Waiver of Jury Trial. EACH PARTY TO THIS AMENDMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AMENDMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AMENDMENT, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7.8 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

7.9 Tax Treatment. For U.S. federal and applicable state and local income tax purposes, immediately before and after giving effect to this Amendment, all of the Initial Term B-1 Loans shall be treated as one fungible tranche. Unless otherwise required by applicable law, none of the Loan Parties, the Administrative Agent or any Lender shall take any tax position inconsistent with the preceding sentence.

[SIGNATURE PAGES FOLLOW]

 

8


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers and members thereunto duly authorized, as of the date indicated above.

 

ALPHA 3 B.V., as Parent Borrower
By:  

/s/ Cornelis Siemon Stigter

Name:   Cornelis Siemon Stigter
Title:   Director A
By:  

/s/ Johannes Adrianus Man

Name:   Johannes Adrianus Man
Title:   Director B
ALPHA 2 B.V., as Holdings
By:  

/s/ Cornelis Siemon Stigter

Name:   Cornelis Siemon Stigter
Title:   Director A
By:  

/s/ Ingo Steinbeck

Name:   Ingo Steinbeck
Title:   Director B
ATOTECH B.V., as Subsidiary Guarantor
By:  

/s/ Cornelis Siemon Stigter

Name:   Cornelis Siemon Stigter
Title:   Director A
By:  

/s/ Geoffrey Wild

Name:   Geoffrey Wild
Title:   Director B

 

 

[Signature Page to Project Alpha Amendment No. 1]


ALPHA 4 B.V., as Subsidiary Guarantor
By:  

/s/ Cornelis Siemon Stigter

Name:   Cornelis Siemon Stigter
Title:   Director A
By:  

/s/ Johannes Adrianus Man

Name:   Johannes Adrianus Man
Title:   Director B
ALPHA 5 B.V., as Subsidiary Guarantor
By:  

/s/ Cornelis Siemon Stigter

Name:   Cornelis Siemon Stigter
Title:   Director A
By:  

/s/ Johannes Adrianus Man

Name:   Johannes Adrianus Man
Title:   Director B

 

 

[Signature Page to Project Alpha Amendment No. 1]


ALPHA US BIDCO, INC., as Subsidiary Borrower
By:  

/s/ Eve Powars-Bahr

Name:   Eve Powars-Bahr
Title:   Secretary
ATOTECH USA, LLC, as Subsidiary Guarantor
By:  

/s/ Eve Powars-Bahr

Name:   Eve Powars-Bahr
Title:   Secretary

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH DEUTSCHLAND GMBH, as a Borrower
By:  

/s/ Geoffrey Wild

Name:   Geoffrey Wild
Title:   Managing Director
ALPHA GERMANY BIDCO GMBH, as a Subsidiary Guarantor
By:  

/s/ Geoffrey Wild

Name:   Geoffrey Wild
Title:   Managing Director
ATOTECH BETEILIGUNGS GMBH & CO. KG, as a Subsidiary Guarantor
By:  

/s/ Geoffrey Wild

Name:   Geoffrey Wild
Title:   Managing Director
ATOTECH S.E.A. PTE LTD, as a Borrower
By:  

/s/ Sanal Kumar Ramachandrapanicker

Name:   Sanal Kumar Ramachandrapanicker
Title:   Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


   Subsidiary Guarantor
  

Signed by

Atotech Australia Pty Ltd

by

  
sign here u   

/s/ Martin Utteridge

   sign here u   

/s/ Linda Fonner

   Company Secretary/Director       Director
print name   

Martin Utteridge

   print name   

Linda Fonner

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH DO BRASIL GALVANOTECHNICA LTDA.
By:  

/s/ Milton Moraes Silveira Junior

Name:   Milton Moraes Silveira Junior
Title:   Superintendent Officer
By:  

/s/ Maurício Furukawa Bombonati

Name:   Maurício Furukawa Bombonati
Title:   Officer

Witnesses:

 

1. /s/ Kennedy M. Miller                                

Name: Kennedy M. Miller

ID:

CPF/MF:

  

2. /s/ Fernando Jorge Morais                                

Name: Fernando Jorge Morais

ID:

CPF/MF:

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH CANADA LTD., as Subsidiary Guarantor

By:

 

/s/ David Balcerzak

Name:

 

David Balcerzak

Title:

  Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH ASIA PACIFIC LIMITED, as Subsidiary Guarantor

By:

 

/s/ George Yang

Name:

 

George Yang

Title:

  Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH JAPAN KABUSHIKI KAISHA, as Subsidiary Guarantor

By:

 

/s/ Hitoshi Ishikawa

Name:

 

Hitoshi Ishikawa

Title:

  Vice President and Representative Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


UAB “ATOTECH-CHEMETA”, as Subsidiary Guarantor

By:

 

/s/ Grazina Kontrimaviciute

Name:

 

Grazina Kontrimaviciute

Title:

  Managing Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH POLAND SP. Z O.O., as Subsidiary Guarantor

By:

 

/s/ Jaroslaw Rozwadowski

Name:

 

Jarosław Rozwadowski

Title:

  President of the Management Board

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH-CHEMETA LIMITED LIABILITY COMPANY, as Subsidiary Guarantor

By:

 

/s/ Ms. Grazina Kontrimaviciute

Name:

 

Ms. Grazina Kontrimaviciute

Title:

  General Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH SKANDINAVIEN A.B., as Subsidiary Guarantor
By:   /s/ Tobias Mommertz
Name:   Tobias Mommertz
Title:   Director
By:   /s/ Romeo Taddei
Name:   Romeo Taddei

Title:

  Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH TAIWAN LIMITED, as Subsidiary Guarantor

By:

 

/s/ George Yang

Name:

 

George Yang

Title:

  Chairman

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH UK LIMITED, as Subsidiary Guarantor

By:

 

/s/ Romeo Taddei

Name:

 

Romeo Taddei

Title:

  Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


ATOTECH DE MEXICO, S.A. DE C.V., as Subsidiary Guarantor

By:

 

/s/ David Balcerzar

Name:

 

David Balcerzar

Title:

  Director
ATOTECH SERVICIOS DE MEXICO, S.A. DE C.V., as Subsidiary Guarantor

By:

 

/s/ David Balcerzar

Name:

 

David Balcerzar

Title:

  Director

By:

 

/s/ Vicente Pastalle

Name:

 

Vicente Pastalle

Title:

  Business Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


BARCLAYS BANK PLC, as Administrative Agent and Collateral Agent
By:  

/s/ Filippo Crosara

Name:   Filippo Crosara
Title:   Director
BARCLAYS BANK PLC, as Incremental Term Lender
By:  

/s/ Filippo Crosara

Name:   Filippo Crosara
Title:   Director

 

 

[Signature Page to Project Alpha Amendment No. 1]


Annex I

 

Incremental Term Lender

   Amount  

BARCLAYS BANK PLC

   $ 200,000,000  
EX-10.16

Exhibit 10.16

Consulting Services Agreement

CONSULTING SERVICES AGREEMENT

This Consulting Services Agreement (this Agreement), dated as of 31 January, 2017, is being entered into by and among Alpha US Bidco, Inc., incorporated under the laws of Delaware (registered number 6166321), whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (US BidCo), Atotech UK Topco Limited a limited company incorporated in England and Wales, having its registered office address at c/o The Carlyle Group, Lansdowne House, 57 Berkeley Square, London W1J 6ER (registered number 10533697) (the Company) and Carlyle Investment Management L.L.C., a Delaware limited liability company whose registered office is at 1209 Corporation Trust Center, Orange Street, Wilmington, New Castle, Delaware, 19801 (registered number 2645133) (the Consultant).

RECITALS

WHEREAS, the Consultant is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940 and acts as investment adviser or sponsor to various private equity funds that invest or hold securities in operating companies (such as the Company) and provides investment advice to these private equity funds in connection with their investments in such portfolio companies;

WHEREAS, the Consultant, by and through its officers, employees, agents, representatives and Affiliates (as defined below), provides consulting services on, and has expertise in, among other things, formation, management and structuring of businesses and organizations, business strategy, analysis of industries and markets, acquisition and disposition strategy, business due diligence, business integration and other matters relating to the structural, strategic and financial (as opposed to operational) management of businesses;

WHEREAS, the Consultant, in connection with providing investment advice to or for the benefit of these private equity funds, may provide consulting services to portfolio companies in exchange for compensation, all or a portion of which may be paid to the private equity funds or applied to offset payment obligations of the private equity funds to the Consultant; and

WHEREAS, the Company desires to avail itself of the expertise of the Consultant in the aforesaid areas, in which it acknowledges the expertise of the Consultant.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the parties hereto agree as follows:

Section 1.    Appointments.

(a)    The Company hereby appoints the Consultant to render the advisory and consulting services described in Section 2(a) hereof on the terms and conditions set forth in this Agreement.


Consulting Services Agreement

 

Section 2.    Services.

(a)    In connection with the transaction contemplated by the sale and purchase Agreement, dated 6 October 2016, by and among, (i) Alpha 3 B.V., (ii) Total Holdings Europe SAS and (iii) Total Gestion USA S.à r.l., in respect of the acquisition of the issued and to be issued share capital of Atotech B.V. and its subsidiaries (the Transaction) (together with any and all other agreements, documents, instruments and certificates entered into in connection with the transactions contemplated thereby and the financing thereof, the Transaction Documents), the Consultant has provided to the Company strategic advisory and consulting services described in Schedule 1 hereto (the Initial Advisory Services).

(b)    Following completion of the Transaction on 31 January, the Company hereby engages the Consultant to provide to the Company and its subsidiaries (the Atotech Group), by and through such of the Consultant’s officers, employees, agents, representatives and Affiliates as the Consultant, in its sole discretion, shall designate (the Consultant Designees), from time to time as requested by the Company and mutually agreed, by and among, the Company and the Consultant, advisory, consulting and other services in relation to, among other things, development and execution of business strategy, analysis of industries and markets, acquisition and disposition strategy, business due diligence, business integration and other matters relating to the strategic and financial (as opposed to operational) management of the businesses of the Atotech Group (the Consulting Services). The Consulting Services do not include any services related to the day-to-day operation, management or supervision of the business or facilities of the Atotech Group, including, without limitation, facility or business budget analysis, health or safety matters, regulatory compliance or policy and procedure development (the Excluded Services), it being understood that the Consultant will not provide and shall not be deemed to have any knowledge of activities constituting the Excluded Services. Further, in providing the Consulting Services or otherwise, the Consultant shall not be deemed to be acting in concert with the Atotech Group, including, without limitation, for purposes of the Atotech Group’s compliance with any and all consent decrees to which the members of the Atotech Group are a party to or may be party to in the future. As used herein, the term Affiliate of any specified person or entity means any person or entity controlling, controlled by or under common control with such specified person or entity. Nothing herein shall require the Consultant to engage in any activities as a broker-dealer or investment adviser under the laws of any jurisdiction in which it performs services.

Section 3.    Fees.

(a)    In consideration of the Initial Advisory Services and the Consulting Services, US BidCo agrees to pay the Consultant and the Consultant shall issue an invoice to US BidCo for:

 

  (i)

an amount equal to USD 25,000,000.00 in relation to the Initial Advisory Services (the Initial Advisory Fee Amount); and

 

  (ii)

an amount equal to USD 295,890.41 being the Initial Consulting Fee Amount (as defined below),

and US BidCo shall, on the date hereof, pay to the Consultant, or its designee, a non-refundable and irrevocable aggregate sum of the Initial Advisory Fee Amount and the Initial Consulting Fee Amount of USD 25,295,890.41 to the Consultant’s bank account. The parties hereto agree that US BidCo has the right to apportion and to recharge the Initial Advisory Fee Amount and the Initial Consulting Fee Amount to members of the Atotech Group pursuant to a recharge agreement to be entered into after the date hereof.

 

2


Consulting Services Agreement

 

(b)    In consideration of the performance of the Consulting Services contemplated by Section 2(b) hereof, the Company shall (or the Company shall procure that a member of Atotech Group shall) pay to the Consultant or its designee a non-refundable and irrevocable annual fee of USD 1,800,000.00 cash (the Annual Consulting Fee and, together with any fees payable pursuant to Section 3(c) hereof, the Consulting Fees) during the term hereof. The Annual Consulting Fee shall be payable quarterly in advance and shall be paid in quarterly installments or paid on such time and to such entities as may be determined in writing between the Consultant and the Company. The first quarterly installment (the Initial Consulting Fee Amount) of the Annual Consulting Fee (in relation to the period of January 31, 2017 to March 31, 2017) shall be payable on the date hereof as provided in 3(a)(ii) above.

(c)    In consideration of any services, other than the Consulting Services, that may be provided by the Consultant to the Atotech Group from time to time during the term of this Agreement, the Consultant shall be entitled to receive such additional compensation as agreed upon by the Company and the Consultant.

(d)    Any and all payments required to be made to the Consultant or its designee hereunder shall be made free and clear of, and without deduction for, any federal, state, local, foreign or other taxes, duties, and assessments in the nature of a tax imposed by a governmental authority (Taxes), other than any Taxes imposed on the Consultant’s net income or branch profits by any jurisdiction in which the Consultant is organized or in which its principal office is located, or as a result of any other present or former connection between the Consultant and the jurisdiction imposing such Taxes; provided, however, that, if any member of the Atotech Group as payor of the payment, as applicable, shall be required by applicable law to deduct any such Taxes from any payment hereunder, (i) such payment shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional amounts payable under this Section 3(e)), the Consultant receives payments equal to the amount it would have received had no such deductions been made, (ii) the relevant member of the Atotech Group as payor, as applicable, shall make such deductions and (iii) the relevant member of the Atotech Group as payor, as applicable, shall pay the full amount deducted to the relevant governmental authority in accordance with applicable law. Prior to or simultaneous with the execution of this Agreement, the Consultant shall deliver to each of US BidCo and the Company, a properly completed and duly executed Internal Revenue Service Form W-9 establishing that the Consultant is not subject to U.S. backup withholding tax with respect to payments made to the Consultant under this Agreement.

Section 4.    Out-of-Pocket Expenses.

In addition to the compensation payable to the Consultant pursuant to Section 3 hereof, the Company or a member of the Atotech Group, as applicable, shall, promptly at the request of the Consultant, reimburse Consultant for, or at the Consultant’s request, pay directly on the Consultant’s behalf, the Out-of-Pocket Expenses. For the purposes of this Agreement, the term Out-of-Pocket Expenses means all reasonable out-of-pocket expenses incurred or accrued by or on behalf of the Consultant or its Affiliates in connection with the performance of (a) the Initial Advisory Services and (b) the Consulting Services, in each case, including, without limitation, (i) fees, expenses and disbursements of any counsel, consultants, investment bankers, accountants, financial advisors and other independent professionals and organizations, (ii) costs of any outside services or independent contractors such as financial printers, couriers, business publications, regulatory filings or similar services and (iii) any travel, entertainment and other third-party expenses not associated with the Consultant’s ordinary operations. For the avoidance of doubt, Out-of-Pocket Expenses shall not include any fees or expenses incurred in connection with any other transaction or services involving any portfolio company of the Consultant other than the entities within Atotech Group. All reimbursements for Out-of-Pocket Expenses shall be made promptly upon presentation by the Consultant to the Company or the relevant member of the Atotech Group, as applicable, of the invoices in connection therewith. The Consultant shall pay the relevant portions of such Out-of-Pocket Expenses to various external service providers on behalf of the Consultant and its Affiliates.

 

3


Consulting Services Agreement

 

Section 5.    Termination.

(a)    This Agreement will continue in full force and effect for so long as (i) the Consultant and its Affiliates collectively and beneficially own at least ten percent (10%) of the outstanding voting securities of the Company, its successor, any parent entity of the Company or such successor; and (ii) an officer, director, employee, associate or representative of the Consultant or any of its Affiliates serves as a member of the board of directors or similar governing body of the Company, its successor, any parent entity of the Company or such successor or any other Atotech Group entity or its successor; provided that (a) this Agreement may be terminated at any time by written notice to the Company from the Consultant and (b) this Agreement shall automatically terminate upon a material breach not remedied with 60 days by the Consultant or its Affiliates. For the avoidance of doubt, termination of this Agreement will not relieve any party from liability for any breach of this Agreement at or prior to such termination. In the event of a termination of this Agreement, on the date of such termination, the Company will pay to the Consultant (or its designee) all unpaid Consulting Fees due to the Consultant with respect to periods ending on the date of termination and will reimburse the Consultant for all Out-of-Pocket Expenses as of such date of termination.

(b)    Sections 4 to 16 of this Agreement shall survive termination of this Agreement with respect to matters arising before or after such termination.

Section 6.    Disclaimer and Limitation of Liability; Opportunities.

(a)     Disclaimer; Standard of Care. Neither the Consultant nor any of its Consultant Designees make any representations or warranties, express or implied, in respect of the services to be provided by it or its Consultant Designees hereunder. In no event will the Consultant, any of its Consultant Designees or any of the Consultant’s or its Consultant Designees’ respective former, current or future partners, members, stockholders, Affiliates, associates, associated investment funds, officers, directors, employees, controlling persons, agents or representatives, or any former, current or future partners, members, stockholders, Affiliates, associates, associated investment funds, officers, directors, employees, controlling persons, agents or representatives of any of the foregoing (together with the Consultant and the Consultant Designees, the Consultant Related Parties) be liable to the Company and any members of the Atotech Group (other than the Consultant Related Parties) for any act, alleged act, omission or alleged omission hereunder that does not constitute gross negligence or willful misconduct of a Consultant Related Party, as determined by a final, non-appealable determination of a court of competent jurisdiction.

(b)     Freedom to Pursue Opportunities. In recognition that the Consultant Related Parties currently have, and will in the future have or will consider acquiring, investments in numerous companies with respect to which one or more Consultant Related Parties may serve as an advisor or director or in some other capacity, and in recognition that the Consultant Related Parties have myriad duties to various investors and partners, and in anticipation that a member of the Atotech Group, on the one hand, and the Consultant Related Parties, on the other hand, may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in recognition of the benefits to be derived by a member of the Atotech Group hereunder and in recognition of the difficulties which may confront any advisor who desires and endeavors fully to satisfy such advisor’s duties in determining the full scope of such duties in any particular situation, the provisions of this Section 6(b) are set forth to regulate, define and guide the conduct of certain affairs of the Atotech

 

4


Group as they may involve Consultant Related Parties. Except as the Consultant or any Consultant Designee may otherwise agree in writing after the date hereof:

(i)     Each Consultant Related Party will have the right: (A) to directly or indirectly engage in any business (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with the Atotech Group), (B) to directly or indirectly do business with any client or customer of the Atotech Group, (C) to take any other action that such Consultant Related Party believes in good faith is necessary to or appropriate to fulfill its obligations as described in the first sentence of this Section 6(b) to persons or entities other the Atotech Group, and (D) not to communicate or present potential transactions, matters or business opportunities to the Atotech Group, and to pursue, directly or indirectly, any such opportunity for itself or any persons or entities other than the Atotech Group, and to direct any such opportunity to another person or entity.

(ii)     No Consultant Related Party will have any duty (contractual or otherwise) to communicate or present any corporate opportunities to the Atotech Group or to refrain from any actions specified in Section 6(b)(i), and the Atotech Group hereby renounces and waives any right to require any Consultant Related Party to act in a manner inconsistent with the provisions of this Section 6(b).

(iii)    Except as provided in this Section 6(b), no Consultant Related Party will be liable to the Atotech Group for breach of any duty (contractual or otherwise) by reason of any activities or omissions of the types referred to in this Section 6(b) or of any such person’s participation therein.

(c)     Limitation of Liability. In no event will any Consultant Related Party be liable to any member of the Atotech Group for any indirect, special, incidental or consequential damages, including, without limitation, lost profits or savings, whether or not such damages are foreseeable, relating to, in connection with or arising out of this Agreement or the performance of the services contemplated hereby, including, without limitation, the services to be provided by the Consultant or any Consultant Designee hereunder. In no event will any Consultant Related Party be liable for damages of any kind for any act or omission that does not constitute gross negligence or willful misconduct of such Consultant Related Party (as determined by a final non-appealable judgment of a court of competent jurisdiction) or for damages in excess of the fees received by the Consultant corresponding to such Consultant Related Party hereunder for the service to which such act or omission relates. The limitations in this Section 6(c) shall not, to the extent required by applicable law, apply to lability for fraud or fraudulent misrepresentation.

(d)     Accuracy of Information. The Company should procure that the Atotech Group shall furnish or cause to be furnished to the Consultant such information as the Consultant believes reasonably appropriate to render the services contemplated by this Agreement (all such information so furnished, the Information). The Company recognizes and confirms that the Consultant (i) will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same, (ii) does not assume responsibility for the accuracy or completeness of the Information and such other information and (iii) is entitled to rely upon the Information without independent verification.

 

5


Consulting Services Agreement

 

Section 7.    Indemnification.

(a)     The Company, as applicable, will indemnify, defend, exonerate and hold harmless any Consultant Related Parties from and against any and all actions, causes of action, suits, claims, liabilities, losses, damages, costs and expenses (including, without limitation reasonable attorneys’ fees, expenses and disbursements) incurred by such Consultant Related Parties or any of them before, on or after the date of this Agreement, arising out of, incurred in connection with or as a result of, or in any way relating to, (i) this Agreement, the Transaction Documents, any transaction to which, the Company or any members of the Atotech Group are a party or any other circumstances with respect to the Company or any members of the Atotech Group or the conduct of the respective businesses of the Company or any members of the Atotech Group, (ii) services provided by the Consultant or any Consultant Designee to the Company or any members of the Atotech Group from time to time pursuant to this Agreement or (iii) the exercise, enforcement or preservation of any rights or remedies under this Agreement (collectively, the Indemnified Liabilities); provided that the foregoing indemnification rights will not be available to the extent that a court of competent jurisdiction determines by final non-appealable judgment or order that such Indemnified Liabilities arose on account of such Consultant Related Party’s gross negligence or willful misconduct; and provided, further, that if and to the extent that the foregoing right to indemnification may be unavailable or unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

(b)     The Company, as applicable, will reimburse any Consultant Related Party for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses and any other litigation-related expenses) as they are incurred in connection with investigating, preparing, pursuing, defending or assisting in the defense of any action, claim, suit, investigation or proceeding for which the Consultant Related Party would be entitled to indemnification under the terms of Section 7(a), or any action or proceeding arising therefrom, whether or not such Consultant Related Party is a party thereto. The Company agree that it will not, without the prior written consent of the Consultant, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any Consultant Related Party is a party thereto or has been threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the Consultant Related Party from all liability, without future obligation or prohibition on the part of such Consultant Related Party, arising or that may arise out of such claim, action or proceeding, and does not contain an admission of guilt or liability on the part of the Consultant Related Party.

(c)     The rights of any Consultant Related Party to indemnification hereunder will be in addition to any other rights any such person may have under any other agreement or instrument referenced above or any other agreement or instrument to which such Consultant Related Party is or becomes a party or is or otherwise becomes a beneficiary or under law or regulation. The Company hereby acknowledges that each Consultant Related Party may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more persons or entities with whom or which such Consultant Related Party may be associated (including, without limitation, any other Consultant Related Party). The Company hereby acknowledges and agrees that (i) the Company shall be the indemnitors of first resort with respect to any Indemnified Liability, (ii) the Company shall be primarily liable for all Indemnified Liabilities and any indemnification afforded to any Consultant Related Party in respect of any Indemnified Liabilities, whether created by law, organisational or constituent documents, contract (including this Agreement) or otherwise, (iii) any obligation of any other person or entity with whom or which any Consultant Related Party may be associated (including, without limitation, any other Consultant Related Party) to indemnify such Consultant Related Party and/or advance expenses to such Consultant Related Party in respect of any proceeding shall be secondary to the

 

6


Consulting Services Agreement

 

obligations of UK the Company hereunder, (iv) the Company shall be required to indemnify each Consultant Related Party and advance expenses to each Consultant Related Party hereunder to the fullest extent provided herein without regard to any rights such Consultant Related Party may have against any other person or entity with whom or which such Consultant Related Party may be associated (including, without limitation, any other Consultant Related Party) or insurer of any such person or entity and (v) the Company (on behalf of themselves and their respective insurers) irrevocably waives, relinquishes and releases any other person or entity with whom or which any Consultant Related Party may be associated from any claim of contribution, subrogation or any other recovery of any kind in respect of amounts paid by the Company hereunder. In the event any other person or entity with whom or which any Consultant Related Party may be associated (including, without limitation, any other Consultant Related Party) or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnified Liability owed by the Company or payable under any insurance policy provided under this Agreement, the payor shall have a right of subrogation against UK the Company or their respective insurer or insurers, as applicable, for all amounts so paid which would otherwise be payable by the Company or their respective insurer or insurers under this Agreement. In no event will payment of an Indemnified Liability under this Agreement by any other person or entity with whom or which any Consultant Related Party may be associated (including, without limitation, other Consultant Related Parties) or their insurers affect the obligations of the Company hereunder or shift primary liability for any Indemnified Liability to any other person or entity with whom or which such Consultant Related Party may be associated (including, without limitation, any other Consultant Related Party).

Section 8.    Amendments and Waivers.

No amendment or waiver of any provision of this Agreement, or consent to any departure by either party from any such provision, shall be effective unless the same shall be in writing and signed by the parties to this Agreement, and, in any case, such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The waiver by any party of any breach of this Agreement shall not operate as or be construed to be a waiver by such party of any subsequent breach.

Section 9.    Assignment; Successors.

This Agreement and the rights and obligations of the parties hereunder may not be assigned or transferred without the prior written consent of the parties hereto; provided, however, that the Consultant may assign or transfer all or a portion of its rights, duties, obligations or interests hereunder to an Affiliate at the sole discretion of the Consultant. Subject to the foregoing, the provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 10.    Notices.

(a)     Any and all notices in connection with this Agreement shall be delivered by registered or certified mail (postage prepaid), email, overnight courier (using an internationally recognized courier company) or hand delivery to the parties at the following addresses (or such different addresses specified by a party for itself by notice to the other party in accordance with this Section 10):

 

If to the Consultant:

   c/o The Carlyle Group
   8 Promenadepl.
   80333 München, Germany
   Email: Michael.Schuster@carlyle.com

 

7


Consulting Services Agreement

 

with a copy to:

   Freshfields Bruckhaus Deringer LLP
   2 Rue Paul Cézanne
   75008 Paris, France

Attention:

   Florent Mazeron

Email:

   florent.mazeron@freshfields.com

If to the Company:

   c/o The Carlyle Group Lansdowne House
   57 Berkeley Square, London
   United Kingdom, W1J 6ER

Attention:

   Florian Kreuzer / Martin Sumner

Email:

   Florian.Kreuzer@carlyle.com / Martin.Sumner@carlyle.com

If to US Bidco:

   2711 Centerville Road, Suite 400
   Wilmington, Delaware 19808

Attention:

   Gregory Nikodem / Martin Sumner

Email:

   Gregory.Nikodem@carlyle.com / Martin.Sumner@carlyle.com

(b)    A notice shall be effective upon receipt and shall be deemed to have been received (i) at the time of delivery, if delivered by hand, registered or certified mail or courier or (ii) at the time of transmission if delivered by email.

Section 11.    Entire Agreement.

This Agreement shall constitute the entire agreement between and among the parties with respect to the subject matter hereof, and shall supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto.

Section 12.    Governing Law and Jurisdiction.

(a)    This Agreement and any non-contractual obligations arising out of or in connection with this Agreement shall be governed by, and interpreted in accordance with, English law.

(b)    The English courts shall have exclusive jurisdiction in relation to all disputes (including claims for set-off and counterclaims) arising out of or in connection with this Agreement including, without limitation, disputes arising out of or in connection with: (i) the creation, validity, effect, interpretation, performance or non-performance of, or the legal relationships established by, this Agreement; and (ii) any non-contractual obligations arising out of or in connection with this Agreement. For such purposes each party irrevocably submits to the jurisdiction of the English courts and waives any objection to the exercise of such jurisdiction.

Section 13.    Third party Rights

(a)    Each of the Consultant Related Parties may, under the Contracts (Rights of Third Parties) Act 1999, enforce the terms of Sections 6 and 7. This right is subject to (i) the rights of the parties to rescind or vary this Agreement without the consent of any Consultant Related Party and (ii) the other terms and conditions of this Agreement.

(b)    Except as set out in Section 13(a), a person who is not a party to this Agreement shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

 

8


Consulting Services Agreement

 

Section 14.     Counterparts. This Agreement may be executed in two or more counterparts, and by different parties on separate counterparts. Each set of counterparts showing execution by all parties shall be deemed an original, and shall constitute one and the same instrument.

Section 15.    Severability. If any provision or provisions of this Agreement shall be held to be invalid or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

Section 16.    Independent Contractor. In providing services to the Atotech Group, the Consultant will act as an independent contractor, and it is expressly understood and agreed that this Agreement is not intended to create, and does not create, any partnership, agency, joint venture or similar relationship and that no party hereto has the right or ability to contract for or on behalf of the other party, respectively, or to effect any transaction for the account of the other party, respectively.

[Signature Page Follows]

 

9


Consulting Services Agreement

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers or agents as of the date first referenced above as set forth below.

SIGNED by CARLYLE INVESTMENT MANAGEMENT L.L.C.

 

By:  

/s/ Catherine L. Ziobro

Name:   Catherine L.
Title:   Chief Compliance Officer

 

SIGNED by    )   
   )   
   )   

/s/ Florian Kreuzer

   )   
for and on behalf of    )   
ATOTECH UK TOPCO LIMITED    )   
SIGNED by    )   
   )   
   )   

/s/ Eve Powards-Bahr

   )   
for and on behalf of    )   
ALPHA US BIDCO, INC.    )   

[Signature Page to Consulting Services Agreement]

 


Consulting Services Agreement

 

Schedule 1

Strategic advisory and consulting services, including, without limitation:

1. Transaction structuring services;

2. Assistance and advice concerning negotiation of the terms and conditions of the Transaction Documents;

3. Acquisition due diligence services, including advice and analysis concerning the industry, operations, customers, management, historical and projected financial performance, quality of earnings, prospects and business plans of the Company and its subsidiaries and parent companies and their business functions (including the management, human resources, sales and marketing, risk management, business technology, strategic planning, contract management, corporate planning, accounting, financial reporting and treasury functions of the Company and its subsidiaries and parent companies);

4. Industry and market analysis related to the products, services and competitive position of the businesses of the Company and its subsidiaries and parent companies;

5. Analysis and advice concerning the management compensation plans and arrangements of the Atotech Group, including the management incentive equity plan of Platin 1263. GmbH & Co. Verwaltungs KG, in respect of the ordinary shares issued by the Company;

6. Analysis and advice concerning management, operational and organizational structure of the Atotech Group;

7. Analysis and advice concerning strategic planning and financial and operational forecasting and budgeting; and

8. Assistance and advice concerning transition planning.

 

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

 

Legal Name of Subsidiary

  

Jurisdiction

Alpha 2 B.V.*    The Netherlands
Alpha 3 B.V.*    The Netherlands
Alpha 4 B.V.    The Netherlands
Alpha 5 B.V.    The Netherlands
Alpha US Bidco, Inc.*    United States
Atotech Argentina S.A.*    Argentina
Atotech Asia Pacific Ltd.    Hong Kong
Atotech Australia PTY Ltd.*    Australia
Atotech Beteiligungs und Management GmbH & Co KG    Germany
Atotech Bulgaria EOOD    Bulgaria
Atotech B.V.*    The Netherlands
Atotech Canada Ltd.    Canada
Atotech (China) Chemicals Ltd.*    China
Atotech CZ, a.s.*    Czech Republic
Atotech de México S.A. de C.V.*    Mexico
Atotech Deutschland GmbH*    Germany
Atotech Development Center Private Limited*    India
Atotech do Brasil Galvanotécnica Ltda.    Brazil
Atotech España, S.A.*    Spain
Atotech France S.A.    France
Alpha Germany Bidco GmbH    Germany
Atotech India Private Limited*    India
Atotech İstanbul Kimya Sanayi Ticaret Limited Şirketi    Turkey
Atotech Italia S.r.l.*    Italy
Atotech Japan K.K.*    Japan
Atotech Korea Ltd.*    Korea
Atotech (Malaysia) Sdn. Bhd.*    Malaysia    


Atotech Österreich GmbH*   

Austria

Atotech (Philippines) Chemicals, Inc.   

The Philippines

Atotech Poland Sp. z.o.o.   

Poland

Atotech Servicios de México S.A. de C.V.*   

Mexico

Atotech (Singapore) Chemicals Pte. Ltd. (formerly Atotech S.E.A. Pte. Ltd.)   

Singapore

Atotech SK, s.r.o.*   

Slovakia

Atotech Skandinavien AB   

Sweden

Atotech Slovenija d.d.   

Slovenia

Atotech Taiwan Ltd*   

Taiwan

Atotech (Thailand) Co., Ltd. *   

Thailand

Atotech Vietnam Co., Ltd.*   

Vietnam

Atotech UK Ltd.   

United Kingdom

Atotech USA, LLC*   

United States

Atotech (Yangzhou) Chemicals Ltd   

China

J-KEM International AB   

Sweden

OOO “Atotech-Chemeta”*   

Russia

Pt. Atotech Indonesia Chemicals   

Indonesia

UAB Atotech-Chemeta   

Lithuania

Atotech UK Topco Limited   

United Kingdom

 

*

Denotes a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the use of our report, dated July 29, 2019, with respect to the consolidated balance sheets of Atotech UK Topco Limited (Successor) as of December 31, 2018 and 2017, the related consolidated statements of income (loss), comprehensive income (loss), cash flows and changes in shareholders’ equity for the years ended December 31, 2018 and 2017, and for the year ended December 31, 2016 and for the period from January 1, 2017 to January 31, 2017, of Atotech B.V. (Predecessor), and the related notes, included herein and to the reference to our firm under the heading “Experts” in the prospectus.

/s/ KPMG AG Wirtschaftsprüfungsgesellschaft

We have served as the Company’s auditor since 2018.

Berlin, Germany

January 15, 2020

EX-99.1

Exhibit 99.1

Representation to the Securities and Exchange Commission Pursuant to Item 8.A.4 of Form 20-F

Atotech Limited (the “Company”) has included in this Registration Statement on Form F-1 audited financial statements, prepared in accordance with International Financial Reporting Standards, for the year ended December 31, 2016 and the period from January 1, 2017 through January 31, 2017 for Atotech B.V., the predecessor to Atotech UK Topco Limited, the Company’s direct subsidiary, as of and for the years ended December 31, 2017 and December 31, 2018 for Atotech UK Topco Limited, and unaudited interim financial statements for the nine months ended September 30, 2018 and September 30, 2019 and as of September 30, 2019 for Atotech UK Topco Limited. Atotech Limited had no operations, assets or liabilities for these periods.

Instruction 2 to Item 8.A.4 of Form 20-F (the “Instruction”) provides that a company may comply with only the 15-month requirement in such item if the issuer is able to represent that it is not required to comply with the 12-month requirement in any other jurisdiction outside the United States and that complying with the 12-month requirement is impracticable or involves undue hardship.

Pursuant to the Instruction, the registrant hereby represents to the U.S. Securities and Exchange Commission that:

 

  1.

the Company is not required by any jurisdiction outside the United States to comply with a requirement to issue audited financial statements not older than 12 months after the Company’s fiscal year-end;

 

  2.

full compliance with Item 8.A.4 of Form 20-F at present is impracticable and involves undue hardship for the Company;

 

  3.

the Company does not anticipate that its audited financial statements for the year ended December 31, 2019 will be available until March 2020; and

 

  4.

in no event will the Company seek effectiveness of this registration statement on Form F-1 if its audited financial statements are older than 15 months at the time of the Company’s initial public offering.

Date: January 15, 2020

 

Atotech Limited
By:  

/s/ Geoff Wild

Name:   Geoff Wild
Title:   President and Chief Executive Officer
EX-99.2

Exhibit 99.2

Consent of Director Nominee

Pursuant to Rule 438 under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the Registration Statement on Form F-1 (the “Registration Statement”) of Atotech Limited (the “Company”), the undersigned hereby consents to being named and described as a person who will become a director of the Company in the Registration Statement and any amendment or supplement to any prospectus included in such Registration Statement, any amendment to such Registration Statement or any subsequent Registration Statement filed pursuant to Rule 462(b) under the Securities Act and to the filing or attachment of this consent with such Registration Statement and any amendment or supplement thereto.

IN WITNESS WHEREOF, the undersigned has executed this consent as of the 15th day of January, 2020.

 

/s/ Brian A. Bernasek

Brian A. Bernasek
EX-99.3

Exhibit 99.3

Consent of Director Nominee

Pursuant to Rule 438 under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the Registration Statement on Form F-1 (the “Registration Statement”) of Atotech Limited (the “Company”), the undersigned hereby consents to being named and described as a person who will become a director of the Company in the Registration Statement and any amendment or supplement to any prospectus included in such Registration Statement, any amendment to such Registration Statement or any subsequent Registration Statement filed pursuant to Rule 462(b) under the Securities Act and to the filing or attachment of this consent with such Registration Statement and any amendment or supplement thereto.

IN WITNESS WHEREOF, the undersigned has executed this consent as of the 15th day of January, 2020.

 

/s/ Herman H. Chang

Herman H. Chang
EX-99.4

Exhibit 99.4

Consent of Director Nominee

Pursuant to Rule 438 under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the Registration Statement on Form F-1 (the “Registration Statement”) of Atotech Limited (the “Company”), the undersigned hereby consents to being named and described as a person who will become a director of the Company in the Registration Statement and any amendment or supplement to any prospectus included in such Registration Statement, any amendment to such Registration Statement or any subsequent Registration Statement filed pursuant to Rule 462(b) under the Securities Act and to the filing or attachment of this consent with such Registration Statement and any amendment or supplement thereto.

IN WITNESS WHEREOF, the undersigned has executed this consent as of the 15th day of January, 2020.

 

/s/ Charles W. Shaver

Charles W. Shaver