l< b å + kË ÆÂ2 Õjiµ
TRANSCRIPT
UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 20-FANNUAL REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13 OR 15(d) ofTHE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2020
Commission File Number: 001-38032
Ardagh Group S.A.(Name of Registrant)
Grand Duchy of Luxembourg(Jurisdiction of incorporation)
56, rue Charles MartelL--2134 Luxembourg, Luxembourg
+352 26 25 85 55 (Address of Principal Executive Offices)David Matthews, Chief Financial Officer
56, rue Charles Martel, L-2134 Luxembourg, Luxembourg+352 26 25 85 55
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registeredClass A Common Shares, par value €0.01 per share ARD New York Stock ExchangeSecurities registered or to be registered pursuant to Section 12(g) of the Act:NoneSecurities for which there is a reporting obligation pursuant to Section 15(d) of the Act:NoneIndicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:18,670,555 Class A Common Shares, par value €0.01 per shareIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:
Yes ☐ No ☒If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934.
Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “largeaccelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☐ Accelerated Filer ☒ Non-Accelerated Filer ☐ Emerging growth company ☐
Indicate by check mark whether the registrant has fi led a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reportingunder Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ International Financial Reporting Standards as issued bythe International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.Item 17 __ Item 18__If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No ☒
Table of Contents
Ardagh Group S.A.1
Table of Contents
Definitions and Terminology 2General Information 4Group Consolidated Financial Statements – Basis of Preparation 4Currencies 4Safe Harbour Statement 5Forward-Looking Statements 5Non-GAAP Financial Measures 5
Part I 6Item 1. Identity of Directors, Senior Management and Advisors 6Item 2. Offer Statistics and Expected Timetable 6Item 3. Key Information 6Item 4. Information on the Company 39Item 4A. Unresolved Staff Comments 54Item 5. Operating and Financial Review and Prospects 55Item 6. Directors, Senior Management and Employees 81Item 7. Major Shareholders and Related Party Transactions 90Item 8. Financial Information 94Item 9. The Offer and Listing 95Item 10. Additional Information 96Item 11. Quantitative and Qualitative Disclosures About Market Risk 107Item 12. Description of Securities Other than Equity Securities 109
Part II 109Item 13. Defaults, Dividend Arrearages and Delinquencies 109Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 109Item 15. Controls and Procedures 110Item 16. Reserved 111Item 16A. Audit committee financial expert 111Item 16B. Code of Ethics 111Item 16C. Principal Accountant Fees and Services 111Item 16D. Exemptions from the Listing Standards for Audit Committees 112Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 112Item 16F. Changes in Registrant’s Certifying Accountant 112Item 16G. Corporate Governance 112Item 16H. Mine Safety Disclosure 113
Part III 113Item 17. Financial Statements 113Item 18. Financial Statements 113Item 19. Exhibits 114Signatures 116Index to the Financial Statements F-1
Table of Contents
Ardagh Group S.A.2
Definitions and Terminology
Except where the context otherwise requires or where otherwise indicated, all references to “Ardagh”, “Ardagh Group”, “Group”, the“Company”, “we”, “us” and “our” refer to Ardagh Group S.A. and its consolidated subsidiaries, except where the context otherwise requires.Ardagh’s operations have the following divisions: “Metal Beverage Packaging” and “Glass Packaging”.
References to legislation are, except where otherwise stated, references to the legislation of the United States of America.
In addition, unless indicated otherwise, or the context otherwise requires, references in this annual report to:
● “AMP Business” are to the business of developing, manufacturing, marketing and selling metal beverage cans and ends and relatedtechnical and customer services as engaged by the Ardagh Group and its subsidiaries, including the AMP Entities (as defined in theBusiness Combination Agreement).
● “Ardagh Metal Packaging” are to Ardagh Metal Packaging S.A., an Ardagh wholly owned subsidiary that will hold the AMP Business;
● “Articles” are to the Company’s articles of association;
● “Beverage Can Acquisition” are to the Group’s acquisition of certain beverage can manufacturing assets from Ball Corporation and RexamPLC on June 30, 2016;
● “Brexit” are to the withdrawal of the United Kingdom from the European Union on January 31, 2020;
● “Business Combination” are to the issuance by Ardagh Metal Packaging of shares to certain private investors (the “Subscribers”) inaccordance with the Subscription Agreements, and the merger of MergeCo with and into GHV, with GHV being the surviving corporationas a wholly owned subsidiary of Ardagh Metal Packaging, as a result of which the GHV shares of Class A common stock will be exchangedfor Ardagh Metal Packaging shares and the GHV warrants will be converted in accordance with their terms into the right to acquire ArdaghMetal Packaging shares.
● “Business Combination Agreement” are to the Business Combination Agreement dated as of February 22, 2021, as it may be amended fromtime to time, by and among GHV, Ardagh Metal Packaging, Ardagh Group S.A. and MergeCo;
● “CCIRS” are to cross currency interest rate swaps;
● “CERCLA” are to the U.S. federal Resource Conservation and Recovery Act and the Comprehensive Environmental Response,Compensation and Liability Act of 1980;
● “CGUs” are to cash generating units;
● “Code” are to the U.S. Internal Revenue Code of 1986, as amended;
● “COVID-19” are to SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemic ordisease outbreaks;
● “CPGs” are to Consumer Packaged Goods companies;
● “EPA” are to the U.S. Environmental Protection Agency;
● “EWC” are to the European Works Council of Ardagh Group S.A.;
Table of Contents
Ardagh Group S.A.3
● “Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended;
● “FATCA” are to the U.S. Foreign Account Tax Compliance Act;
● “GHV” are to Gores Holdings V, Inc., a Delaware corporation;
● “IAS” are to the International Accounting Standards;
● “IASB” are to the International Accounting Standards Board;
● “IED” are to the EU Industrial Emissions Directive;
● “IFRS” are to International Financial Reporting Standards;
● “IFRS 5” are to Non-current assets held for sale and discontinued operations;
● “IPO” are to the Company’s initial public offering, which closed on March 20, 2017;
● “IRS” are to the U.S. Internal Revenue Service;
● “Luxembourg Law” are to the provisions of the laws of Luxembourg;
● “MergeCo” are to Ardagh MP MergeCo Inc;
● “NYSE” are to the New York Stock Exchange;
● “Parent Company” are to ARD Holdings S.A. and/or, where relevant, one or more of its subsidiaries;
● “PFIC” are to a passive foreign investment company;
● “Ppm” are to parts per million;
● “REACH” are to the European Union’s regulations concerning the Registration, Evaluation, Authorization and Restriction of Chemicals;
● “Sarbanes-Oxley Act” are to the U.S. Sarbanes-Oxley Act of 2002;
● “Shareholder Agreement” are to the shareholder agreement dated March 20, 2017, entered into between ourselves and the Parent Company;
● “Subscription Agreements” are to the subscription agreements, dated as of February 22, 2021, entered into with the private investors partiesthereto (the “Subscribers”) related to the issuance to the Subscribers of 60 million Ardagh Metal Packaging shares;
● “Toggle Notes” are to the Parent Company’s Dollar Toggle Notes and Euro Toggle Notes as referred to in “Item 7 – Major Shareholdersand Related Party Transactions – Toggle Notes”;
● “Trivium” are to Trivium Packaging B.V. and/or, where relevant, its consolidated subsidiaries;
● “U.S. GAAP” are to the Generally Accepted Accounting Principles in the U.S.;
● “VNA Acquisition” are to the acquisition in 2014 of Verallia North America; and
● “VNA” are to the Group's U.S. glass packaging business, formerly Verallia North America.
Table of Contents
Ardagh Group S.A.4
General Information
Ardagh Group S.A. (the “Company”), was incorporated under the laws of Luxembourg on May 6, 2011 and is a subsidiary of ARDHoldings S.A.. The Company’s registered office is 56, rue Charles Martel, L-2134 Luxembourg, Luxembourg. The Company is registered with theR.C.S Luxembourg under number B 160804.
The Company has direct and indirect ownership of 100% of the issued share capital of holding companies which hold all of our finance andoperating subsidiaries. Ardagh holds approximately 42% of the ordinary shares of Trivium Packaging B.V., a leading supplier of metal packaging inthe form of cans and aerosol containers, serving a broad range of end-use categories, principally including food, seafood, pet food and nutrition, aswell as beauty and personal care.
Group Consolidated Financial Statements – Basis of Preparation
The consolidated financial statements of the Group have been prepared in accordance with, and are in compliance with IFRS and relatedinterpretations, as adopted by the IASB. IFRS is comprised of standards and interpretations approved by the IASB and IFRS and interpretationsapproved by the predecessor International Accounting Standards Committee that have been subsequently approved by the IASB and remain ineffect. References to IFRS hereafter should be construed as references to IFRS as adopted by the IASB.
The consolidated financial statements, are presented in U.S. dollar, rounded to the nearest million and have been prepared under thehistorical cost convention, except for the following:
● derivative financial instruments are stated at fair value; and
● employee benefit obligations are measured at the present value of the future estimated cash flows related to benefits earned and pensionassets valued at fair value.
The preparation of consolidated financial information in conformity with IFRS requires the use of critical accounting estimates andassumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgment inthe process of applying Group accounting policies. These estimates, assumptions and judgments are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances and are subject to continual re-evaluation.However, actual outcomes may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas whereassumptions and estimates are significant to the consolidated financial statements are discussed in the critical accounting estimates, assumptions andjudgments.
The consolidated financial statements for the Group were authorized for issue by the board of directors of Ardagh Group S.A. on February24, 2021.
Currencies
In this annual report, unless otherwise specified or the context otherwise requires:
● “$”, “USD” and “U.S. dollar” each refer to the United States dollar;
● “€”, “EUR” and “euro” each refer to the euro, the single currency established for members of the European Economic and Monetary Unionsince January 1, 1999; and
“£”, “pounds” and “GBP” refer to pounds sterling, the lawful currency of the United Kingdom.
Table of Contents
Ardagh Group S.A.5
Safe Harbour StatementThis annual report does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or
subscribe for any securities, including in the United States, nor shall it or any part of it form the basis of or be relied on in connection with anycontract or commitment whatsoever. Specifically, this annual report does not constitute a “prospectus” within the meaning of the U.S. Securities Actof 1933.
The Company routinely posts important information on its website https://www.ardaghgroup.com/corporate/investors. This website and theinformation contained therein or connected thereto shall not be deemed to be incorporated into this annual report.
Forward-Looking StatementsThis annual report may contain "forward-looking" statements within the meaning of Section 21E of the Exchange Act and Section 27A of
the U.S. Securities Act of 1933. Forward-looking statements reflect the Company's current expectations and projections about future events at thetime, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,”“estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward-looking statements. It is possible the Company's future financial performance may differ from expectations due to a variety of factors including, butnot limited to, the following:
(i) global and regional economic downturn; (ii) the impact of COVID-19 and measures to prevent its spread on our business, demand forour customers’ products, supply chain and workforce; (iii) competition from other metal beverage packaging and glass packaging producers andmanufacturers of alternative forms of packaging; (iv) increases in metal beverage cans and glass container manufacturing capacity; (v) theCompany’s inability to maintain relationships with its largest customers or suppliers; (vi) less than expected levels of demand; (vii) varied seasonaldemands, climate and water conditions, and the availability and cost of raw materials; (viii) foreign currency, interest rate and commodity pricefluctuations; (ix) various environmental requirements; (x) the Company’s substantial debt and its ability to generate cash and comply with financialcovenants; (xi) the Group’s accounting carrying value of its investment in a material joint venture reduces if it incurs losses; (xii) the Company’sability to integrate acquired businesses and achieve expected operating efficiencies, cost savings and other synergies; (xiii) the availability and costof raw materials and energy; (xiv) costs associated with post-retirement and post-employment obligations; (xv) operating hazards, supply chaininterruptions or unanticipated interruptions at our manufacturing facilities, including due to virus and disease outbreaks, labor strikes or workstoppages; (xvi) claims of injury or illness from materials used at our production sites or in our products; (xvii) regulation of materials used inpackaging and consumer preferences for alternative forms of packaging; and (xviii) retention of executive and senior management.
Any forward-looking statements in this document are based on certain assumptions and analyses made by the Company in light of itsexperience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in thecircumstances. Forward-looking statements are not a guarantee of future performance and actual results or developments may differ materially fromexpectations. While the Company continually reviews trends and uncertainties affecting the Company's results of operations and financial condition,the Company does not assume any obligation to update or supplement any particular forward-looking statements contained in this document.
Non-GAAP Financial Measures
This annual report contains certain consolidated financial measures such as Adjusted EBITDA, working capital, net debt, Adjustedprofit/(loss), Adjusted earnings/(loss) per share, and ratios relating thereto that are not calculated in accordance with IFRS or U.S. GAAP. AdjustedEBITDA consists of profit/(loss) for the year before income tax expense/(credit), net finance expense, depreciation and amortization, exceptionaloperating items and share of profit or loss in equity accounted joint venture. Adjusted profit consists of profit/(loss) for the year before totalexceptional items, gains/(losses) on derivatives, intangible amortization and associated tax credits. Adjusted earnings per share is calculated based onadjusted profit for the year divided by the weighted average number of ordinary shares in issue.
Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for thecorresponding GAAP measures. The non-GAAP financial measures used by Ardagh may differ from, and not be comparable to, similarly titledmeasures used by other companies.
Table of Contents
Ardagh Group S.A.6
Part I
Item 1. Identity of Directors, Senior Management and Advisors
Not Applicable
Item 2. Offer Statistics and Expected Timetable
Not Applicable
Item 3. Key Information
A. Selected financial data
Summary Consolidated Financial and Other Data of Ardagh Group S.A.
On October 31, 2019, the Group completed the combination of its Food & Specialty Metal Packaging business, operating as part of theMetal Packaging Europe and Metal Packaging Americas segments, with the business of Exal, to form Trivium, a global leader in metal packaging.As a result of the completion of the transaction, the Food & Specialty Metal Packaging business was reported as a discontinued operation. As theGroup jointly controls Trivium, the investment is accounted for as a joint venture under the equity method. The financial data as of and for the yearsended December 31, 2018 and 2017 was restated retrospectively in accordance with IFRS 5. The financial data of Ardagh Group S.A. as of and forthe years ended December 31, 2020, 2019, 2018 and 2017 are derived from the audited consolidated financial statements included in this and ourprior year annual report. However, the selected financial data as of December 31, 2016, and for the year ended December 31, 2016 is omitted fromdisclosure due to the Company not being able to restate such financial data without unreasonable effort and expense.
The summary historical financial data set forth below should be read in conjunction with and is qualified in its entirety by reference to theaudited consolidated financial statements included in this annual report and the related notes thereto. The following financial data should also be readin conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” also included in this annual report.Our historical results are not necessarily indicative of results to be expected in any future period.
Year endedDecember 31,
2020 2019 2018 2017Income Statement Data (1) (in $ millions except margins and per share data)Revenue 6,731 6,660 6,676 6,390
Cost of sales (5,698) (5,597) (5,731) (5,387)Gross profit 1,033 1,063 945 1,003
Sales, general and administration expenses (381) (362) (317) (331)Intangible amortization and impairment (243) (233) (423) (237)
Operating profit 409 468 205 435Net finance expense (338) (659) (479) (638)Share of post-tax loss in equity accounted joint venture (48) (49) — —
Profit/(loss) before tax 23 (240) (274) (203)Income tax (charge)/credit (10) (44) (18) 77
Profit/(loss) from continuing operations 13 (284) (292) (126)Profit from discontinued operation 22 1,742 198 189
Profit/(loss) for the year 35 1,458 (94) 63
Weighted average number of ordinary shares for basic EPS (millions) 236 236 236 230Earnings/(loss) per share (basic and diluted) $0.15 $6.17 ($0.40) $0.27
Table of Contents
Ardagh Group S.A.7
Balance Sheet Data (at year end)Cash and cash equivalents (2) 1,267 614 530 784Working capital (3) 302 173 431 569Total assets 9,652 8,678 10,314 11,152Net liabilities (361) (215) (1,509) (1,374)Issued share capital 23 23 23 23Net borrowings (4) 6,861 5,910 7,879 8,308Net debt (5) 5,699 5,328 7,462 7,825
Other DataAdjusted EBITDA (6) 1,155 1,173 1,115 1,141Adjusted EBITDA Margin (6) 17.2% 17.6% 16.7% 17.9%Adjusted profit for the year - Group (7) 341 431 400 423Adjusted earnings per share - Group (8) $1.44 $1.82 $1.69 $1.84Depreciation and Amortization (9) 688 652 599 583Capital Expenditure (10) 543 505 467 400Net cash from operating activities - Group 692 839 855 962Net cash from operating activities - Continuing Operations 692 698 480 632Dividend per share (11) $0.59 $0.56 $0.56 $0.75
(1) The income statement data presented above is on a reported basis and includes certain exceptional items which, by their incidence or nature,management considers should be adjusted for to enable a better understanding of the financial performance of the Company. A summary ofthese exceptional items included in the income statement data is as follows:
Year endedDecember 31,
2020 2019 2018 2017Exceptional Items (in $ millions)Exceptional cost of sales 19 2 108 78Exceptional sales, general and administrative expenses 31 51 17 45Exceptional impairment - intangible assets 8 — 186 —Exceptional operating items 58 53 311 123Exceptional net finance expense 74 203 22 132Share of exceptional items in material joint venture 15 39 — —Exceptional items from continuing operations 147 295 333 255Exceptional income tax (credit)/charge (53) 3 (49) (124)Exceptional items from continuing operations, net of tax 94 298 284 131Exceptional items from discontinued operation, net of tax (22) (1,527) 13 12Total exceptional items net of tax 72 (1,229) 297 143
For further details on the exceptional items for the years ended December 31, 2020, 2019, and 2018, see Note 4 and Note 5 to the consolidatedfinancial statements of Ardagh included elsewhere in this annual report.
(2) Cash and cash equivalents include restricted cash as per the note disclosures to the consolidated financial statements included in this annualreport.
Table of Contents
Ardagh Group S.A.8
(3) Working capital is comprised of inventories, trade and other receivables, contract assets, trade and other payables and current provisions. Othercompanies may calculate working capital in a manner different to ours.
Year endedDecember 31,
2020 2019 2018 2017(in $ millions)
Inventories 923 964 1,284 1,353Trade and other receivables 869 734 1,053 1,274Contract asset 139 151 160 —Trade and other payables (1,579) (1,628) (1,983) (1,988)Current provisions (50) (48) (83) (70)Working capital 302 173 431 569
(4) Net borrowings comprises non-current and current borrowings, net of deferred debt issue costs and bond premium/discount.
(5) Net debt is comprised of net borrowings and derivative financial instruments used to hedge foreign currency and interest rate risk, net of cashand cash equivalents. (see Item 5. Operating and Financial Review and Prospects— Supplemental Management’s Discussion and Analysis—Liquidity and Capital Resources).
(6) To supplement our financial information presented in accordance with IFRS, we use the following additional financial measures to clarify andenhance an understanding of past performance: Adjusted EBITDA, Adjusted EBITDA margin and Adjusted profit. We believe that thepresentation of these financial measures enhances an investor’s understanding of our financial performance. We further believe that thesefinancial measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that webelieve are not representative of our core business. We use certain of these financial measures for business planning purposes and in measuringour performance relative to that of our competitors.
Adjusted EBITDA consists of profit/(loss) for the year before income tax expense/(credit), net finance expense, depreciation and amortization,exceptional operating items and share of profit or loss in equity accounted joint venture. Adjusted EBITDA margin is calculated as AdjustedEBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA margin are presented because we believe that they are frequently usedby securities analysts, investors and other interested parties in evaluating companies in the packaging industry. However, other companies maycalculate Adjusted EBITDA and Adjusted EBITDA margin in a manner different from ours. Adjusted EBITDA and Adjusted EBITDA marginare not measurements of financial performance under IFRS and should not be considered an alternative to profit/(loss) as indicators of operatingperformance or any other measures of performance derived in accordance with IFRS.
The reconciliation of profit/(loss) for the year to Adjusted EBITDA is as follows:
Year endedDecember 31,
2020 2019 2018 2017(in $ millions)
Profit/(loss) from continuing operations 13 (284) (292) (126)Income tax expense/(credit) 10 44 18 (77)Net finance expense 338 659 479 638Depreciation and amortization 688 652 599 583Share of post-tax loss in equity accounted joint venture 48 49 — —EBITDA 1,097 1,120 804 1,018Exceptional operating items 58 53 311 123Adjusted EBITDA 1,155 1,173 1,115 1,141
Table of Contents
Ardagh Group S.A.9
(7) Adjusted profit/(loss) for the year is calculated as follows:
Year endedDecember 31,
2020 2019 2018 2017(in $ millions)
Profit/(loss) for the year - Group 35 1,458 (94) 63Share of post-tax loss in equity accounted joint venture 48 49 — —
83 1,507 (94) 63Exceptional items, net of tax 57 (1,268) 297 143Intangible amortization, net of tax 180 193 207 189(Gains)/losses on derivative financial instruments and non-recurring Trivium transactionrelated foreign currency impact in net finance expense (15) 9 (10) 28
305 441 400 423Share of Adjusted profit/(loss) in equity accounted joint venture 36 (10) — —Adjusted profit for the year - Group 341 431 400 423
Adjusted profit consists of profit/(loss) for the year before total exceptional items (net of tax impact), (gain)/loss on derivatives, intangibleamortization and associated tax credits and includes the Group’s share of Adjusted profit/(loss) of its material equity accounted joint venture,Trivium. Adjusted profit is presented because we believe that it accurately reflects the ongoing cost structure of the company. It excludes totalexceptional items and (gain)/loss on derivatives which we consider not representative of ongoing operations because such items are notreflective of the normal earnings potential of the business. We have also adjusted for the amortization of intangible assets and associated taxcredits, as this is driven by our acquisition activity which can vary in size, nature and timing compared to other companies within our industryand from period to period. Accordingly, due to the incomparability of acquisition activity among companies and from period to period, webelieve exclusion of the amortization associated with intangible assets acquired through our acquisitions and total exceptional items allowsinvestors to better compare and understand our results.
(8) Adjusted earnings per share is calculated based on adjusted profit for the year divided by the weighted average number of ordinary shares inissue. See Note 7 “Earnings per Share” and Note 18 “Issued Capital and Reserves” included in the consolidated financial statements included inthis annual report for details on the calculation of weighted average number of shares for the periods presented.
(9) Depreciation, amortization and gain/(loss) on disposal of property, plant and equipment.
(10)Capital expenditure is the sum of purchase of property, plant and equipment and software and other intangibles, net of proceeds from disposal ofproperty, plant and equipment.
(11)See Note 26 “Dividends” of the consolidated financial statements included elsewhere in this annual report for details on dividends on ordinaryshares declared and paid. See “Item 8. Financial Information – Dividend Policy” in this annual report for details of our current dividend policy.
B. Capitalization and indebtedness
Not Applicable
C. Reasons for the offer and use of proceeds
Not Applicable
Table of Contents
Ardagh Group S.A.10
D. Risk Factors
Summary Risk Factors
Our business is subject to a number of risks and uncertainties that may adversely affect our business, financial condition, results ofoperations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to:
Risks Relating to Our Business
● Our customers principally sell to consumers of beverages & food products. If economic conditions affect consumer demand, our customersmay be affected and so reduce the demand for our products. Additionally, the global credit, financial and economic environment could havea material adverse effect on our business, financial position, liquidity and results of operations.
● We face intense competition from other metal and glass packaging producers, as well as from manufacturers of alternative forms ofpackaging.
● An increase in metal beverage can or glass container manufacturing capacity, including that of our competitors, without a correspondingincrease in demand for metal beverage can packaging or glass packaging could cause prices to decline, which could have a material adverseeffect on our business, financial condition and results of operations.
● We are implementing a significant multi-year business growth investment program to increase our capacity. Failure to implement thisprogram successfully may have a material impact on our business and results of operations.
● As our customers are concentrated, our business could be adversely affected if we were unable to maintain relationships with our largestcustomers.
● Further consolidation of our customer base may intensify pricing pressures or result in the loss of customers, either of which could have amaterial adverse effect on our business, financial condition and results of operations.
● Our profitability could be affected by the availability and cost of raw materials including as a result of changes in tariffs and duties.
● Our inability to fully pass-through input costs may have an adverse effect on our financial condition and results of operations.
● We are involved in a continuous manufacturing process, in Glass Packaging in particular, with a high degree of fixed costs. Anyinterruption in the operations of our manufacturing facilities may adversely affect our business, financial condition and results of operations.
● Our Glass Packaging business requires relatively high levels of maintenance capital expenditures, which we may be unable to fund.
● Our expansion strategy may adversely affect our business.
● We may not be able to integrate any future acquisitions effectively.
● A significant write down of goodwill would have a material adverse effect on our financial condition and results of operations.
● Our investment in Trivium is accounted as a joint venture using the equity method which may result in a reduction in the accountingcarrying value of the Group’s investment should Trivium incur post-tax losses.
● We have potential indemnification obligations relating to divestments.
Table of Contents
Ardagh Group S.A.11
● Climate change or legal, regulatory or other measures to address climate change or related concerns, may adversely affect our ability toconduct our business, including the availability and cost of resources required for our production processes.
● We are subject to various environmental and other legal requirements and may be subject to new requirements of this kind in the future thatcould impose substantial costs upon us.
● Changes in product requirements and their enforcement may have a material impact on our operations.
● We could incur significant costs in relation to claims of injury and illness resulting from materials present or used at our production sites, orfrom our use of these sites or other workplace injuries, or from our products.
● We may be subject to litigation, regulatory investigations, arbitration and other proceedings that could have an adverse effect on us.
● Changes in consumer lifestyle, nutritional preferences, health related concerns and consumer taxation could adversely affect our business.
● The COVID-19 pandemic and any future epidemics may have a negative impact on worldwide economic activity and our business.
● Increasing privacy and data security obligations or a significant data breach may adversely affect the Company’s business.
● The Company’s heavy reliance on technology and automated systems to operate its business could mean any significant failure ordisruption of the technology or these systems could materially harm its business.
● Our substantial debt could adversely affect our financial health and our ability to effectively manage and grow our business.
Risks Relating to Our Class A Common Shares
● The dual class structure of our common shares has the effect of concentrating voting control with our Parent Company or its shareholdersand limiting our other shareholders’ ability to influence corporate matters.
● Future sales of our Class A common shares in the public market could cause our share price to fall.
● While we currently intend to pay quarterly cash dividends, we are a holding company and depend on dividends and other distributions fromsubsidiaries in order to do so.
● The rights of our shareholders may differ from the rights they would have as shareholders of a U.S. corporation and consequently ourshareholders may have more difficulty protecting their interests.
● The super voting rights of our Class B common shares and other anti-takeover provisions in our Articles might discourage or delay attemptsto acquire us.
Risks Related to the Business Combination
● A significant delay in consummating or a failure to complete the Business Combination could negatively impact the price of our Class Acommon shares, as well as our future business and financial results. Moreover, we are subject to contractual restrictions while the BusinessCombination is pending, and there can be no assurance that it will be completed.
● Certain events could have a negative impact on the price of Ardagh Metal Packaging’s shares, thereby reducing the value attributed to ourinvestment in Ardagh Metal Packaging.
Table of Contents
Ardagh Group S.A.12
Risks Relating to Our Business
Our customers principally sell to consumers of beverages & food products. If economic conditions affect consumer demand, our customers maybe affected and so reduce the demand for our products. Additionally, the global credit, financial and economic environment could have amaterial adverse effect on our business, financial position, liquidity and results of operations.
Demand for our packaging depends on demand for the products that use our packaging, which is primarily consumer driven. Generaleconomic conditions may adversely impact consumer confidence resulting in reduced spending on our customers’ products and, thereby, reduced orpostponed demand for our products.
Adverse economic conditions may also lead to more limited availability of credit, which may have a negative impact on the financialcondition, particularly on the purchasing ability, of some of our customers and distributors and may also result in requests for extended paymentterms, and result in credit losses, insolvencies and diminished sales channels available to us. Our suppliers may have difficulties obtaining necessarycredit, which could jeopardize their ability to provide timely deliveries of raw materials and other essentials to us. Adverse economic conditions mayalso lead to suppliers requesting credit support or otherwise reducing credit, which may have a negative effect on our cash flows and workingcapital.
Volatility in exchange rates may also increase the costs of our products that we may not be able to pass on to our customers; impair thepurchasing power of our customers in different markets; result in significant competitive benefit to certain of our competitors that incur a materialpart of their costs in different currencies than we do; hamper our pricing; and increase our hedging costs and limit our ability to hedge our exchangerate exposure.
Changes in global economic conditions may reduce our ability to forecast developments in our industry and plan our operations and costsaccordingly, resulting in operational inefficiencies. Negative developments in our business, results of operations and financial condition due tochanges in global economic conditions or other factors could cause ratings agencies to lower the credit ratings, or ratings outlook, of our short- andlong-term debt and, consequently, impair our ability to raise new financing or refinance our existing borrowings, as applicable, or increase our costsof issuing any new debt instruments. Additionally, a significant weakening of our financial position or operating results due to changes in globaleconomic conditions or other factors could result in noncompliance with our debt covenants and reduced cash flow from our operations, which, inturn, could adversely affect our ability to execute our long-term strategy to continue to expand our packaging activities through investing in existingand new facilities to increase our capacity in line with our 2021-2024 business growth investment program, or, in the future, by selectivelyevaluating and opportunistically acquiring other businesses.
Furthermore, the economic outlook could be adversely affected by the risk that one or more current eurozone countries could leave theEuropean Monetary Union, or the euro as the single currency of the eurozone could cease to exist. Either of these developments, or the perceptionthat either of these developments are likely to occur, could have a material adverse effect on the economic development of the affected countries andcould lead to severe economic recession or depression, and a general anticipation that such risks will materialize in the future could jeopardize thestability of financial markets or the overall financial and monetary system. This, in turn, would have a material adverse effect on our business,financial position, liquidity and results of operations. See below “The United Kingdom’s withdrawal from the European Union may have a negativeeffect on our financial condition and results of operations.”
Table of Contents
Ardagh Group S.A.13
We face intense competition from other metal and glass packaging producers, as well as from manufacturers of alternative forms of packaging.
Metal Beverage Packaging
The sectors in which Metal Beverage Packaging operates are relatively mature and competitive. Prices for the products manufactured byour Metal Beverage Packaging business are primarily driven by raw material costs. Competition in the market is based on price, as well as oninnovation, sustainability, design, quality and service. Increases in productivity, combined with potential surplus capacity from planned newinvestment in the industry, could result in pricing pressures in the future. Our principal competitors include Ball Corporation, Crown Holdings andCan Pack. Some of our competitors may have greater financial, technical or marketing resources or may, in the future, have excess capacity. To theextent that any one or more of our competitors become more successful with respect to any key competitive factor, our ability to attract and retaincustomers could be materially and adversely affected, which could have a material adverse effect on our business. Moreover, changes in the globaleconomic environment could result in reductions in demand for our products in certain instances, which could increase competitive pressures and, inturn, have a material adverse effect on our business.
Metal Beverage Packaging is subject to substantial competition from producers of packaging made from plastic, glass, carton andcomposites, for example, PET bottles for carbonated soft drinks. Changes in consumer preferences in terms of packaging materials, style and productpresentation can significantly influence sales. An increase in Metal Beverage Packaging’s costs of production or a decrease in the costs of, or anincrease in consumer demand for alternative packaging could have a material adverse effect on our business, financial condition and results ofoperations.
Glass Packaging
Glass Packaging is subject to intense competition from other glass packaging producers, as well as from producers of other forms of rigidand non-rigid packaging, against whom we compete on the basis of price, product characteristics, quality, customer service, reliability of deliveryand the overall attractiveness of our offering. Advantages or disadvantages in any of these competitive factors may be sufficient to cause customersto consider changing suppliers or to use an alternative form of packaging. In some instances, we also face the threat of vertical integration by ourcustomers into the manufacture of their own packaging materials.
Our principal competitors in glass packaging include Anchor Glass and O-I Glass in North America and O-I Glass, Verallia and Vidrala inEurope. Additionally, we face competition from firms that carry out specific export operations at low prices when their domestic markets are atovercapacity or when foreign exchange rates or economic conditions (particularly transport costs) allow this, such as has been seen with theimportation of glass containers into the United States from lower cost countries. Despite the generally regional nature of the glass packagingmarkets, these export operations could have a material negative impact on our business, financial condition and results of operations.
In addition to competing with other large, well-established manufacturers in the glass packaging industry, we also compete withmanufacturers of other forms of rigid packaging, principally plastic packaging and aluminum cans, on the basis of quality, price, service andconsumer preference. We also compete with manufacturers of non-rigid packaging alternatives, including flexible pouches and aseptic cartons,particularly in serving the packaging needs of non-alcoholic beverage customers, including juice customers and food customers. We believe that theuse of glass packaging for alcoholic and non-alcoholic beverages is subject to consumer taste. In addition, the association of glass packaging withpremium items in certain product categories exposes glass packaging to economic variations. Therefore, if economic conditions are poor, we believethat consumers may be less likely to prefer glass packaging over other forms of packaging. We cannot ensure that our products will continue to bepreferred by end consumers and that consumer preference will not shift from glass packaging to alternative packaging. A material shift in consumerpreference away from glass packaging, or competitive pressures from our various competitors, could result in a decline in sales volume, or pricingpressure, that would have a material adverse effect on our business, financial condition and results of operations. Furthermore, new threats fromcontainer and production innovations in all forms of packaging could disadvantage our existing business. If
Table of Contents
Ardagh Group S.A.14
we are unable to respond to competitive technological advances, our future performance could be materially adversely affected.
Certain customers meet some of their metal beverage and glass packaging requirements through self-manufacturing, reducing their externalpurchases of packaging. For example, AB InBev manufactures metal beverage packaging through its Metal Container Corporation subsidiary in theUnited States, as well as directly in Brazil. In glass packaging, companies which satisfy some of their requirements through self-manufacture includeAB InBev and Gallo, which manufacture glass packaging in the United States, and AB InBev and Constellation Brands, which produce glasspackaging in Mexico. The potential vertical integration of our customers could introduce new production capacity in the market, which may createan imbalance between metal beverage and glass packaging supply and demand. The growth of vertically integrated operations could have a materialnegative impact on our future performance.
An increase in metal beverage can or glass container manufacturing capacity, including that of our competitors, without a correspondingincrease in demand for metal beverage can packaging or glass packaging could cause prices to decline, which could have a material adverseeffect on our business, financial condition and results of operations.
The profitability of metal beverage or glass packaging companies is heavily influenced by the supply of, and demand for, metal or glasspackaging. In response to increased demand for beverage cans, we and others, including all our major competitors, have announced significantmedium-term metal beverage can capacity expansions in the United States, Europe and Brazil.
We cannot assure you that metal beverage can or glass container manufacturing capacity in any of our markets, including the capacity ofour competitors, will not increase further in the future, nor can we assure you that demand for metal beverage or glass packaging will continue tomeet or exceed supply. While the metal beverage can market is currently experiencing demand that exceeds supply, if in the future metal beveragecan manufacturing capacity or glass container manufacturing capacity increases and there is no corresponding increase in demand, the prices wereceive for our products could decline, which could have a material adverse effect on our business, financial condition and results of operations.
We are implementing a significant multi-year business growth investment program to increase our capacity. Failure to implement this programsuccessfully may have a material impact on our business and results of operations.
In response to the positive forecast demand outlook for our metal and glass packaging we have announced a $2.1 billion business growthinvestment program covering the period 2021 to 2024. Approximately 85% of this investment is in our Metal Beverage Packaging business, with thebalance in Glass Packaging. This program principally involves capacity expansion initiatives, including the installation of multiple new lines, linespeed-ups, brownfield and greenfield development and furnace expansion, as well as additional investments in automation, digitalization and otherefficiency measures.
Successful implementation of this complex and extensive program will require the availability of skilled employees, project managers andconsultants with the experience and know-how to ensure successful commissioning of capacity on time and budget and in line with our customers’exacting requirements. It will also require the availability of specialist equipment, tooling, components, materials, related services and the requiredpermits.
Failure to successfully complete these investment projects, including through a lack of suitably-skilled personnel, or through a lack ofavailable equipment and materials on expected terms, or other delays or disruptions would impact our capacity expansion and other efficiencyinitiatives. This could adversely impact our ability to serve existing and new customers, thereby damaging our customer relationships, or couldnegatively affect our cost base and could have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
Ardagh Group S.A.15
As our customers are concentrated, our business could be adversely affected if we were unable to maintain relationships with our largestcustomers.
Metal Beverage Packaging’s ten largest customers accounted for approximately 64% of its 2020 consolidated revenues. Glass Packaging’sten largest customers accounted for approximately 38% of its 2020 revenues. Our ten largest customers accounted for approximately 45% of our2020 revenues.
We believe our relationships with these customers are good, but there can be no assurance that we will be able to maintain theserelationships. For the Group, approximately three quarters of our sales agreements for the year ended December 31, 2020, were under multi-yearsupply agreements of varying terms of two to ten years. Although these arrangements have provided, and we expect they will continue to provide,the basis for long-term partnerships with our customers, there can be no assurance that our customers will not cease purchasing our products. Thesearrangements, unless they are renewed, expire in accordance with their respective terms and are terminable under certain circumstances, such as ourfailure to meet quality, volume or other contractual commitments. If our customers unexpectedly reduce the amount of glass packaging and/or metalbeverage cans they purchase from us, or cease purchasing our glass packaging and/or metal beverage cans altogether, our revenues could decreaseand our inventory levels could increase, both of which could have an adverse effect on our business, financial condition and results of operations.
In addition, while we believe that the arrangements that we have with our customers will be renewed, there can be no assurance that sucharrangements will be renewed upon their expiration or that the terms of any renewal will be as favorable to us as the terms of the currentarrangements. There is also the risk that our customers may shift their filling operations to locations in which we do not operate. The loss of one ormore of these customers, a significant reduction in sales to these customers or a significant change in the commercial terms of our relationships withthese customers could have a material adverse effect on our business.
Further consolidation of our customer base may intensify pricing pressures or result in the loss of customers, either of which could have amaterial adverse effect on our business, financial condition and results of operations.
Some of our customers have previously acquired companies with similar or complementary product lines. For example, in 2015 KraftFoods Group merged with H.J. Heinz Holding Corporation, 2016 AB InBev acquired SABMiller and in 2017 Heineken acquired Brasil Kirin. Suchconsolidation has increased the concentration of our sales with our largest customers and may continue in the future, potentially accompanied bypressure from customers for lower prices. Increased pricing pressures from our customers may have a material adverse effect on our business,financial condition and results of operations. In addition, this consolidation may lead manufacturers to rely on a reduced number of suppliers. If,following the combination of one of our customers with another company, a competitor was to be the main supplier to the consolidated companies,this could have a material adverse effect on our business, financial condition or results of operations.
Our profitability could be affected by varied seasonal demands.
Demand for Metal Beverage Packaging’s and Glass Packaging’s products is seasonal. Metal Beverage Packaging’s sales in Europe andNorth America are typically, based on historical trends, greater in the second and third quarters of the year, with generally lower sales in the first andfourth quarters. In Brazil, sales are typically strongest in the first and fourth quarters. Unseasonably cool weather during the summer months in eachof these regions can reduce demand for certain beverages packaged in metal beverage cans, such as those manufactured by us.
Demand for our Glass Packaging products is typically, based on historical trends, strongest during the summer months and in the periodprior to the holidays in December because of the seasonal nature of the consumption of beer and other beverages. Unseasonably cool weather duringthe summer months can reduce demand for certain beverages packaged in our glass packaging. Similarly, weather conditions can reduce crop yieldsand adversely affect customer demand for glass packaging for fruit and vegetable end-use categories which could have a material adverse effect onour business, financial condition and results of operations.
Table of Contents
Ardagh Group S.A.16
We generally schedule shutdowns of our furnaces for rebuilding and repairs of machinery in the first quarter in Europe and around year-endand the first quarter in North America. If demand for glass packaging should unexpectedly rise during such a shutdown, we would not have theability to fulfill such demand and may lose potential revenues. These shutdowns and seasonal sales patterns could have a material adverse effect onprofitability during the first quarter.
Additionally, climate change and the increasing frequency of severe weather events could adversely affect demand for our products, oursupply chain and the costs of inputs to our production and delivery of products in different regions around the world. Such severe weather eventscould have a material adverse effect on our business, financial condition or results of operations. Refer to “Climate change or legal, regulatory orother measures to address climate change or related concerns, may adversely affect our ability to conduct our business, including the availabilityand cost of resources required for our production processes.”
Our profitability could be affected by the availability and cost of raw materials, including as a result of changes in tariffs and duties.
The raw materials that we use have historically been available in adequate supply from multiple sources. For certain raw materials,however, there may be temporary shortages due to transportation, production delays impacting supplier plant output, pandemic outbreaks, includingCOVID-19, or other factors. In such an event, no assurance can be given that we would be able to secure our raw materials from sources other thanour current suppliers on terms as favorable as our current terms, or at all. Any such shortages, as well as significant increases in the cost of any of theprincipal raw materials that we use, including such shortages or material increases resulting from the introduction of tariffs, such as the introductionof tariffs of 10% on aluminum imports into the United States in 2018, which remain in effect, could have a material adverse effect on our business,financial condition and results of operations. Further tariffs, sanctions, duties, other trade actions or increases in our transportation costs, could havea material adverse effect on our business, financial condition and results of operations. Furthermore, the relative price of oil and its by-products mayimpact our business, by affecting transport, coatings, lacquer and ink costs. Additionally, certain energy sources are vital to our operations, andfuture increases in energy costs could result in a significant increase in our operating costs, which could, if we are not able to recover these costs,have a material adverse effect on our business, financial condition and results of operations.
The primary raw materials that we use for Metal Beverage Packaging are aluminum ingot and, to a much lesser extent, steel. Aluminumingot is traded daily as a commodity on the London Metal Exchange, which has historically been subject to significant price volatility. Becausealuminum is priced in U.S. dollar, fluctuations in the U.S. dollar/euro rate also affect the euro cost of aluminum ingot. Our business is exposed toboth the availability of aluminum and the volatility of aluminum prices, including associated premia. While raw materials are generally availablefrom a range of suppliers, they are subject to fluctuations in price and availability based on a number of factors, including general economicconditions, commodity price fluctuations (with respect to aluminum on the London Metal Exchange), the demand by other industries, such asautomotive, aerospace and construction, for the same raw materials and the availability of complementary and substitute materials. In particular, thelevel of investment in beverage can capacity expansion by us and other beverage can producers will require a significant increase in can sheetproduction by the aluminum suppliers, which will in turn require significant investment and capital expenditures. Failure by the suppliers to increasecapacity could cause supply shortages and significant increases in the cost of these raw materials, notably aluminum. In addition, adverse economicor financial changes, industrial disputes or pandemic-related disruptions could impact our suppliers, thereby causing supply shortages or increasingcosts for our business.
We may not be able to pass on all or substantially all raw material price increases. In addition, we may not be able to hedge successfullyagainst raw material cost increases. Furthermore, aluminum prices are subject to considerable volatility in price and demand. While in the pastsufficient quantities of aluminum have been generally available for purchase, these quantities may not be available in the future, and, even ifavailable, we may not be able to continue to purchase them at current prices. Further increases in the cost of these raw materials could adverselyaffect our operating margins and cash flows.
Table of Contents
Ardagh Group S.A.17
The supplier industries from which Metal Beverage Packaging receives its raw materials are relatively concentrated, and this concentrationcan impact raw material costs. Over the last ten years, the number of major aluminum and steel suppliers has decreased and there remains thepossibility of further consolidation. Further consolidation could hinder our ability to obtain adequate supplies of these raw materials and could leadto higher prices for aluminum and steel.
Glass Packaging also consumes significant amounts of raw materials in the manufacturing process, in particular, glass sand, limestone andsoda ash (natural or synthetic). Crushed recycled glass (“cullet”) is also a key raw material that is used in varying percentages, depending on the typeof glass manufactured and the availability of cullet in a particular market. The combination of higher energy prices and a tight supply market hasresulted in a historic increase in price for soda ash. Further increases in demand without corresponding increase in supply may put pressure not onlyon soda ash, but also on some other raw materials. The price, quality and availability of cullet varies widely from one region to another and isdependent on a number of factors, including glass collection and its effectiveness and the distance of our production sites to population centerswhere the waste glass is generated. Changes in regulations related to glass collection and recycling, including, for example, the introduction ofdeposit recycling schemes (“DRS”) such as planned in Scotland from July 1, 2022, could have a significant impact on the availability of cullet and,as a result, on its price. Any significant increase in the price of the raw materials we use to manufacture glass could have a material negative impacton our business, financial condition and results of operations.
The failure to obtain adequate supplies of raw materials or future price increases could have a material adverse effect on our business,financial condition and results of operations.
Currency, interest rate fluctuations and commodity prices may have a material impact on our business.
The Company’s functional currency is the euro and we present our financial information in U.S. dollar. Insofar as possible, we activelymanage currency exposures through the deployment of assets and liabilities throughout the Group and, when necessary and economically justified,enter into currency hedging arrangements to manage our exposure to currency fluctuations by hedging against rate changes with respect to ourfunctional currency, the euro. However, we may not be successful in limiting such exposure, which could adversely affect our business, financialcondition and results of operations. In addition, our presented results may be impacted as a result of fluctuations in the U.S. dollar exchange rateversus the euro.
Metal Beverage Packaging has production facilities in 9 different countries worldwide. It also sells products to, and obtains raw materialsfrom, entities located in these and different regions and countries globally. As a consequence, a significant portion of consolidated revenue, costs,assets and liabilities of Metal Beverage Packaging are denominated in currencies other than the euro, particularly the U.S. dollar and the Britishpound. The exchange rates between the currencies which we are exposed to, such as the euro, the U.S. dollar and the British pound, have fluctuatedsignificantly in the past and may continue to do so in the future.
In Glass Packaging, a substantial portion of the assets, liabilities, revenues and expenses are denominated in U.S. dollars, British pounds,Swedish krona, Danish krone and Polish zloty. Fluctuations in the value of these currencies with respect to the euro have had, and may continue tohave, a significant impact on our financial condition and results of operations.
For the year ended December 31, 2020, 72% of the Group’s revenues were from countries with currencies other than the euro.
In addition to currency translation risk, we are subject to currency transaction risk. Our policy is, where practical, to match net investmentsin foreign currencies with borrowings in the same currency. The debt and interest payments relating to our Swedish, Danish and Polish operationsare all denominated in euro. Fluctuations in the value of these currencies with respect to the euro may have a significant impact on our financialcondition and results of operations.
Table of Contents
Ardagh Group S.A.18
Changes in exchange rates can affect our ability to purchase raw materials and sell products at profitable prices, reduce the value of ourassets and revenues, and increase liabilities and costs.
We are also exposed to interest rate risk. Fluctuations in interest rates may affect our interest expense on existing debt and the cost of newfinancing. We occasionally use CCIRS to manage this type of risk, but sustained increases in interest rates could nevertheless materially adverselyaffect our business, financial condition and results of operations.
In addition, we are exposed to movements in the price of electricity and natural gas. We try to ensure that natural gas prices are fixed forfuture periods but do not always do so because the future prices can be far in excess of the spot price.
We use derivative agreements to manage some of the material cost risk. The use of derivative contracts to manage our risk is dependent onrobust hedging procedures. Increasing raw material costs over time has the potential, if we are unable to pass on price increases, to reduce salesvolume and could therefore have a significant impact on our financial condition.
For a further discussion of these matters and the measures we have taken to seek to protect our business against these risks, see “Item 5.Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
It is difficult to compare our results of operations from period to period.
It is difficult to make period-to-period comparisons of our results of operations. Our business has been created as a result of a series ofacquisitions and other corporate transactions over many years. These acquisitions have had a positive effect on our results of operations in periodsfollowing their completion and integration. Furthermore, our sales and, therefore, our net operating income are variable within the fiscal year due tothe seasonality described above. Thus, a period-to-period comparison of our results of operations may not be meaningful.
Our inability to fully pass-through input costs may have an adverse effect on our financial condition and results of operations.
A significant number of our sales contracts with customers include provisions enabling us to pass-through increases and reductions incertain input costs, which help us deliver consistent margins, although margin percentages may fluctuate as a result. However, there is no assurancethat the Company will be in a position to fully recover increased input costs from all of our customers.
Interrupted energy supplies and higher energy costs may have a material adverse effect on our business.
We use natural gas, electrical power, oil, oxygen and, in limited circumstances, liquefied petroleum gas to manufacture our products.Energy sources are vital to our operations and we rely on a continuous power supply to effectively conduct our business. Energy prices are subject toconsiderable volatility. We seek to mitigate the inherent risk in energy price fluctuations through a combination of contractual customerpass‑through agreements, fixed‑price procurement contracts, index tracking procurement contracts and hedging. We are not able to predict to whatextent energy prices will vary in the future. Future increases in energy costs could result in a significant increase in operating costs, which could, ifwe are not able to recover these costs increases from our customers through selling price increases and our hedging strategy, have a material adverseeffect on our business, financial condition and results of operations. Moreover, energy supplies are subject to various risks, including extremeweather events. Any interruption to our energy supplies, whether as a result of extreme weather events or otherwise, could have a material adverseeffect on our business, financial condition and results of operations.
Table of Contents
Ardagh Group S.A.19
Our manufacturing facilities are subject to operating hazards.
Our manufacturing processes include cutting, coating and shaping metal into containers, as well as heating raw materials to extremely hightemperatures to make glass, which we then form into glass containers. These processes, which are conducted at high speeds and involve operatingheavy machinery and equipment, entail risks and hazards, including industrial accidents, leaks and ruptures, explosions, fires, mechanical failuresand environmental hazards, such as spills, storage tank leaks, discharges or releases of hot glass or toxic or hazardous substances and gases. Thesehazards may cause unplanned business interruptions, unscheduled downtime, transportation interruptions, personal injury and loss of life, severedamage to or the destruction of property and equipment, environmental contamination and other environmental damage, civil, criminal andadministrative sanctions and liabilities, and third-party claims, any of which could have a material adverse effect on our business, financial conditionand results of operations.
We are involved in a continuous manufacturing process with, in Glass Packaging in particular, a high degree of fixed costs. Any interruption inthe operations of our manufacturing facilities may adversely affect our business, financial condition and results of operations.
All of our manufacturing activities take place at facilities that we own or that we lease under long-term leases. We conduct regularmaintenance on all of our operating equipment. However, due to the extreme operating conditions inherent in some of our manufacturing processes,we cannot assure you that we will not incur unplanned business interruptions due to furnace or equipment breakdowns or similar manufacturingproblems or that such interruptions will not have an adverse impact on our business, financial condition and results of operations. In such a scenario,it is very unlikely that alternative production capacity would be available in the future. A disruption in such circumstances could have a materialadverse effect on our business, financial condition and results of operations.
To the extent that we experience any furnace breakdowns, equipment failures or similar manufacturing problems, we will be required tomake unplanned capital expenditures even though we may not have available resources at such time and we may not be able to meet customerdemand, which would result in a loss of revenues. As a result, our liquidity may be impaired as a result of such expenditures and loss of revenues orthe incurrence of unplanned capital expenditures.
A mechanical failure or disruption affecting any major operating line may result in a disruption of our ability to supply customers. Thepotential impact of any disruption would depend on the nature and extent of the damage caused to such facility. Further, our facilities ingeographically vulnerable areas, including parts of the United States and Italy, may be disrupted by the occurrence of natural phenomena, such asearthquakes, hurricanes, floods and wildfires.
Our Glass Packaging business requires relatively high levels of maintenance capital expenditures, which we may be unable to fund.
Our Glass Packaging business requires relatively high levels of maintenance capital expenditures. We may not be able to make such capitalexpenditures if we do not generate sufficient cash flow from operations, have funds available for borrowing under our existing credit facilities tocover these capital expenditure requirements or if we were restricted from incurring additional debt to cover such expenditures or as a result of acombination of these factors. If we are unable to meet our capital expenditure plans, we may not be able to maintain our manufacturing capacity,which may negatively impact our competitive position and ultimately, our revenues and profitability. If we are unable to meet our maintenancecapital expenditures, our manufacturing capacity may decrease, which may have a material adverse effect on our profitability.
Table of Contents
Ardagh Group S.A.20
Our expansion strategy may adversely affect our business.
We aim over the longer term to continue to expand our packaging activities. In addition to our organic expansion and capital expenditure onexisting and new facilities, such future expansion may require us to capitalize on strategic opportunities including the acquisition of existingbusinesses. As we believe that such businesses may be acquired with modest equity and relatively high levels of financial leverage given the cashgenerating capabilities of our business streams, our leverage and interest expense may increase in the future in connection with any acquisitions.Additionally, if we incur additional debt, our liquidity and financial stability could be impaired as a result of using a significant portion of availablecash or borrowing capacity to finance an acquisition. Accordingly, such future expansion could have an adverse effect on our business, financialcondition and results of operations.
There is no certainty that any businesses we may acquire in the future will be effectively integrated. If we cannot successfully integrateacquired businesses within a reasonable time frame, it may not be able to realize the potential benefits anticipated from those acquisitions. Ourfailure to successfully integrate such businesses and the diversion of management attention and other resources from its existing operations couldhave a material adverse effect on our business, financial condition and results of operations.
Furthermore, we may not be able to identify suitable acquisition candidates consistent with our strategy, and we may not be able to fundfuture acquisitions because of limitations under our indebtedness or otherwise, including due to the limited availability of funds if the financialmarkets are impaired.
We may not be able to integrate any future acquisitions effectively.
Even though we have acquired businesses in the past, there is no certainty that any businesses we may acquire in the future will beeffectively integrated. If we cannot successfully integrate acquired businesses within a reasonable time frame, we may not be able to realize thepotential benefits anticipated from those acquisitions. Our failure to successfully integrate such businesses and the diversion of managementattention and other resources from our existing operations could have a material adverse effect on our business, financial condition and results ofoperations.
Furthermore, even if we are able to integrate successfully the operations of acquired businesses, we may not be able to realize the costsavings, synergies and revenue enhancements that we anticipate either in the amount or within the time frame that we anticipate, and the costs ofachieving these benefits may be higher than, and the timing may differ from, what we expect. Our ability to realize anticipated cost savings andsynergies may be affected by a number of factors, including the following:
● the use of more cash or other financial resources on integration and implementation activities than we expect, including restructuringand other exit costs;
● conditions imposed in connection with obtaining required regulatory approvals; and
● increases in acquisition costs and expenses, which may offset the cost savings and other synergies realized from such acquisitions.
To the extent we pursue an acquisition that causes us to incur unexpected costs or that fails to generate expected returns, this couldhave a material adverse effect on our business, financial condition and results of operations.
A significant write down of goodwill would have a material adverse effect on our financial condition and results of operations.
Goodwill at December 31, 2020 totaled $1.7 billion. The Company evaluates goodwill annually following approval of the annual budget orwhenever indicators suggest that impairment may have occurred. The determination of
Table of Contents
Ardagh Group S.A.21
the recoverable amounts of goodwill requires the use of estimates and assumptions which are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, bydefinition, seldom equal the related actual results. As described further in the audited consolidated financial statements included in this annual report,the Group uses the value in use (“VIU”) model for the purposes of goodwill impairment testing, as this reflects the Group’s intention to hold andoperate the assets. However, if an impairment indicator exists for a CGU, the Group also uses the fair value less costs of disposal (“FVLCD”) modelin order to establish the recoverable amount being the higher of the VIU model and FVLCD model when compared to the carrying value of theCGU. Sensitivity analysis is performed reflecting potential variations in assumptions. Future changes in the estimates and assumptions used in theVIU or FVLCD models, general market conditions, or other factors may cause the Company’s goodwill to be impaired, resulting in a non cashcharge against results of operations to write down goodwill for the amount of the impairment. If a significant write down is required, the chargewould have a material adverse effect on the Company’s financial condition and results of operations.
Our investment in Trivium is accounted as a joint venture using the equity method, which may result in a reduction in the accounting carryingvalue of the Group’s investment should Trivium incur post-tax losses.
The Group holds approximately 42% of the ordinary shares of Trivium. As the Group jointly controls both the financial and operatingpolicy decisions of Trivium, the investment is accounted for as a joint venture under the equity method. The Group’s carrying amount of its interestunder the equity method, which at December 31, 2020 totaled $0.4 billion, will change as a result of the requirements of the equity method. Theequity method results in the Group accounting for its share of the post-tax profit or loss and share of the other comprehensive income of Trivium. AsTrivium has a substantial amount of debt and significant debt service obligations and may incur post tax and other comprehensive losses, theGroup’s accounting carrying value of its interest may reduce as a result of the application of equity accounting.
We have potential indemnification obligations relating to divestments.
We have previously divested a number of businesses, including, in 2019, the divestment of our Food & Specialty Metal Packagingbusiness. Pursuant to these agreements, we may be required to provide indemnification to the acquirers for damages resulting from a breach of anyrepresentation, warranty or covenants contained therein. To the extent that we are required to make any significant payments under theseindemnification provisions, these payments could adversely impact our business, financial condition and results of operations.
Climate change or legal, regulatory or other measures to address climate change or related concerns, may adversely affect our ability to conductour business, including the availability and cost of resources required for our production processes.
There is a growing concern that carbon dioxide and other greenhouse gases (“GHG”) in the atmosphere may have an adverse impact onglobal temperatures, weather and precipitation patterns and the frequency and severity of extreme weather conditions and natural disasters. Theimpact of climate change may over time affect our operations and the markets in which we operate. This could include changes in weather, resultingin reduced availability of inputs such as water, or increased costs of such inputs, and/or transitional risks such as technological development, policyand regulatory change, and market and economic responses. Measures to address climate change through laws and regulations, for example byrequiring reductions in emissions of GHGs or the introduction of compliance schemes could create economic risks and uncertainties for ourbusinesses, by increasing GHG related costs, the cost of abatement equipment to reduce emissions to comply with legal requirements on GHGemissions or required technological standards, as well as reduced demand for the Group’s products.
The glass production process generates significant CO2 emissions, while the vast majority of the Metal Packaging business’ Scope 3emissions arise in the various stages of the manufacture of the aluminum and steel coils that we purchase. In line with our commitment to ScienceBased Sustainability targets, we have a plan to reduce these emissions. Failure to meet our targets and to reduce our emissions risks reputationaldamage and could adversely impact demand for our products, resulting in an adverse impact on financial performance.
Table of Contents
Ardagh Group S.A.22
We are subject to various environmental and other legal requirements and may be subject to new requirements of this kind in the future thatcould impose substantial costs upon us.
Our operations and properties are subject to extensive laws, ordinances, regulations and other legal requirements relating to the protectionof people and the environment. Such laws and regulations which may affect our operations include requirements regarding remediation ofcontaminated soil, groundwater and buildings, water supply and use, natural resources, water discharges, air emissions, waste management, noisepollution, asbestos and other deleterious materials, the generation, storage, handling, transportation and disposal of regulated materials, productsafety, and workplace health and safety. These laws and regulations are also subject to constant review by lawmakers and regulators which mayresult in further, including more stringent, environmental or health and safety legal requirements. We strive to mitigate risks related to environmentalissues, including through the purchase of renewable energy, the adoption of sustainable practices, and by positioning ourselves as a sustainabilityleader in our industry.
We have incurred, and expect to continue to incur, costs to comply with such legal requirements, and these costs may increase in the future.Demands for more stringent pollution control devices could also result in the need for further capital upgrades to our furnaces and plant operations.Further, in order to comply with air emission restrictions, significant capital investments may be necessary at some sites. We require a variety ofpermits to conduct our operations, including operating permits such as those required under various U.S. laws, including the federal Clean Air Act,and the EU Industrial Emissions Directive water and trade effluent discharge permits, water abstraction permits and waste permits. We are in theprocess of applying for, or renewing, permits at a number of our sites. Failure to obtain and maintain the relevant permits, as well as noncompliancewith such permits, could have a material adverse effect on our business, financial condition and results of operations.
If we violate or fail to comply with these laws and regulations or our permits, we could be subject to criminal, civil and administrativesanctions and liabilities, including substantial fines and orders, or a partial or total shutdown of our operations, as well as litigation, any of whichcould have a material adverse effect on our business, financial condition and results of operations. For example, in 2017 we settled alleged violationsof hazardous waste regulations governing the reuse of electrostatic precipitator dust at our Madera plant in the United States, which occurred in theperiod prior to the acquisition in 2014 of VNA. As part of this settlement, we paid a civil penalty of $3.5 million and expect to incur increased dustdisposal costs, which we estimate to be about $500,000 annually. We cannot assure you that our reuse of electrostatic precipitator dust at our otherglass manufacturing plants will not result in regulatory inquiries or enforcement relating to compliance with hazardous waste regulations.
In order to comply with air emission restrictions, significant capital investments may be necessary at some sites. For example, to complywith U.S. environmental regulations and the demands of the EPA, VNA, which we acquired in 2014, we agreed to make sizable investments toreplace or install new electrostatic precipitators and other equipment in order to control the air emissions at certain sites located in the United States.In 2010, prior to the 2014 acquisition of VNA by Ardagh, VNA and the EPA signed a global consent decree pursuant to which VNA has madeinvestments estimated at up to an aggregate of $112 million over a ten-year period, excluding operating costs of the systems installed. In addition,VNA paid a penalty amounting to $2.5 million, excluding interest, pursuant to this consent decree.
We have received notices of violation from the EPA for alleged violations under the Clean Air Act’s Prevention of SignificantDeterioration, New Source Performance Standards and Title V provisions stemming from past furnace-related projects at our other glassmanufacturing facilities unrelated to our acquisition of VNA, including furnace-related projects conducted by third parties who owned the facilitiesbefore us. The EPA has sent information requests to a number of our glass manufacturing facilities concerning furnace-related projects, as well asour air pollutant emissions more generally, which could culminate in notices of violation or other enforcement.
In Europe, under the IED and its reference document for “Best Available Techniques” for glass manufacturing plants and metalmanufacturing plants with surface treatment using solvents, permitted emissions levels from these plants including ours are substantially reducedperiodically. EU member states introduced lower permitted emission levels into national legislation, which could potentially result in stricter limitsin the future. These types of changes could require
Table of Contents
Ardagh Group S.A.23
additional investment in our affected operations. There may be greenhouse gas compliance or emission control schemes introduced in anyjurisdiction on country and local municipality level which include metal and glass packaging which may require additional measures to control theemission of greenhouse gases that may have a material adverse effect on our business, financial condition and results of operations. California hasimplemented a similar program, which results in the need for us to incur potentially significant compliance costs, including for the purchase ofoffsets against our greenhouse gas emissions. There are also some municipalities exploring further regulation to reduce or in some cases eliminatenatural gas usage.
Changes to the laws and regulations governing the materials that are used in our manufacturing operations may impact the price of suchmaterials or result in such materials no longer being available, which could have a material adverse effect on our business, financial condition andresults of operations. The European Union passed regulations concerning REACH, which place onerous obligations on the manufacturers andimporters of substances, preparations and articles containing substances, and which may have a material adverse effect on our business. Furthermore,substances we use may have to be removed from the market (under REACH’s authorization and restriction provisions) or need to be substituted foralternative chemicals which may also adversely impact upon our operations.
Sites at which we operate often have a long history of industrial activities and may be, or have been in the past, engaged in activitiesinvolving the use of materials and processes that could give rise to contamination and result in potential liability to investigate or remediate, as wellas claims for alleged damage to persons, property or natural resources. Liability may be imposed on us an owner, occupier or operator ofcontaminated facilities. These legal requirements may apply to contamination at sites that we currently or formerly owned, occupied or operated, orthat were formerly, owned, occupied or operated by companies we acquired or at sites where we have sent waste offsite for treatment or disposal.Regarding assets acquired by us, we cannot assure you that our due diligence investigations identified or accurately quantified all materialenvironmental matters related to the acquired facilities. Our closure of a site may accelerate the need to investigate and remediate any contaminationat the site.
In addition, we may be required to remediate contaminated third-party sites where we have sent waste for disposal. Liability forremediation of these third-party sites may be established without regard to whether the party disposing of the waste was at fault or the disposalactivity was legal at the time it was conducted. For example, “Superfund” sites in the United States are the highest priority contaminated sitesdesignated by the federal government as requiring remediation, and costs of their remediation tend to be high. We and a number of other companieshave been named as potentially responsible parties to clean up the Lower Duwamish Waterway Superfund Site in Washington, because our Seattleplant is adjacent to the waterway and is alleged to have contributed to its contamination. Whether we will have any liability for investigation andremediation costs at this or any other Superfund site or for costs relating to claims for natural resource damages, and what portion of the costs wemust bear, has not been determined.
Changes in product requirements and their enforcement may have a material impact on our operations.
Changes in laws and regulations relating to deposits on, and any limits or restrictions to recycling of, glass or metal packaging couldadversely affect our business if implemented on a large scale in the major markets in which we operate. Changes in laws and regulations layingdown restrictions on, and conditions for use of, food contact materials or on the use of materials and agents in the production of our products couldlikewise adversely affect our business. Changes to health and food safety regulations could increase costs and also might have a material adverseeffect on revenues if, as a result, the public attitude toward end-products, for which we provide packaging, were substantially affected.
Additionally, the effectiveness of new standards such as the ones related to recycling or deposits on different packaging materials, couldresult in excess costs or logistical constraints for some of our customers, who could choose to reduce their consumption and limit the use of glass ormetal packaging for their products. We could thus be forced to reduce, suspend or even stop the production of certain types of products. Theregulatory changes could also affect our prices, margins, investments and activities, particularly if these changes resulted in significant or structuralchanges in the market for food packaging that might affect the market shares for glass, the volumes produced or production costs.
Table of Contents
Ardagh Group S.A.24
Environmental concerns could lead U.S., European Union, United Kingdom or Brazilian, bodies to implement other product regulationsthat are likely to impose restrictions on us and have a material adverse effect on our business, financial condition and results of operations. There issignificant variation, among countries where we sell our products, in the limitation on certain constituents in packaging, which can have the effect ofrestricting the types of raw materials or amount of recycled glass we use. In turn, these restrictions can increase our operating costs, by requiringincreased energy consumption or greater environmental controls.
Similarly, in the United States, some state regulations set the concentration of certain heavy metals in glass packaging at 100 ppm andprovide for an exception to this rule in the event of additions of recycled packaging. Because this exemption has expired in certain states, the bottlesmanufactured from recycled glass that have a heavy metals concentration higher than 100 ppm could be noncompliant, which could have a negativeimpact on our earnings, financial condition, assets or image. We have had regulatory inquiries about our compliance and may in the future haveadditional inquiries or enforcement.
Our operations are subject to laws and regulations in multiple jurisdictions relating to some of the raw materials utilized in our can makingprocess, such as epoxy-based coatings. Changes in regulatory agency statements, adverse information concerning bisphenol A or rulings made incertain jurisdictions may result in restrictions, for example, on bisphenol A in epoxy-based internal liners for some of our products. Such restrictionshave required us, together with our respective suppliers and customers, to develop substitutes for relevant products to meet legal and customerrequirements.
Increasing legal requirements on the reporting, due diligence and restricted use of “conflict minerals” originating from mines in theDemocratic Republic of the Congo and adjoining countries as well as any increasing regulatory requirements on the bauxite or cassiterite value chaincould bear reputational and compliance risks along the supply chain and affect the sourcing, availability and economics of minerals used in themanufacture of aluminum and steel beverage cans.
We could incur significant costs due to the location of some of our industrial sites in urban areas.
Obtaining, renewing or maintaining permits and authorizations issued by administrative authorities necessary to operate our productionplants could be made more difficult due to the increasing urbanization of the sites where some of our manufacturing plants are located. Urbanizationcould lead to more stringent operating conditions (by imposing traffic restrictions for example), conditions for obtaining or renewing the necessaryauthorizations, the refusal to grant or renew these authorizations, or expropriations of these sites in order to allow urban planning projects to proceed.
The occurrence of such events could result in us incurring significant costs and there can be no assurance that the occurrence of such eventswould entitle us to partial or full compensation.
We could incur significant costs in relation to claims of injury and illness resulting from materials present or used at our production sites, orfrom our use of these sites or other workplace injuries, or from our products.
As is the case in a number of other industrial processes that deal with high temperatures, asbestos was once present in the glass-makingindustry, primarily in safety equipment, until measures were taken to substitute this material for other materials made possible through technologicaladvances. Since the 1990s, items made of asbestos have gradually been removed at our sites in Western Europe and the United States. Because of theage of some of our sites, however, asbestos-cement may have been used in construction and may still be present at these sites. When these buildingsare modernized or repaired, the cost of upgrades is higher because of the restrictions associated with removing asbestos-containing materials.
We are exposed to claims alleging injury or illness associated with asbestos and related compensation over and above the support that maybe offered through various existing social security systems in countries where we operate.
Table of Contents
Ardagh Group S.A.25
Claims associated with our glass manufacturing operations exist and may arise for reasons associated with the work environment unrelatedto the presence of asbestos. For example, claims have arisen associated with the acoustic environment generated by forming machines, the use ofglass sand in making glass and products likely to contain heavy metals or solvents for decoration. We may also face the risk of work-related healthclaims owing to materials present or used at our production sites such as silicosis, and, under certain conditions, Legionnaires’ disease. The U.S.Occupational Safety and Health Administration has implemented a requirement that reduced by 50% the permissible exposure limit to crystallinesilica and requires engineering controls or personal protective equipment to safeguard employees from such exposure. The European Union has alsoset stricter exposure limit values for respirable crystalline silica in work processes under the Carcinogens and Mutagens Directive. This substance isa common mineral found in sand, which is a significant raw material component for glass manufacturing and is also contained in refractories, orbricks, used in glass manufacturing operations. Our costs to meet these reduced limits could be substantial, particularly if it becomes necessary for usto implement broad engineering controls across many of our glass manufacturing plants.
We are also exposed to claims alleging musculoskeletal disorders caused by performing certain repetitive operations or motions. We couldalso face claims alleging illness or injury from use of the products that we manufacture or sell or from workplace injuries more generally. If theseclaims succeed, they could have a material adverse impact on our business, financial condition and results of operations.
We may be subject to litigation, regulatory investigations, arbitration and other proceedings that could have an adverse effect on us.
We are currently involved in various litigation matters, and we anticipate that we will be involved in litigation matters from time to time inthe future. The risks inherent in our business expose us to litigation, including personal injury, environmental litigation, contractual litigation withcustomers and suppliers, intellectual property litigation, tax or securities litigation, and product liability lawsuits. We cannot predict with certaintythe outcome or effect of any claim, regulatory investigation, or other litigation matter, or a combination of these. If we are involved in any futurelitigation, or if our positions concerning current disputes are found to be incorrect, this may have an adverse effect on our business, financialcondition and results of operations, including due to potential negative outcomes, the costs associated with asserting our claims or defending suchlawsuits, and the diversion of management’s attention to these matters. See Note 28 to the audited consolidated financial statements.
We are subject to an extensive, complex and evolving legal and regulatory framework, which may expose us to investigations by governmentalauthorities, legal proceedings and fines.
Our business encompasses multiple jurisdictions and complex legal and regulatory frameworks, including in relation to anti-trust, economicsanctions, anti-corruption and anti-money laundering matters. Laws and regulations in these areas are complex and constantly evolving andenforcement continues to increase. As a result, we may become subject to increasing limitations on our business activities and to the risk of fines orother sanctions for non-compliance. Additionally, we may become subject to governmental investigations and lawsuits by private parties. Thesecould require significant expenditures and result in liabilities or governmental orders that could have a material adverse effect on our business,financial condition or results of operations.
Changes in consumer lifestyle, nutritional preferences, health-related concerns and consumer taxation could adversely affect our business.
Changes in consumer preferences and tastes can have an impact on demand for our customers’ products, which in turn can lead to reduceddemand for our products. In the United States, for example, the growth in consumption of imported beer and in newer beverage categories such ashard seltzers, has seen reduced demand for domestically-produced mass beer brands, resulting in reduced demand for glass packaging for this end-use category. Certain end-products represent a significant proportion of our packaging market. Our ability to develop new product offerings for adiverse group of global customers with differing preferences, while maintaining functionality and spurring innovation, is critical to our success. Thisrequires a thorough understanding of our existing and potential customers and end users on a global
Table of Contents
Ardagh Group S.A.26
basis, particularly in potential high developing markets. Failure to adapt and deliver quality products that meet customer or end user needs, throughresearch and development or licensing of new technology, ahead of competitors, could have a material adverse effect on our business.
Additionally, public health and government officials have become increasingly concerned about the health consequences associated withover-consumption of certain types of beverages, such as sugar-sweetened beverages, including those produced by certain of our customers. Forexample, France and the United Kingdom have introduced taxes on drinks with added sugar and artificial sweeteners that companies produce orimport. France has also imposed taxes on energy drinks using certain amounts of taurine and caffeine. As a result of such taxes, demand decreasedtemporarily in these countries, and the imposition of similar taxes in the future may lower the demand for certain soft drinks and beverages that ourcustomers produce, which may cause our customers to respond by reducing their purchases of our metal and glass packaging products. Consumer taxlegislation and future attempts to tax sugar or energy drinks or to lower consumption of certain alcoholic and non-alcoholic categories by otherjurisdictions could reduce the demand for our products and adversely affect our profitability.
In addition, any decline in the popularity of these product types as a result of lifestyle, nutrition or health considerations, or our inability toadapt to customer needs, could have a significant impact on our customers and could have a material adverse effect on our business, financialcondition and results of operations.
We face costs and future funding obligations associated with post-retirement benefits provided to employees, which could have an adverse effecton our financial condition.
As of December 31, 2020, our accumulated post-retirement benefit obligation was approximately $811 million covering employees inmultiple jurisdictions. The costs associated with these and other benefits to employees could have a material adverse effect on our financialcondition.
We operate and contribute to pension and other post-retirement benefit schemes funded by a range of assets which may include property,derivatives, equities and/or bonds. The value of these assets is heavily dependent on the performance of markets, which are subject to volatility. Theliability structure of the obligations to provide such benefits is also subject to market volatility in relation to its accounting valuation andmanagement. Additional significant funding of our pension and other post-retirement benefit obligations may be required if marketunderperformance is severe. In addition, we may have to make significant cash payments to some or all of these plans, including under guaranteeagreements, in the future to provide additional funding, which would reduce the cash available for our businesses.
Under the United States Employee Retirement Income Security Act of 1974, as amended, the U.S. Pension Benefit Guaranty Corporation(“PBGC”) has the authority to terminate pension plans regulated by the PBGC if certain funding requirements are not met; any such terminationwould further accelerate the cash obligations related to such a pension plan.
Organized strikes or work stoppages by unionized employees could have a material adverse effect on our business.
Many of our operating companies are party to collective bargaining agreements with trade unions. These agreements cover the majority ofour employees and although we consider our employee relations to be generally good, a prolonged work stoppage or strike at any facility with unionemployees could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot ensure that,upon the expiration of existing collective bargaining agreements, new agreements will be reached without union action or that our operatingcompanies will be able to negotiate acceptable new contracts with trade unions, which could result in strikes by the affected workers and increasedoperating costs as a result of higher wages or benefits paid to union members. If unionized workers at our operating companies or any unionizedworkers were to engage in a strike or other work stoppage, we could experience a significant disruption of operations and/or higher ongoing laborcosts, which may have a material adverse effect on our business, financial condition and results of operations.
Table of Contents
Ardagh Group S.A.27
Failure of control measures and systems resulting in faulty or contaminated product could have a material adverse effect on our business.
We have strict control measures and systems in place to ensure that the maximum safety and quality of our products is maintained. Theconsequences of a product not meeting these rigorous standards, due to, among other things, accidental or malicious raw materials contamination ordue to supply chain contamination caused by human error or equipment fault, could be severe. Such consequences might include adverse effects onconsumer health, litigation exposures, loss of market share, financial costs and loss of revenues.
In addition, if our products fail to meet rigorous standards, we may be required to incur substantial costs in taking appropriate correctiveaction (up to and including recalling products from consumers) and to reimburse customers and/or end-consumers for losses that they suffer as aresult of this failure. Customers and end-consumers may seek to recover these losses through litigation and, under applicable legal rules, maysucceed in any such claim, despite there being no negligence or other fault on our part. Placing an unsafe product on the market, failing to notify theregulatory authorities of a safety issue, failing to take appropriate corrective action and failing to meet other regulatory requirements relating toproduct safety could lead to regulatory investigation, enforcement action and/or prosecution. Any product quality or safety issue may also result inadverse publicity, which may damage our reputation. This could in turn have a material adverse effect on our business, financial condition andresults of operations. Although we have not had material claims for damages for defective products in the past, and have not conducted anysubstantial product recalls or other material corrective action, these events may occur in the future.
In certain contracts, we provide warranties in respect of the proper functioning of our products and the conformity of a product to thespecific use defined by the customer.
In addition, if a product contained in packaging manufactured by us is faulty or contaminated, it is possible that the manufacturer of theproduct may allege that our packaging is the cause of the fault or contamination, even if the packaging complies with contractual specifications.Furthermore, in certain countries, certain participants in the distribution chain refill bottles, even though they may not be designed for this purpose.
In case of the failure of packaging produced by us to open properly or to preserve the integrity of its contents, we could face liability to ourcustomers and to third parties for bodily injury or other tangible or intangible damages suffered as a result. Such liability, if it were to be establishedin relation to a sufficient volume of claims or to claims for sufficiently large amounts, could have a material adverse effect on our business, financialcondition and results of operations.
Our existing insurance coverage may be insufficient and future coverage may be difficult or expensive to obtain.
Although we believe that our insurance arrangements provide adequate coverage for the risks inherent in our business, these insurancearrangements typically exclude certain risks and are subject to certain thresholds and limits. We cannot assure you that our property, plant andequipment and inventories will not suffer damages due to unforeseen events or that the proceeds available from our insurance arrangements will besufficient to protect us from all possible loss or damage resulting from such events. As a result, our insurance coverage may prove to be inadequatefor events that may cause significant disruption to our operations, which may have a material adverse effect on our business, financial condition andresults of operations.
We may suffer indirect losses, such as the disruption of our business or third-party claims of damages, as a result of an insured risk event.While we carry business interruption coverage and general liability coverage, such coverage is subject to certain limitations, thresholds and limits,and may not fully cover all indirect losses.
We renew our insurance arrangements on an annual basis. The cost of coverage may increase to an extent that we may choose to reduce ourcoverage limits or agree to certain exclusions from our coverage. Among other factors, adverse political developments, security concerns and naturaldisasters in any country in which we operate may materially
Table of Contents
Ardagh Group S.A.28
adversely affect available insurance coverage and result in increased premiums for available coverage and additional exclusions from coverage.
Our business may suffer if we do not retain our executive and senior management.
We depend on our experienced executive team, who are identified under “Item 6—Directors, Senior Management and Employees” of thisannual report. The loss of services of any of the members of our executive team, members of senior management or other key personnel couldadversely affect our business until a suitable replacement can be found. There may be a limited number of persons with the requisite skills to serve inthese positions and there is no assurance that we would be able to locate or employ such qualified personnel on terms acceptable to us or at all.
The United Kingdom’s withdrawal from the European Union may have a negative effect on our financial condition and results of operations.
Approximately 12% of our total 2020 revenue was derived from revenues generated in the United Kingdom and 7 of our 56 MetalBeverage or Glass Packaging manufacturing facilities are located in the United Kingdom, as of December 31, 2020.
The relationship between the United Kingdom and the European Union is governed by a Withdrawal Agreement entered into at the end ofJanuary 2020, and a Trade and Cooperation Agreement, which took effect from 1 January 2021 (the “Brexit Agreements”). The Brexit Agreementsprovide for a zero tariff, zero quota arrangement on sales of goods and agriproducts between the United Kingdom and the European Union. Customsduties on goods originating outside the European Union or United Kingdom, or in the event that the zero tariff arrangements under the BrexitAgreements are amended or suspended, might lead to additional costs for products and materials shipped from the United Kingdom to Europe orfrom Europe to the United Kingdom respectively. Further, required changes to our business systems and processes in order to comply with newlyintroduced customs procedures may lead to additional costs.
More generally, differences in standards or processes or risk aversion may mean that some businesses choose not to serve other markets ona temporary or permanent basis, causing supplier disruption. Uncertainty remains regarding the impact of the withdrawal of the United Kingdomfrom the European Union ("Brexit") and the Brexit Agreements on the United Kingdom and Europe, including among commercial parties in theUnited Kingdom and the European Union, financial institutions, suppliers and service providers and their respective customers. Any changes to thetrading relationship between the United Kingdom and the European Union arising from the Brexit Agreements may adversely affect the cost ortiming of imports, including aluminum and coatings, including aluminum and coatings in our Metal Beverage Packaging operations and soda ash,molds and machinery in our Glass Packaging operations.
Some of our customers are based in the United Kingdom and export outside the local United Kingdom market. These customers mayexperience reduced demand or delays arising from these post-Brexit arrangements. Although we seek to export through channels where delayswould be minimized, we have nonetheless experienced delays in the transport of certain products, consumables and other materials particularly inrelation to shipments from the United Kingdom to the European Union. The impact of these delays, if prolonged, could adversely affect our financialcondition and the results of our operations.
Brexit may also have an adverse impact on our business, employees and customers in the United Kingdom. In particular, the BrexitAgreements allow for the possibility of future changes in laws and regulations. Such changes could include import, tax and employment laws andregulations, which could adversely impact the results of operations of our United Kingdom business. For example, there is uncertainty with regard tothe upcoming regulatory regime relating to environmental permits and permissions, with such environmental permits and permissions currentlygoverned by the EU Industrial Emissions Directive (Directive 2010/75/EU). More burdensome requirements imposed by the new upcomingregulatory regime could require that we commit additional resources to ensure compliance and although we will use reasonable efforts to ensuresuch compliance, the introduction of new regulations increases the risk of non-compliance.
Table of Contents
Ardagh Group S.A.29
Further, continued political uncertainty as a result of Brexit may result in negative effects on credit markets, and foreign direct investmentsin Europe and the United Kingdom. It may also result in volatility in the British pound foreign exchange markets and interest rates. See also the riskfactor entitled “Currency, interest rate fluctuations and commodity prices may have a material impact on our business.”
Brexit could also lead to legal and regulatory uncertainty and politically divergent national laws and regulations as a new relationshipbetween the United Kingdom and the European Union is defined and the United Kingdom determines which European Union laws to replace oramend. Volatility in political, regulatory, economic or market conditions could adversely affect employment rates, increase consumer andcommercial bankruptcy filings, negatively impact on national and local economies, and cause other results that negatively affect household incomes.
The economic outlook could be further adversely affected by the risk that one or more European Union member states could also leave theEuropean Union, the risk of a demand for independence by Scotland or Northern Ireland, or the risk that the euro as the single currency of any or allof the Eurozone member states could cease to exist. These developments, or the perception that any of them could occur, may have a materialadverse effect on the stability of global financial markets, and could significantly reduce global market liquidity and restrict the ability of key marketparticipants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings may be especially subject toincreased market volatility. These negative impacts could adversely affect our business, financial condition and results of operations.
The COVID-19 pandemic and any future epidemics may have a negative impact on worldwide economic activity and our business.
The COVID-19 global pandemic and measures to prevent its spread, including restrictions on travel, imposition of quarantines andprolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation ofevents, has impacted our business in a number of ways.
The COVID-19 pandemic has reduced global economic activity resulting in lower demand for certain of our customers’ products and,therefore, the products we manufacture, though demand for “at-home” consumption has increased and therefore demand for many of our customers’products and, as a result, for the products we manufacture, has proven to be resilient to date during the pandemic. The COVID-19 pandemic has attimes caused, and may again give rise to an adverse effect on our operations, including disruptions to our supply chain and workforce and theincurrence of increased costs. Although our production has not been significantly impacted to date, our plants may be required to curtail or ceaseproduction in response to the spread of COVID-19. The COVID-19 impact on capital markets could also impact our cost of borrowing. In addition,our customers, distribution partners, service providers or suppliers may experience financial distress, file for bankruptcy protection, go out ofbusiness, or suffer disruptions in their business due to the outbreak of COVID-19, which would have a negative impact on our business. The extentof the impacts of the COVID-19 pandemic on our business and results of operations continues to be uncertain.
The ultimate significance of these disruptions, including the extent of their adverse impact on our financial and operational results, will bedetermined by the duration of the ongoing pandemic, its severity in the markets that we serve and the nature and efficacy of government and otherregulatory responses, protective measures and vaccination programs, and the related impact on macroeconomic activity and consumer behavior.
If the COVID-19 pandemic continues unabated despite containment efforts, it could cause a severe economic slowdown and potentially anextended recession or depression, which would adversely affect the demand for our products or cause other unpredictable events, each of whichwould adversely affect its business, results of operations or financial condition. Any future epidemics may also have similar, or more severe, effectson global economic activity and on our business, results of operations or financial condition.
Table of Contents
Ardagh Group S.A.30
Increasing privacy and data security obligations or a significant data breach may adversely affect the Company’s business.
The Company will continue its efforts to meet data security obligations and must manage evolving cybersecurity threats. The loss,disclosure, misappropriation of or access to employees’ or business partners’ information or the Company’s failure to meet its obligations couldresult in lost revenue, increased costs, legal claims or proceedings, liability or regulatory penalties. A significant data breach or the Company’sfailure to meet its obligations may adversely affect the Company’s reputation and financial condition.
The Company’s heavy reliance on technology and automated systems to operate its business could mean any significant failure or disruption ofthe technology or these systems could materially harm its business.
The Company depends on automated systems and technology to operate its business, including accounting systems, manufacturing systemsand telecommunication systems. The Company operates a cyber and information risk management program including operating a global informationsecurity function, which partners with global leaders in the security industry to deliver an integrated information and cyber risk management serviceusing state-of-the-art technologies in areas including antivirus & anti-malware, email and web security platforms, firewalls, intrusion detectionsystems, cyber threat intelligence services and advanced persistent threat detection. The Company also partners with global leaders to deliver highavailability and resilient systems and communication platforms. However, there is the possibility that these systems could suffer substantial orrepeated disruptions due to various events, some of which are beyond the Company’s control, including natural disasters, power failures, terroristattacks, equipment or software failures, computer viruses or cyber security attacks.
Substantial or repeated systems failures or disruptions, could result in the unauthorized release of confidential or otherwise protectedinformation, improper use of our systems and networks, defective products, harm to individuals or property, contractual or regulatory actions andfines, penalties and potential liabilities, production downtime and operational disruptions and loss or compromise of important data, which mayresult in increased costs and lost revenue and competitiveness and may negatively impact our reputation, any of which could adversely affect ourbusiness, results of operations and financial condition. Increased global IT security threats and more sophisticated and targeted computer crime mayfurther increase this risk.
Our substantial debt could adversely affect our financial health and our ability to effectively manage and grow our business.
We have a substantial amount of debt and significant debt service obligations. As of December 31, 2020, we had total borrowings and netdebt of $7.0 billion and $5.7 billion, respectively. For more information, see the description of our debt facilities and the table outlining our principalfinancing arrangements in “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources”.
Our substantial debt could have negative consequences for us and for our shareholders. For example, our substantial debt could:
● require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments on our debt, therebyreducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
● increase our vulnerability to adverse general economic or industry conditions;
● limit our flexibility in planning for, or reacting to, changes in our business or industry;
● limit our ability to raise additional debt or equity capital in the future;
Table of Contents
Ardagh Group S.A.31
● restrict us from making strategic acquisitions or exploiting business opportunities;
● make it difficult for us to satisfy our obligations with respect to our debt; and
● place us at a competitive disadvantage compared to our competitors that have less debt.
In addition, a portion of our debt bears interest at variable rates that are linked to changing market interest rates. Although we may hedge aportion of our exposure to variable interest rates by entering into interest rate swaps, we cannot assure you that we will do so in the future. As aresult, an increase in market interest rates would increase our interest expense and our debt service obligations, which would exacerbate the risksassociated with our leveraged capital structure.
Further, notwithstanding our current indebtedness levels and restrictive covenants, we may still be able to incur substantial additional debtor make certain restricted payments, which could exacerbate the risks described above.
Negative developments in our business, results of operations and financial condition due to changes in global economic conditions or otherfactors could cause ratings agencies to lower the credit ratings, or ratings outlook, of our short- and long-term debt and, consequently, impair ourability to raise new financing or refinance our current borrowings and increase our costs of issuing any new debt instruments.
Risks Related to Our Class A Common Shares
The dual class structure of our common shares has the effect of concentrating voting control with our Parent Company or its shareholders andlimiting our other shareholders’ ability to influence corporate matters.
Our Class B common shares, with a nominal value of €0.10 each, have 10 votes per share, and our Class A common shares, with a nominalvalue of €0.01 each, have one vote per share. Our Parent Company owns indirectly all Class B common shares, which represent approximately99.15% of the voting power of our issued and outstanding share capital. Our Parent Company has the ability to control the outcome of most mattersrequiring shareholder approval, including:
● the election of our board of directors and, through our board of directors, decision making with respect to our business direction andpolicies, including the appointment and removal of our officers;
● mergers and de-mergers;
● changes to our Articles; and
● our capital structure.
This voting control and influence may discourage transactions involving a change of control of the Company, including transactions inwhich holders of our Class A common shares might otherwise receive a premium for their shares.
In addition, our Parent Company may continue to be able to control the outcome of most matters submitted to our shareholders for approvaleven if their shareholdings represent less than 50% of all issued shares. Due to the 10-to-1 voting ratio between our Class B and Class A commonshares, our Parent Company will continue to control a majority of the combined voting power of our issued and outstanding share capital even whenClass B common shares represent substantially less than 50% of all issued and outstanding common shares. This concentrated control will limit theability of holders of our Class A common shares to influence corporate matters for the foreseeable future, and, as a result, the market price of ourClass A common shares could be adversely affected.
The Company has agreed with the Parent Company to take such actions as are necessary to implement a reorganization of the ParentCompany so that shareholders of the Parent Company become proportionate direct holders of
Table of Contents
Ardagh Group S.A.32
our common shares, provided that the aggregate number of Class B common shares received by such shareholders in such event shall besubstantially the same as or fewer than (adjusting for fractional shares) the number of the Class B common shares owned by the Parent Companyimmediately prior to the date of such event. If such a reorganization were to occur, we anticipate that such holders who are Qualified Holders (asdefined under “Item 10. Additional Information—B. Memorandum and articles of association”) will be entitled to elect to receive either Class Acommon shares or Class B common shares in the reorganization and that following the reorganization, holders of Class B common shares maycontinue to collectively have voting power that would allow them to control the outcome of most matters requiring shareholder approval. The pre-IPO shareholders of the Parent Company are also permitted, in our Articles, to transfer Class B common shares among themselves and to certainfamily members and permitted entities.
Future sales of our Class A common shares in the public market could cause our share price to fall.
Future sales of our Class A common shares, or securities convertible or exchangeable into our Class A common shares, in the publicmarket, whether by us, our existing shareholders, the shareholders of the Parent Company or pledgees of our Class B common shares, futureissuances of additional Class A common shares in connection with any future acquisitions or pursuant to any employee benefit plans, futureissuances of our Class A common shares upon exercise of options or warrants, or the perception that such sales, issuances and/or exercises couldoccur, may adversely affect the market price of our Class A common shares, which could decline significantly.
A decline in the price of our Class A common shares might impede our ability to raise capital through the issuance of additional Class Acommon shares or other equity securities.
To the extent we issue substantial additional Class A common shares, the ownership of our existing shareholders would be diluted and ourearnings per share could be reduced, which may negatively affect the market price of our Class A common shares.
In addition, the Toggle Notes issued by the Parent Company are secured by all of our outstanding Class B common shares. Enforcement ofthe pledges in an event of default under the Toggle Notes could impact corporate control and might trigger change of control provisions under theindentures.
In the future, we may issue options, restricted shares and other forms of share-based compensation, which have the potential to diluteshareholder value and cause the price of our Class A common shares to decline.
We may offer share options, restricted shares and other forms of share-based compensation to our directors, officers and employees in thefuture. If any options that we issue are exercised, or any restricted shares that we may issue vest, and those shares are sold into the public market, themarket price of our Class A common shares may decline. In addition, the availability of Class A common shares for award under any equityincentive plan we may introduce, or the grant of share options, restricted shares or other forms of share-based compensation, may adversely affectthe market price of our Class A common shares.
We are organized under the laws of Luxembourg and a substantial amount of our assets are not located in the United States. It may be difficultfor you to obtain or enforce judgments or bring actions against us or our directors and officers in the United States.
We are organized under the laws of Luxembourg. In addition, a substantial amount of our assets are located outside the United States.Furthermore, many of our directors and officers reside outside the United States and will continue to reside outside the United States. As a result,although we have appointed an agent for service of process in the United States, investors may not be able to effect service of process within theUnited States upon us or these persons or enforce judgments obtained against us or these persons in U.S. courts, including judgments in actionspredicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it also may be difficult for an investor to enforce in U.S.courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including
Table of Contents
Ardagh Group S.A.33
judgments predicated upon the civil liability provisions of the U.S. federal securities laws. Awards of punitive damages in actions brought in theUnited States or elsewhere are generally not enforceable in Luxembourg.
Any judgments obtained in any U.S. federal or state court against us may have to be enforced in the courts of Luxembourg or other EUmember states. As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters betweenthe United States and Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. Avalid judgment obtained from a court of competent jurisdiction in the United States may be entered and enforced through a court of competentjurisdiction in Luxembourg, subject to compliance with the enforcement procedures (exequatur). The enforceability in Luxembourg courts ofjudgments rendered by U.S. courts will be subject, prior to any enforcement in Luxembourg, to the procedure and the conditions set forth in theLuxembourg procedural code, which conditions may include the following (which may change):
● the judgment of the U.S. court is final and enforceable (exécutoire) in the United States and has not been enforced in the United States;
● the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both withLuxembourg private international law and local law rules and with the applicable domestic U.S. federal or state jurisdictional rules);
● the judgment was granted following proceedings where the counterparty had the opportunity to appear, and if it appeared, to present adefense and other conditions for a fair trial have been complied with taking into account all facts and circumstances whether occurringbefore, during or after trial or issue and delivery of the judgement, and the judgment has not been obtained by reason of fraud;
● the U.S. court applied the substantive laws as designated by the Luxembourg conflict of law rules;
● the U.S. judgment does not contravene international public policy (ordre public) or order, both substantive and procedural, as understoodunder the laws of Luxembourg or has been given in proceedings of a criminal nature; and
● the absence of contradiction between such judgment and an already issued judgment of a Luxembourg court.
In addition, actions brought in a Luxembourg court against us, the members of our board of directors or our officers to enforce liabilitiesbased on U.S. federal securities laws may be subject to certain restrictions. In particular, Luxembourg courts generally do not award punitivedamages. Litigation in Luxembourg also is subject to rules of procedure that differ from the U.S. rules, including, with respect to the taking andadmissibility of evidence, the conduct of the proceedings and the allocation of costs. Proceedings in Luxembourg would have to be conducted in theFrench or German language, and all documents submitted to the court would, in principle, have to be translated into French or German. For thesereasons, it may be difficult for a U.S. investor to bring an action in a Luxembourg court predicated upon the civil liability provisions of the U.S.federal securities laws against us, the members of our board of directors or our officers. In addition, even if a judgment against us, the members ofour board of directors or our officers based on the civil liability provisions of the U.S. federal securities laws is obtained, a U.S. investor may not beable to enforce it in U.S. or Luxembourg courts.
Our directors and officers have entered into indemnification agreements with us. Under such agreements, the directors and officers areentitled to indemnification from us to the fullest extent permitted by Luxemburg law against liability and expenses reasonably incurred or paid bythem in connection with claims, actions, suits or proceedings in which they become involved as a party or otherwise by virtue of performing orhaving performed as a director or officer, and against amounts paid or incurred by them in the settlement of such claims, actions, suits orproceedings. Luxembourg law and our Articles permit us to keep directors indemnified against any expenses, judgments, fines and amounts paid inconnection with liability of a director towards us or a third party for management errors, i.e., for wrongful acts committed during the execution of themandate (mandat) granted to the director by us, except in connection with criminal offenses,
Table of Contents
Ardagh Group S.A.34
gross negligence, fraud or dishonesty. The rights to and obligations of indemnification among or between us and any of our current or formerdirectors and officers are generally governed by the laws of Luxembourg and subject to the jurisdiction of the Luxembourg courts, unless such rightsor obligations do not relate to or arise out of such persons’ capacities listed above. Although there is doubt as to whether U.S. courts would enforcethis indemnification provision in an action brought in the United States under U.S. federal or state securities laws, this provision could make it moredifficult to obtain judgments outside Luxembourg or from non-Luxembourg jurisdictions that would apply Luxembourg law against our assets inLuxembourg.
While we currently intend to pay quarterly cash dividends, we are a holding company and depend on dividends and other distributions fromsubsidiaries in order to do so.
As we are a holding company, our ability to pay cash dividends on our shares may be limited by restrictions on our ability to obtainsufficient funds through dividends from subsidiaries, including restrictions under the terms of the agreements governing the current indebtedness ofus and our subsidiaries or future indebtedness that we or our subsidiaries may incur.
Subject to any limitations referred to above, or as prescribed by Luxembourg Law, the declaration of future dividends, if any, will dependupon our future operations and earnings, capital expenditure requirements, general financial conditions, legal and contractual restrictions and otherfactors. In addition, under the indenture governing the Toggle Notes, the Parent Company is required to cause us to take all actions necessary orappropriate to permit the making of the maximum amount of dividends or other distributions that would be lawfully permitted to be declared andpaid in order for it to meet its cash interest payment obligations. In certain circumstances, we may be required to declare a special dividend to theParent Company in order to comply with these obligations.
The rights of our shareholders may differ from the rights they would have as shareholders of a U.S. corporation and consequently ourshareholders may have more difficulty protecting their interests.
Our corporate affairs are governed by our Articles and Luxembourg Law, including the Luxembourg law of 10 August 1915, oncommercial companies, as amended. The rights of our shareholders and the responsibilities of our directors and officers under Luxembourg law aredifferent from those applicable to a corporation incorporated in the United States.
In the performance of its duties, the board of directors is required to act as a collegiate body in the interest of the Company. It is possiblethat the Company may have interests that are different from interests of the shareholders. If any member of our board of directors has a direct orindirect financial interest in a matter which has to be considered by the board of directors which conflicts with the interests of the Company,Luxembourg Law provides that such director will not be entitled to participate in deliberations on and exercise his vote with respect to the approvalof such transaction. If the interest of such a member of the board of directors does not conflict with the interests of the Company, then the applicabledirector with such interest may participate in deliberations on, and vote on the approval of, that transaction.
Further, under Luxembourg law, there may be less publicly available information about the Company than is regularly published by orabout U.S. issuers. In addition, Luxembourg law governing the securities of Luxembourg companies may not be as extensive as those in effect in theUnited States, and Luxembourg law and regulations in respect of corporate governance matters might not be as protective of minority shareholdersas state corporation laws in the United States. Therefore, our shareholders may have more difficulty in protecting their interests in connection withactions taken by its directors and officers or its principal shareholders than they would as shareholders of a corporation incorporated in the UnitedStates.
Neither our Articles nor Luxembourg law provides for appraisal rights for dissenting shareholders in certain extraordinary corporatetransactions that may otherwise be available to shareholders under certain U.S. state laws. As a result of these differences, our shareholders mayhave more difficulty protecting their interests than they would as shareholders of a U.S. issuer.
Table of Contents
Ardagh Group S.A.35
All of our shareholder meetings will take place in Luxembourg. Generally, shareholders may vote by proxy or in person at any generalmeeting, however, in response to the COVID‐19 pandemic and in accordance with the Luxembourg law of September 23, 2020, as amended, whichallows for meetings of shareholders to be held without requiring their physical presence and which provides for the exercise of the shareholders’rights through their representation by a proxy holder, the 2021 annual general meeting will be conducted without shareholders’ physical presenceand so shareholders may vote only by proxy.
Our Articles include compulsory share transfer provisions that may not provide our minority shareholders with the same benefits as they wouldhave in a merger of a Delaware corporation.
We have included in our Articles provisions that give the holder of 75% of the number of our outstanding common shares (which wouldinclude the Parent Company for so long as it holds the requisite number of our common shares) the right to acquire our outstanding shares held by allother holders at such time for a purchase price payable in cash that is equal to the fair market value of such shares, as determined by an independentinvestment banking firm of international reputation in accordance with the procedures contained in our Articles. These procedures include a disputeresolution provision permitting holders of at least 10% of the shares of the Company held by our minority shareholders at that time to dispute thepurchase price proposed by the acquiring shareholder. It is uncertain whether our minority shareholders will be able to coordinate with each other ina manner that will enable them to take full advantage of these provisions. There can be no assurance that these provisions would result in a price asfavorable to our minority shareholders as they would receive in a transaction subject to Delaware law and appraisal rights.
The super voting rights of our Class B common shares and other anti-takeover provisions in our Articles might discourage or delay attempts toacquire us.
In addition to the super voting rights of our Class B common shares, our Articles contain provisions that may make the acquisition of ourCompany more difficult, including the following:
● Control by Class B common shareholders. Our Articles provide for a dual class share structure, which, for so long as Class B commonshares are issued and outstanding, will allow our Parent Company to control the outcome of most matters requiring shareholder approval,even if it owns Class B common shares representing significantly less than a majority of the Company’s issued and outstanding commonshares. As a result, the holders of our Class B common shares could delay or prevent the approval of a change of control transaction thatmay otherwise be approved by the holders of the issued and outstanding Class A common shares.
● Classified Board. Our board of directors is classified into three classes of directors that are, as nearly as possible, of equal size. Each classof directors will be elected for a three-year term of office, but the terms are staggered so that the term of only one class of directorsexpires at each annual general meeting. The existence of a classified board could impede a proxy contest or delay a successful tenderofferor from obtaining majority control of the board of directors, and the prospect of that delay might deter a potential offeror.
● Notice Requirements for Shareholder Proposals. Luxembourg Law and our Articles provide that one or more shareholders togetherholding at least the 10% threshold may request the addition of one or more items to the agenda of any general meeting. The request mustbe sent to the registered office by registered mail, at least five clear days before the meeting is held. Our Articles also specify certainrequirements regarding the form and content of a shareholder’s notice. These requirements may make it difficult for our shareholders tobring matters before a general meeting.
● Special Resolutions. Our Articles require special resolutions adopted at an extraordinary general meeting for any of the following matters,among other things: (a) an increase or decrease of the authorized or issued capital, (b) an amendment to our Articles and (c) dissolving theCompany. Pursuant to our Articles, for any special resolutions to be considered at a general meeting the quorum is at least one-half (1/2)of the share capital in issue present in person or by proxy, taking into account the par value of each Class A common share (€0.01) and thepar value of each Class B common share (€0.10) (in effect one-half (1/2) of the voting rights), unless
Table of Contents
Ardagh Group S.A.36
otherwise mandatorily required by Luxembourg Law. Any special resolution may be adopted at a general meeting at which a quorum ispresent (except as otherwise provided by mandatory law) by the affirmative votes of at least two-thirds (2/3) of the votes validly cast onsuch resolution by shareholders entitled to vote.
These anti-takeover provisions could discourage, delay or prevent a transaction involving a change in control of our Company, even if suchtransaction would benefit our shareholders.
We qualify for and rely on exemptions from certain corporate governance requirements.
We are exempt from certain corporate governance requirements of the NYSE by virtue of being a “foreign private issuer.” Although ourforeign private issuer status exempts us from most of the NYSE’s corporate governance requirements, we intend to voluntarily comply with theserequirements, except those from which we would be exempt by virtue of being a “controlled company.” Our Parent Company controls, directly orindirectly, a majority of the voting power of our issued and outstanding shares and is a controlled company within the meaning of the NYSEcorporate governance standards, entitled to certain limited corporate governance exemptions. Under these NYSE standards, a company of whichmore than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not tocomply with certain NYSE corporate governance requirements, including the requirements that:
● a majority of the board of directors consist of independent directors;
● the nominating and governance committee be composed entirely of independent directors with a written charter addressing thecommittee’s purpose and responsibilities;
● the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purposeand responsibilities; and
● there be an annual performance evaluation of the nominating and governance and compensation committees.
As a controlled company, we utilize these exemptions, including the exemption from the requirement to have a board of directorscomposed of a majority of independent directors. In addition, although we have adopted charters for our audit, compensation and nominating andgovernance committees, our compensation and nominating and governance committees are not expected to be composed of independent directors.
As a result of the foregoing exemptions, we can cease voluntary compliance at any time, and our shareholders may not have the sameprotections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely andaccurate financial statements or comply with applicable regulations could be impaired.
As a listed company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank WallStreet Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and NYSE. The requirements of these rules andregulations may further, increase our legal, accounting, and financial compliance costs and make some activities more difficult, time consuming andcostly.
The Sarbanes-Oxley Act requires, among other things that, as a listed company, our principal executive officer and principal financialofficer certify the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting. Any failure to maintaineffective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail tomeet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintaineffective internal control over financial reporting also could adversely affect the results of management evaluations and independent registeredpublic accounting firm audits of our internal control over financial reporting. Ineffective disclosure controls and procedures or ineffective internalcontrol over financial reporting could also cause investors to lose confidence in our reported financial information.
Table of Contents
Ardagh Group S.A.37
Holders generally will be subject to a 15% withholding tax on payment of dividends made on the Class A common shares under currentLuxembourg tax law.
Under current Luxembourg tax law, payments of dividends made on the Class A common shares generally are subject to a 15%Luxembourg withholding tax. Certain exemptions or reductions in the withholding tax may apply, but it will be up to the holders to claim anyavailable refunds from the Luxembourg tax authority. For more information on the taxation implications, see, “Item 10. Additional Information—Taxation”.
Risks Related to the Business Combination
A significant delay in consummating or a failure to complete the Business Combination could negatively impact the price of our Class Acommon shares, as well as our future business and financial results. Moreover, we are subject to contractual restrictions while the BusinessCombination is pending, and there can be no assurance that it will be completed.
The Business Combination Agreement contains a number of conditions that must be satisfied or waived prior to the completion of theBusiness Combination. We cannot assure you that all of the conditions to the Business Combination will be satisfied or waived. If the conditions tothe Business Combination are not satisfied or waived, we will be unable to complete the Business Combination.
Additionally, the Business Combination Agreement requires us to conduct the AMP Business in the ordinary course of business consistentwith past practice, subject to certain exceptions, and to refrain from taking certain actions without the prior written consent of GHV. Theserestrictions could adversely affect our ability to execute on certain of our business strategies, which could adversely affect the AMP Business.
If the Business Combination is not completed, our ongoing business may be adversely affected as follows: (i) we may experience negativereactions from the financial markets, including negative impacts on the market price of our Class A common shares; (ii) some of our time andresources, including management’s attention, will have been directed to the Business Combination instead of being directed to our own operationsand the pursuit of other opportunities that could have been beneficial to us; (iii) the manner in which customers, suppliers and other third partiesperceive us may be negatively impacted, which in turn could affect our ability to compete for business; and (iv) we may experience negativereactions from employees or employee departures. In addition, while the Business Combination is pending, uncertainty about the effects of theBusiness Combination on Ardagh Metal Packaging’s business, management team, employees, or third parties may have similar effects on us.
Certain events could have a negative impact on the price of Ardagh Metal Packaging’s shares, thereby reducing the value attributed to ourinvestment in Ardagh Metal Packaging.
Pursuant to the Subscription Agreements, Ardagh Metal Packaging has agreed to file a registration statement with the SEC registering theshares issued to the Subscribers within 30 days of the closing of the Business Combination to facilitate their ability to sell their Ardagh MetalPackaging shares in the public market. In addition, pursuant to the Registration Rights and Lock-Up Agreement (as defined in the BusinessCombination Agreement), following the expiration of a 180-day lock-up period, we and Gores Sponsor V LLC (the “GHV Sponsor”) have the rightto request Ardagh Metal Packaging to register their shares for purposes of effecting sales of those Ardagh Metal Packaging shares in the publicmarket. Future sales of the Ardagh Metal Packaging shares, including by the Subscribers, the GHV Sponsor or us, or the perception that sales maybe made by these shareholders, could significantly reduce the market price of the Ardagh Metal Packaging shares, and, accordingly, the valueattributed to our ongoing investment in Ardagh Metal Packaging. Further, even if none of these shareholders sell a large number of the Ardagh MetalPackaging shares into the market, their right to sell their Ardagh Metal Packaging shares as contemplated by these agreements may depress the priceof the Ardagh Metal Packaging shares.
Table of Contents
Ardagh Group S.A.38
In addition, following the completion of the Business Combination, there may not be a robust market for Ardagh Metal Packaging’s shares,which would adversely affect their liquidity and price. Furthermore, the price of Ardagh Metal Packaging’s shares may fluctuate significantly due tothe market’s reaction to the Business Combination and general market and economic conditions, or an active trading market for Ardagh MetalPackaging’s shares following the Business Combination may never develop or, if developed, may not be sustained. Any of these occurrences couldnegatively affect the value attributed to our continuing investment in Ardagh Metal Packaging.
Table of Contents
Ardagh Group S.A.39
Item 4. Information on the Company
A. History and development of the company
Ardagh Group traces its origins back to 1932 in Dublin, Ireland, when the Irish Glass Bottle Company was founded and listed on the IrishStock Exchange. The Company operated a single glass plant in Dublin, largely serving the domestic beverage and food customer base until 1998,when Yeoman International, led by the current Chairman and Chief Executive Officer and major shareholder, Paul Coulson, took an initial stake inArdagh, becoming Chairman later that year.
Since 1999, we have played a major role in the consolidation of the global metal and glass packaging industries, completing 23 acquisitionsand significantly increasing our scope, scale, and geographic presence. Acquisitions, divestments and investments in greenfield projects tostrengthen our position in selected segments have included the following material transactions:
● In 1999, we acquired Rockware PLC, from O-I Glass for approximately GBP 247 million, which established the Company as theleading glass packaging producer in the U.K. and Ireland;
● In 2007, we acquired Rexam PLC’s European glass packaging business for approximately €657 million, broadening our presenceacross Continental Europe;
● In 2010, we acquired Impress Group for approximately €1.7 billion, which diversified our presence into metal packaging;
● In 2012, we acquired Leone Industries Inc., a single plant glass packaging business in New Jersey, United States for approximately$220 million, representing our first expansion into the U.S. glass packaging market. We also acquired Anchor Glass for $880 million,the third largest producer of glass packaging in the United States, operating eight glass packaging plants;
● In 2014, we completed the acquisition of VNA, the second largest glass packaging producer in North America, with 13 manufacturingplants in the United States, for $1.5 billion. The VNA Acquisition expanded our glass packaging business in North America into newgeographies and end-use categories. We also divested six former Anchor Glass plants and ancillary assets as a condition of gainingregulatory approval for this acquisition;
● In 2015, we completed an investment of approximately $220 million in two new food can-making facilities in Roanoke, Virginia andReno, Nevada, as well as a significant expansion of our Conklin, New York, ends plant;
● In 2016, we acquired 22 plants required to be divested by Ball Corporation and Rexam PLC as a condition of Ball Corporation’sacquisition of Rexam PLC. This acquisition, for a total consideration of €2.7 billion, broadened our presence in metal packaging toinclude leading global beverage can market positions;
● In 2018, the construction of a greenfield production facility in Manaus, Brazil was completed, which supplies can ends to our canproduction facilities in Jacarei, Brazil and Alagoinhas, Brazil.
● In 2019, we combined our Food & Specialty Metal Packaging business with the business of Exal Corporation, controlled by theOntario Teachers’ Pension Plan Board, to form Trivium, a global leader in metal packaging. As consideration, Ardagh received a stakeof approximately 42% in Trivium and $2.6 billion in cash proceeds.
● In October 2020, the Group announced a $1.8 billion business growth investment program to grow the Metal Beverage Packaging($1.5 billion) and Glass Packaging business. In February 2021, the Group announced its decision to undertake additional investmentsincreasing the total amount of the business growth investment program to $2.1 billion, with a total $1.8 billion investment to grow theMetal Beverage Packaging business in the period from 2021 to 2024.
Table of Contents
Ardagh Group S.A.40
● In February 2021, the Group entered into the Business Combination Agreement with GHV, under which GHV will combine with theAMP business that will be held by Ardagh Metal Packaging to create an independent, pure-play beverage can business. Ardagh MetalPackaging also announced its intention to apply to list its shares on the NYSE.
The SEC maintains an internet site at www.sec.gov that contains reports and information statements and other information regardingregistrants like us that file electronically with the SEC.
The Company routinely posts important information on the Company website https://www.ardaghgroup.com/corporate/investors. Thiswebsite and the information contained therein or connected thereto shall not be deemed to be incorporated into this annual report.
B. Business Overview
We are a leading supplier of sustainable, innovative, value added rigid packaging solutions. Our products include metal beverage cans andglass containers primarily for beverage and food markets, which are characterized by stable, consumer driven demand. Our end use categoriesinclude beer, food, hard seltzers, wine, spirits, carbonated soft drinks, energy drinks, juices and sparkling waters. Our customers include a widevariety of leading consumer product companies which value our packaging products for their features, convenience and quality, as well as the enduser appeal they offer through design, innovation, functionality, premium association and brand promotion. With our significant invested capitalbase, supported by consistent levels of re-investment, our extensive technological capabilities and manufacturing know how, we believe we are wellpositioned to continue to meet the dynamic needs of our customers. We have mainly built our Company through strategic acquisitions and othercorporate transactions and have established leadership positions in large, attractive markets in beverage cans and glass containers. We have recentlyset out a significant 2021-2024 growth investment program, totalling $2.1 billion and comprising multiple projects in Metal Beverage Packaging andGlass Packaging to support our customers’ growth and to enhance our productivity.
We serve over 1,500 customers across approximately 90 countries, comprised of multi-national companies, large national and regionalcompanies and numerous local businesses. In our target regions of Europe, North America and Brazil, our customers include a wide variety of CPGs,which own some of the best known brands in the world. We have a stable customer base with long-standing relationships and approximately threequarters of our sales are generated under multi-year contracts, with the remainder largely subject to annual arrangements. A significant portion of oursales volumes are supplied under contracts which include input cost pass-through provisions, which help us deliver generally consistent margins.
We operate 56 production facilities in 12 countries and employ approximately 16,400 personnel. Our plant network includes 23 metalbeverage can production facilities and 33 glass production facilities. Our plants are generally located to serve our customers’ filling locations.Certain facilities may also be dedicated to specific end-use categories, enhancing product-specific expertise and generating benefits of scale andproduction efficiency. Significant capital has been invested in our extensive network of long-lived production facilities, which, together with ourskilled workforce and related manufacturing process know-how, supports our competitive positions.
We are committed to market-leading innovation and product development and maintain dedicated innovation, development and engineeringcenters in the United States and Europe to support these efforts. These facilities focus on three main areas: (i) innovations that provide enhancedproduct design, differentiation and user friendliness for our customers and end-use consumers; (ii) innovations that reduce input costs to generatecost savings for both our customers and us (lightweighting); and (iii) developments to meet evolving product safety standards and regulations.
Table of Contents
Ardagh Group S.A.41
Sustainability
Sustainability is a core pillar of our business, recognizing that long-term economic viability is dependent upon having a sustainablebusiness model.
Our sustainability focus is centered on minimizing the impact of our operations and products on the environment, promoting a healthy, safeand inclusive workplace for our employees and contributing positively to the communities in which we operate. We have established a BoardSustainability Committee to oversee our sustainability initiatives, supported by our Group sustainability function.
In pursuance of our environmental objective we seek to promote recycling of our products, enhance our product design and targetcontinuous improvement in our processes. Metal and glass are both infinitely recyclable, without any degradation in quality, differentiating themfrom many other packaging substrates. We expect these attributes to continue to enhance our products’ appeal, as consumer awareness ofsustainability and the environment grows.
Recycling rates for aluminum beverage cans are relatively high in the geographies in which we operate, estimated at 56% in the UnitedStates, 76% in Europe and 98% in Brazil as of 2018-2019. The use of recycled aluminum reduces energy consumption by over 90% compared withthe alternative of producing aluminum cans from its virgin source.
In glass packaging, we aim to maximize the use of recycled glass, or cullet, in our production process, thereby reducing energyconsumption and emissions. In Europe, the recycling rate for glass packaging is 76% with up to 90% used in some of our furnaces. Recycling ratesfor glass packaging in the United States are significantly lower at 34%. We are committed to working, including with industry associations, topromote recycling rates in the regions in which we operate. Feve, the European glass federation, has targeted an increase in glass recycling rates inthe European Union to 90% by 2030, through its Close the Glass Loop initiative. In addition, we have investments and partnerships in Europe toenhance our supply of cullet and are seeking to increase supply in the United States.
We continuously aim to reduce the material and resource usage in the manufacture of our products, through lightweighting of our metalbeverage cans and glass containers. In addition, we have established specialist groups across our business and promote best practice sharing, in orderto to drive continuous improvement in our processes.
We have established targets for reductions in energy consumption, emissions, water usage, waste and other metrics and report on progresstowards their achievement in our Sustainability Reports (available at www.ardaghgroup.com) on progress towards their achievement. In 2020, werevised our sustainability strategy and set new targets, including a 27% reduction in our carbon emissions by 2030. These will be achieved through awide range of initiatives, including (i) greater usage of renewable energy, including the installation of solar projects in multiple production facilities(ii) promoting the use of recycled content (iii) pursuing energy-efficiency projects across our plant network (iv) procuring electricity from renewablesources (v) sourcing sustainable inputs from our supplier base and (vi) minimizing VOC and NOx emissions.
We are playing a leading role in Feve’s “Furnace of the Future” project to build the world’s first large-scale hybrid oxy-fuel furnace to runon 80% renewable electricity at one of our glass production facilities in Europe. This technological initiative, on which we are collaborating, has thepotential to significantly de-carbonise the glass production process over the long term.
We have committed to adopt science-based sustainability targets through the Science-Based Targets initiative, whereby we will set specificgoals for reducing greenhouse gas emissions in alignment with the Paris Agreement 2015, under which governments mutually pledged to limit theincrease in global temperatures to 1.5 degrees Celsius.
We are a signatory to the United National Global Compact and our strategy is linked to specific development goals, including Affordableand Clean Energy (#7), Responsible Consumption and Production (#12), Climate Action (#13), Partnerships for the Goals (#17), Good Health andWellbeing (#3), Quality Education (#4) and Gender Equality (#5).
Table of Contents
Ardagh Group S.A.42
We have been awarded Leadership Class ratings by CDP (formally the Carbon Disclosure Project), gaining A- in respect of climate changeand A- in respect of water management.
We aim to ensure a safe and healthy workplace for all of our employees by embedding a culture of safety awareness. Broad principles aresupported by detailed policies and procedures to minimize accidents and injuries through continuous training and education. We are committed topromoting diversity and inclusion in the workplace and are establishing diversity and inclusion councils across our business units.
We are a significant local employer and seek to play a positive role in our communities. This can involve promoting educational linkageswith the community, through internships and apprenticeships, engagement with schools in relation to environmental awareness and recycling, and bypromoting and supporting initiatives to help local charities and good causes.
Development
Our leading global positions have been established through acquisitions, with 23 successful acquisitions completed over the past 22 years.In addition to organic and acquisitive growth initiatives, we have also expanded our footprint through strategic investments in new capacity tosupport our customers’ growth, including most recently a new beverage can ends facility in Manaus, Brazil, completed in 2018 and in December2020 we acquired a large brownfield building and site in Huron, Ohio, which we intend to convert into a new beverage can and ends plant,commencing production in late-2021. These initiatives, as well as other acquisitions and investments over many years, in existing and adjacent enduse categories, have increased our scale and diversification and provided opportunities to grow our business with both existing and new customers.
We have recently set out a significant 2021-2024 growth investment program, totalling approximately $2.1 billion and comprising multipleprojects in Metal Beverage Packaging and Glass Packaging to support our customers’ growth and to enhance our productivity.
Our profit from continuing operations for the year ended December 31, 2020 was $13 million. Adjusted EBITDA and net cash fromoperating activities from continuing operations for the year ended December 31, 2020, were $1,155 million and $692 million, respectively.
The following chart illustrates the breakdown of our revenue by destination for the year ended December 31, 2020:
Table of Contents
Ardagh Group S.A.43
Our Industry
The global packaging industry is a large, consumer-driven industry with stable growth characteristics. We operate in the metal beverage canand glass container sectors and our target regions are Europe, North America and Brazil. Metal beverage cans and glass containers are attractive tobrand owners, as their strength and rigidity allows them to be filled at high speeds and easily transported, resulting in further efficiencies through thesupply chain. The ability to customize and differentiate products supplied in metal beverage cans and glass containers, through innovative design,shaping and printing, also appeals to our customers. Both the metal and the glass container markets have been marked by progressive lightweighting,which has generated material savings in input costs and logistics, while enhancing the consumer experience. This reduction in raw material andenergy usage in the manufacturing process has also increased the appeal to end-users, who are increasingly focused on sustainability.
Our Competitive Strengths
● Leader in Rigid Packaging. We believe we are one of the leading suppliers of metal beverage can and glass packaging solutions,capable of supplying multi-national beverage and food producers in our target markets. We believe that we are the #2 supplier of metalbeverage cans by value in Europe. In addition, we believe that we are the #3 supplier of metal beverage cans by value in the UnitedStates and Brazil. We believe that we are the #2 supplier of glass packaging by value globally. In the United States, we believe we arethe #2 supplier of glass packaging by value, serving the beer, food, wine, spirits and other beverage sectors. In addition, we believe weare the #3 supplier of glass packaging by value in Europe and the #1 supplier of glass packaging by value in Northern Europe,Germany, the United Kingdom and the Nordic region, serving the beer, food, wine, spirits, non-alcoholic beverage and pharmaceuticalend-use categories. We believe the combination of our extensive footprint, proximity to customers, efficient manufacturing and highlevel of customer service underpins our leading positions.
● Long-term relationships with diverse blue-chip customer base. We supply some of the world’s best-known brands with innovativepackaging solutions and have been recognized with numerous industry awards. We have longstanding relationships with many of ourmajor customers, which include leading multinational, large national and regional beverage and food companies, as well as numerouslocal companies. Some of our major customers include AB InBev, Britvic, Coca-Cola, Diageo, Heineken, Monster Beverage, PepsiCoand Grupo Petrópolis, among others. In recent years, in North America, in beverage cans, we have significantly diversified ourcustomer base. Approximately three-quarters of our revenues are derived from multi-year contracts of between two and ten years, mostof which include input cost pass-through provisions.
● Focus on stable economies and generally growing product demand. We derive over 93% of our revenues in Europe and NorthAmerica, mature economies characterized by generally predictable consumer spending and relatively low cyclicality, with the balancelargely derived from the Brazilian beverage market. Furthermore, over 98% of our revenues are generated from the stable beverage andfood end-use categories, including beer, wine, spirits, non-alcoholic and other beverages, as well as vegetables and sauces. In Europe,North America and Brazil, demand for metal beverage cans has accelerated in recent years, principally driven by new beverage productinnovations, increased awareness by consumers of sustainability and, notably in Brazil pack mix shifts. Demand for glass packaging inEurope has generally shown modest volume growth, while glass packaging demand in North America has declined modestly.
● Highly contracted revenue base. Approximately three-quarters of our sales are made pursuant to multi-year contracts, with theremainder largely pursuant to annual arrangements. A significant proportion of our sales volumes are supplied under contracts whichinclude mechanisms that help to protect us from earnings volatility related to input costs, including aluminum and energy. Specifically,such arrangements include (i) multi-year contracts that include input cost pass-through and/or margin maintenance provisions and (ii)one-year contracts that allow us to negotiate pricing levels for our products on an annual basis at the same time that we determine ourinput costs for the relevant year.
Table of Contents
Ardagh Group S.A.44
● Well-invested asset base with significant scale and operational excellence. We operate 56 strategically-located production facilitiesin 12 countries, enabling us to efficiently serve our customers with high quality and innovative products and services across multiplegeographies. We pursue continuous improvement in our facilities by applying our lean manufacturing techniques (‘‘Lean’’). OurOperational Excellence Group and Central Technical Services group in Glass Packaging and our engineering teams in Metal BeveragePackaging supplement our Lean initiatives and promote a culture of consistently pursuing excellence through standardizing and sharingbest practices across our network of plants. We believe the total value proposition we offer our customers, in the form of geographicreach, customer service, product quality, reliability and innovation will enable us to continue to drive growth and profitability. Inaddition, we have announced a business growth investment program involving total growth expenditure of $2.1 billion from 2021 to2024.
● Significant and growing specialty can capacity. We have a significant presence in the specialty can segment, which has grown at afaster rate than the standard can segment in recent years and which typically offers more attractive margins. In 2020, specialty cansrepresented 43% of our total can shipments, with strong representation in both the Europe and Americas segments. Specialty canexpansion represents approximately 80% of the capacity expansion under the business growth investment program in our beverage canbusiness, following which we expect specialty cans will represent approximately 55% to 60% of our total beverage can capacity.
● Attractive presence in faster-growing end-use categories. Different beverage categories are experiencing different rates of growth inthe markets we serve. We have targeted growth in faster growing end-use categories of the beverage markets we serve, including hardseltzers and sparkling waters in North America and beer in Europe and in Brazil, while reducing our exposure to other end-usecategories. We believe the mix of end-use categories we serve positions us well to continue to grow our business over the mediumterm.
● Infinitely recyclable products respond to growing sustainability awareness. Both metal and glass are permanent materials and areinfinitely recyclable without loss of quality. Metal beverage can recycling rates are currently 76% in Europe, 56% in the United Statesand 98% in Brazil in 2018-2019. In glass packaging, we aim to maximize the use of recycled glass, or cullet, in our production process,thereby reducing energy consumption and emissions. In Europe, the recycling rate for glass packaging is 76% with up to 90% used insome of our furnaces. We believe that an increasing awareness of the benefits of sustainable packaging in many of our markets willfavor pack mix shifts to metal beverage cans and glass containers in the future. We also believe that legislative and other measuresdesigned to increase recycling rates will favor our substrates in the future.
● Technical leadership and innovation. We have advanced technical and manufacturing capabilities in both metal beverage and glasspackaging, including research and development and engineering centers in the United States and Europe, principally based in ElkGrove, Illinois, and Bonn, Germany. In addition, our subsidiary, Heye International, is a leading provider of engineering solutions tothe glass container industry globally, with significant proprietary know-how and expertise. We continually seek to improve the qualityof our products and processes, through focused investment in new technology. These capabilities have enabled us to develop productand process innovations to meet the dynamic needs of our customers. Our innovations have also been recognized with numerousindustry awards and accreditations. We have significant expertise in the production of value-added metal beverage cans, principallyaluminum, with features such as high-quality graphic designs, colored tabs and tactile finishes. We produce metal beverage cans in arange of sizes and have been a leader in the introduction of lighter aluminum cans. In Glass Packaging, our focus has been on productdevelopment, process improvement and cost reduction, which has resulted in progressive advances such as container lightweightingand the increased use of cullet in the production process. This has delivered significant environmental benefits by reducing rawmaterials and energy usage, as well as lower emissions.
Table of Contents
Ardagh Group S.A.45
● Proven track record of generating attractive growth through successful acquisitions and business optimization. We have grown ourbusiness through a combination of acquisitions, organic expansion, strategic investment and continuous improvement, which hassignificantly increased the size and scope of our Company and the breadth of our product offering, including increasing our exposure tofaster growing categories of the beverage market, as well as diversifying our customer base, notably in North America. We havesuccessfully integrated these acquired businesses and realized or exceeded targeted cost synergies. We believe we can continue tocreate value for shareholders through strategic transactions, including acquisitions and business combinations, ongoing optimizationand strategic investments. We are focused on continuous improvement across our businesses to optimize costs and drive efficiencies.We expect our principal focus to be on growth through organic expansion and strategic development and investment with new andexisting customers, including through the announced business growth investment program. We believe that we can maintain and growattractive margins through business mix optimization, growth with new and existing customers, efficiency gains, cost reduction,working capital optimization and disciplined capital allocation.
● Experienced management team with a proven track record and high degree of shareholder alignment. Members of our managementteam with extensive experience in the consumer packaging industry have demonstrated their ability to manage costs, adapt to changingmarket conditions, undertake strategic investments and acquire and integrate new businesses, thereby driving significant value creation.Our board of directors, led by our Chairman and Chief Executive Officer, has a high degree of indirect ownership in our Company,which we believe promotes efficient capital allocation decisions and results in strong shareholder alignment and commitment to furthershareholder value creation.
Our Business Strategy
Our principal objective remains to increase shareholder value by achieving growth in Adjusted EBITDA and cash generation. We aim toachieve this objective through organically growing our business, but will also continue to evaluate other acquisitions and strategic opportunities toenhance shareholder value. We pursue these objectives through the following strategies:
● Grow Adjusted EBITDA and cash flow. We seek to leverage our extensive footprint, proximity to customers, efficient manufacturingand high level of customer service to grow revenue with new and existing customers, improve our productivity, and reduce our costs.To increase Adjusted EBITDA, we will continue to take actions with respect to our assets and invest in business growth opportunities,in line with our stringent investment criteria. To increase cash generation, we actively manage our working capital and capitalexpenditures. We have announced a business growth investment program that will see $2.1 billion invested in our business in theperiod from 2021 to 2024, the implementation of which is expected to grow our revenue, Adjusted EBITDA and cash flow generation.
● Continue to enhance product mix and profitability. We have enhanced our product mix over the years by replacing lower marginbusiness with higher margin business and by pursuing growth opportunities in new and emerging end-use categories of the beverageand food markets. We will continue to develop long-term partnerships with existing and new customers, including new and emerginggrowth customers, and selectively pursue such opportunities that will grow our business and improve our overall profitability. We areinvesting in significantly growing our specialty can mix in our beverage can business and our investments will be supported by long-term customer contracts and commitments.
● Apply leading process technology and technical expertise. We intend to continue increasing productivity through the deployment ofleading technology (including our in-house engineering, innovation and design capabilities), and development and dissemination ofbest practices and know-how across our operations.
Table of Contents
Ardagh Group S.A.46
● Emphasize operational excellence and optimize manufacturing base. In managing our businesses, we seek to improve our efficiency,control our costs and preserve and expand our margins. We aim to consistently reduce total costs through implementing operationalefficiencies, promoting continuous improvement and investing to enhance our production capacity. We will continue to take actions toenhance efficiency through continuous improvement, best practice sharing and investment, enabling us to serve our existing and newcustomers’ exacting requirements for sustainable packaging.
● Enhance our environmental and social sustainability impact. We will continue to improve the sustainability profile of our business.In 2020, the Group updated its sustainability targets, including a 27% reduction in the Group’s carbon emissions by 2030, in addition tocommitting to adoption of science-based targets through the Science-Based Targets initiative. We seek to ensure that we meet theevolving requirements of end consumers and our customers, while creating a safe and inclusive environment for our employees,contributing positively to the communities in which we operate, improving our efficiency, controlling our costs and preserving andexpanding our margins while at the same time growing our revenue, Adjusted EBITDA and free cash flow generation.
● Evaluate and pursue acquisitions and other strategic opportunities. We have achieved our current market positions by selectivelypursuing acquisition and other strategic opportunities. Our principal near and medium term focus is to organically grow our businessthrough the implementation of the business growth investment program from 2021 – 2024 to support our customers’ growth in eachregion. We will continue to evaluate and pursue acquisition and other strategic opportunities, to grow with existing or new customers,including in new markets that offer attractive risk-adjusted returns, in line with our stringent investment criteria and focus onenhancing shareholder value.
Our Divisions
Today, we manage our business in two divisions, Metal Beverage Packaging and Glass Packaging. The following charts illustrate thebreakdown of our revenue and Adjusted EBITDA for the year ended December 31, 2020:
We are organized into four operating and reportable segments, Europe and Americas in Metal Beverage Packaging, and Europe and NorthAmerica in Glass Packaging. The Group changed the composition of its operating and reporting segments following the disposal of its Food &Specialty Metal Packaging business which completed on October 31, 2019. Adjusted EBITDA is the performance measure used to manage andassess performance of our reportable segments.
Table of Contents
Ardagh Group S.A.47
Metal Beverage Packaging
We are one of the leading suppliers of consumer metal beverage packaging in the world. We believe that we hold the #2 or #3 marketpositions in the beverage can industry in Europe, the United States and Brazil.
Metal Beverage Packaging sales represented approximately 51% of our total revenues in 2020. Revenues and Adjusted EBITDA for MetalBeverage Packaging were $3,451 million and $545 million, respectively. For a discussion of the impact of seasonality on the Metal BeveragePackaging division, see “Item 5.—Operating and Financial Review and Prospects”.
The global beverage can industry is a large, consumer-driven industry with attractive growth characteristics. Our end‑use categories includebeer, carbonated soft drinks, energy drinks, hard seltzers, juices, pre-mixed cocktails, teas, sparkling waters and wine. Our customers include a widevariety of leading beverage producers, which value our packaging products for their convenience and quality, as well as the end‑user appeal theyoffer through design, innovation and brand promotion. With our significant invested capital base, supported by consistent levels of re-investment,our extensive technical capabilities and manufacturing know‑how, we believe we are well‑positioned to continue to meet the dynamic needs of ourglobal customers.
Within the $117 billion global metal packaging industry, the metal can packaging market is comprised of beverage cans (50%), food cans(28%), aerosol cans (5%) and other cans (17%), according to a October 2020 report from Smithers Pira, a leading independent market research firmwith extensive specialized experience in the packaging, paper and print industries. We compete in the beverage can sector of the consumer metalpackaging industry. We estimate the beverage can sector revenues to be approximately $33 billion based on sales as of 2019 with more than 360billion beverage cans produced globally. Because the consumer metal beverage packaging industry primarily supplies packaging for food, beverageand other basic needs, it is considered to be a relatively stable market sector that is less sensitive to economic cycles than many other industries.
Manufacturing and Production
As of December 31, 2020, we operated 23 production facilities in 9 countries and had approximately 4,900 employees. Our plants arecurrently located in 7 European countries, as well as in Brazil and the United States.
The following table summarizes Metal Beverage Packaging’s principal production facilities as of December 31, 2020.
Location
Number of Production
FacilitiesUnited States (2) 8Germany 4Brazil 3United Kingdom 3Other European countries(1) 5
23
(1) One facility in each of Austria, France, The Netherlands, Poland and Spain.(2) In December 2020, we acquired a facility in Huron, Ohio, which is under development but not yet in operation. This facility is not reflected in the number of
production facilities above.
Table of Contents
Ardagh Group S.A.48
Industry Overview
We operate in the beverage can segment of the consumer metal packaging industry.
The beverage can sector is growing in each of Europe, North America and Brazil. In each of these markets demand for metal beverage canshas accelerated in recent years, principally driven by new beverage product innovations, increased awareness by consumers of sustainability and,notably in Brazil pack mix shifts.. In addition, the convenience of filling, transporting and stocking beverage cans, compared with alternativesubstrates are believed to be contributing to this growth. Growth in unit volumes of specialty beverage cans has exceeded growth in standardbeverage cans, thereby increasing specialty can penetration, a trend that is expected to continue.
We believe the purchasing decisions of retail consumers are significantly influenced by packaging. Consumer product manufacturers andmarketers are increasingly using packaging to position their products in the market and differentiate them from alternative products. A growingawareness of sustainability issues among consumers, as well as potential regulatory or legislative changes in this area, are also expected to influencefuture packaging decisions by consumer product manufacturers. The development and production of premium, differentiated packaging productswith additional value-added features require a higher level of design capabilities, manufacturing and process know-how and quality control than formore standardized products.
Customers
We operate production facilities in Europe, the United States and Brazil, and we sell metal beverage cans to multinational, regional andnational customers in these regions. We supply leading manufacturers in each of the markets we serve, including AB InBev, Britvic, Coca-Cola,Diageo, Heineken, Mark Anthony Brands, Monster Beverage, National Beverage Company, PepsiCo and Grupo Petrópolis, among others.
The top ten Ardagh Metal Packaging customers represented approximately 64% of our revenue in 2020. We estimate that over 80% of ourrevenue is backed by multi-year supply agreements, ranging from two to seven years in duration. These contracts generally provide for the pass-through of metal price fluctuations and, in most cases, most of variable cost movements, while others have tolling arrangements whereby customersarrange for the procurement of metal themselves. In addition, within multi-year relationships, both parties can work together to streamline theproduct, service and supply process, leading to significant cost reductions and improvements in product and service, with benefits arising to bothparties. Wherever possible, we seek to enter into multi-year supply agreements with our customers. In other cases, sales are made under commercialsupply agreements, typically of one-year’s duration, with prices based on expected purchase volumes.
Competitors
Our principal competitors in metal beverage packaging include Ball Corporation, Crown Holdings, and Can Pack.
Raw Materials and Suppliers
The principal raw materials used in Metal Beverage Packaging are aluminum, steel, coatings and lining compounds. Over 95% of our metalraw material spend in 2020 related to aluminum. Our major aluminum suppliers include Constellium, Hydro, Novelis and Tri-Arrows.
We continuously seek to minimize the price of raw materials and reduce exposure to price movements in a number of ways, including thefollowing:
● harnessing the scale of our global metal purchasing requirements, to achieve better raw materials pricing;
Table of Contents
Ardagh Group S.A.49
● entering into variable-priced pass-through contracts with customers, whereby selling prices are indexed to the price of the underlyingraw materials;
● maintaining the focus on metal content reduction;
● continuing the process of reducing spoilage and waste in manufacturing;
● rationalizing the number of both specifications and suppliers; and
● hedging the price of aluminum ingot and the related euro/U.S. dollar exposure.
Aluminum is typically purchased under three-year contracts, with prices that are fixed in advance. Despite an increase in the level ofaluminum production being targeted to new end-use applications, including automotive and aerospace, we believe that adequate quantities of therelevant grades of packaging aluminum will continue to be available from various producers and that we are not overly dependent upon any singlesupplier. Some of our aluminum requirements are subject to tolling arrangements with our customers, whereby risk and responsibility for theprocurement of aluminum is managed by the customer.
Distribution
We use various freight and haulage contractors to make deliveries to customer sites or warehousing facilities. In some cases, customersmake their own delivery arrangements and therefore may purchase from us on an ex-works basis. Warehousing facilities are primarily situated at ourmanufacturing facilities; however, in some regions, networks of externally-rented warehouses at strategic third-party locations, close to majorcustomers’ filling operations are used.
Innovation, Research and Development
The majority of Metal Beverage Packaging’s innovation, development and engineering activities are primarily concentrated at our regionaltechnical center in Elk Grove, Illinois and at our research facility in Bonn, Germany. These centers focus on identifying and serving the existing andpotential needs of customers, including the achievement of cost reductions, particularly metal content reduction, and meeting new and anticipatedlegislative requirements, as well as providing technology, engineering and support services to our product facilities and customers.
Metal Beverage Packaging currently holds and maintains a number of patent families, filed in several jurisdictions and covering a range ofdifferent products.
Glass Packaging
We manufacture both proprietary and non-proprietary glass containers for a variety of end-use categories, mainly beverage and food. Ourproprietary products are customized to the exact specifications of our customers and play an important role in their branding strategies. Our non-proprietary products deliver consistent performance and product differentiation through value-added decoration, including embossing, coating,printing and pressure-sensitive labeling. Our product offerings and continuing focus on operational excellence have enabled us to meet and exceedour customers’ requirements and consistently generate margins in Glass Packaging that compare well with other large competitors in the sector.
Glass Packaging revenues represented 49% of our total revenues in 2020. Revenues and Adjusted EBITDA for Glass Packaging were$3,280 million and $610 million, respectively. For a discussion of the impact of seasonality on the Glass Packaging division, see “Item 5.—Operating and Financial Review Prospects”.
We believe we are the #1 supplier of glass packaging in Northern Europe by market share and the #3 supplier in Europe overall by marketshare, as well as the #2 supplier in the U.S. market by market share.
Table of Contents
Ardagh Group S.A.50
Products and Services
In addition to the manufacturing of proprietary and non-proprietary glass containers, Glass Packaging includes our glass engineeringbusiness, Heye International, which designs and supplies glass packaging machinery and spare parts for existing glass packaging machinery. We alsoprovide technical assistance to third-party users of our equipment and licensees of our technology. For the 2020 fiscal year, these activitiesrepresented approximately 2% of Glass Packaging’s revenues.
Manufacturing and Production
As of December 31, 2020, we operated 33 glass plants with 68 glass furnaces and had approximately 11,500 employees. We have glassmanufacturing facilities in Denmark, Germany, Italy, the Netherlands, Poland, Sweden, the United Kingdom and the United States. We believe thatour facilities are well maintained and that we generally have sufficient capacity to satisfy current and expected demand. We own all of ourmanufacturing facilities, some of which are subject to finance leases or similar financial arrangements. Certain of our warehousing facilities areleased from third parties.
The following table summarizes Glass Packaging’s principal production facilities as of December 31, 2020.
Location
Number of Production
FacilitiesUnited States 13Germany 8Netherlands 2Poland 3United Kingdom 4Other European countries(1) 3
33
(1) Denmark, Italy and Sweden.
Industry Overview
Glass packaging is utilized in a wide range of end-use categories in the beverage and food market, as well as in applications such aspharmaceuticals, cosmetics and personal care. We principally operate in the beverage and food end-use categories and benefit from the premiumappeal of glass packaging to spirits, craft beer, wine and other brand owners, as higher levels of design and differentiation support end-user brandperception and loyalty.
We believe the purchasing decisions of retail consumers are significantly influenced by packaging. Consumer product manufacturers andmarketers are increasingly using packaging as a means to position their products in the market and differentiate them on retailers’ shelves. Thedevelopment and production of premium, specialized packaging products with a combination of value-added features requires a higher level ofdesign capabilities, manufacturing and process know-how and quality control than for more standardized products. The glass packaging industry hascontinued to produce advances in light-weighting technology and energy efficiency over many years, delivering supply chain benefits, as well asreducing raw material and energy usage in the manufacturing process, thereby increasing the appeal to end-users, who are increasingly focused onsustainability.
Customers
In certain end-use categories, such as beer, wine, spirits and non-alcoholic beverages, revenues are relatively concentrated among keycustomers with whom we have strong, long-term relationships, mirroring the recent consolidation in these end-use categories. Our top ten customersin Glass Packaging accounted for 38% of total glass revenues in 2020.
Table of Contents
Ardagh Group S.A.51
Some of our largest and longest-standing customers include AB InBev, Bacardi, Carlsberg, Coca-Cola, Constellation Brands, Diageo, Heineken,J.M. Smucker, The Kraft Heinz Company, PepsiCo, Pernod Ricard, Sazerac, and Treehouse Foods.
Glass packaging revenues are made pursuant to multi-year supply arrangements, a majority of which allow us to recover input cost inflationon some or all of our cost base. Our remaining revenues are subject to shorter arrangements, largely annual, which have provided, and which weexpect will continue to provide, the basis for long-term partnership with our customers. These customer arrangements are typically renegotiatedannually (in terms of price and expected volume) and typically we have been able to recover the majority of input cost inflation which has impactedour cost base, as demonstrated by the generally consistent margins we have generated in the past, despite occasional volatility in certain input costssuch as energy and freight and logistics costs.
Competitors
Our principal competitors in glass packaging include Anchor Glass and O-I Glass in North America and O-I Glass, Verallia and Vidrala inEurope.
Energy, Raw Materials and Suppliers
We use natural gas, electricity, oil and oxygen to fuel our furnaces. We have developed substantial backup systems, which protect ouroperations in the case of an interruption of our primary energy sources. We have multiple energy suppliers in both Europe and the United States,with contractual pricing arrangements typically linked to the relevant market index. We seek to mitigate the inherent risk in energy price fluctuationsthrough a combination of contractual customer pass-through agreements, fixed-price procurement contracts, index tracking procurement contractsand hedging.
We have developed an active hedging strategy. In Europe, we typically hedge in small tranches and our policy is to hedge approximately70% of our energy requirements before the beginning of the following year. In North America, customer contracts are almost exclusively multi-yearand provide for the pass-through of movements in energy costs. Consequently, in North America our purchasing strategy for energy mirrors ourcustomer contracts.
The primary raw materials used in our glass manufacturing operations are cullet, sand, soda ash and limestone. We have several countrysuppliers of cullet and a number of global and regional suppliers of soda ash. We seek to optimize the use of recycled glass in our production processas this enables the other raw materials to melt at lower temperatures, thereby lowering our energy costs and carbon emissions and prolonging furnacelife.
Distribution
We use various freight and haulage contractors to make deliveries to customer sites or warehousing facilities. In some cases, customersmake their own delivery arrangements and therefore may purchase from us on an ex-works basis. Warehousing facilities are primarily situated at ourmanufacturing facilities; however, in some regions, we use networks of externally-rented warehouses at strategic third-party locations, close to majorcustomers’ filling operations.
Intellectual Property and Innovation, Development and Engineering
Heye International has an extensive portfolio of patents covering the design of equipment for the manufacture of glass packaging. It alsohas substantial proprietary knowledge of the technology and processes involved in the production of glass packaging, based on its history of morethan 40 years as a leading supplier of engineering solutions to the industry globally. It has entered into a large number of agreements to providetechnical assistance and technology support to glass packaging manufacturers for which it receives annual fees.
We support an innovation, development and design effort, particularly at Heye International, which we believe is important to our ability tocompete effectively. We are a member of glass research associations and other organizations that are engaged in initiatives aimed at improving themanufacturing processes and the quality and design of products, while continuing to meet our environmental responsibilities. In addition, we havethree glass engineering facilities in
Table of Contents
Ardagh Group S.A.52
Europe and the United States and we operate one of the largest in-house decoration facilities in the European glass packaging industry.
Trivium Joint Venture
We hold a stake of approximately 42% in Trivium. Trivium is a leading supplier of innovative, value-added, infinitely-recyclable metalpackaging solutions with revenues of approximately $2.7 billion. Its products principally comprise metal packaging in the form of cans and aerosolcontainers, serving a broad range of end-use categories, including food, seafood, pet food and nutrition, as well as beauty and personal care.Trivium’s serves over 1,300 customers across more than 70 countries, comprised of multi-national companies, large national and regional companiesand small local businesses. In its target regions of Europe, North America and South America, its customers include a wide variety of consumerpackaged goods companies, which own some of the best-known brands in the world. Trivium has 53 facilities, located in 20 countries, and hasapproximately 7,700 employees.
In connection with the formation of Trivium, Ardagh entered into a shareholders agreement with Element Holdings II L.P., an entitycontrolled by Ontario Teachers’ Pension Plan Board, (the “JV Partner”) and Trivium (the “Trivium Shareholders Agreement”), containingprovisions relating to the governance of Trivium, including (i) the formation of a nine person supervisory board (including up to five members to bedesignated or nominated by the JV Partner and up to four members to be designated or nominated by Ardagh) and (ii) the formation of amanagement board. The Trivium Shareholders Agreement reserves certain matters that require the approval of shareholders holding sharesconstituting at least 70% of the then-outstanding shares of Trivium, including its annual budget and five year business plan, material acquisitions ordispositions, mergers, demergers or consolidations, issuances or repurchases of its shares, incurrence of indebtedness over a certain amount,incurrence of unbudgeted capital expenditure (over a certain limit), related party transactions, distributions or dividends, the adoption of amanagement incentive plan, or a change in accounting policies, the adoption of the audited financial statements or the appointment or termination ofmembers of the senior management team.
The Trivium Shareholders Agreement contains a non-competition covenant providing that the JV Partner and Ardagh will not, directly orindirectly, engage in the development, manufacture, marketing or sale of metal food or specialty cans (including aerosol cans), in each case asdeveloped, manufactured, marketed or sold by Trivium as of the date of the Trivium Shareholders Agreement), with certain limited exceptions;provided, that Ardagh is permitted to develop, manufacture, market or sell containers for the beverage market, including aluminum bottles.
The Trivium Shareholders Agreement contains customary non-solicitation covenants restricting the JV Partner and Ardagh from solicitingor hiring individuals who are employed by the other party or its affiliates. The Trivium Shareholders Agreement also contains provisions restrictingthe transfer of Trivium shares prior to an initial public offering of Trivium, including granting the non-transferring shareholder “tag-along” rights oncustomary terms. In addition, the Trivium Shareholders Agreement grants the JV Partner and Ardagh certain additional rights with respect to theirTrivium shares, including pre-emptive rights, registration rights, certain liquidity rights, and purchase rights in the event Ardagh or the JV Partnerundergoes a change of control.
Environmental, Health and Safety and Product Safety Regulation
Our operations and properties are regulated under a wide range of laws, ordinances and regulations and other legal requirements concerningthe environment, health and safety and product safety in each jurisdiction in which we operate. We believe that our manufacturing facilities are incompliance, in all material respects, with these laws and regulations.
The principal environmental issues we face include the environmental impact of the disposal of water used in our production processes,generation and disposal of waste, the receiving, use and storage of hazardous and non hazardous materials, the potential contamination andsubsequent remediation of land, surface water and groundwater arising from our operations and the impact on air quality through gas and particleemissions, including the emission of greenhouse gases.
Table of Contents
Ardagh Group S.A.53
Our substantial operations in the EU are subject to, among additional requirements, the requirements of the IED which requires thatoperators of industrial installations, including glass manufacturing and can making installations, take into account the whole environmentalperformance of the installation and obtain and maintain compliance with a permit, which sets emission limit values that are based on best availabletechniques.
Our EU glass production facilities are also regulated under the EU Emissions Trading Scheme, now in its fourth phase, which runs toDecember 31, 2030. Under this regime, the European Commission sets emission caps for greenhouse gases for all installations covered by thescheme, which are then implemented by the EU member states. Installations that emit less than their greenhouse gas emission cap can sell emissionallowances on the open market and installations that exceed their emission cap are required to buy emission allowances, the cost of which hasincreased in recent years and may increase further in the future, and are penalized if they are unable to surrender the required amount of allowancesat the end of each trading year. California has enacted a similar greenhouse gas reduction scheme that works on a cap and trade basis and that appliesto our manufacturing operations in the state, requiring us to purchase offsets against our greenhouse gas emissions. Other states where we haveoperations, such as Washington, are expected to implement similar programs. In addition, the EPA has also begun to regulate certain greenhouse gasemissions under the Clean Air Act.
Furthermore, the EU Directive on environmental liability with regard to the prevention and remedying of environmental damage aims tomake those who cause damage to the environment (specifically damage to habitats and species protected by EU law, damage to water resources andland contamination which presents a threat to human health) financially responsible for its remediation. It requires operators of industrial premises(including those which hold a permit governed by the IED) to take preventive measures to avoid environmental damage, inform the regulators whensuch damage has or may occur and to remediate contamination.
Our U.S. operations are also subject to stringent and complex U.S. federal, state and local laws and regulations relating to environmentalprotection, including the discharge of materials into the environment, health and safety and product safety including, but not limited to: the U.S.federal Clean Air Act, the U.S. federal Water Pollution Control Act of 1972, the U.S. federal Resource Conservation and Recovery Act and theComprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”). These laws and regulations may, among otherthings (i) require obtaining permits to conduct industrial operations; (ii) restrict the types and quantities and concentration of various substances thatcan be released into the environment; (iii) result in the suspension or revocation of necessary permits, licenses and authorizations; (iv) require thatadditional pollution controls be installed and (v) require remedial measures to mitigate pollution from former and ongoing operations, includingrelated natural resource damages. Specifically, certain U.S. environmental laws, such as CERCLA, or Superfund, and analogous state laws, providefor strict, and under certain circumstances, joint and several liability for the investigation and remediation of releases or the disposal of regulatedmaterials into the environment including soil and groundwater, as well as for damages to natural resources.
In North America, sales of beverage cans and bottles are affected by governmental regulation of packaging, including deposit return laws.As of January 1, 2019, there were ten U.S. states with container deposit laws in effect, requiring consumer deposits of between 5 and15 cents (USD), depending on the size of the container or product. In Canada, there are 10 provinces and three territories. Deposit laws cover someform of beverage container in all provinces and territories except the territory of Nunavut, which does not have a deposit program. The range fordeposits are between 5 and 40 cents (Canadian Dollar), depending on size of container and type of beverage.
A wider roll out of packaging deposit return systems (DRS) in Europe, such as that proposed in Scotland from July 2022, can lead to costincreases for collection and recycling of glass containers and beverage cans and therefore potentially have impacts on the packaging material mix atretailers.
Many beverages and containers, particularly new product innovations and unique alcohol beverage products, are not clearly defined in U.S.and Canadian deposit laws. The text of some U.S. and Canadian deposit laws expressly exempts certain beverages or containers from application ofthe deposit laws. In many states, certain common beverage categories are simply not found in the text of the deposit law. Local agencies providefinal decisions on the application of deposit laws. Many states are defining their own beverage categories with local agencies providing finaldecisions on the application of deposit laws.
Table of Contents
Ardagh Group S.A.54
We are also committed to ensuring that safe operating practices are established, implemented and maintained throughout our organization.In addition, we have instituted active health and safety programs throughout our company. See “Item 3. Key Information—Risk Factors—RisksRelating to Our Business—We are subject to various environmental and other legal requirements and may be subject to new requirements of thiskind in the future that could impose substantial costs upon us”.
C. Organizational structureThe following table provides information relating to our principal operating subsidiaries, all of which are wholly owned, at December 31,
2020.Country of
Company incorporation ActivityArdagh Metal Beverage Manufacturing Austria GmbH Austria Metal Beverage PackagingArdagh Metal Beverage Trading Austria GmbH Austria Metal Beverage PackagingLatas Indústria de Embalagens de Alumínio do Brasil Ltda. Brazil Metal Beverage PackagingArdagh Indústria de Embalagens de Metálicas do Brasil Ltda. Brazil Metal Beverage PackagingArdagh Glass Holmegaard A/S Denmark Glass PackagingArdagh Metal Beverage Trading France SAS France Metal Beverage PackagingArdagh Metal Beverage France SAS France Metal Beverage PackagingArdagh Glass GmbH Germany Glass PackagingHeye International GmbH Germany Glass EngineeringArdagh Metal Beverage Trading Germany GmbH Germany Metal Beverage PackagingArdagh Metal Beverage Germany GmbH Germany Metal Beverage PackagingArdagh Glass Sales Limited Ireland Glass PackagingArdagh Glass Italy S.r.l. Italy Glass PackagingArdagh Glass Dongen B.V. Netherlands Glass PackagingArdagh Glass Moerdijk B.V. Netherlands Glass PackagingArdagh Metal Beverage Trading Netherlands B.V. Netherlands Metal Beverage PackagingArdagh Metal Beverage Netherlands B.V. Netherlands Metal Beverage PackagingArdagh Glass S.A. Poland Glass PackagingArdagh Metal Beverage Trading Poland Sp. z o.o Poland Metal Beverage PackagingArdagh Metal Beverage Poland Sp. z o.o Poland Metal Beverage PackagingArdagh Metal Beverage Trading Spain SL Spain Metal Beverage PackagingArdagh Metal Beverage Spain SL Spain Metal Beverage PackagingArdagh Glass Limmared AB Sweden Glass PackagingArdagh Metal Beverage Europe GmbH Switzerland Metal Beverage PackagingArdagh Glass Limited United Kingdom Glass PackagingArdagh Metal Beverage Trading UK Limited United Kingdom Metal Beverage PackagingArdagh Metal Beverage UK Limited United Kingdom Metal Beverage PackagingArdagh Metal Beverage USA Inc. United States Metal Beverage PackagingArdagh Glass Inc. United States Glass PackagingArdagh Glass Packaging USA Inc. * United States Glass Packaging
* Ardagh Glass Packaging Inc. is the Group’s subsidiary which is acquiring the Longhorn glass manufacturing facility located in Houston, Texas. Thetransaction is subject to regulatory approval and is expected to complete in the first quarter of 2021.
D. Property, plant and equipment
See "Item 4.—Information on the Company—B. Business Overview—Metal Beverage Packaging-Manufacturing and Production" and Item4.—Information on the Company—B. Business Overview—Glass Packaging-Manufacturing and Production".
Item 4A. Unresolved Staff Comments
Not Applicable
Table of Contents
Ardagh Group S.A.55
Item 5. Operating and Financial Review and Prospects
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with, and is qualified in its entirety by reference to the audited consolidated financialstatements of Ardagh Group S.A. for the three-year period ended December 31, 2020, including the related notes thereto, included elsewhere in thisannual report. The following discussion should also be read in conjunction with “Selected Financial Information”. As used in this section, the“Group” refers to Ardagh Group S.A. and its subsidiaries.
Some of the measures used in this annual report are not measurements of financial performance under IFRS and should not be consideredan alternative to cash flow from operating activities as a measure of liquidity or an alternative to operating profit/(loss) or profit/(loss) for the year, asindicators of our operating performance or any other measures of performance derived in accordance with IFRS.
Business Drivers
The main factors affecting our results of operations for Metal Beverage Packaging and Glass Packaging are: (i) global economic trends,end-consumer demand for our products and production capacity of our manufacturing facilities; (ii) prices of energy and raw materials used in ourbusiness, primarily aluminum, steel, cullet, sand, soda ash and coatings, and our ability to pass through these and other cost increases to ourcustomers, through contractual pass through mechanisms under multi-year contracts, or through renegotiation in the case of short-term contracts; (iii)investment in operating cost reductions; (iv) acquisitions; and (v) foreign exchange rate fluctuations and currency translation risks arising fromvarious currency exposures, primarily with respect to the euro, U.S. dollar, British pound, Swedish krona, Polish zloty, Danish krone and Brazilianreal.
COVID-19
The COVID-19 global pandemic and measures to prevent its spread, including restrictions on travel, imposition of quarantines andprolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation ofevents, has impacted our business in a number of ways including as a result of the impact of reduced global economic activity which resulted inlower demand for some of our customers’ products and, therefore, certain of the products we manufacture.
During the year ended December 31, 2020 our Glass business, in particular, was affected, and experienced reductions in customer demandand therefore revenue as a direct consequence of the various global lockdowns and the related impact to “on-premise” sales. The impact wasparticularly evident in the second quarter of the year. Gradual relaxation of governmental measures to prevent the spread of the virus, in the secondhalf of the year ended December 31, 2020 resulted in a sequential improvement in customer demand for our Glass packaging products.
COVID-19 may continue to have an adverse affect on our business and operations, including potential disruptions to our supply chain andworkforce. Although our production has not been significantly impacted to date, our plants may be required to curtail or cease production in order torespond to any future measures which may arise in order to prevent the spread of COVID-19. In addition, the pandemic may in the future impact oncapital markets which could impact our cost of borrowing. During the year ended December 31, 2020, incremental COVID-19 related direct costs of$30 million, including safety and cleaning costs, were incurred throughout the Group.
The ultimate significance of the disruptions arising as a result of COVID-19, including the extent of their adverse impact on our financialand operational results, will be determined by the duration of the ongoing pandemic, its severity in the markets that we serve and the nature andefficacy of government and other regulatory responses, protective measures and vaccination programs and the related impact on macroeconomicactivity and consumer behavior.
Table of Contents
Ardagh Group S.A.56
As a result of the specific risks and challenges posed by the COVID-19 pandemic, management has continually reviewed the effectivenessof the internal controls over financial reporting. Measures have been taken to address specific risks and challenges arising from the move to remoteworking. No material changes to our control environment were required. We have implemented enhancements to some existing controls, includingthose for our payments process and we continue to focus on digital security.
Metal Beverage Packaging
Metal Beverage Packaging generates its revenue from supplying metal can packaging to the beverage end use category. Revenue isprimarily dependent on sales volumes and sales prices.
Sales volumes are influenced by a number of factors, including factors driving customer demand, seasonality and the capacity of our metalbeverage packaging plants. Demand for our metal beverage cans may be influenced by trends in the consumption of beverages, industry trends inpackaging, including marketing decisions, and the impact of environmental regulations and shifts in consumer sentiment towards a greater awarenessof sustainability. The demand for our beverage products is strongest during spells of warm weather and therefore demand typically, based onhistorical trends, peaks during the summer months, as well as in the period leading up to holidays in December. Accordingly, we generally buildinventories in the first and fourth quarter in anticipation of the seasonal demands in our beverage business.
Metal Beverage Packaging’s Adjusted EBITDA is based on revenue derived from selling our metal beverage cans and is affected by anumber of factors, primarily cost of sales. The elements of Metal Beverage Packaging’s cost of sales include (i) variable costs, such as electricity,raw materials (including the cost of aluminum), packaging materials, decoration and freight and other distribution costs, and (ii) fixed costs, such aslabor and other plant-related costs including depreciation, maintenance and sales, marketing and administrative costs. Metal Beverage Packaging’svariable costs have typically constituted approximately 75% and fixed costs approximately 25% of the total cost of sales for our Metal BeveragePackaging business.
Glass Packaging
Glass Packaging generates its revenue principally from selling glass containers. Glass Packaging revenue is primarily dependent on salesvolumes and sales prices. Glass Packaging includes our glass engineering business, Heye International.
Sales volumes are affected by a number of factors, including factors impacting customer demand, seasonality and the capacity of GlassPackaging’s plants. Demand for glass containers may be influenced by trends in the consumption of beverages, fruit and vegetable harvests, industrytrends in packaging, including marketing decisions, and the impact of environmental regulations, as well as changes in consumer sentiment includinga greater awareness of sustainability issues.
In the U.S., for example, the growth in consumption of imported beer has seen reduced demand for domestically-produced mass beerbrands, resulting in reduced demand for glass packaging for this end-use category. Recent years have also seen an increase in the imports of emptyglass containers into the United States. In response, the Group reduced production capacity in its Glass Packaging North America division by over10%, in the period 2018-2019. The Group is pursuing growth opportunities in stronger performing end-markets, including food, wines and spiritsand has converted production capacity from the mass beer sector to serve these alternative end-markets. Investments in advanced inspectionequipment and automation have also been undertaken, and continue to be undertaken, in order to enhance quality and productivity.
Beverage sales within our Glass Packaging business are seasonal in nature, with strongest demand during the summer and during periods ofwarm weather, as well as the period leading up to holidays in December. Accordingly, Glass Packaging’s shipment volumes of glass containers istypically lower in the first quarter. Glass Packaging builds inventory in the first quarter in anticipation of these seasonal demands. In addition, GlassPackaging generally schedules shutdowns
Table of Contents
Ardagh Group S.A.57
of its plants for furnace rebuilding and repairs of machinery in the first quarter. These strategic shutdowns and seasonal sales patterns adverselyaffect profitability in Glass Packaging’s glass manufacturing operations during the first quarter of the year. Plant shutdowns may also affect thecomparability of results from period to period. Glass Packaging’s working capital requirements are typically greatest at the end of the first quarter ofthe year.
Glass Packaging’s Adjusted EBITDA is based on revenue derived from selling glass containers and glass engineering products and servicesand is affected by a number of factors, primarily cost of sales. The elements of Glass Packaging’s cost of sales for its glass container manufacturingbusiness include (i) variable costs, such as natural gas and electricity, raw materials (including the cost of cullet), packaging materials, decorationand freight and other distribution costs, and (ii) fixed costs, such as labor and other plant-related costs including depreciation, maintenance and sales,marketing and administrative costs. Glass Packaging’s variable costs have typically constituted approximately 40% and fixed costs approximately60% of the total cost of sales for our glass container manufacturing business.
Recent Acquisitions, Divestments and Developments
Divestment of Food & Specialty Metal Packaging
On October 31, 2019, the Group completed the combination of its Food & Specialty Metal Packaging business, operating as part of theMetal Packaging Europe and Metal Packaging Americas segments, with the business of Exal, to form Trivium, a global leader in metal packaging.As a result of the completion of the transaction, the Food & Specialty Metal Packaging business was reported as a discontinued operation in 2019.As consideration, Ardagh received a stake of approximately 42% in Trivium and $2.6 billion in cash proceeds. See, “Item 4. Information on theCompany-History and development of the company.”
Combination of Ardagh Metal Packaging with Gores Holdings V
On February 22, 2021, the Group entered into the Business Combination Agreement with GHV, under which GHV will combine with theAMP business that will be held by Ardagh Metal Packaging to create an independent, pure-play beverage can business. Ardagh Metal Packagingalso announced its intention to apply to list its shares on the NYSE.
Ardagh Metal Packaging will hold Ardagh’s metal packaging business, which is a leading supplier of beverage cans globally, with a focuson Europe, North America and Brazil. Headquartered, in Luxembourg, the business supplies sustainable and infinitely-recyclable metal packaging toa diversified customer base of leading global, regional and national beverage producers. Ardagh’s metal packaging business operates 23 productionfacilities in Europe and the Americas, employs approximately 4,900 people and recorded revenues of $3.5 billion in 2020. Ardagh Metal Packagingwill be a global leader in the supply of sustainable and infinitely-recyclable beverage cans that has a leading presence in the Americas and Europeand is the second-largest beverage can producer in Europe and the third-largest in North America and Brazil.
Additional investors have committed to participate in the proposed business combination by purchasing 60 million shares of Ardagh MetalPackaging for an aggregate purchase price of $600 million in a private placement at $10.00. In connection with the transactions, Ardagh MetalPackaging priced on February 26, 2021 an upsized green bond offering of $2.8 billion. Assuming no share redemptions by the public stockholders ofGHV, approximately $525 million in cash held in GHV’s trust account, together with the $600 million in private placement proceeds andapproximately $2.3 billion of the new debt raised by Ardagh Metal Packaging, will be used to pay up to $3.4 billion in cash to Ardagh, as well as topay transaction expenses and for general corporate purposes. Upon closing of the transactions, assuming no redemptions by GHV’s publicstockholders, Ardagh will retain an equity interest in the Company of approximately 80%, the investors in the private placement will holdapproximately 10% and GHV’s stockholders and its sponsor will hold approximately 10%. Ardagh intends to remain a committed, long-termmajority shareholder of Ardagh Metal Packaging. The cash proceeds from the transactions will be used to reduce net debt at Ardagh.
Table of Contents
Ardagh Group S.A.58
The proposed business combination, which has been unanimously approved by the boards of directors of both Ardagh and GHV, isexpected to close in the second quarter of 2021, subject to receipt of GHV stockholder approval, approval of Ardagh Metal Packaging’s shares forlisting on the NYSE, the satisfaction of the condition to Ardagh’s obligations that it receives at least $3 billion in cash from the transactions and thesatisfaction or waiver of other customary closing conditions.
Critical Accounting Policies
We prepare our financial statements in accordance with IFRS as issued by the IASB. A summary of significant accounting policies iscontained in Note 2 to our audited consolidated financial statements for the three years ended December 31, 2020. In applying accounting principles,we make assumptions, estimates and judgments which are often subjective and may be affected by changing circumstances or changes in ouranalysis. Material changes in these assumptions, estimates and judgments have the potential to materially alter our results of operations. Theestimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within thenext financial year are discussed below.
Business combinations and goodwill
All business combinations are accounted for by applying the purchase method of accounting. This involves measuring the cost of thebusiness combination and allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities assumed.Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value,and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs areexpensed as incurred and included in sales, general and administration expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation inaccordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date.
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at thedate of acquisition.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to those groups of CGUs that are expected tobenefit from the business combination in which the goodwill arose for the purpose of assessing impairment. Goodwill is tested annually forimpairment or whenever indicators suggest that impairment may have occurred.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with thedisposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in thesecircumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.
Table of Contents
Ardagh Group S.A.59
Impairment of goodwill
Goodwill acquired through a business combination has been allocated to groups of CGUs for the purpose of impairment testing based onthe segment into which the business combination is assimilated. The groupings represent the lowest level at which the related goodwill is monitoredfor internal management purposes. As at the reporting date, Metal Beverage Packaging Europe, Metal Beverage Packaging Americas, GlassPackaging Europe and Glass Packaging North America were the groups of CGUs to which goodwill was allocated and monitored.
Value-in-use
The Group used the value-in-use (“VIU”) model for the purposes of the goodwill impairment testing, as this reflects the Group’s intentionto hold and operate the assets. However, if an impairment indicator exists for a CGU, the Group uses the fair value less costs of disposal (“FVLCD”)model in order to establish the recoverable amount being the higher of the VIU model and the FVLCD model when compared to the carrying valueof the CGU.
The VIU model used the 2021 budget approved by the Board and a three year forecast for 2022 to 2024 (2019 two-year forecast period).The budget and forecast results were then extended for a further one year period (2019: two-year period) making certain assumptions, including theprofile between long-term depreciation and capital expenditure in addition to the how changes in input cost will impact customer pricing, in line withhistoric practice and contractual terms.
The terminal value assumed long-term growth based on a combination of factors including long-term inflation in addition to industry andmarket specific factors. The terminal value is estimated based on capitalizing the year 5 cash flows in perpetuity. The range of growth rates appliedby management in respect of the terminal values applicable to all groups of CGU’s were 1.0 - 1.5% (2019: 1.0 - 1.5%).
Cash flows considered in the VIU model included the cash inflows and outflows related to the continuing use of the assets over theirremaining useful lives, expected earnings, required maintenance capital expenditure, depreciation, amortization, tax paid, working capital and leaseprincipal repayments.
The discount rate applied to cash flows in the VIU model was estimated using our weighted average cost of capital as determined by theCapital Asset Pricing Model with regard to the risks associated with the cash flows being considered (country, market and specific risks of the asset).
The modelled cash flows take into account the Group’s established history of earnings, cash flow generation and the nature of the marketsin which we operate, where product obsolescence is low. The key assumptions employed in modelling estimates of future cash flows are subjectiveand include projected Adjusted EBITDA, discount rates and growth rates, replacement capital expenditure requirements, rates of customer retentionand the ability to maintain margin through the pass through of input cost inflation.
The discount rates used ranged from 5.1% - 7.9% (2019: 5.1% - 8.5%). These rates are pre-tax. These assumptions have been used for theanalysis for each group of CGUs. Management determined budgeted cash flows based on past performance and its expectations for the marketdevelopment.
For all CGUs, a sensitivity analysis was performed reflecting potential variations in terminal growth rate and discount rate assumptions. Inall cases the recoverable values calculated were in excess of the carrying values of the CGUs. The variation applied to terminal value growth ratesand discount rates was a 50 basis points decrease and increase respectively and represents a reasonably possible change to the key assumptions of theVIU model. Further, a reasonably possible change to the operating cash flows would not reduce the recoverable amounts below the carrying value ofthe CGUs.
Table of Contents
Ardagh Group S.A.60
Fair value less costs of disposal
Management has determined the recoverable amount of the Glass Packaging North America CGU by assessing the fair value less cost ofdisposal (FVLCD) of the underlying assets using a market approach, on the basis that this gave a higher recoverable amount than an assessmentbased on Value in Use. The valuation is considered to be level 3 in the fair value hierarchy due to unobservable inputs used in the valuation.
The key assumptions applied in the FVLCD calculation for the Glass Packaging North America CGU are, by their nature, subjective andinclude, FY21 projected revenue volumes, cost savings and the effects of future restructuring as part of estimating the projected adjusted EBITDAfrom a market participant’s perspective. The market participant projected adjusted EBITDA was then multiplied by a multiple of 6.5x, based oncomparable companies and also based on market transactions, which was then adjusted for selling costs. The recoverable amount was then comparedto the carrying value of the Glass Packaging North America CGU, resulting in an excess of the recoverable amount on the carrying value goodwillallocated to Glass Packaging North America in the year ended December 31, 2020.
A sensitivity analysis was performed on the FVLCD calculation by increasing and decreasing the market participant projected adjustedEBITDA by 5% and also, the multiple which was applied to the market participant projected adjusted EBITDA by 25 basis points respectively. Theresults of the sensitivity analysis did not result in an impairment charge.
Income taxes
The Group is subject to income taxes in numerous jurisdictions and judgment is therefore required in determining the worldwide provisionfor income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course ofbusiness. The Group recognizes liabilities for anticipated tax audit matters based on estimates of whether additional taxes will be due. Where thefinal tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferredtax provisions in the period in which such determination is made.
Measurement of employee benefit obligations
The Group follows the guidance of IAS 19(R) to determine the present value of our obligations to current and past employees in respect ofdefined benefit pension obligations, other long-term employee benefits and other end of service employee benefits, which are subject to similarfluctuations in value in the long-term. We, with the assistance of a network of professionals, value such liabilities designed to ensure consistency inthe quality of the key assumptions underlying the valuations.
The principal pension assumptions used in the preparation of the financial statements take account of the different economic circumstancesin the countries in which we operate and the different characteristics of the respective plans including the length of duration of liabilities.
The ranges of the principal assumptions applied in estimating defined benefit obligations were:
U.S. Germany UK2020 2019 2020 2019 2020 2019
% % % % % %Rates of inflation 2.50 2.50 1.50 1.50 2.75 2.90Rates of increase in salaries 3.00 3.00 2.50 2.50 2.25 2.00Discount rates 2.55 3.40 0.84 - 1.08 1.20 - 1.48 1.45 - 1.50 2.10 - 2.15
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience.
Table of Contents
Ardagh Group S.A.61
These assumptions translate into the following average life expectancy in years for a pensioner retiring at age 65. The mortalityassumptions for the countries with the most significant defined benefit plans are set out below:
U.S. Germany UK2020 2019 2020 2019 2020 2019
Years Years Years Years Years YearsLife expectancy, current pensioners 22 21 22 22 20 21Life expectancy, future pensioners 23 23 25 24 22 22
If the discount rate were to decrease by 50 basis points from management estimates, the carrying amount of the pension obligations wouldincrease by an estimated $204 million (2019: $186 million). If the discount rate were to increase by 50 basis points, the carrying amount of thepension obligations would decrease by an estimated $182 million (2019: $166 million).
If the inflation rate were to decrease by 50 basis points from management estimates, the carrying amount of the pension obligations woulddecrease by an estimated $65 million (2019: $56 million). If the inflation rate were to increase by 50 basis points, the carrying amount of the pensionobligations would increase by an estimated $68 million (2019: $63 million).
If the salary increase rate were to decrease by 50 basis points from management estimates, the carrying amount of the pension obligationswould decrease by an estimated $67 million (2019: $61 million). If the salary increase rate were to increase by 50 basis points, the carrying amountof the pension obligations would increase by an estimated $71 million (2019: $69 million).
The impact of increasing the life expectancy by one year would result in an increase in the Group’s liability of $80 million at December 31,2020 (2019: $68 million), holding all other assumptions constant.
Exceptional items
The Group’s consolidated income statement, cash flow and segmental analysis separately identify results before specific items. Specificitems are those that in management’s judgment need to be disclosed by virtue of their size, nature or incidence to provide additional information.Such items include, where significant, restructuring, redundancy and other costs relating to permanent capacity realignment or footprintreorganization, directly attributable acquisition costs and acquisition integration costs, and other transaction-related costs, profit or loss on disposalor termination of operations, start-up costs incurred in relation to and associated with plant builds, significant new line investments or furnaces,major litigation costs and settlements and impairments of non-current assets. In this regard the determination of “significant” as included in ourdefinition uses qualitative and quantitative factors. Judgment is used by the Group in assessing the particular items, which by virtue of their scale andnature, are disclosed in the Group’s consolidated income statement, and related notes as exceptional items. Management considers columnarpresentation to be appropriate in the consolidated income statement as it provides useful additional information and is consistent with the way thatfinancial performance is measured by management and presented to the Board. Exceptional restructuring costs are classified as restructuringprovisions and all other exceptional costs when outstanding at the balance sheet date are classified as exceptional items payable.
Lease term upon adoption of IFRS 16
Upon adoption of IFRS 16, several lease agreements include renewal and termination options. As part of the recognition of such leases, theGroup assessed all facts and circumstances that create an economic incentive to exercise a renewal option, or not exercise a termination option.Renewal options (or periods after termination options) were only included in the lease term if the conclusion was that the lease is reasonably certainto be renewed (or not terminated).
Table of Contents
Ardagh Group S.A.62
Recently adopted accounting standards and changes in accounting policies
The impact of new standards, amendments to existing standards and interpretations issued and effective for annual periods beginning on orafter January 1, 2020 have been assessed by the Board as not having had a material impact on the Group.
Recent accounting pronouncements
The Board’s assessment of the impact of new standards, which are not yet effective and which have not been early adopted by the Group,on the consolidated financial statements and disclosures is on-going.
A. Operating results
Year Ended December 31, 2020 compared to Year Ended December 31, 2019
Year endedDecember 31,
2020 2019(in $ millions)
Revenue 6,731 6,660Cost of sales (5,698) (5,597)
Gross profit 1,033 1,063Sales, general and administration expenses (381) (362)Intangible amortization and impairment (243) (233)
Operating profit 409 468Net finance expense (338) (659)Share of post-tax loss in equity accounted joint venture (48) (49)
Profit/(loss) before tax 23 (240)Income tax charge (10) (44)
Profit/(loss) from continuing operations 13 (284)Profit from discontinued operation 22 1,742
Profit for the year 35 1,458
Revenue
Revenue in the year ended December 31, 2020 increased by $71 million, or 1%, to $6,731 million, compared with $6,660 million inthe year ended December 31, 2019. The increase in revenue principally reflected favorable foreign currency translation effects of $27 million andfavorable volume/mix effects of $87 million, partly offset by the pass through to customers of lower input costs.
Cost of sales
Cost of sales in the year ended December 31, 2020 increased by $101 million, or 2%, to $5,698 million, compared with $5,597 million inthe year ended December 31, 2019. The increase in cost of sales is mainly due to the impact of higher sales as outlined above, unfavorable currencytranslation effects and higher exceptional cost of sales, partly offset by lower input and other operating costs. Exceptional cost of sales increased by$17 million, mainly reflecting prior year effects of a $37 million pension service credit in Glass Packaging North America, partly offset by a $15million provision for a court award and related interest and lower start-up related and restructuring costs. Further analysis of the movement inexceptional items is set out in the “Supplemental Management’s Discussion and Analysis” section.
Gross profit
Gross profit in the year ended December 31, 2020 decreased by $30 million, or 3%, to $1,033 million, compared with $1,063 million inthe year ended December 31, 2019. Gross profit percentage in the year ended December 31, 2020
Table of Contents
Ardagh Group S.A.63
decreased by 70 basis points to 15.3%, compared with 16.0% in the year ended December 31, 2019. Excluding exceptional cost of sales, gross profitpercentage in the year ended December 31, 2020 decreased by 40 basis points to 15.6%, compared with 16.0% in the year ended December 31,2019.
Sales, general and administration expenses
Sales, general and administration expenses in the year ended December 31, 2020 increased by $19 million, or 5%, to $381 million,compared with $362 million in the year ended December 31, 2019. Excluding exceptional items, sales, general and administration expensesincreased by $39 million, or 13%, mainly due to higher operating costs, including direct costs related to COVID-19. Further analysis of themovement in exceptional items is set out in the “Supplemental Management’s Discussion and Analysis” section.
Intangible amortization and impairment
Intangible amortization and impairment in the year ended December 31, 2020 increased by $10 million, to $243 million, compared with$233 million in the year ended December 31, 2019. The increase was mainly due to an $8 million impairment charge of other intangible assets,primarily software, following a review of the Group’s digital infrastructure.
Operating profit
Operating profit in the year ended December 31, 2020 decreased by $59 million, or 13%, to $409 million compared with $468 million inthe year ended December 31, 2019. The decrease in operating profit primarily reflected lower gross profit and higher sales, general andadministration expenses.
Net finance expense
Net finance expense in the year ended December 31, 2020 decreased by $321 million, or 49%, to $338 million, compared with $659 millionin the year ended December 31, 2019. Net finance expense for the year ended December 31, 2020 and 2019 comprised of the following:
Year endedDecember 31,
2020 2019(in $ millions)
Interest expense 302 407Net pension interest cost 14 18(Gain)/loss on derivative financial instruments (3) 9Foreign currency translation (gain)/loss (42) 27Other finance income (7) (5)Finance expense before exceptional items 264 456Exceptional finance expense 74 203Net finance expense 338 659
Interest expense in the year ended December 31, 2020 decreased by $105 million, or 26%, to $302 million, compared with $407 million inthe year ended December 31, 2019. The decrease primarily relates to lower interest expense on the Group’s Senior Secured Notes and Senior Notes,which were reduced in 2019 using proceeds from the disposal of Food & Specialty Metal Packaging business and also reflects the Group’s financingactivity in 2020. Further analysis of the Group’s financing activity is set out in the “Supplemental Management Discussion and Analysis” section.
Derivative financial instruments in the year ended December 31, 2020 reflected a gain of $3 million, compared with a loss of $9 million inthe year ended December 31, 2019, which related to the Group’s CCIRS.
Foreign currency translation gains in the year ended December 31, 2020 increased by $69 million to $42 million, compared with a loss of$27 million in the year ended December 31, 2019 driven by foreign exchange rate fluctuations, primarily the U.S. dollar and British pound.
Table of Contents
Ardagh Group S.A.64
Exceptional finance expense of $74 million for the year ended December 31, 2020 primarily related to costs associated with the debtrefinancings and related redemption activities during the year, principally comprising applicable redemption premium of $61 million, acceleratedamortization of deferred financing costs, and interest charges from the call date to date of redemption. Exceptional finance expense of $203 millionfor the year ended December 31, 2019 primarily relates to $200 million in costs associated with debt redemption and refinancing activity in August2019 and November 2019, principally comprising applicable redemption premium of $165 million, accelerated amortization of deferred financecosts, interest charges from the call date to date of redemption and a charge related to the termination of derivative financial instruments.
Share of post–tax loss in equity accounted joint venture
The Group recognized a $48 million share of post-tax loss in its equity accounted joint venture, relating to its approximate 42% investmentin Trivium, compared with a $49 million loss in the year ended December 31, 2019.
Income tax charge
Income tax charge in the year ended December 31, 2020 resulted in a tax charge of $10 million, compared with a tax charge of $44 millionin the year ended December 31, 2019.
The decrease in income tax charge is primarily attributable to a decrease of $37 million in tax charge in respect of prior years (whichincludes tax credits relating to the carry back of net operating losses in the United States as a result of the enactment from March 27, 2020 of theCoronavirus Aid, Relief and Economic Security (“CARES”) Act of $15 million, additional tax relief on finance expense, and the availability of taxcredits relating to a historic divestment), a decrease of $35 million in tax charge in respect of non-deductible items (relating to non-deductibleinterest expense in certain jurisdictions), a decrease of $31 million in the tax charge on tax losses for which no deferred income tax was recognized(amounts in the year ended December 31, 2019 related to tax losses incurred in Ireland in respect of exceptional finance expense, in addition to thecarry-forward of interest expense in certain jurisdictions), a decrease of $6 million in tax charge in respect of income subject to state and other localincome taxes and a decrease of $2 million in tax charge in respect of income taxed at rates other than standard tax rates. These decreases werepartially offset by an increase in the profit before tax of $264 million (tax effect of $66 million at the standard rate of Luxembourg corporation tax),an increase of $9 million in other tax items and a decrease of $2 million in the tax credit on the re-measurement of deferred taxes.
The effective income tax rate on profit before exceptional items and share of post-tax loss in equity accounted joint venture for the yearended December 31, 2020 was 31% compared with a rate of 63% for the year ended December 31, 2019. The effective income tax rate is a functionof the profit or loss before tax and the tax charge or credit for the year. The profit before exceptional items and share of post-tax loss in equityaccounted joint venture for the year ended December 31, 2020 increased by $138 million compared to the year ended December 31, 2019, andtogether with movements in non-deductible interest expense and the tax credit arising on the enactment of the CARES Act, are the primary drivers ofthe movement in the effective tax rate.
Profit/(loss) from continuing operations
As a result of the items described above, the profit for the year ended December 31, 2020 increased by $297 million to $13 million,compared with a loss of $284 million in the year ended December 31, 2019.
Profit from discontinued operation
Profit from discontinued operation of $22 million in the year ended December 31, 2020 primarily relates to a gain arising from theremeasurement of the consideration for the disposal of Food & Specialty Metal Packaging business. Profit from discontinued operation of $1,742million in the year ended December 31, 2019 reflected the gain recognized on the disposal of the Food & Specialty Metal Packaging business.
Table of Contents
Ardagh Group S.A.65
Year Ended December 31, 2019 compared to Year Ended December 31, 2018
Year endedDecember 31,
2019 2018(in $ millions)
Revenue 6,660 6,676Cost of sales (5,597) (5,731)
Gross profit 1,063 945Sales, general and administration expenses (362) (317)Intangible amortization and impairment (233) (423)
Operating profit 468 205Net finance expense (659) (479)Share of post-tax loss in equity accounted joint venture (49) —
Loss before tax (240) (274)Income tax charge (44) (18)
Loss from continuing operations (284) (292)Profit from discontinued operation 1,742 198
Profit/(loss) for the year 1,458 (94)
Revenue
Revenue in the year ended December 31, 2019 decreased by $16 million to $6,660 million, compared with $6,676 million in the year endedDecember 31, 2018. The decrease in revenue principally reflected unfavorable foreign currency translation effects of $173 million, partly offset byfavorable volume/mix effects of $149 million and the pass through to customers of higher input costs in selling prices.
Cost of sales
Cost of sales in the year ended December 31, 2019 decreased by $134 million, or 2%, to $5,597 million, compared with $5,731 million inthe year ended December 31, 2018. The decrease in cost of sales is due mainly to favorable currency translation effects and higher input and otheroperating costs, partly offset by lower exceptional cost of sales, inclusive of a $37 million pension service credit in Glass Packaging North America.Exceptional cost of sales decreased by $106 million, reflecting lower restructuring, capacity realignment and start-up related charges. Furtheranalysis of the movement in exceptional items is set out in the “Supplemental Management’s Discussion and Analysis” section.
Gross profit
Gross profit in the year ended December 31, 2019 increased by $118 million, or 12%, to $1,063 million, compared with $945 million inthe year ended December 31, 2018. Gross profit percentage in the year ended December 31, 2019 increased by 180 basis points to 16.0%, comparedwith 14.2% in the year ended December 31, 2018. Excluding exceptional cost of sales, gross profit percentage in the year ended December 31, 2019increased by 20 basis points to 16.0%, compared with 15.8% in the year ended December 31, 2018.
Sales, general and administration expenses
Sales, general and administration expenses in the year ended December 31, 2019 increased by $45 million, or 14%, to $362 million,compared with $317 million in the year ended December 31, 2018. The increase primarily related to higher exceptional transaction-related costs.Excluding exceptional items, sales, general and administration expenses increased by $11 million, or 4%, mainly due to higher operating costs.Further analysis of the movement in exceptional items is set out in the “Supplemental Management’s Discussion and Analysis” section.
Table of Contents
Ardagh Group S.A.66
Intangible amortization and impairment
Intangible amortization and impairment in the year ended December 31, 2019 decreased by $190 million, to $233 million, compared with$423 million in the year ended December 31, 2018. The decrease was mainly due to a $186 million impairment charge to goodwill in GlassPackaging North America in 2018.
Operating profit
Operating profit in the year ended December 31, 2019 increased by $263 million, or 128%, to $468 million compared with $205 million inthe year ended December 31, 2018. The increase in operating profit primarily reflected higher gross profit, and the impact of the impairment chargeto goodwill in 2018 as outlined above, partly offset by the higher sales, general and administration expenses.
Net finance expense
Net finance expense in the year ended December 31, 2019 increased by $180 million, or 38%, to $659 million, compared with $479 millionin the year ended December 31, 2018. Net finance expense for the year ended December 31, 2019 and 2018 comprised of the following:
Year endedDecember 31,
2019 2018(in $ millions)
Interest expense 407 443Net pension interest cost 18 16Loss/(gain) on derivative financial instruments 9 (10)Foreign currency translation losses 27 8Other finance income (5) —Finance expense before exceptional items 456 457Exceptional finance expense 203 22Net finance expense from continuing operations 659 479
Interest expense in the year ended December 31, 2019 decreased by $36 million, or 8%, to $407 million, compared with $443 million inthe year ended December 31, 2018. The decrease was mainly due to the favorable impact of refinancing activity and debt redemptions in 2019.Further analysis of the Group’s refinancing activity is set out in the “Supplemental Management Discussion and Analysis” section. Derivativefinancial instruments in the year ended December 31, 2019 reflected a loss of $9 million, compared to a gain of $10 million in the year endedDecember 31, 2018 which related to the Group’s CCIRS.
Foreign currency translation losses in the year ended December 31, 2019 increased by $19 million to $27 million, compared with a loss of$8 million in the year ended December 31, 2018.
Exceptional finance expense of $203 million for the year ended December 31, 2019 primarily relates to $200 million in costs associatedwith debt redemption and refinancing activity in August 2019 and November 2019, principally comprising applicable redemption premium of $165million, accelerated amortization of deferred finance costs, interest charges from the call date to date of redemption and a charge related to thetermination of derivative financial instruments. Exceptional finance expense was $22 million for the year ended December 31, 2018 and mainlycomprised $10 million in costs relating to the redemption in July 2018 of the Group’s $440 million 6.000% Senior Notes due 2021 and $6 millionrelating to the loss on the termination of the related $440 million U.S. dollar to euro CCIRS.
Table of Contents
Ardagh Group S.A.67
Share of post–tax loss in equity accounted joint venture
The Group recognized a $49 million share of post-tax loss in its equity accounted joint venture, relating to its approximate 42% investmentin Trivium.
Income tax charge
Income tax charge in the year ended December 31, 2019 resulted in a tax charge of $44 million, compared with a tax charge of $18 millionin the year ended December 31, 2018. The increase in income tax charge is primarily attributable to an increase of $32 million in the tax charge ontax losses for which no deferred income tax was recognized (relating to tax losses incurred in Ireland in respect of exceptional finance expense, inaddition to the carry-forward of interest expense in certain jurisdictions), in addition to a decrease in the loss before tax of $34 million (tax effect of$11 million at the standard rate of Luxembourg corporation tax), an increase of $2 million in tax charge in respect of prior years, and an increase of$2 million in the tax charge relating to income taxed at rates other than the standard rate of Luxembourg corporation tax. These increases werepartially offset by a decrease of $10 million in other tax items, a reduction of $7 million in the tax effect of non-deductible items, an increase of $3million in the tax credit on the remeasurement of deferred taxes and a decrease of $1 million in income subject to state and other local income taxes.
The effective income tax rate on profit before exceptional items and share of post-tax loss in equity accounted joint venture for the yearended December 31, 2019 was 63% compared to an effective income tax rate for the year ended December 31, 2018 of 114%. The effective incometax rate is a function of the profit or loss before tax and the tax charge or credit for the year. The primary drivers impacting the effective tax rate aretax losses for which no deferred income tax was recognized and non-deductible interest expense.
Loss from continuing operations
As a result of the items described above, the loss for the year ended December 31, 2019 decreased by $8 million to $284 million, comparedwith a loss of $292 million in the year ended December 31, 2018.
Profit from discontinued operation
Profit from discontinued operation in the year ended December 31, 2019 increased by $1,544 million to $1,742 million, compared with$198 million in the year ended December 31, 2018. The increase primarily reflects the gain recognized on the disposal of the Food & SpecialtyMetal Packaging business.
Table of Contents
Ardagh Group S.A.68
Supplemental Management’s Discussion and Analysis
Key Operating Measures
Adjusted EBITDA consists of profit/(loss) for the year before income tax charge/(credit), net finance expense, depreciation andamortization, exceptional operating items and share of profit or loss in equity accounted joint venture. We use Adjusted EBITDA to evaluate andassess our segment performance. Adjusted EBITDA is presented because we believe that it is frequently used by securities analysts, investors andother interested parties in evaluating companies in the packaging industry. However, other companies may calculate Adjusted EBITDA in a mannerdifferent from ours. Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered an alternative toprofit/(loss) as indicators of operating performance or any other measures of performance derived in accordance with IFRS.
For a reconciliation of the profit/(loss) for the year to Adjusted EBITDA see footnote 6 to the Summary Consolidated Financial and OtherData of Ardagh Group S.A., in Item 3A.
Adjusted EBITDA in the year ended December 31, 2020 decreased by $18 million, or 2%, to $1,155 million, compared with $1,173 millionin the year ended December 31, 2019.
Adjusted EBITDA in the year ended December 31, 2019 increased by $58 million, or 5%, to $1,173 million, compared with $1,115 millionin the year ended December 31, 2018.
Exceptional Items
The following table provides detail on exceptional items from continuing operations included in cost of sales, sales, general andadministration expenses, finance expense and finance income:
Year ended December 31,2020 2019 2018
$'m $'m $'mStart-up related costs 7 13 48Impairment - property, plant and equipment 6 5 5Past service charge/(credit) 5 (37) 5Restructuring and other costs 1 6 50Legal matter — 15 —Exceptional items - cost of sales 19 2 108Transaction-related and other costs 25 51 17Restructuring and other costs 6 — —Exceptional items - SGA expenses 31 51 17Impairment - other intangible assets 8 — —Impairment - goodwill — — 186Exceptional items - impairment of intangible assets 8 — 186Debt refinancing and settlement costs 74 200 16Loss on derivative financial instruments — 3 6Exceptional items - finance expense 74 203 22Share of exceptional items in material joint venture 15 39 —Exceptional items from continuing operations 147 295 333Exceptional income tax (credit)/charge (53) 3 (49)Exceptional items from continuing operations, net of tax 94 298 284Exceptional items from discontinued operation, net of tax (22) (1,527) 13Total exceptional charge/(credit), net of tax 72 (1,229) 297
Table of Contents
Ardagh Group S.A.69
Exceptional items are those that in management’s judgment need to be disclosed by virtue of their size, nature or incidence.
2020
Exceptional items of $72 million have been recognized for the year ending December 31, 2020, primarily comprising:
● $13 million related to the Group’s capacity realignment and investment programs, including start-up related costs in Metal BeveragePackaging North America ($7 million) and property, plant and equipment impairment charges in Glass Packaging North America ($6million).
● $5 million pension costs recognized in Glass Packaging North America following the finalization of amendments to the pension schemeinitiated in 2019.
● $25 million transaction-related and other costs primarily comprised of costs relating to acquisition and other transactions, includingprofessional advisory fees, and other costs related to transformation initiatives.
● $7 million restructuring and other costs.
● $8 million impairment of other intangible assets, following a review of the Group’s digital infrastructure and future investment plans.
● $74 million debt refinancing and settlement costs related to the redemption of notes in May and June 2020 as described in Note 20,including premium payable on the early redemption of the notes of $61 million, accelerated amortization of deferred finance costs, andinterest charges from the call date to date of redemption.
● $15 million charge from the share of exceptional items in the Trivium joint venture.
● $53 million from tax credits including $15 million relating to U.S. tax reform and $13 million from debt refinancing and settlement costsincurred in the period as described in Note 6 of the consolidated financial statements.
● $22 million credit in relation to the disposal of Food & Specialty Metal Packaging business including the finalization of the completionaccounts process.
2019
Exceptional items of $1,229 million were recognized for the year ending December 31, 2019, primarily comprising:
● $15 million related to a provision for a court award and related interest, net of the tax adjusted indemnity receivable in respect of a U.S.glass business legal matter.
● $24 million related to the Group’s capacity realignment programs, including start-up related costs ($13 million), restructuring costs ($6million), property, plant and equipment impairment charges ($5 million). These costs were incurred in Glass Packaging North America ($15million), Glass Packaging Europe ($5 million), Metal Beverage Packaging America ($2 million) and Metal Beverage Packaging Europe ($2million).
● $37 million pension service credit recognized in Glass Packaging North America following amendments to a pension scheme.
● $51 million transaction-related costs, primarily comprising costs relating to the combination of the Food & Specialty Metal Packagingbusiness with the business of Exal Corporation to form Trivium.
● $200 million debt refinancing and settlement costs related to the redemption of notes in August and November 2019 as described in Note20 of the consolidated financial statements and includes, premium payable on the early redemption of the notes of $165 million, acceleratedamortization of deferred finance costs, and include interest
Table of Contents
Ardagh Group S.A.70
charges from the call date to date of redemption and $3 million exceptional loss on the termination of derivative financial instruments.
● $39 million charge from the share of exceptional items in the Trivium joint venture.
● $3 million from tax charge, as described in Note 6 of the consolidated financial statements.
● $1,527 million from discontinued operation, net of tax, primarily related to the gain, net of directly attributable disposal costs, on thedisposal of Food & Specialty Metal Packaging business.
2018
Exceptional items of $297 million were recognized for the year ending December 31, 2018, primarily comprising:
● $103 million related to the Group’s capacity realignment programs, including start-up related costs ($48 million) restructuring costs ($50million), property, plant and equipment impairment charges ($5 million). These costs were incurred in Glass Packaging North America ($78million), Metal Beverage Packaging Europe ($24 million), Glass Packaging Europe ($5 million) and a cost reduction in Metal BeveragePackaging Americas ($4 million).
● $5 million pension service cost recognized in Metal Beverage Packaging Europe and Glass Packaging Europe following a High Court rulingin the U.K. in October 2018 in respect of GMP equalization.
● $17 million transaction-related costs, primarily comprised of costs relating to acquisition, integration and other transactions.
● $186 million impairment of goodwill in Glass Packaging North America.
● $16 million debt refinancing and settlement costs primarily relating to the redemption of the Group’s $440 million 6.000% Senior Notes due2021 in July 2018, principally comprising an early redemption premium and accelerated amortization of deferred finance costs.
● $6 million exceptional loss on the termination of the Group’s $440 million U.S. dollar to euro CCIRS in July 2018.
● $49 million from tax credits, as described in Note 6 of the consolidated financial statements.
● $13 million related to exceptional items from discontinued operation, net of tax.
Table of Contents
Ardagh Group S.A.71
Segment Information
Year Ended December 31, 2020 compared to Year Ended December 31, 2019
Year endedDecember 31,
2020 2019(in $ millions)
Revenue Metal Beverage Packaging Europe 1,599 1,556Metal Beverage Packaging Americas 1,852 1,816Glass Packaging Europe 1,640 1,613Glass Packaging North America 1,640 1,675Total Revenue 6,731 6,660Adjusted EBITDA Metal Beverage Packaging Europe 249 253Metal Beverage Packaging Americas 296 250Glass Packaging Europe 369 391Glass Packaging North America 241 279Total Adjusted EBITDA 1,155 1,173
Revenue
Metal Beverage Packaging Europe. Revenue increased by $43 million, or 3%, to $1,599 million in the year ended December 31, 2020,compared with $1,556 million in the year ended December 31, 2019. The increase in revenue principally reflects favorable volume/mix effects of4% and favorable foreign currency translation effects of $10 million, partly offset by the pass through of lower input costs.
Metal Beverage Packaging Americas. Revenue increased by $36 million, or 2%, to $1,852 million in the year ended December 31, 2020,compared with $1,816 million in the year ended December 31, 2019. Revenue growth reflected favorable volume/mix effects of 5%, partly offset bythe pass through of lower input costs.
Glass Packaging Europe. Revenue increased by $27 million, or 2%, to $1,640 million in the year ended December 31, 2020, comparedwith $1,613 million in the year ended December 31, 2019. Excluding favorable foreign currency translation effects of $17 million, revenue increasedby $10 million, or 1%, principally reflected increased selling prices, including related to the pass through of higher inputs costs, partly offset byunfavourable volume/mix effects of 1%, primarily as a result of COVID-19 impacts on demand, principally in the second quarter.
Glass Packaging North America. Revenue decreased by $35 million, or 2%, to $1,640 million in the year ended December 31, 2020,compared with $1,675 million in the year ended December 31, 2019. The decrease in revenue was mainly attributed to unfavorable volume/mixeffects of 2%, which includes the impact of COVID-19 on demand, principally in the second quarter.
See Item 5. Operating and Financial Review and Prospects—Business Drivers.
Adjusted EBITDA
Metal Beverage Packaging Europe. Adjusted EBITDA decreased by $4 million, or 2%, to $249 million in the year ended December 31,2020, compared with $253 million in the year ended December 31, 2019. Excluding favorable foreign currency translation effects of $1 million, thedecrease in Adjusted EBITDA reflected the net impact of a prior year pension credit and increased operating costs, partly offset by favorablevolume/mix effects and lower input costs.
Table of Contents
Ardagh Group S.A.72
Metal Beverage Packaging Americas. Adjusted EBITDA increased by $46 million, or 18%, to $296 million in the year endedDecember 31, 2020, compared with $250 million in the year ended December 31, 2019. Adjusted EBITDA growth was mainly driven by favorablevolume/mix effects and operating costs savings.
Glass Packaging Europe. Adjusted EBITDA decreased by $22 million, or 6%, to $369 million in the year ended December 31, 2020,compared with $391 million in the year ended December 31, 2019. The decrease mainly reflected unfavorable fixed cost absorption arising as aresult of lower production, partly offset by favorable foreign currency translation effects of $5 million selling price increases, productivity gains andoperating cost savings.
Glass Packaging North America. Adjusted EBITDA decreased by $38 million, or 14%, to $241 million in the year ended December 31,2020, compared with $279 million in the year ended December 31, 2019. The decrease in Adjusted EBITDA was driven by unfavorable volume/mixeffects and lower production resulting in unfavorable fixed cost absorption and increased other costs.
Year Ended December 31, 2019 compared to Year Ended December 31, 2018
Year endedDecember 31,
2019 2018(in $ millions)
Revenue Metal Beverage Packaging Europe 1,556 1,616Metal Beverage Packaging Americas 1,816 1,742Glass Packaging Europe 1,613 1,623Glass Packaging North America 1,675 1,695Total Revenue 6,660 6,676Adjusted EBITDA Metal Beverage Packaging Europe 253 270Metal Beverage Packaging Americas 250 230Glass Packaging Europe 391 358Glass Packaging North America 279 257Total Adjusted EBITDA 1,173 1,115
Revenue
Metal Beverage Packaging Europe. Revenue decreased by $60 million, or 4%, to $1,556 million in the year ended December 31, 2019,compared with $1,616 million in the year ended December 31, 2018. The decrease in revenue principally reflected unfavorable foreign currencytranslation effects of $86 million and lower selling prices, partly offset by favorable volume/mix effects of 4%.
Metal Beverage Packaging Americas. Revenue increased by $74 million, or 4%, to $1,816 million in the year ended December 31, 2019,compared with $1,742 million in the year ended December 31, 2018. Revenue growth reflected favorable volume/mix effects of 9%, partly offset bythe pass through of lower input costs.
Glass Packaging Europe. Revenue decreased by $10 million, or 1%, to $1,613 million in the year ended December 31, 2019, comparedwith $1,623 million in the year ended December 31, 2018. The decrease in revenue principally reflected unfavorable foreign currency translationeffects of $87 million, partly offset by increased selling prices.
Glass Packaging North America. Revenue decreased by $20 million, or 1%, to $1,675 million in the year ended December 31, 2019,compared with $1,695 million in the year ended December 31, 2018. The decrease in revenue was mainly attributed to unfavorable volume/mixeffects of 3%, partly offset by the pass through of higher input costs
See Item 5. Operating and Financial Review and Prospects—Business Drivers.
Table of Contents
Ardagh Group S.A.73
Adjusted EBITDA
Metal Beverage Packaging Europe. Adjusted EBITDA decreased by $17 million, or 6%, to $253 million in the year ended December 31,2019, compared with $270 million in the year ended December 31, 2018. The decrease in Adjusted EBITDA reflected unfavorable foreign currencytranslation effects of $13 million and lower selling prices, partly offset by the impact of IFRS 16 of $14 million, favorable volume/mix effects andthe achievement of operating and other cost savings including a one-time pension credit of approximately $15 million.
Metal Beverage Packaging Americas. Adjusted EBITDA increased by $20 million, or 9%, to $250 million in the year ended December 31,2019, compared with $230 million in the year ended December 31, 2018. Adjusted EBITDA growth principally reflected favorable volume/mixeffects and the impact of IFRS 16 of $9 million, partly offset by higher operating and other costs.
Glass Packaging Europe. Adjusted EBITDA increased by $33 million, or 9%, to $391 million in the year ended December 31, 2019,compared with $358 million in the year ended December 31, 2018. Adjusted EBITDA growth mainly reflected higher selling prices to recoverincreased input costs, the impact of IFRS 16 of $24 million and favorable volume/mix effects, partly offset by unfavorable currency translationeffects of $19 million and higher operating costs.
Glass Packaging North America. Adjusted EBITDA increased by $22 million, or 9%, to $279 million in the year ended December 31,2019, compared with $257 million in the year ended December 31, 2018. The increase in Adjusted EBITDA is driven by increased selling prices andthe impact of IFRS 16 of $36 million, partly offset by unfavorable volume/mix effects and higher operating costs.
Table of Contents
Ardagh Group S.A.74
B. Liquidity and Capital Resources
Cash Requirements Related to Operations
Our principal sources of cash are cash generated from operations and external financings, including borrowings and other credit facilities.Our principal funding arrangements include borrowings available under the Group’s Global Asset Based Loan Facility. These and other sources ofexternal financing are described further in the following table. Our principal credit agreements and indentures are also filed as exhibits to this annualreport.
Both our metal beverage packaging and glass packaging divisions’ sales and cash flows are subject to seasonal fluctuations. Demand forour metal beverage and glass products is typically, based on historical trends, strongest during the summer months and in the period prior toDecember because of the seasonal nature of beverage consumption. The investment in working capital for metal beverage and glass packagingtypically peaks in the first quarter. We manage the seasonality of our working capital by supplementing operating cash flows with drawings underour credit facilities.
The following table outlines our principal financing arrangements as of December 31, 2020.
Maximum Final amount maturity Facility Undrawn
Facility Currency drawable date type Amount drawn amountLocal Local
currency currency $'m $'mm m
5.250% Senior Secured Notes USD 700 30-Apr-25 Bullet 700 700 –4.125% Senior Secured Notes USD 1,215 15-Aug-26 Bullet 1,215 1,215 –2.125% Senior Secured Notes EUR 439 15-Aug-26 Bullet 439 539 –2.125% Senior Secured Notes EUR 790 15-Aug-26 Bullet 790 969 –6.000% Senior Notes USD 800 15-Feb-25 Bullet 800 826 –4.750% Senior Notes GBP 400 15-Jul-27 Bullet 400 546 –5.250% Senior Notes USD 800 15-Aug-27 Bullet 800 800 –5.250% Senior Notes USD 1,000 15-Aug-27 Bullet 1,000 1,000 –Global Asset Based Loan Facility USD 599 07-Dec-22 Revolving – – 599Lease obligations Various – Amortising – 366 –Other borrowings/credit lines Various – Rolling Amortising – 14 1Total borrowings / undrawn facilities 6,975 600Deferred debt issue costs and bond discounts/bondpremium (114) –Net borrowings / undrawn facilities 6,861 600Cash and cash equivalents (1,267) 1,267Derivative financial instruments used to hedge foreigncurrency and interest rate risk 105 –Net debt / available liquidity 5,699 1,867
On April 8, 2020, the Group issued $500 million 5.250% Senior Secured Notes due 2025 and on April 9, 2020, the Group issued $200million add-on 5.250% Senior Secured Notes due 2025. Net proceeds from the issuance of the notes were used to redeem in full a $300 million termloan credit facility on April 8, 2020 and for general corporate purposes.
On June 2, 2020, the Group issued $1,000 million 5.250% Senior Notes due 2027. The notes are non-fungible mirror notes to the $800million 5.250% Senior Notes due 2027, issued in August, 2019. The net proceeds from the issuance of the notes were used to repurchase, by meansof a tender and consent offer, approximately $900 million of the $1,700 million 6.000% Senior Notes due 2025, together with applicable redemptionpremium and accrued interest.
Table of Contents
Ardagh Group S.A.75
On June 4, 2020, the Group issued $715 million add-on 4.125% Senior Secured Notes due 2026. The notes are an add-on to the $500million 4.125% Senior Secured Notes due 2026, issued in August, 2019. Proceeds from the issuance of the notes, net of expenses, were used toredeem in full the $695 million 4.250% Senior Secured Notes due 2022, together with applicable redemption premium and accrued interest.
On June 10, 2020, the Group issued €790 million 2.125% Senior Secured Notes due 2026. The notes are non-fungible mirror notes to the2.125% Senior Secured Notes due 2026, issued in August, 2019. Proceeds from the issuance of the notes, net of expenses, were used to redeem infull the €741 million 2.750% Senior Secured Notes due 2024, together with applicable redemption premium and accrued interest.
On October 23, 2020, the Group launched a consent solicitation for consents from holders of the £400m 4.750% Senior Notes due 2027, toapprove certain amendments to the Notes indentures. On November 4, 2020, the Group obtained majority consents in connection with this consentsolicitation.
Lease obligations at December 31, 2020, of $366 million primarily reflect $86 million of new lease liabilities and $9 million of unfavorableforeign currency movements, partly offset by $93 million of principal repayments in the year ended December 31, 2020.
At December 31, 2020 the Group had $599 million available under the Global Asset Based Loan Facility.
The following table outlines the minimum repayments the Group is obliged to make in the twelve months ending December 31, 2021,assuming that the other credit lines will be renewed or replaced with similar facilities as they mature.
Minimum netrepayment for
the twelveFinal months ending
Local Maturity Facility December 31,Facility Currency Currency Date Type 2021
(in millions) (in $ millions)Lease obligations Various — Amortizing 83Other borrowings/credit lines Various — Rolling Amortizing 14
97
The Group believes it has adequate liquidity to satisfy its cash needs for at least the next 12 months. In the year ended December 31, 2020,the continuing operations reported operating profit of $409 million, cash generated from operations of $1,037 million and generated AdjustedEBITDA of $1,155 million.
The Group generates substantial cash flow from our operations and had $1,267 million in cash and cash equivalents and restricted cash asof December 31, 2020, as well as available but undrawn liquidity of $600 million under its credit facilities. We believe that our cash balances andfuture cash flow from operating activities, as well as our credit facilities, will provide sufficient liquidity to fund our purchases of property, plant andequipment, interest payments on our notes and other credit facilities and dividend payments for at least the next 12 months. In addition, we believethat we will be able to fund certain additional investments from our current cash balances, credit facilities and cash flow from operating activities.
Accordingly, the Group believes that its long-term liquidity needs primarily relate to the service of our debt obligations. We expect tosatisfy our future long-term liquidity needs through a combination of cash flow generated from operations and, where appropriate, to refinance ourdebt obligations in advance of their respective maturity dates as we have successfully done in the past.
Table of Contents
Ardagh Group S.A.76
Cash Flows
The following table sets forth certain information reflecting a summary of our cash flow activity for the three years ended December 31,2020 set forth below:
Year ended December 31,2020 2019 2018
(in $ millions)Operating profit 409 468 205Depreciation and amortization 688 652 599Exceptional operating items 58 53 311Movement in working capital(1) (31) 105 (9)Transaction-related, start-up and other exceptional costs paid (86) (87) (92)Exceptional restructuring paid (1) (12) (23)Cash generated from continuing operations 1,037 1,179 991Interest paid (296) (417) (414)Income tax paid (49) (64) (97)Net cash from operating activities - continuing operations 692 698 480Net cash from operating activities - discontinued operation(2) — 141 375Net cash from operating activities 692 839 855
Capital expenditure(3) (543) (505) (467)Other non current asset investing cash flows (3) — —Investing cash flows used in continuing operations (546) (505) (467)Proceeds from disposal of discontinued operation, net of cash disposed of 32 2,539 —Investing cash flows from discontinued operation — (107) (108)Net cash (used in)/from investing activities (514) 1,927 (575)
Proceeds from borrowings 4,068 1,806 110Repayment of borrowings (3,261) (4,088) (442)Early redemption premium paid (61) (165) (7)Deferred debt issued costs paid (39) (14) (5)Lease payments (93) (78) (4)Dividends paid (139) (132) (132)Consideration received/(paid) on extinguishment of derivative financial instruments — 9 (44)Financing cash flows from/(used in) continuing operations 475 (2,662) (524)Financing cash flows from discontinued operation — — 3Net inflow/(outflow) from financing activities 475 (2,662) (521)
Net increase/(decrease) in cash and cash equivalents 653 104 (241)Exchange losses on cash and cash equivalents — (20) (13)Net increase/(decrease) in cash and cash equivalents after exchange losses 653 84 (254)
(1) Working capital is made up of inventories, trade and other receivables, contract assets, trade and other payables and current provisions.(2) Net cash from operating activities - discontinued operation for the year ended December 31, 2019, includes interest and income tax payments of $6 million
and $15 million respectively (2018: $2 million and $8 million).(3) Capital expenditure is the sum of purchase of property, plant and equipment and software and other intangibles, net of proceeds from disposal of property,
plant and equipment.
Table of Contents
Ardagh Group S.A.77
Net cash from operating activities – continuing operations
Net cash from operating activities decreased by $6 million from $698 million in the year ended December 31, 2019, to $692 million inthe year ended December 31, 2020. The decrease was mainly due to an increase in working capital outflows of $136 million and lower AdjustedEBITDA, as outlined in the “Supplemental Management’s Discussion and Analysis – Key operating measures” section, partly offset by lowerinterest and tax payments of $296 million and $49 million respectively, and a decrease in exceptional restructuring costs paid of $11 million.
Net cash from operating activities increased by $218 million from $480 million in the year ended December 31, 2018, to $698 million inthe year ended December 31, 2019. The increase was primarily due to an increase of $263 million in operating profit, increased working capitalinflows of $114 million, an increase in depreciation and amortization of $53 million, a decrease in restructuring costs paid of $11 million and adecrease of $5 million in transaction-related, start-up and other exceptional costs paid, partly offset by an decrease in exceptional operating items of$258 million. Net cash from operating activities was further impacted by interest paid and tax paid of $417 million and $64 million, respectively.
Net cash used in investing activities – continuing operations
Net cash used in investing activities increased by $41 million to $546 million in the year ended December 31, 2020, compared with thesame period in 2019 due to increased capital expenditure, reflecting capital investment initiatives, including from the Group’s business growthinvestment program, the timing of projects and furnace rebuild and repair activity. Capital expenditure for the year ended December 31, 2020includes $217 million on the Group’s Business Growth Investment projects.
Net cash used in investing activities increased by $38 million to $505 million in the year ended December 31, 2019, compared with thesame period in 2018 due to increased capital expenditure, reflecting capital investment initiatives, the timing of projects and furnace rebuilds. Capitalexpenditure for the year ended December 31, 2019 includes $75 million related to the Group’s short payback projects.
Net cash from investing activities – discontinued operation
Net cash from investing activities, for the year ended December 31, 2020, of $32 million reflected proceeds arising from the remeasurementof consideration for the disposal of the Food & Specialty Metal Packaging business, net of cash disposed of. Net cash from investing activities, forthe year ended December 31, 2019, includes $2,539 million relating to the proceeds from the disposal of the Food & Specialty Metal Packagingbusiness, net of cash disposed of.
Net inflow/(outflow) from financing activities – continuing operations
In the year ended December 31, 2020, net cash from financing activities represented an inflow of $475 million compared with an outflow of$2,662 million in the same period in 2019.
2020 Financing Activity
Proceeds from borrowings of $4,068 million and repayment of borrowings of $3,261 million principally reflected the effects of therefinancing activities during the twelve months ended December 31, 2020, as described in Note 20 of the audited consolidated financial statements.Total associated redemption premium and deferred debt issue costs paid were $61 million and $39 million respectively.
In the year ended December 31, 2020, the Company paid dividends to shareholders of $139 million. Please refer to Note 26 of the auditedconsolidated financial statements.
Lease payments of $93 million, in the year ended December 31, 2020, increased by $15 million, compared with $78 million in the prioryear, primarily reflecting increased principal repayments on the Group’s leasing activities.
Table of Contents
Ardagh Group S.A.78
2019 Financing Activity
In the year ended December 31, 2019, net cash from financing activities represented an outflow of $2,662 million compared with $524million in the same period in 2018.
Proceeds from borrowings of $1,806 million and repayment of borrowings of $4,088 million mainly reflected the refinancing and bondredemption activities of the Group during the twelve months ended December 31, 2019, as described in Note 20 of the audited consolidated financialstatements. Total associated early redemption premium paid was $165 million and deferred debt issue costs paid were $14 million. Repayment ofborrowings also included $100 million related to the Group’s Global Asset Based Loan Facility.
For the year ended December 31, 2019, consideration received on the extinguishment of derivative financial instruments of $9 millionreflected the net proceeds of $23 million received on settlement of a number of CCIRS in August 2019, partly offset by $14 million of amounts paidin settlement of the Group’s $200 million U.S. dollar to euro CCIRS in February 2019.
In the year ended December 31, 2019, the Company paid dividends to shareholders of $132 million.
Lease payments in the year ended December 31, 2019 were $78 million and reflected increased principal repayments following theadoption of IFRS 16, effective from January 1, 2019.
Working capital
For the year ended December 31, 2020, the movement in working capital decreased by $136 million to an outflow of $31 million,compared to an inflow of $105 million in December 31, 2019. The decrease in working capital was primarily due to lower cash inflows generatedfrom trade and other payables and trade and other receivables compared to the year ended December 31, 2019, partly offset by favorable movementsin inventory resulting in higher cash inflows compared to the year ended December 31, 2019.
For the year ended December 31, 2019, the movement in working capital during the period increased by $114 million to an inflow of $105million, compared to an outflow of $9 million in December 31, 2018. The increase in working capital was primarily due to favorable cash flowsgenerated from trade and other payables and trade and other receivables, partly offset by unfavorable cash flows generated from inventories.
Exceptional operating costs paid
Transaction-related, start-up and other exceptional costs paid in the year ended December 31, 2020 decreased by $1 million to $86 millioncompared with $87 million in the year ended December 31, 2019. In the year ended December 31, 2020, amounts paid of $86 million primarilycomprised of the cash settlement of costs related to the combination in 2019 of the Group’s Food & Specialty Metal Packaging business with thebusiness of Exal to form Trivium, in addition to start-up related costs primarily in Metal Beverage Packaging Americas, related to the Group’sbusiness growth investment program.
Exceptional restructuring costs paid in the year ended December 31, 2020 decreased by $11 million to $1 million compared with $12million in the year ended December 31, 2019. The decrease is mainly driven by lower restructuring costs compared to the year ended December 31,2019.
Transaction-related, start-up and other exceptional costs paid in the year ended December 31, 2019 decreased by $5 million to $87 millioncompared with $92 million in the year ended December 31, 2018. In the year ended December 31, 2019, amounts paid of $87 million primarilyrelated to capacity realignment and start-up related costs paid in Glass Packaging North America, Metal Beverage Packaging Europe and MetalBeverage Packaging Americas, other transaction-related costs paid and settlement of the court award respect of a U.S. glass business legal matter.
Table of Contents
Ardagh Group S.A.79
Exceptional restructuring costs paid in the year ended December 31, 2019, decreased by $11 million to $12 million compared with $23million in the year ended December 31, 2018. The decrease was mainly driven by lower restructuring cost in Glass Packaging North Americacompared to the year ended December 31, 2018.
Income tax paid
Income tax paid during the year ended December 31, 2020 was $49 million, which represents a decrease of $15 million when compared tothe year ended December 31, 2019. The decrease is primarily attributable to refunds received in certain jurisdictions.
Income tax paid during the year ended December 31, 2019 was $64 million, which represents a decrease of $33 million when compared tothe year ended December 31, 2018. The decrease is primarily attributable to the timing of tax payments and refunds received in certain jurisdictions,in addition to the phasing of tax incentives in certain jurisdictions.
Capital expenditureYear ended
December 31,2020 2019 2018
(in $ millions)Metal Beverage Packaging Europe 101 95 103Metal Beverage Packaging Americas 167 110 79Glass Packaging Europe 145 163 151Glass Packaging North America 130 137 134Capital expenditure 543 505 467
Capital expenditure for the year ended December 31, 2020 increased by $38 million to $543 million, compared to $505 million for the yearended December 31, 2019. The increase was primarily attributable to increased capital expenditure, primarily in Metal Beverage Packaging, partlyoffset by the timing of projects and furnace rebuild and repair activity in Glass Packaging. For the year ended December 31, 2020, capitalexpenditure included $217 million related to the Group’s business growth investment program.
In Metal Beverage Packaging Europe, capital expenditure in the year ended December 31, 2020 was $101 million, compared to capitalexpenditure of $95 million in the same period in 2019 with the increase primarily attributable to business growth investment projects and the timingof projects. In Metal Beverage Packaging Americas capital expenditure in the year ended December 31, 2020 was $167 million compared to capitalexpenditure of $110 million in the same period in 2019, with the increase primarily attributable to increased capital investment initiatives, inparticular from the business growth investment programs and included the acquisition of a large brownfield facility in Huron, Ohio and otherexpansion projects.
In Glass Packaging Europe, capital expenditure was $145 million in the year ended December 31, 2020, compared to capital expenditure of$163 million in the same period in 2019, with the decrease mainly attributable to the timing of furnace rebuild and repair activity. In GlassPackaging North America, capital expenditure was $130 million in the year ended December 31, 2020, compared to capital expenditure of$137 million in the same period in 2019, also due to the timing of furnace rebuild and repair activity.
Capital expenditure for the year ended December 31, 2019 increased by $38 million to $505 million, compared to $467 million for the yearended December 31, 2018. The increase was primarily attributable to spending of $75 million on short payback projects during 2019.
In Metal Beverage Packaging Europe, capital expenditure in the year ended December 31, 2019 was $95 million, compared to capitalexpenditure of $103 million in the same period in 2018 with the decrease primarily attributable to the timing of projects. In Metal BeveragePackaging Americas capital expenditure in the year ended December 31, 2019 was $110 million compared to capital expenditure of $79 million inthe same period in 2018, with the increase primarily attributable to increased capital investment initiatives.
Table of Contents
Ardagh Group S.A.80
In Glass Packaging Europe, capital expenditure was $163 million in the year ended December 31, 2019, compared to capital expenditure of$151 million in the same period in 2018, reflecting short payback project spending and the timing of furnace rebuild activity. In Glass PackagingNorth America, capital expenditure was $137 million in the year ended December 31, 2019, compared to capital expenditure of $134 million in thesame period in 2018, also due to the timing of furnace rebuild activity, partly offset by investments in short payback projects.
C. Research and development, patents and licenses
See “Item 4. Information on the Company—B. Business Overview—Metal Beverage Packaging—Innovation, Research and Development”and “Item 4. Information on the Company—B. Business Overview—Glass Packaging—Intellectual Property and Innovation, Development andEngineering”.
D. Trend information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or eventssince December 31, 2020 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capitalresources, or that would cause the reported financial information in this annual report to be not necessarily indicative of future operating results orfinancial conditions.
E. Off-balance sheet arrangements
Receivables Factoring and Related Programs
The Group participates in several uncommitted accounts receivable factoring and related programs with various financial institutions forcertain receivables, accounted for as true sales of receivables, without recourse to the Group. Receivables of $440 million were sold under theseprograms at December 31, 2020 (December 31, 2019: $473 million).
Trade Payables Processing
Our suppliers have access to independent third party payable processors. The processors allow suppliers, if they choose, to sell theirreceivables to financial institutions at the sole discretion of both the supplier and the financial institution. We have no involvement in the sale ofthese receivables and the suppliers are at liberty to use these arrangements if they wish to receive early payment. As the original liability to oursuppliers, including amounts due and scheduled payment dates, remains as agreed in our supply agreements and is neither legally extinguished norsubstantially modified, the Group continues to present such obligations within trade payables.
F. Contractual Obligations and Commitments
The following table outlines our principal contractual obligations as of December 31, 2020:
Less than More thanTotal one year 1 – 3 years 3 – 5 years five years
(in $ millions)Long term debt—capital repayment 6,595 — — 1,526 5,069Long term debt—interest * 1,623 289 578 510 246Lease obligations and other borrowings 477 113 136 76 152Purchase obligations 1,579 1,579 — — —Derivatives 1,749 1,192 557 — —Contracted capital commitments 148 148 — — —Total 12,171 3,321 1,271 2,112 5,467
* Long term debt interest is calculated based on the contractual interest rates for the Senior Secured and Senior Notes as described in Note 20 to the consolidatedfinancial statements.
Table of Contents
Ardagh Group S.A.81
Item 6. Directors, Senior Management and Employees
A. Directors and Officers
Set forth below is information concerning our directors and officers as of the date of this annual report including their names, ages,positions and current directorship terms (which expire on the date of the relevant year’s annual general meeting of shareholders). For purposes ofthis Item 6. A, references to the “Group” refer to Ardagh Group S.A.. There are no family relationships among the executive officers or between anyexecutive officer or director. Our executive officers are appointed by the board of directors to serve in their roles. Each executive officer is appointedfor such term as may be prescribed by the board of directors or until a successor has been chosen and qualified or until such officer’s death,resignation or removal. Unless otherwise indicated, the business address of all of our executive officers and directors is 56, rue Charles Martel, L-2134 Luxembourg, Luxembourg.
Name Age Position
Expiration ofcurrentdirectorshipterm
Paul Coulson 68 Chairman and Chief Executive Officer 2023David Matthews 57 Chief Financial Officer and Director 2023Shaun Murphy 54 Chief Operating Officer and Director 2022Johan Gorter 61 Chairman Glass North America and Director 2021Oliver Graham 52 Chief Executive Officer Metal Beverage and Director 2022Gerald Moloney 63 Director, Executive Committee 2022Brendan Dowling 73 Director 2022Houghton Fry 75 Director 2022Abigail Blunt 59 Independent Non-Executive Director 2023Yves Elsen 62 Independent Non-Executive Director 2023The Rt. Hon. the Lord Hammond of Runnymede
65 Independent Non-Executive Director 2021Damien O’Brien 65 Independent Non-Executive Director 2021Hermanus Troskie 50 Independent Non-Executive Director 2021Edward White 73 Independent Non-Executive Director 2023
Backgrounds of Our Directors and Officers
Paul Coulson
Paul Coulson graduated from Trinity College Dublin with a business degree in 1973. He spent five years with Price Waterhouse in Londonand Dublin and qualified as a Chartered Accountant in 1978. He then established his own accounting firm before setting up Yeoman International in1980 and developing it into a significant leasing and structured finance business. In 1998 he became Chairman of the Group and initiated thetransformation of Ardagh from a small, single plant operation into a leading global packaging company. Over the last 30 years he has been involvedin the creation and development of a number of businesses apart from Yeoman and Ardagh. These include Fanad Fisheries, a leading Irish salmonfarming company, and Sterile Technologies. Prior to its sale to Stericycle, Inc. in 2006, Sterile Technologies had been developed into the leadingmedical waste management company in the United Kingdom and Ireland.
David Matthews
David Matthews was appointed Chief Financial Officer and director of the Group in 2014. Prior to joining Ardagh, Mr. Matthews heldvarious senior finance positions at DS Smith plc and Bunzl plc. Mr. Matthews qualified as a Chartered Accountant in 1989 with Price Waterhouse inLondon and holds an engineering degree from the University of Southampton.
Table of Contents
Ardagh Group S.A.82
Shaun Murphy
Shaun Murphy was appointed Chief Operating Officer and Director of the Group in 2019. He is Chairman of the Sustainability Committee.Prior to joining Ardagh, he was a partner at KPMG for almost 20 years and completed a six-year term as Managing Partner of KPMG in Ireland in2019. Mr. Murphy also served as the Lead Director on KPMG’s Global Board from 2015 until 2019. He holds a business degree from UniversityCollege Dublin and is a Chartered Accountant.
Johan Gorter
Johan Gorter was appointed director of the Group in 2016. Mr. Gorter joined PLM in 1998 as plant director for the Dongen glass plant. Hethen held several management positions within Rexam before he joined the Group in 2007 as Group Director for Continuous Improvement. He wasChief Executive Officer of Glass Packaging Europe from 2011 to 2019 and Chief Executive Officer of Glass Packaging from 2017 to 2019. Since2020, Mr. Gorter is Chairman of Glass Packaging North America. Mr. Gorter holds a Masters in Industrial Engineering from the University ofEindhoven.
Oliver Graham
Oliver Graham is CEO of Ardagh’s Global Metal Beverage business, comprising Europe, North America and South America, a position hehas held since January 1, 2020. Before taking up his current role, Mr. Graham was CEO of Metal Beverage Europe with responsibility for MetalBeverage Brazil, as well as being Group Commercial Director. He joined Ardagh in 2016 following the acquisition of the metal beverage business,prior to which he was Group Commercial Director at Rexam PLC. Mr. Graham joined Rexam PLC in 2013 from The Boston Consulting Group,where he was a partner. Mr. Graham joined the Board in 2020 and is a member of the Sustainability Committee.
Gerald Moloney
Gerald Moloney has been a director of the Group since 2016, having served for many years on the boards of Yeoman International GroupLimited and Yeoman Capital S.A.. He is an executive with the Group since 2018 and is a member of the Executive Committee. He holds a lawdegree from University College Cork and qualified as a solicitor in 1981. He worked for a period in European law in Brussels and has many years'experience working in the areas of commercial law and commercial litigation. He is a founding partner of the commercial and litigation law firm,G.J. Moloney, with offices in Dublin and Cork, Ireland.
Brendan Dowling
Brendan Dowling has been a director of the Group since 1998. He holds graduate degrees in economics from University College Dublinand Yale University. He was Economic Advisor to the Minister for Foreign Affairs in Dublin before joining Davy Stockbrokers in 1979 as ChiefEconomist and later partner. He is a former member of the Committee of the Irish Stock Exchange and the Industrial Development Authority ofIreland. Prior to joining Yeoman International Group in 1995, he was Executive Chairman of Protos Stockbrokers in Helsinki, Finland.
Houghton Fry
Houghton Fry qualified as a solicitor in 1967 with William Fry, Solicitors in Dublin, Ireland having obtained an LLB law degree fromTrinity College, Dublin University, Ireland. He became a Partner in the firm in 1970 and, in 1986, Chairman and Senior Partner. He specialised ininternational corporate and financial law and had extensive transaction experience in many different jurisdictions. He retired from legal practice in2004 and has been a director of the Group since that time.
Table of Contents
Ardagh Group S.A.83
Abigail Blunt
Abigail Blunt currently serves as Global Head of Government Affairs and Advisor to the Board of The Kraft Heinz Company. Prior tojoining Kraft Foods Global, a predecessor to Kraft Heinz, in 2007, Ms Blunt was Senior Director of Federal Government Relations at AltriaCorporate Services Inc., which she joined in 2001. Earlier in her career, Ms Blunt gained extensive legislative and political experience as FinanceDirector of the National Republican Congressional Committee, as Foundation Director with the US Chamber of Commerce and as a legislative aidein the US House of Representatives. She is a member of The Economic Club of Washington. Ms Blunt joined the Board in 2020 as an IndependentDirector and is a member of the Sustainability Committee.
Yves Elsen
Yves Elsen is CEO and managing partner of HITEC Luxembourg S.A., a Luxembourg-based industrial and technology company servingcontractors in over 20 countries around the world. Prior to this, Mr. Elsen founded and led SATLYNX S.A., following extensive experience withlisted satellite operator SES - Société Européenne des Satellites S.A.. He was a member of the supervisory board of Villeroy & Boch AG from 2013to 2019 and its Chairman from 2017. Mr. Elsen is Chairman of the board of governors of the University of Luxembourg. Mr. Elsen joined the Boardin 2020 as an Independent Director and is a member of the Audit Committee.
The Rt. Hon. the Lord Hammond of Runnymede
The Rt. Hon. the Lord Hammond of Runnymede has had a distinguished career in British politics. A Member of Parliament of the UnitedKingdom from 1997 to 2019, he held a range of ministerial offices, most recently serving as Chancellor of the Exchequer from 2016 to 2019. Priorto this, he served as Foreign Secretary from 2014 to 2016, as Defence Secretary from 2011 to 2014 and as Transport Secretary from 2010 to 2011.Lord Philip Hammond joined the Board in 2019 as an Independent Director and is a member of the Audit Committee.
Damien O’Brien
Damien O’Brien has served as CEO of Egon Zehnder from 2008 to 2014 and as its Chairman from 2010 to 2018. Mr. O’Brien joined EgonZehnder in 1988 and since then he has been based in Australia, Asia and Europe. He is also a member of the boards of IMD Business School inLausanne, Switzerland, and St. Vincents Health Australia. He joined the Board in 2017 as an Independent Director and is a member of the AuditCommittee.
Hermanus Troskie
Hermanus Troskie has been a director of the Group since 2009. Mr. Troskie is the Deputy CEO at Maitland, a global advisory andadministration firm. He has extensive experience in the areas of international corporate structuring, cross-border financing and capital markets, witha particular interest in integrated structuring for entrepreneurs and their businesses. Mr. Troskie is a director of companies within the Yeoman groupof companies, and other private and public companies. He qualified as a South African Attorney in 1997, and as a Solicitor of the Senior Courts ofEngland and Wales in 2001. Mr. Troskie is based in Luxembourg.
Edward White
Edward White has been an Executive Professor of Finance in the Mays Business School at Texas A&M University since 2014. He wasformerly a Senior Vice President and the Chief Financial Officer of O-I Glass, Inc. for seven years until his retirement in 2012. During his 38-yearcareer with O-I, he worked in a variety of management roles across finance, manufacturing and marketing. His international experiences includedsenior management positions as an expatriate in Finland, Poland, France and Switzerland. Mr. White holds a Masters in Business Administrationfrom the University of Hawaii and a Bachelors in Business Administration from Indiana University. He joined the Board in 2017 as an IndependentDirector and is Chairman of the Audit Committee.
Table of Contents
Ardagh Group S.A.84
B. Compensation
Director Compensation
The Company has established a compensation program for our non-employee directors. The non-employee directors’ compensationprogram will allow each non-employee director the opportunity to elect to receive Class A common shares in lieu of a portion of the annual cashretainer payable to the non-employee director under the program. If a non-employee director elects to receive shares in lieu of a portion of the annualcash retainer, the Company would deliver the shares to the director at the time that the cash payment would otherwise be made to the director.
The aggregate amount of our non-employee directors’ compensation, as approved by the annual general meeting of shareholders for theyear 2020, was approximately $1,100,000. We also reimburse our non-employee directors for reasonable out-of-pocket expenses incurred inconnection with the performance of their duties as directors, including, without limitation, travel expenses in connection with their attendance in-person at board of directors and committee meetings. Directors who are employees do not receive any compensation for their services as directors.
Key Management Compensation
The aggregate amount of compensation our key management (including directors) received from the Group for service as key managementfor the year ended December 31, 2020 was $20 million. An aggregate of approximately $800,000 has been set aside or accrued for the year endedDecember 31, 2020 to provide pension, retirement or similar benefits to our key management (including directors). See Note 27 to the auditedconsolidated financial statements included elsewhere in this annual report.
C. Board practices
Controlled Company
The Class A common shares are listed on the NYSE. Our Parent Company controls more than 50% of the voting power of our commonshares, and, as a result, under the NYSE’s current listing standards, we qualify for and avail of the controlled company exception under the corporategovernance rules of the NYSE. As a controlled company, we are not required to have (1) a majority of “independent directors” on our board ofdirectors, (2) a compensation committee and a nominating and governance committee composed entirely of “independent directors” as defined underthe rules of the NYSE or (3) an annual performance evaluation of the compensation and nominating and governance committees.
Composition of Our Board of Directors
Our board of directors currently consists of 14 members divided into three classes. Our board of directors consists of such number ofdirectors as the general meeting of shareholders may from time to time determine.
Number and Election of Directors
Pursuant to Luxembourg Law, the board of directors must be composed of at least three directors. Under the Articles, the number ofdirectors of the Company is not to be more than 15. The holders of the shares have the right to elect the board of directors at a general meeting ofshareholders by a simple majority of the votes validly cast. The existing directors have the right to appoint persons to fill vacancies, which personsmay hold office until the next following annual general meeting.
Table of Contents
Ardagh Group S.A.85
Service Contracts of Directors
There are no service contracts between us and any of our current non-employee directors providing for benefits upon termination of theirservice. For a discussion of compensation, including post-termination benefits, of employee directors, see “Item 6. Directors, Senior Managementand Employees—B. Compensation—Key Management Compensation” above.
Board of Directors Powers and Function
The board of directors has the power to take any action necessary or useful to realize the corporate objects of the Company, with theexception of the powers reserved by Luxembourg Law or by the Articles to the general meeting of shareholders. Directors must act with diligenceand in good faith in performing their duties. The expected behavior of a director is that of a normally prudent person, in a like position, having thebenefit, when making such a decision, of the same knowledge and information as the directors having made the decision.
Board of Directors Meetings and Decisions
We expect that all of the resolutions of the board of directors will be adopted by a simple majority of votes cast in a meeting at which aquorum is present or represented by proxy. A member of the board of directors may authorize another member of the board of directors to representhim/her at the board meeting and to vote on his/her behalf at the meeting.
Our board of directors meets as often as it deems necessary to conduct the business of the Company.
Experience of Directors
We believe that the composition of the board of directors, which includes a broad spread of nationalities, backgrounds and expertiseprovides the breadth and depth of skills, knowledge and experience that are required to effectively lead an internationally diverse business withinterests spanning three continents and 12 individual countries.
We believe that each of the Group’s independent non-executive directors has broad-based international business expertise and many havegained significant and relevant industry specific expertise over a number of years. The composition of the board of directors reflects the need tomaintain a balance of skills, knowledge and experience.
The independent non-executive directors use their broad based skills, diverse range of business and financial experiences and internationalbackgrounds in reviewing and assessing any opportunities or challenges facing the Group and play an important role in developing the Group’sstrategy and scrutinizing the performance of management in meeting the Group’s goals and objectives.
We expect our board members collectively to have the experience, qualifications, attributes and skills to effectively oversee themanagement of the Company, including a high degree of personal and professional integrity, an ability to exercise sound business judgment on abroad range of issues, sufficient experience and background to have an appreciation of the issues facing the Company, a willingness to devote thenecessary time to board duties, a commitment to representing the best interests of the Company and a dedication to enhancing shareholder value.
Committees of the Board of Directors
Our board of directors has six standing committees: an executive committee, an audit committee, a compensation committee, a nominatingand governance committee, a finance committee and a sustainability committee. The members of each committee are appointed by the board ofdirectors and serve until their successors are elected and qualified, unless they are earlier removed or they resign. Each of the committees’ report tothe board of directors as it deems appropriate
Table of Contents
Ardagh Group S.A.86
and as the board may request. The composition, duties and responsibilities of the six standing committees are set forth below. In the future, our boardof directors may establish other committees, as it deems appropriate, to assist it with its responsibilities.
Executive Committee
The board of directors has established an executive committee that oversees the management of the business and affairs of the Company.Paul Coulson, David Matthews, Shaun Murphy, Gerald Moloney, Oliver Graham and a number of members of the key management of the Groupserve on the executive committee as of the date of this annual report, with Paul Coulson serving as the chair of the executive committee.
Audit Committee
Our audit committee consists of Edward White, Yves Elsen, The Rt. Hon. the Lord Hammond of Runnymede and Damien O’Brien, withEdward White serving as the chair of the audit committee. All of our audit committee members are independent directors, in accordance with NYSEand the SEC requirements for a company listed on the NYSE.
Our audit committee, among other matters, oversees (1) our financial reporting, auditing and internal control activities; (2) the integrity andaudits of our financial statements; (3) our compliance with legal and regulatory requirements; (4) the qualifications and independence of ourindependent auditors; (5) the performance of our internal audit function and independent auditors; and (6) our overall risk exposure andmanagement. Duties of the audit committee include the following:
● annually review and assess the adequacy of the audit committee charter and the performance of the audit committee;
● be responsible for recommending the appointment, retention and termination of our independent auditors and determine thecompensation of our independent auditors;
● review the plans and results of the audit engagement with the independent auditors;
● evaluate the qualifications, performance and independence of our independent auditors;
● have authority to approve in advance all audit and non-audit services by our independent auditors, the scope and terms thereof and thefees therefor;
● review the adequacy of our internal accounting controls; and
● meet at least quarterly with our executive officers, internal audit staff and our independent auditors in separate executive sessions.
The audit committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel forthis purpose where appropriate. Each of the audit committee members meets the financial literacy requirements of the NYSE listing standards andthe board of directors has determined that Edward White qualifies as an “audit committee financial expert,” as defined in the rules of the SEC. Thedesignation does not impose on the audit committee financial expert any duties, obligations or liabilities that are greater than those generallyimposed on members of our audit committee and our board of directors. Our board of directors has adopted a written charter for the audit committee,which is available on our corporate website at https://www.ardaghgroup.com/corporate/investors.
Table of Contents
Ardagh Group S.A.87
Compensation Committee
Our compensation committee consists of Paul Coulson, Brendan Dowling, Damien O’Brien and Hermanus Troskie, with Paul Coulsonserving as the chair of the compensation committee. As we are a controlled company under the rules of the NYSE, our compensation committee isnot required to be independent, although if such rules change in the future or we no longer meet the definition of a controlled company under thecurrent rules, we will adjust the composition of the compensation committee accordingly in order to comply with such rules.
The compensation committee has the sole authority to retain, and terminate, any compensation consultant to assist in the evaluation ofemployee compensation and to approve the consultant’s fees and the other terms and conditions of the consultant’s retention. The compensationcommittee, among other matters:
● assists our board of directors in developing and evaluating potential candidates for executive officer positions and overseeing thedevelopment of executive succession plans;
● administers, reviews and makes recommendations to our board of directors regarding our compensation plans;
● annually reviews and approves our corporate goals and objectives with respect to compensation for executive officers and, at leastannually, evaluates each executive officer’s performance in light of such goals and objectives to sets his or her annual compensation,including salary, bonus and equity and non-equity incentive compensation, subject to approval by our board of directors; and
● provides oversight of management’s decisions regarding the performance, evaluation and compensation of other officers.
Nominating and Governance Committee
Our nominating and governance committee consists of Paul Coulson, Brendan Dowling and Houghton Fry, with Paul Coulson serving asthe chair of the nominating and governance committee. As we are a controlled company under the rules of the NYSE, our nominating andgovernance committee is not required to be independent, although if such rules change in the future or we no longer meet the definition of acontrolled company under the current rules, we will adjust the composition of our nominating and governance committee accordingly in order tocomply with such rules. The nominating and governance committee, among other matters:
● selects and recommends to the board of directors nominees for election by the shareholders or appointment by the board;
● annually reviews with the board of directors the composition of the board with regards to characteristics such as independence,knowledge, skills, experience and diversity of the board members;
● makes recommendations on the frequency and structure of board meetings and to monitor the functioning of the committees of theboard;
● develops and recommends to our board of directors a set of corporate governance guidelines applicable to us and, at least annually,reviews such guidelines and recommends changes to our board of directors for approval as necessary; and
● oversees the annual self-evaluation of our board of directors.
Table of Contents
Ardagh Group S.A.88
Finance Committee
Our finance committee consists of Paul Coulson, Brendan Dowling, David Matthews and Hermanus Troskie and members of our seniormanagement with Paul Coulson serving as the chair of the finance committee. The finance committee, among other matters,
● reviews and monitors the capital structure, financial policies and treasury function of the Company and makes recommendations to theboard of directors in relation thereto; and
● reviews and recommends to the board of directors whether to approve financing agreements or arrangements, including plans to issue,incur, amend, repurchase, redeem or repay, as applicable, indebtedness.
Sustainability Committee
The sustainability committee consists of Shaun Murphy, Abigail Blunt, Oliver Graham, David Matthews and John Sadlier (the Group’sChief Sustainability Officer), with Shaun Murphy serving as the chair of the sustainability committee. The meetings of the sustainability committeewill be attended by the CEO’s of Metal Beverage Packaging Europe and Americas and Glass Packaging Europe and North America as well as ourCorporate Development and Investor Relations Director, our Chief Procurement Officer, our Chief Risk Officer and our Chief Human ResourcesOfficer. The sustainability committee, among other matters:
● assists the board of directors in fulfilling its oversight responsibility for the Company’s environmental and social sustainabilityobjectives;
● makes recommendations to the board of directors relating to environmental and social sustainability matters;
● develops and oversees the implementation of a sustainability strategy; and
● advises the board of directors periodically with regard to current and emerging environmental and social sustainability developments
Code of Conduct
Our board of directors has adopted a code of conduct that establishes the standards of ethical conduct applicable to all of our directors,officers, employees, consultants and contractors. The code addresses, among other things, competition and fair dealing, conflicts of interest, financialmatters and external reporting, compliance with applicable governmental laws, rules and regulations, company funds and assets, confidentiality andthe process for reporting violations of the code, employee misconduct, conflicts of interest or other violations. Any waiver of the code with respect toany director or executive officer will be promptly disclosed and posted on our website. Amendments to the code will be promptly disclosed andposted on our website. The code is publicly available on our website at http://ardaghgroup.com/investors and in print to any shareholder whorequests a copy.
Corporate Governance Guidelines
Our board of directors has adopted corporate governance guidelines that serve as a flexible framework within which our board of directorsand its committees operate. These guidelines cover a number of areas including the size and composition of the board, board membership criteriaand director qualifications, director responsibilities, board agenda, roles of the chairman of the board and chief executive officer, meetings ofindependent directors, board member access to management and independent advisors, director communications with third parties, directorcompensation, director orientation and continuing education, evaluation of senior management and management succession planning. Ournominating and governance committee will review our corporate governance guidelines periodically and, if necessary, recommend changes to ourboard of directors. Additionally, our board of directors has adopted independence standards as part of our corporate governance guidelines. A copyof our corporate governance guidelines are posted on our website at http://ardaghgroup.com/investors.
Table of Contents
Ardagh Group S.A.89
D. Employees
As of December 31, 2020, we had approximately 16,400 employees globally. Metal Beverage Packaging had approximately4,900 employees globally, of which approximately 2,900 were located in Europe, approximately 1,300 were located in the United States andapproximately 700 employees were located in Brazil. Glass Packaging had approximately 11,500 employees, of which approximately 6,500employees were located in Europe, approximately 5,000 employees were located in the United States.
We strive to maintain a safe working environment for all of our employees, with safety in the workplace being a key objective, measuredthrough individual accident reports, detailed follow-up programs and key performance indicator reporting. We believe that our safety record isamong the best in the industry.
The health and safety of our 16,400 employees and their families and communities, as well as our contractors, suppliers and customers hasbeen our highest priority since the outbreak of COVID-19. We established a Group-wide task force to ensure an effective and consistent responseacross our business. Regular updates have been issued and a dedicated intranet site established to facilitate effective communication ofrecommendations, policies and procedures. Communication with all stakeholders has been a core element in our response. Measures continue toevolve in line with best practice and with recommendations by national health authorities and the World Health Organization. Initiatives introducedto date have included: enhanced hygiene procedures in all locations, including temperature screening and increased cleaning in our productionfacilities; increased investment in personal protective equipment; adapting work practices and routines to ensure social distancing; establishingprocedures for self-isolation; travel advisories including restrictions on all non-essential travel, prior to broader restrictions on any travel; restrictionson visitors to our production facilities or by our employees to external facilities; actively encouraging and ultimately requiring remote working fornon-operational personnel, and enhancing our IT capability to facilitate increased remote working.
The majority of our employees are members of labor unions or are subject to centrally-negotiated collective agreements. We generallynegotiate national contracts with our unions, with variations agreed at the local plant level. Most such labor contracts have a duration of one to twoyears. Our management believes that, overall, our current relations with our employees are good.
For the employees of our subsidiaries located in countries of the European Union we have established an EWC in compliance with EUdirectives. The EWC acts as a communications conduit and consultative body between our EU subsidiaries and our employees. All the elected EWCcountry employee representatives meet at least once a year and senior management attends an annual EWC Forum meeting.
The EWC has the right to be notified of any special circumstances that would have a major impact on the interests of employees. In order tofacilitate this process in an efficient and effective way, the EWC has elected a Select Committee which meets at least 4 times a year with a seniormanagement delegation to discuss any matters which are of interest for the EWC.
EWC delegates are elected for four-year terms on the basis of legal principles or practices in the relevant countries, while the allocation ofEWC delegates between countries is governed by EU directives.
E. Share Ownership
Included in Item 7A.
Table of Contents
Ardagh Group S.A.90
Item 7. Major Shareholders and Related Party TransactionsA. Major shareholders
We have two classes of common shares: Class A common shares and Class B common shares. The rights of the holders of our Class Acommon shares and Class B common shares are identical except for par value, voting and conversion rights. Each Class A common share is entitledto one vote per share. Each Class B common share is entitled to ten votes per share. Each Class B common share is convertible at any time, at theoption of the holder, into one Class A common share, and subject to certain exceptions, is converted into one Class A common share upon transfer toa third party.
The following table sets forth information with respect to the beneficial ownership of our outstanding shares as of December 31, 2020:Shares Beneficially Owned
Class A commonshares(i) Class B common shares
% ofTotal
Name of Beneficial Owner Shares % Shares %VotingPower
ARD Finance S.A.(ii) — — 181,826,382 76.9% 82.8%ARD Group Finance Holdings S.A.(iii) — — 35,869,618 15.2% 16.3%Canyon Capital Advisors, LLC (iv) 2,615,318 14.0% — —Diameter Capital Partners LP (iv) 1,915,259 10.3% — —Private Management Group, Inc. (iv) 1,517,353 8.1% — —Wellington Management Company, LLP (iv) 1,163,328 6.2% — —Fidelity Management & Research Company (iv) 1,129,249 6.0% — —Schroder Investment Management North America, Inc. (iv) 1,058,236 5.7% — —Renaissance Technologies, LLC (iv) 1,054,493 5.6% — —Our directors and key management Paul Coulson * * — — *David Matthews * * — — *Shaun Murphy * * — — *Johan Gorter * * — — *Oliver Graham * * — — *Gerald Moloney * * — — *Brendan Dowling * * — — *Houghton Fry * * — — *Abigail Blunt * * — — *Yves Elsen * * — — *The Rt. Hon. the Lord Hammond of Runnymede * * — — *Damien O'Brien * * — — *Hermanus Troskie * * — — *Edward White * * — — *Michael Dick * * — — *John Sheehan * * — — *All directors and key management as a group 339,466 1.8% — — *
(i) Class A common shares represent 7.9% of the Company’s outstanding shares.
(ii) ARD Finance S.A. is a 100% subsidiary of the Parent Company.
(iii) ARD Group Finance Holdings S.A. is a 100% subsidiary of the Parent Company.
(iv) Based on most recent available public filings as of the date of filing this annual report.
* Represents beneficial ownership of less than one percent or no Class A common shares.
Table of Contents
Ardagh Group S.A.91
The Parent Company may be deemed to be the ultimate beneficial owner of the Class B common shares held by ARD Finance S.A. andARD Group Finance Holdings S.A.. The Parent Company has approximately 400 record shareholders and a board of directors consisting of 9directors. No shareholder is able to elect the majority of the directors or is able to exercise veto rights over the actions of the board. A companywhich is owned by Paul Coulson, our Chairman and Chief Executive Officer, owns approximately 25% of the ordinary shares of the ParentCompany. Through its non-controlling interest in the Yeoman group of companies, this company has an interest in a further approximate 34% of theordinary shares of the Parent Company.
B. Related Party Information
Relationship with our Parent Company
Our shares are currently owned indirectly by our Parent Company. Our Parent Company continues to exercise control over the compositionof our board of directors and any other action requiring the approval of our shareholders.
Shareholder Agreement
In connection with our IPO, we entered into the Shareholder Agreement which is filed as an exhibit to this annual report. The ShareholderAgreement addresses, among other things:
(i) Matters relating to the assumption, indemnification and allocation of benefits and responsibilities and mutual release of liabilities inconnection with arrangements and other obligations with respect to our business that were entered into by our Parent Company prior toour IPO;
(ii) Our obligation to cooperate in providing information to our Parent Company and taking such other actions reasonably requested tofacilitate the Parent Company’s ability to manage its investment in the Company and comply with governmental or contractualobligations, including reporting obligations under the 7.125%/7.875% Senior Secured Toggle Notes due 2023 (collectively, the “2023Toggle Notes”) or any replacement notes thereof , the defense of litigation, the preparation of tax returns, financial statements ordocuments required to be filed with the SEC or any regulatory authority (including any stock exchange), or the management of any taxaudits;
(iii) Our acknowledgement that there is anticipated at a future date a Reorganization Event (defined as an event in which the shareholdersof the Parent Company and/or its subsidiaries will receive direct ownership in a number of our common shares (in proportion to theirrespective ownership interest in the Parent Company and/or its subsidiaries), whether by dividend, distribution, exchange offer or othermeans; provided that the aggregate number of Class B common shares received by such shareholders in such event shall besubstantially the same as or fewer than (adjusting for fractional shares) the number of the Class B common shares owned by the ParentCompany and/or its subsidiaries immediately prior to the date of such event) and our agreement to take such actions as are necessary toimplement the Reorganization Event at our cost;
(iv) Our intention to pay dividends to all shareholders in amounts that will, at a minimum, be sufficient to enable the Parent Company tosatisfy the cash interest payment obligations under the 2023 Toggle Notes or any replacement notes thereof in accordance withapplicable laws, contractual obligations and our Articles; and
(v) Our agreement, so long as the 2023 Toggle Notes or any replacement notes thereof, are outstanding, not to, and not to permit oursubsidiaries to, agree to restrictions on the payment of dividends that are materially more restrictive than the restrictions in place underany contract or agreement existing on the closing date of our IPO, unless such restriction would not have a material adverse effect onour ability to pay dividends as described in the preceding clause (iv) (such determination to be made at the time such restrictions areentered into).
Table of Contents
Ardagh Group S.A.92
Registration Rights Agreement
We have entered into a Registration Rights Agreement with the Parent Company. The Registration Rights Agreement provides customary“demand,” “shelf,” and “piggyback” registration rights to eligible holders, which includes (i) the Parent Company and its subsidiaries who hold ourClass B common shares; (ii) any Qualified Holder (as defined under “Item 10. B.—Memorandum and articles of association”) of Class B or Class Acommon shares received in the Reorganization Event; and (iii) certain Registration Rights Transferees who acquire at least 5% of the registrablesecurities under the Registration Rights Agreement. The Registration Rights Agreement provides that we and the eligible holders will providecustomary indemnities to one another for certain liabilities relating to such registrations.
Related Party Transactions
For additional information, see “Note 27 – Related Party Information” to the audited consolidated financial statements included elsewherein this annual report.
There have been no materially significant related party transactions in the period since the date of approval of the financial statementsincluded elsewhere in this annual report.
Toggle Notes
In November 2019, the Parent Company issued (i) $1,130 million aggregate principal amount of 6.500% / 7.250% Senior Secured ToggleNotes due 2027 (the “Dollar Toggle Notes”), and (ii) €1,000 million aggregate principal amount of 5.000% / 5.750% Senior Secured Toggle Notesdue 2027 (the “Euro Toggle Notes”), collectively, the “Toggle Notes”. The Toggle Notes, which were used, inter alia, to redeem the 2023 ToggleNotes, are senior obligations of the Parent Company and are not obligations of ours or of our subsidiaries. However, we expect the Parent Companyto direct our affairs so as to comply with the customary covenants and events of default of the Toggle Notes which include restrictions on the ParentCompany’s ability to incur debt, grant liens and make investments.
Interest on the Toggle Notes is payable entirely in cash, except as set forth below:
If the Cash Available for Debt Service (as defined below) for an interest period:
(i) is equal to or exceeds 75%, but is less than 100% of the aggregate amount of cash interest payable, then the Parent Company may, at itsoption, elect to pay interest on up to 25% of the then outstanding principal amount of the Toggle Notes by increasing the principal amountof the outstanding Toggle Notes or by issuing additional Toggle Notes in a principal amount equal to such interest (“Parent PIK Interest”);
(ii) is equal to or exceeds 50%, but is less than 75%, of the aggregate amount of cash interest payable, then the Parent Company may, at itsoption, elect to pay interest on up to 50% of the then-outstanding principal amount of the Toggle Notes as Parent PIK Interest;
(iii) is equal to or exceeds 25%, but is less than 50%, of the aggregate amount of cash interest payable, then the Parent Company may, at itsoption, elect to pay interest on up to 75% of the then outstanding principal amount of the Toggle Notes as Parent PIK Interest; or
(iv) is less than 25% of the aggregate amount of cash interest payable, then the Parent Company may, at its option, elect to pay interest on up to100% of the then-outstanding principal amount of the Toggle Notes as Parent PIK Interest.
“Cash Available for Debt Service” is defined as the amount equal to the sum (without duplication) of (i) all cash and cash equivalents heldat the Parent Company, subject to certain exceptions and (ii) the maximum amount of all dividends and other distributions that would be lawfullypermitted to be paid to the Parent Company, if any, for the purpose
Table of Contents
Ardagh Group S.A.93
of paying cash interest by all of the Parent Company’s restricted subsidiaries after giving effect to all corporate, shareholder or other comparableactions (including fiduciary and other directors’ duties) required in order to make such payment, requirements under applicable law and allrestrictions or limitations on the ability to make such dividends or distributions that are otherwise permitted by certain restrictive covenants andprovisions in financing or other contractual arrangements of our subsidiaries.
At any time prior to November 15, 2022, the Parent Company may redeem the Toggle Notes at 100% of their principal amount plusaccrued and unpaid interest, if any, and any other amounts payable thereon, to the dates of redemption (excluded), plus the applicable “make-whole”redemption premium. Except as provided under the mandatory redemption provision described below, at any time on or after November 15, 2022,the Parent Company may also redeem all or part of the Dollar Toggle Notes at 103.250% and/or all or part of the Euro Toggle Notes at 102.500%,each with the premium declining after that date.
At any time prior to November 15, 2022, the Parent Company is required to make an offer to purchase the Dollar Toggle Notes or the EuroToggle Notes with the net cash proceeds certain sales by the Parent Company or certain holding companies of the Parent Company of our commonshares at a purchase price of (i) at least 104% of the principal amount of the notes being repurchased, plus accrued and unpaid interest to thepurchase date.
To facilitate making certain transactions in compliance with covenants of the Toggle Notes, the Parent Company may from time to timedeposit amounts into an escrow account. These amounts will be applied to fund offers to purchase and redemptions of the Toggle Notes. OnNovember 15, 2022, the Parent Company will be required to use any funds remaining in the escrow account to repurchase Toggle Notes at apurchase price equal to 104% of the principal amount of the Toggle Notes being repurchased, plus accrued and unpaid interest to the purchase date.
At any time on or after November 15, 2022, the Parent Company shall redeem the Dollar Toggle Notes and Euro Toggle Notes with the netcash proceeds from certain sales by the Parent Company or certain holding companies of the Parent Company of our common shares at a purchaseprice of 103.250% for the Dollar Toggle Notes and 102.500% for the Euro Toggle Notes, each with the premium declining after that date, plusaccrued and unpaid interest, if any, to the redemption date (excluded).
In an event treated as a change of control, the Parent Company must make an offer to purchase all outstanding Toggle Notes at aredemption price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.
In addition, our Parent Company is required to beneficially own, directly or indirectly, at least 80% of the total voting power and 67% ofthe economic rights, in our common shares.
The Toggle Notes issued by the Parent Company are secured by pledge on all our issued qualified Class B common shares.
Policy Concerning Related Person Transactions
Our board of directors has adopted a written policy, which we refer to as the related party transactions policy, for the review of anytransaction, arrangement or relationship in which we are a participant, if the amount involved exceeds $120,000 and one of our executive officers,directors or beneficial owner of more than 5% of Class A common shares or Class B common shares (or their immediate family members), each ofwhom we refer to as a related person, has a direct or indirect material interest.
C. Interests of experts and counsel
Not Applicable
Table of Contents
Ardagh Group S.A.94
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
See Item 18. of this annual report for consolidated financial statements.
Legal or arbitration proceedings
We become involved from time to time in various claims and lawsuits arising in the ordinary course of business, such as employee claims,disputes with our suppliers, environmental liability claims and intellectual property disputes.
In 2015, the German competition authority (the Federal Cartel Office) initiated an investigation of the practices in Germany of metalpackaging manufacturers, including Ardagh’s Food & Specialty Metal Packaging business which was sold to Trivium in 2019. In 2018, theEuropean Commission took over this investigation and the German investigation is, as a result, at an end. Ardagh has agreed to provide an indemnityin respect of certain losses that Trivium might incur in connection with this investigation. The European Commission’s investigation is ongoing, andthere is, at this stage no certainty as to the extent of any charge which may arise. Accordingly, no provision or indemnification liability has beenrecognized.
With the exception of the above legal matter, the Group is involved in certain other legal proceedings arising in the normal course of itsbusiness. The Group believes that none of these proceedings, either individually or in aggregate, are expected to have a material adverse effect on itsbusiness, financial condition, results of operations or cash flows.
Dividend Policy
We currently pay and intend to pay a quarterly cash dividend of $0.15 per share on our Class A and Class B common shares. We offer theholders of our Class A or Class B common shares the option to elect to receive dividends in euro.
We are a holding company incorporated in Luxembourg. We depend upon dividends paid to us by our wholly owned subsidiaries to fundthe payment of dividends, if any, to our shareholders. Our ability to obtain sufficient funds through dividends from subsidiaries is limited byrestrictions under the terms of the agreements governing our subsidiaries’ indebtedness, including indentures governing the Secured Notes andSenior Notes. These indentures contain standard high yield debt covenants including a restricted payment covenant.
Subject to Luxembourg Law, interim dividends may be declared by the board of directors. The annual general meeting of shareholderswould in the normal course be asked to declare as final the interim dividends paid during the year. Where the payments made on account of interimdividends exceed the amount of dividends subsequently approved by the shareholders at the general meeting, the additional amounts shall, to theextent of the overpayment, be deemed to have been paid on account of the next dividend. The shareholders may declare dividends at a generalmeeting of shareholders, but, in accordance with the provisions of the Articles, the dividend may not exceed the amount recommended by the boardof directors. Dividends may only be declared from the freely distributable reserves available to the Company as determined in accordance withLuxembourg Law.
In addition, under the terms of the indenture governing the Toggle Notes issued by the Parent Company, the Parent Company is required to(i) pay the interest due on the Toggle Notes in cash, unless it is entitled to pay interest on up to a specified percentage of the then-outstandingprincipal amount of the Toggle Notes as PIK Interest (defined herein), based on the amount of the Cash Available for Debt Service and, (ii) to theextent that cash interest is payable, cause us and the Parent Company’s other restricted subsidiaries (including our subsidiaries) to take all suchshareholder, corporate and other actions necessary or appropriate to permit the making of any such dividends or other distribution or other form ofreturn on capital, provided that any such shareholder and corporate and other actions would not violate applicable law and such actions wouldotherwise be consistent with fiduciary and directors’ duties of the relevant companies.
Table of Contents
Ardagh Group S.A.95
We anticipate that the expected quarterly dividend will be sufficient to enable the Parent Company to satisfy its cash interest obligationsunder the Toggle Notes; however, because our dividends will be declared in U.S. dollars and the Parent Company’s interest obligations for theToggle Notes are payable in a combination of U.S. dollars and euro, exchange rate fluctuations may affect the amount of the Parent Company’sinterest obligations, which may require us to make a special dividend to the extent of any shortfall, which will be payable to holders of both Class Aand Class B common shares.
B. Significant Changes
In connection with the transaction, as outlined in “Item 5. Operating and Financial Review and Prospects— Supplemental Management’sDiscussion and Analysis— Recent Acquisitions, Divestments and Developments” and Note 30 of the Consolidated Financial Statements elsewhere inthis annual report, on February 26, 2021, Ardagh Metal Packaging priced an upsized green bond offering of approximately $2.8 billion equivalent,consisting of €450 million 2.000% Senior Secured Notes due 2028, $600 million 3.250% Senior Secured Notes due 2028, €500 million 3.000%Senior Notes due 2029 and $1,050 million 4.000% Senior Notes due 2029.
There have been no other significant changes since the approval date of the financial statements included elsewhere in this annual report.
Item 9. The Offer and Listing
A. Offer and listing details
Our Class A common shares are listed on the NYSE under the symbol “ARD”.
B. Plan of distribution
Not applicable
C. Markets
New York Stock Exchange (“NYSE”)
D. Selling shareholders
Not applicable
E. Dilution
Not applicable
F. Expenses of the issue
Not applicable
Table of Contents
Ardagh Group S.A.96
Item 10. Additional Information
A. Share Capital
Not Applicable
B. Memorandum and articles of association
The information under the headings “Description of Share Capital” and “Comparison of Luxembourg Corporate Law and DelawareCorporate Law” in Amendment No. 5 to our Registration Statement on Form F-1 (303-214684) filed on March 6, 2017 are incorporated herein byreference. There have been no changes to the Company’s Articles, except for increases in the amount of outstanding share capital, as reflected in theCompany’s financial statements.
C. Material contracts
In connection with the Group’s combination of its Food & Specialty Metal Packaging business with the Exal business to form Trivium, theGroup entered into a Transaction Agreement with Element Holdings II L.P. (“Element”) and Trivium, dated July 14, 2019, as amended on October31, 2019, which effected (i) the transfer of the Group’s Food & Specialty Metal Packaging business to Trivium in exchange for approximately $2.6billion in cash proceeds and an approximately 42% equity interest in Trivium and (ii) the transfer of Element’s Exal business to Trivium in exchangefor an approximately 58% equity interest in Trivium. Ardagh has agreed to provide an indemnity in respect of certain losses that Trivium might incurin connection with an investigation by the European Commission of metal packaging manufacturers. See “Item 8. Financial Information—Legal orarbitration proceedings.” For further information on Trivium, see “Item 4.—Information on the Company—B. Business Overview—Joint Venture”.
On February 22, 2021, the Group entered into the Business Combination Agreement with GHV, under which GHV will combine with theAMP Business that will be held by Ardagh Metal Packaging to create an independent, pure-play beverage can business. Ardagh Metal Packagingalso announced its intention to apply to list its shares on the NYSE. For further information on the transaction, see “Item 5. Operating and FinancialReview and Prospects— Supplemental Management’s Discussion and Analysis— Recent Acquisitions, Divestments and Developments” and “Item8B— Significant Events”.
D. Exchange controls
There are no legislative or other legal provisions currently in force in Luxembourg or arising under the Company’s Articles that restrict theexport or import of capital, including the availability of cash and cash equivalents for use by our affiliated companies, or that restrict the payment ofdividends to holders of Class A common shares not resident in Luxembourg, except for regulations restricting the remittance of dividends and otherpayments in compliance with United Nations and EU sanctions. There are no limitations, either under the laws of Luxembourg or in the Articles, onthe right of non-Luxembourg nationals to hold or vote Class A common shares.
E. Taxation
Material U.S. Federal Income Tax Considerations
The following summary is a discussion of material U.S. federal income tax considerations relevant to the acquisition, ownership anddisposition of our Class A common shares by U.S. Holders (as defined below). This discussion deals only with U.S. Holders who hold our Class Acommon shares as capital assets for U.S. federal income tax purposes. Furthermore, this discussion assumes that U.S. Holders are qualified“residents of a Contracting State” as defined in Article 4 of the U.S. Luxembourg Income Tax Treaty. This discussion is based on the tax laws of theUnited States, including the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, andadministrative and judicial decisions thereof, in each case as in effect on the date hereof. All of the foregoing authorities
Table of Contents
Ardagh Group S.A.97
are subject to change, which change could apply retroactively and could affect the tax consequences described below. There can be no assurance thatthe United States Internal Revenue Service (the “IRS”) or U.S. courts will agree with the tax consequences described in this discussion.
This discussion does not cover all aspects of U.S. federal income taxation that may be relevant to an investor in light of such investor’sparticular circumstances, including the potential application of the Medicare contribution tax on net investment income or the alternative minimumtax, any U.S. federal tax consequences other than U.S. federal income tax consequences (such as U.S. federal gift or estate tax consequences), or theU.S. federal income tax consequences to investors subject to special treatment (such as banks or other financial institutions; insurance companies;tax-exempt entities; regulated investment companies; real estate investment trusts; investors liable for the alternative minimum tax; U.S. expatriates;dealers in securities or currencies; traders in securities; persons that directly, indirectly or constructively own 10% or more of the Company’s equityinterests; investors that will hold the Class A common shares as part of straddles, hedging transactions or conversion transactions for U.S. federalincome tax purposes; or U.S. Holders whose functional currency is not the U.S. dollar).
In addition, the Tax Cuts and Jobs Act of 2017, which was enacted into law on December 22, 2017, includes substantial changes to the U.S.federal income taxation of individuals and businesses which became effective from January 1, 2018. Although the new law substantially decreasedcorporate tax rates, all of the consequences of the new law and the proposed and final regulations promulgated thereunder, including the unintendedconsequences, if any, are not yet known. For the avoidance of doubt, this discussion does not cover any implications of Code section 965 (Treatmentof deferred foreign income upon transition to participation exemption system of taxation) or Code section 245A (Deduction for foreign source-portion of dividends received by domestic corporations from specified 10% owned foreign corporations).
No ruling has been or will be requested from the Internal Revenue Service (the “IRS”) regarding any matter affecting us or ourshareholders. The statements made herein may be challenged by the IRS and, if so challenged, may not be sustained upon review in a court.
As used herein, a “U.S. Holder” is a beneficial owner of Class A common shares that is for U.S. federal income tax purposes (i) anindividual who is a citizen or resident of the United States; (ii) a corporation (or any other entity taxable as a corporation for U.S. federal income taxpurposes) created in or organized under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate, the income ofwhich is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust, if (a) a U.S. court is able to exerciseprimary supervision over the administration of the trust and one or more U.S. persons control all substantial decisions of the trust or (b) a validelection is in place to treat the trust as a domestic trust for U.S. federal income tax purposes.
If any entity or arrangement classified as a partnership for U.S. federal income tax purposes invests in the Class A common shares, the U.S.tax treatment of a partner in the partnership will depend on the status of the partner and the activities of the partnership. Investors that arepartnerships or partners in partnerships should consult their tax advisors concerning the U.S. federal income tax consequences of the acquisition,ownership and disposition of Class A common shares.
THE DISCUSSION OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR GENERALINFORMATION ONLY. ALL INVESTORS SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE TAXCONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING CLASS A COMMON SHARES IN LIGHT OF THEIRPARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND EFFECT OF OTHER FEDERAL, STATE, LOCAL,FOREIGN AND OTHER TAX LAWS AND POSSIBLE CHANGES IN TAX LAW.
Distributions
Subject to the discussion under “—Passive Foreign Investment Company” below, distributions made on the Class A common shares(without reduction for any Luxembourg taxes withheld) generally will be included in a U.S.
Table of Contents
Ardagh Group S.A.98
Holder’s gross income as ordinary income from foreign sources to the extent such distributions are paid out of our current or accumulated earningsand profits (as determined for U.S. federal income tax purposes), in the taxable year in which the distribution is actually or constructively received.Generally, distributions in excess of our current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extentof the U.S. Holder’s adjusted tax basis in the Class A common shares, and thereafter as capital gain from the disposition of our Class A commonshares.
Subject to certain holding period requirements and other conditions, dividends paid to individuals and other non corporate U.S. Holders ofthe Class A common shares may be eligible for the special reduced rate normally applicable to long term capital gains if the dividends are “qualifieddividends” for U.S. federal income tax purpose. Dividends received with respect to the Class A common shares may be qualified dividends if (a) ourClass A common shares are readily tradable on the NYSE, or (b) the Company is eligible for the benefits of a comprehensive income tax treaty withthe United States that the IRS has approved for purposes of the qualified dividend rules, and certain other requirements are met. Notwithstanding theforegoing, dividends received with respect to Class A common shares will not be qualified dividends if (i) the Company was a passive foreigninvestment company (“PFIC”) under Code section 1297(a) during the year in which the dividend is paid or the prior taxable year or (ii) the Companyfirst became a “surrogate foreign corporation” under Code section 7874(a)(2)(B) (other than a surrogate foreign corporation treated as a domesticcorporation) after December 22, 2017. Accordingly, provided that we are not and do not become a PFIC or a “surrogate foreign corporation,”dividends on our Class A common shares will be qualified dividends so long as our Class A common shares are listed on NYSE. U.S. Holdersshould consult their tax advisors regarding the availability of the preferential rate on dividends to their particular circumstances. Distributionsreceived on the Class A common shares will not be eligible for the dividends received deduction allowed to corporations; however, certain 10%corporate shareholders may be eligible for a deduction under section 245A (Deduction for foreign source-portion of dividends received by domesticcorporations from specified 10% owned foreign corporations), if applicable.
Distributions on the Class A common shares will be paid in U.S. dollars with an election for U.S. Holders to receive amounts paid in euro.U.S. Holders electing to receive distributions in euro should consult their tax advisors regarding the impact of such election in their particularcircumstances.
Effect of Luxembourg Withholding Taxes
As discussed in “—Material Luxembourg Tax Considerations”, under current Luxembourg Law payments of dividends made on theClass A common shares generally are subject to a 15% Luxembourg withholding tax. This rate is not generally reduced under the U.S.-LuxembourgTreaty. For U.S. federal income tax purposes, U.S. Holders will be treated as having received the amount of any Luxembourg taxes withheld, and asthen having paid over the withheld taxes to the Luxembourg taxing authorities. As a result, the amount of dividend income included in gross incomefor U.S. federal income tax purposes by a U.S. Holder with respect to a payment of dividends may be greater than the amount of cash actuallyreceived by the U.S. Holder.
Subject to certain limitations and restrictions, a U.S. Holder may be able to claim a foreign tax credit for U.S. federal income tax purposeswith respect to any non-U.S. withholding tax (including any Luxembourg withholding tax) imposed on distributions, so long as the U.S. Holderelects not to take a deduction for any non-U.S. taxes for that taxable year.
For purposes of the foreign tax credit limitation, foreign source income is classified in one of four “baskets,” and the credit for foreign taxeson income in any basket is limited to U.S. federal income tax allocable to that income. Dividends paid on the Class A common shares generally willconstitute foreign source income in the “passive income” basket, which generally includes dividends, interest, royalties, rents, income from interestequivalents and notional principal contracts, foreign currency gains and certain other categories of income, subject to exceptions. If a U.S. Holderreceives a dividend that qualifies for the special reduced rate normally applicable to long-term capital gains described above under “—Distributions,” the amount of the dividend taken into account in calculating the foreign tax credit limitation will in general be limited to the grossamount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. A U.S. Holder may beunable to claim foreign tax credits (and may instead be allowed deductions)
Table of Contents
Ardagh Group S.A.99
for non-U.S. withholding taxes, including any Luxembourg withholding taxes, imposed on a dividend if the U.S. Holder has not held the shares forat least 16 days in the 31-day period beginning 15 days before the ex-dividend date. U.S. Holders are urged to consult their tax advisors.
The rules relating to foreign tax credits and deductions are complex. U.S. Holders should consult their tax advisors concerning theapplication of these rules in their particular circumstances.
Sale, Exchange or other Taxable Disposition
Subject to the discussion under “—Passive Foreign Investment Company” below, a U.S. Holder generally will recognize capital gain orloss on the sale, exchange or other taxable disposition of the Class A common shares in an amount equal to the difference, if any, between theamount realized on such sale, exchange or other taxable disposition and its adjusted tax basis in the Class A common shares. The adjusted tax basisin Class A common shares generally will be equal to the cost of such Class A common shares. The capital gain or loss will be long-term capital gainor loss if a U.S. Holder has held the Class A common shares for more than one year. In the case of non-corporate U.S. Holders, long-term capitalgain is generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to significant limitations.
Any gain or loss recognized by a U.S. Holder on the sale, exchange or other taxable disposition of the Class A common shares generallywill be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. Accordingly, if any gain from the sale, exchange or other taxabledisposition of the Class A common shares is subject to a non-U.S. tax, U.S. Holders may not be able to obtain a credit or claim a deduction againsttheir U.S. federal income tax liability because the gain generally would not qualify as foreign source income. U.S. Holders should consult their taxadvisors regarding the availability of foreign tax credits or deductions in connection with non-U.S. taxes imposed on the gain realized upon the sale,exchange or other taxable disposition of the Class A common shares.
See “—Passive Foreign Investment Company” below for a discussion of more adverse rules that will apply to a sale, exchange or othertaxable disposition of Class A common shares if the Company is or becomes a PFIC for U.S. federal income tax purposes.
Passive Foreign Investment Company & Surrogate Foreign Corporation Status
The Company believes it was not a PFIC for U.S. federal income tax purposes in the 2020 taxable year and based on the nature of theCompany’s business, the projected composition of the Company’s income and the projected composition and estimated fair market values of theCompany’s assets, the Company does not expect to be a PFIC for U.S. federal income tax purposes in 2021 or in the foreseeable future. However,the determination of whether the Company is a PFIC is made annually, after the close of the relevant taxable year. Therefore, it is possible that theCompany could be classified as a PFIC depending on, among other things, changes in the nature of the Company’s business, composition of itsassets or income, as well as changes in its market capitalization. Accordingly, no assurance can be given that the Company will not be a PFIC in anygiven taxable year.
A non-U.S. corporation generally will be a PFIC for U.S. federal tax purposes in any taxable year in which, after taking into account theincome and assets of the corporation and certain subsidiaries pursuant to applicable look-through rules, either:
(i) at least 75% of its gross income is “passive income”; or
(ii) at least 50% of the average quarterly value of its gross assets (which may be determined in part by the market value of Class Acommon shares, which is subject to change) is attributable to assets that produce “passive income” or are held for the productionof “passive income”.
Table of Contents
Ardagh Group S.A.100
Passive income for this purpose generally includes dividends, interest, royalties, rents and certain gains from commodities (other than commoditiessold in an active trade or business) and securities transactions.
The Company believes it was not a surrogate foreign corporation for U.S. federal income tax purposes in the 2020 taxable year andfurthermore the Company does not expect to be a surrogate foreign corporation for U.S. federal income tax purposes in 2021 or in the foreseeablefuture. However, the determination of whether the Company is a surrogate foreign corporation is made on a real-time basis. Accordingly, noassurance can be given that the Company will not be a surrogate foreign corporation in any given taxable year.
A non U.S. corporation generally will be a surrogate foreign corporation for U.S. federal tax purposes following a transaction under which:
(i) it acquires (after March 4, 2003) substantially all of the properties held by a U.S. corporation;
(ii) after the acquisition, the U.S. corporation’s former shareholders own at least 60 percent of the stock (by vote or value) of theforeign acquiring corporation; and
(iii) the expanded affiliated group that includes the foreign acquiring corporation does not have substantial business activities in thecountry where the foreign acquiring corporation is organized or created compared to the total business activities of the expanded affiliated group
If the Company is treated as a PFIC for any taxable year during which a U.S. Holder holds Class A common shares, any gain recognized bya U.S. Holder upon a sale or other taxable disposition (including certain pledges) of Class A common shares generally will be allocated ratably overthe U.S. Holder’s holding period for such Class A common shares. The amounts allocated to the taxable year of the sale or other taxable dispositionand to years before the Company became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would besubject to tax at the highest marginal rate in effect for that taxable year for individuals or corporations, as appropriate, (regardless of the U.S.Holder’s actual tax rate and without reduction for any losses) and an interest charge would be imposed on the tax attributable to the allocated amountto reflect the value of the tax deferral. Further, to the extent that any distribution received by a U.S. Holder on Class A common shares exceeds125% of the average of the annual distributions on such Class A common shares received during the preceding three years or the U.S. Holder’sholding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, as described immediately above.
Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the Class A commonshares. An election for mark-to-market treatment is available only if the Class A common shares are considered “marketable stock”, which generallyincludes stock that is regularly traded in more than de minimis quantities on a qualifying exchange (such as the NYSE). No assurance can be giventhat the Class A common shares are considered regularly traded on a qualifying exchange, and therefore considered “marketable stock,” for purposesof the PFIC mark-to-market election. Each U.S. Holder is encouraged to consult its tax advisor as to whether a mark-to-market election is availableor desirable in their particular circumstances. The Company does not intend to prepare or provide the information that would enable U.S. Holders tomake a “qualified electing fund” election.
U.S. Holders should consult their tax advisors concerning the Company’s possible PFIC and/or surrogate foreign corporation status and theconsequences to them if the Company were a PFIC and/or surrogate foreign corporation for any taxable year.
Information Reporting and Backup Withholding
In general, payments of dividends and proceeds from the sale or other disposition, with respect to the Class A common shares held by aU.S. Holder may be required to be reported to the IRS unless the U.S. Holder is an exempt recipient and, when required, demonstrates this fact. Inaddition, a U.S. Holder that is not an exempt recipient may be
Table of Contents
Ardagh Group S.A.101
subject to backup withholding (currently at a rate of 28%) unless it provides a taxpayer identification number and otherwise complies withapplicable certification requirements.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federalincome tax liability and may entitle a U.S. Holder to a refund, provided that the appropriate information is timely furnished to the IRS. U.S. Holdersshould consult with their tax advisors regarding the application of the U.S. information reporting and backup withholding regime.
Foreign Financial Asset Reporting
Certain non-corporate U.S. Holders are required to report information with respect to investments in Class A common shares not heldthrough an account with certain financial institutions. U.S. Holders that fail to report required information could become subject to substantialpenalties. Potential investors are encouraged to consult with their tax advisors about these and any other reporting obligations arising from theirinvestment in Class A common shares.
Material Luxembourg Tax Considerations
Luxembourg Tax Considerations
Scope of Discussion
This summary is based on the laws of Luxembourg, including the Income Tax Act of December 4, 1967, as amended, the MunicipalBusiness Tax Act of December 1, 1936, as amended and the Net Wealth Tax Act of October 16, 1934, as amended, to which we jointly refer as the“Luxembourg tax law”, existing and proposed regulations promulgated thereunder, and published judicial decisions and administrativepronouncements, each as in effect on the date hereof. This discussion does not generally address any aspects of Luxembourg taxation other thanincome tax, corporate income tax, municipal business tax, withholding tax and net wealth tax. This discussion, while not being a complete analysisor listing of all of the possible tax consequences of holding and disposing of Class A common shares, addresses the material tax issues. Also, therecan be no assurance that the Luxembourg tax authorities will not challenge any of the Luxembourg tax consequences described below; in particular,changes in law and/or administrative practice, as well as changes in relevant facts and circumstances, may alter the tax considerations describedbelow.
For purposes of this discussion, a “Luxembourg holder” is any beneficial owner of Class A common shares that for Luxembourg incometax purposes is:
1. an individual resident of Luxembourg under article 2 of the Luxembourg Income Tax Act, as amended; or
2. a corporation or other entity taxable as a corporation that is organized under the laws of Luxembourg under article 159 of theIncome Tax Act, as amended.
A “non-Luxembourg holder” of Class A common shares is a holder that is not a Luxembourg holder. For purposes of this summary,“holder” or “shareholder” means either a Luxembourg holder or a non-Luxembourg holder or both, as the context may require.
This discussion does not constitute tax advice and is intended only as a general guide. However, the summary, while not being exhaustive,addresses the material tax issues. Shareholders should also consult their own tax advisors as to the Luxembourg tax consequences of the ownershipand disposition of the Company’s Class A common shares. The summary applies only to shareholders who own the Company’s Class A commonshares as capital assets and does not apply to other categories of shareholders, such as dealers in securities, trustees, insurance companies, collectiveinvestment schemes and shareholders who have, or who are deemed to have, acquired their Class A common shares in the capital of the Company byvirtue of an office or employment.
Table of Contents
Ardagh Group S.A.102
Company
The Company is a Luxembourg tax resident entity and it will therefore be subject to Luxembourg corporate income tax, municipal businesstax, withholding tax, and net wealth tax.
Corporate Income Tax / Municipal Business Tax
A Luxembourg resident company is subject to corporate income tax and municipal business tax on its worldwide income at the global taxrate (including solidarity surcharge) of 24.94% in 2020 (on the basis the Company is established in Luxembourg City). This rate is composed of thecorporate income tax rate of 17%, the solidarity surcharge of 1.19% (7% on the corporate income tax rate) and the municipal business tax rate of6.75%.
Qualifying dividend income, liquidation proceeds and net capital gains on the sale of qualifying investments in subsidiaries generally isexempt from corporate income tax and municipal business tax under Luxembourg’s “participation exemption” rules, which also includes specificanti-hybrid and anti-abuse rules. Based on the Luxembourg participation exemption regime, dividends, liquidation proceeds received by theCompany from its qualifying subsidiaries and capital gains from sales by the Company of investments in its qualifying subsidiaries should beexempt from corporate income tax and municipal business tax.
Since January 1, 2019, Luxembourg is operating controlled foreign corporation (CFC) rules. The CFC rules apply under specificconditions, the impact being to attribute and tax undistributed profits from a low-taxed foreign subsidiary or permanent establishment at the level ofits Luxembourg parent company. The CFC income will be subject to corporate income tax in Luxembourg, but not to municipal business tax.
Net Wealth Tax
A Luxembourg resident company is subject annually to net wealth tax on its worldwide net wealth up to €500,000,000 at a rate of 0.5%. Areduced rate of 0.05% however applies to the portion of net wealth base which exceeds the amount of €500,000,000. Qualifying investments insubsidiaries generally are exempt from net wealth tax. Consequently, the fair market value of qualifying investments held by the Company should beexempt from net wealth tax. Accordingly, debts relating to the acquisition of exempt participations are not deductible from the net wealth tax basis.
An annual minimum net wealth tax (ranging between €535 and €32,100) may apply depending on the balance sheet composition of theCompany.
Registration duty
The issuance of shares and increases in the capital of Luxembourg corporations is subject to a Luxembourg flat registration duty of €75(this flat registration duty would actually be due on any modification of the Luxembourg corporation’s bylaws).
Shareholders
The tax consequences discussed below, while not being a complete analysis or listing of all the possible tax consequences that may berelevant to our shareholders, are materially complete. Shareholders should consult their own tax advisor in respect of the tax consequences related toownership, sale or other disposition of Class A common shares in the Company.
Table of Contents
Ardagh Group S.A.103
Luxembourg Income Tax on Dividends and Similar Distributions
A non-Luxembourg resident holder will not be subject to Luxembourg income taxes on dividend income and similar distributions in respectof Class A common shares in the Company unless such shares are attributable to a permanent establishment or a fixed place of business maintainedin Luxembourg by such non-Luxembourg resident holder. However, dividends and similar distributions are generally subject to Luxembourgwithholding tax. We assume the non resident holder is resident in a tax treaty country. We will disregard cases where holders may be residents in anon-tax treaty country.
A Luxembourg resident individual holder will be subject to Luxembourg individual income taxes on dividend income and similardistributions in respect of Class A common shares in the Company. Luxembourg individual income tax will be levied on 50% of the gross amount ofthe dividends, under certain conditions, at progressive rates. Taxable dividends are also subject to dependence insurance contribution levied at a rateof 1.4% on the net income in presence of Luxembourg resident holders affiliated to the Luxembourg social security. The dependence insurancecontribution on private income not exceeding €24.79 per annum is considered to be nil. The first €1,500 (or €3,000 for couples filing jointly) ofinvestment income (including dividends and other types of investment income) is exempt from individual income tax in Luxembourg. In addition,investment related expenses may be tax deductible.
A Luxembourg resident corporation may benefit from the Luxembourg participation exemption with respect to dividends received if certainconditions are met: (a) the holder’s Class A common shares form a stake of at least 10% of the total issued share capital in the Company or have acost price of at least €1,200,000 and (b) such qualifying shareholding has been held for an uninterrupted period of at least 12 months or theLuxembourg corporate entity holder undertakes to continue to own such qualifying shareholding until such time as the entity has held the minimumstake for an uninterrupted period of at least 12 months.
The application of the Luxembourg participation exemption to a Luxembourg resident corporation is not granted if the dividend distributedby taxable companies which are resident in other EU Member States is part of a tax avoidance scheme (general anti-abuse rule) or if suchdistributions are deductible by the payer located in another EU Member State or outside the EU in certain cases (anti-hybrid rule).
If the conditions with respect to the Luxembourg participation exemption are not met, the aforementioned 50% exemption may also applyto dividends received by a Luxembourg resident corporation.
Luxembourg Wealth Tax
A non-Luxembourg holder will not be subject to Luxembourg wealth taxes unless the holder’s Class A common shares are attributable to apermanent establishment or a fixed place of business maintained in Luxembourg by such non-Luxembourg holder.
Luxembourg resident individual holders are not subject to Luxembourg wealth tax. A Luxembourg corporate entity holder will be subject toLuxembourg net wealth tax, in respect of the Class A common shares held in the capital of the Company unless such shares form a stake of at least10% of the total issued share capital of the Company or have a cost price of at least €1,200,000. Accordingly, debts relating to the acquisition ofexempt participations are not deductible from the net wealth tax basis.
Luxembourg Capital Gains Tax upon Disposal of Class A Common Shares
A non-Luxembourg holder will be subject to Luxembourg income taxes for capital gains in the following cases:
● The holder’s Class A common shares are attributable to a permanent establishment or a fixed place of business maintained inLuxembourg by such non-Luxembourg holder. In such case, the non-Luxembourg
Table of Contents
Ardagh Group S.A.104
holder is required to recognize capital gains or losses on the sale of such shares, which will be subject to income tax and municipalbusiness tax, unless the participation exemption applies; or
● At any time within a five-year period prior to the disposal of Class A common shares in the Company, the holder’s shares and thoseheld by close relatives belong to a substantial shareholding of more than 10% (directly or indirectly) of the total issued share capital ofthe Company and the shares sold have been disposed (or deemed disposed) of within a period of six months following their acquisitionor the holder of the above-mentioned shares has been a Luxembourg resident taxpayer for more than 15 years and has become a non-resident taxpayer less than 5 years prior to the disposal of the shares, provided no provisions of a treaty for the avoidance of doubletaxation can be invoked to override this domestic law result.
For non-Luxembourg individual holders, no taxation should occur in principle in Luxembourg on the sale of Class A common shares wherethe individual holder is a resident of a tax treaty country.
A Luxembourg resident individual holder will be subject to Luxembourg income taxes for capital gains in the following cases:
● If the Class A common shares (1) represent the assets of a business or (2) were acquired for speculative purposes (i.e. disposed ofwithin six months after acquisition), then any capital gain will be taxed at ordinary income tax rates and subject to dependenceinsurance contribution levied at a rate of 1.4% (note that a “step up in basis” mechanism could be applicable for holders transferringtheir residence to Luxembourg); and
● Provided that the Class A common shares do not represent the assets of a business, and the Luxembourg resident individual hasdisposed of them more than six months after their acquisition, then the capital gains are taxable at half the overall tax rate if suchshares belong to a substantial participation (i.e., a shareholder representing more than 10% of the share capital, owned by theLuxembourg resident individual or together with his spouse/registered partner and dependent children, directly or indirectly at any timeduring the five years preceding the disposal). In this case, the first €50,000 (€100,000 for jointly taxed couples) in an 11-year periodare however tax exempt. In addition, the capital gains would be subject to dependence insurance contribution levied at a rate of 1.4% inpresence of Luxembourg resident holders affiliated to the Luxembourg social security.
Different rules may apply in the scenario of exchange of shares, which may under certain conditions be tax neutral.
A Luxembourg corporate entity holder will be subject to Luxembourg corporate income tax and municipal business tax for capital gainsunless (a) the holder’s Class A common shares form a stake of at least 10% of the total issued share capital in the Company or have a cost price of atleast €6,000,000 and (b) such qualifying shareholding has been held for an uninterrupted period of at least 12 months or the Luxembourg corporateentity holder undertakes to continue to own such qualifying shareholding until such time as the entity has held the minimum stake for anuninterrupted period of at least 12 months. Expenses directly related to a participation that qualifies for the exemption (e.g., interest expenses) areonly deductible for the amount exceeding exempt income arising from the relevant participation in a given year. Decreases in the acquisition cost ofa participation that qualifies for the exemption are deductible. The exempt amount of a capital gain realized on a qualifying participation is, however,reduced by the amount of any expenses related to the participation, including decreases in the acquisition cost, that have previously reduced thecompany’s Luxembourg taxable income. However, decreases in the acquisition cost that result from dividend distributions are not tax deductiblebecause the dividends are tax exempt. If a parent company writes off part or all of a loan to its subsidiary, the value adjustment is treated in the sameway as decreases in the acquisition cost of the participation, i.e., this is taken into account when calculating the exempt capital gain.
Table of Contents
Ardagh Group S.A.105
Luxembourg Withholding Tax—Distributions to Shareholders
A Luxembourg withholding tax of 15% is due on dividends and similar distributions to the Company’s holders (subject to the exceptionsdiscussed under “Exemption from Luxembourg Withholding Tax—Distributions to Shareholders”). The Company will be required to withhold atsuch rate from amounts payable to the shareholder and pay such withheld amounts to the Luxembourg tax authorities.
Exemption from Luxembourg Withholding Tax—Distributions to Shareholders
Dividends and similar distributions paid to the Company’s Luxembourg and non-Luxembourg holders may be exempt from Luxembourgdividend withholding tax if: (1) the shareholder is a qualifying corporate entity holding a stake of at least 10% of the total issued and outstandingshare capital of the Company or acquired the Company’s Class A common shares for at least €1,200,000; and (2) such qualifying shareholder haseither held this qualifying stake in the capital of the Company for an uninterrupted period of at least 12 months at the time of the payment of thedividend. If the minimum 12-month retention period is not met at the distribution date, the tax is first withheld and refunded by the Luxembourg taxauthorities once the 12 months retention period is effectively met. However, based on the current practice the Luxembourg tax authorities usuallyaccept to not levy the dividend withholding tax if a commitment to hold the qualifying shareholding for an uninterrupted period of at least 12 monthsis made. Examples of qualifying corporate shareholders are taxable Luxembourg companies, certain taxable companies resident in other EU memberstates, qualifying permanent establishments, capital companies resident in Switzerland subject to income tax (without benefiting from an exemption)and share capital companies fully subject to a tax corresponding to Luxembourg corporate income tax (levied on a similar taxable basis compared towhat it would be in Luxembourg) that are resident in countries that have concluded a treaty for the avoidance of double taxation with Luxembourg.Residents of countries that have concluded a treaty for avoidance of double taxation with Luxembourg might claim application of a reduced rate onor exemption from dividend withholding tax, depending on the terms of the relevant tax treaty.
The application of the dividend withholding tax exemption to taxable companies resident in other EU member states or to their EUpermanent establishments is not granted if the income allocated is part of a tax avoidance scheme (general anti-abuse rule).
Reduction of Luxembourg Withholding Tax—Distributions to Shareholders
As mentioned above, pursuant to the provisions of certain bilateral treaties for the avoidance of double taxation concluded betweenLuxembourg and other countries, and under certain circumstances, the aforementioned Luxembourg dividend withholding tax may be reduced, butonly with respect to corporate direct investment dividends. Luxembourg has entered into bilateral treaties for the avoidance of double taxation with:
Andorra; Armenia; Austria; Azerbaijan; Bahrain; Barbados; Belgium; Brazil; Brunei; Bulgaria; Canada; China; Croatia; Czech Republic; Cyprus;Denmark; Estonia; Finland; France; Georgia; Germany; Greece; Guernsey; Hong Kong; Hungary; Iceland; India; Indonesia; Ireland; Isle of Man;Israel; Italy; Jersey; Japan; Kazakhstan; Kosovo; Laos; Latvia; Liechtenstein; Lithuania; Macedonia; Malta; Malaysia; Mauritius; Mexico; Moldova;Monaco; Morocco; The Netherlands; Norway; Panama; Poland; Portugal; Qatar; Romania; Russia; Saudi Arabia; San Marino; Senegal; Serbia;Seychelles; Singapore; Slovak Republic; Slovenia; Sri Lanka; South Africa; South Korea; Spain; Sweden; Switzerland; Tajikistan; Taiwan;Thailand; Trinidad and Tobago; Tunisia; Turkey; Ukraine; United Arab Emirates; United Kingdom; United States of America; Uruguay; Uzbekistan;and Vietnam.
U.S. Holders. The Luxembourg-U.S. Tax Treaty provides that U.S. residents eligible for benefits under the treaty can seek a refund of theLuxembourg withholding tax on dividends for the portion exceeding 15% in respect of portfolio dividends, i.e., dividends distributed onshareholdings of less than 10% of the total issued share capital of the dividend paying entity. Given that the domestic Luxembourg withholding taxrate is 15%, no further reductions can be obtained in respect of these portfolio dividends received by a U.S. holder.
Table of Contents
Ardagh Group S.A.106
Credit of Luxembourg Withholding Tax on Dividends and Other Distributions
Luxembourg Holders. Subject to the satisfaction of certain conditions and assuming, in the case of corporate holders, that the participationexemption does not apply, only half of the gross amount of a dividend distributed to a Luxembourg corporate or individual holder will be subject torespectively Luxembourg corporate income tax and municipal business tax for the Luxembourg corporate holder or Luxembourg income tax for theLuxembourg individual holder. All or part of the withholding tax levied can in principle be credited against the applicable tax.
THE LUXEMBOURG TAX CONSIDERATIONS SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACHSHAREHOLDER IN THE COMPANY SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULARCONSEQUENCES THAT MAY APPLY TO SUCH SHAREHOLDER.
F. Dividends and paying agents
Not applicable
G. Statement by experts
Not applicable
H. Documents on display
We provide our shareholders with annual reports on Form 20-F containing financial statements audited by our independent auditors within120 days after the end of each fiscal year. We also issue quarterly earnings press releases as soon as practicable after the end of each quarter andquarterly reports containing interim unaudited financial statements within 60 days after the end of each fiscal quarter. We furnish these earningspress releases and quarterly reports to the SEC on Form 6-K and these are publicly available on our website athttps://www.ardaghgroup.com/corporate/investors and in print to any shareholder who requests a copy.
The SEC maintains a website at www.sec.gov that contains reports and information statements and other information regarding registrantslike us that file electronically with the SEC. For further information about us and our shares, you can also inspect our registration statement and thereports and other information that we file or furnish with the SEC on this website. Our filings with the SEC are available through the electronic datagathering, analysis and retrieval (EDGAR) system of the SEC.
I. Subsidiary Information
Not applicable
Table of Contents
Ardagh Group S.A.107
Item 11. Quantitative and Qualitative Disclosures About Market Risk
The statements about market risk below relate to our historical financial information included in this annual report.
Interest Rate Risk
The Board’s policy, in the management of interest rate risk, is to strike the right balance between the Group’s fixed and floating ratefinancial instruments, which occasionally includes the use of CCIRS. The balance struck by the Board is dependent on prevailing interest ratemarkets at any point in time.
At December 31, 2020, the Group’s external borrowings were 89.6% (2019: 88.1%) fixed, with a weighted average interest rate of 4.4%(2019: 4.6%; 2018: 5.4%). The weighted average interest rate for the Group for the year ended December 31, 2020 was 3.9% (2019: 4.0%; 2018:5.0%).
Holding all other variables constant, including levels of the Group’s external indebtedness, at December 31, 2020 a one percentage pointincrease in variable interest rates would increase interest payable by approximately $11 million (2019: $11 million).
Currency Exchange Risk
The Group presents its consolidated financial information in U.S. dollar. The functional currency of the Company is the euro.
The Group operates in 12 countries, across three continents and its main currency exposure in the year to December 31, 2020, from the eurofunctional currency, was in relation to the U.S. dollar, British pound, Swedish krona, Polish zloty, Danish krone and Brazilian real. Currencyexchange risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations.
As a result of the consolidated financial statements being presented in U.S dollar, the Group’s results are also impacted by fluctuations inthe U.S. dollar exchange rate versus the euro.
The Group has a limited level of transactional currency exposure arising from sales or purchases by operating units in currencies other thantheir functional currencies.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currencyexposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings and swaps denominated in theGroup’s principal foreign currencies.
Fluctuations in the value of these currencies with respect to the euro functional currency may have a significant impact on the Group’sfinancial condition and results of operations. The Group believes that a strengthening of the euro exchange rate (the functional currency) by 1%against all other foreign currencies from the December 31, 2020 rate would decrease shareholders’ equity by approximately $10 million (2019: $4million decrease).
Commodity Price Risk
The Group is exposed to changes in prices of our main raw materials, primarily aluminum and energy. Production costs in our MetalBeverage Packaging division are exposed to changes in prices of our main raw materials, primarily aluminum. Aluminum ingot is traded daily as acommodity on the London Metal Exchange, which has historically been subject to significant price volatility. Because aluminum is priced in U.S.dollars, fluctuations in the U.S. dollar/ euro rate also affect the euro cost of aluminum ingot. The price and foreign currency risk on the aluminumpurchases in Metal
Table of Contents
Ardagh Group S.A.108
Beverage Packaging Europe and Metal Beverage Packaging Americas are hedged by entering into swaps under which we pay fixed euro and U.S.dollar prices, respectively. Furthermore, the relative price of oil and its by products may materially impact our business, affecting our transport,lacquer and ink costs.
Where we do not have pass through contracts in relation to the underlying metal raw material cost the Group uses derivative agreements tomanage this risk. The Group depends on an active liquid market and available credit lines with counterparty banks to cover this risk. The use ofderivative contracts to manage our risk is dependent on robust hedging procedures. Increasing raw material costs over time has the potential, if weare unable to pass on price increases, to reduce sales volume and could therefore have a significant impact on our financial condition. The Group isalso exposed to possible interruptions of supply of aluminum and steel or other raw materials and any inability to purchase raw materials couldnegatively impact our operations.
Production costs in our Glass Packaging division are sensitive to the price of energy. Our main energy exposure is to the cost of gas andelectricity. These energy costs have experienced significant volatility in recent years with a corresponding effect on our production costs. In terms ofgas, which represents 50% of our energy costs, there is a continuous de coupling between the cost of gas and oil, whereby now only significantchanges in the price of oil have an impact on the price of gas. The volatility in gas pricing is driven by shale gas development (United States only),the availability of liquefied natural gas in Europe, as both Europe and Asia compete for shipments, and storage levels. Volatility in the price ofelectricity is caused by the German Renewable Energy policy, the phasing out of nuclear generating capacity, fluctuations in the price of gas andcoal and the influence of carbon dioxide costs on electricity prices.
As a result of the volatility of gas and electricity prices, the Group has either included energy pass through clauses in our sales contracts ordeveloped an active hedging strategy to fix a significant proportion of our energy costs through contractual arrangements directly with our suppliersand/or banks, where there is no energy clause in the sales contract.
Where pass through contracts do not exist, the Group policy is to purchase gas and electricity by entering into forward price fixingarrangements with suppliers for the bulk of our anticipated requirements for the year ahead. Such contracts are used exclusively to obtain delivery ofour anticipated energy supplies. The Group does not net settle, nor do we sell within a short period of time after taking delivery. The Group avails ofthe own use exemption and, therefore, these contracts are treated as executory contracts.
The Group typically builds up these contractual positions in tranches of approximately 10% of the anticipated volumes. Any gas andelectricity which is not purchased under forward price fixing arrangements is purchased under index tracking contracts or at spot prices. As atDecember 31, 2020, we have 89% and 61% of our energy risk covered for 2020 and 2021, respectively.
Credit Risk
Credit risk arises from derivative contracts, cash and deposits held with banks and financial institutions, as well as credit exposures to theGroup’s customers, including outstanding receivables. Group policy is to place excess liquidity on deposit, only with recognized and reputablefinancial institutions. For banks and financial institutions, only independently rated parties with a minimum rating of “BBB+” from at least twocredit rating agencies are accepted, where possible. The credit ratings of banks and financial institutions are monitored to ensure compliance withGroup policy. Risk of default is controlled within a policy framework of dealing with high quality institutions and by limiting the amount of creditexposure to any one bank or institution.
Group policy is to extend credit to customers of good credit standing. Credit risk is managed on an on going basis, by experienced peoplewithin the Group. The Group’s policy for the management of credit risk in relation to trade receivables involves periodically assessing the financialreliability of customers, taking into account their financial position, past experience and other factors. Provisions are made, where deemed necessary,and the utilization of credit limits is regularly monitored. Management does not expect any significant counterparty to fail to meet its obligations.The maximum exposure to credit risk is represented by the carrying amount of each asset. For the year ended December 31,
Table of Contents
Ardagh Group S.A.109
2020, the Group’s ten largest customers accounted for approximately 45% of total revenues (2019: 47%; 2018: 48%). There is no recent history ofdefault with these customers.
Surplus cash held by the operating entities over and above the balance required for working capital management is transferred to Group Treasury.Group Treasury invests surplus cash in interest bearing current accounts, money market funds and bank time deposits with appropriate maturities toprovide sufficient headroom as determined by the below mentioned forecasts.
Liquidity Risk
The Group is exposed to liquidity risk which arises primarily from the maturing of short term and long term debt obligations and from thenormal liquidity cycle of the business throughout the course of a year. The Group’s policy is to ensure that sufficient resources are available eitherfrom cash balances, cash flows or undrawn committed bank facilities, to ensure all obligations can be met as they fall due.
To effectively manage liquidity risk, the Group:
● has committed borrowing facilities that it can access to meet liquidity needs;
● maintains cash balances and liquid investments with highly-rated counterparties;
● limits the maturity of cash balances;
● borrows the bulk of its debt needs under long term fixed rate debt securities; and
● has internal control processes to manage liquidity risk.
Cash flow forecasting is performed in the operating entities of the Group and is aggregated by Group Treasury. Group Treasury monitorsrolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficientheadroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of itsborrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans.
Item 12. Description of Securities Other than Equity Securities
Not applicable
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable
Table of Contents
Ardagh Group S.A.110
Item 15. Controls and Procedures
A. Disclosure Controls and Procedures
Management maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to bedisclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within time periods specified in theSEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer andChief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Ardagh Group S.A.’s controls and procedures aredesigned to provide reasonable assurance of achieving their objectives.
Management carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief FinancialOfficer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of December 31, 2020. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that theCompany’s disclosure controls and procedures were effective as of December 31, 2020 so as to provide reasonable assurance that (1) informationrequired to be disclosed by the Company in the reports that the Company files under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and forms, and (2) that such information is accumulated and communicated to theCompany’s management, including its Chief Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regardingrequired disclosures.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of humanerror and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can onlyprovide reasonable assurance of achieving their control objectives.
B. Management’s annual report on internal control over financial reporting
Management, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, is responsible forestablishing and maintaining adequate internal control over the Company’s financial reporting. The Company’s internal control over financialreporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with IFRS as adopted by IASB and includes policies and procedures that pertain to the maintenance of records that,in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as adopted by IASB, and that receiptsand expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that couldhave a material effect on the consolidated financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting (as defined in Rules 13(a)-13(f) and15(d)-15(f) under the Exchange Act) as of December 31, 2020. In making this assessment, it used the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on ourassessment, management concluded that, as of December 31, 2020, the Company’s internal control over financial reporting is effective based onthose criteria.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate.
Table of Contents
Ardagh Group S.A.111
PricewaterhouseCoopers, an independent registered public accounting firm, has issued an unqualified opinion on the effectiveness of theCompany’s internal control over financial reporting, which is included in this annual report under “Item 18. Financial Statements—Report ofindependent registered public accounting firm.”
C. Attestation report of the registered public accounting firm
See the report of PricewaterhouseCoopers, an independent registered public accounting firm, included under “Item 18. FinancialStatements—Report of independent registered public accounting firm.”
D. Changes in internal control over financial reporting
During the period covered by this report, we have not made any changes to our internal controls over financial reporting that havematerially, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. Reserved
Item 16A. Audit committee financial expert
Our board of directors has determined that Edward White is an “audit committee financial expert” as defined by the SEC item 16A of Form20-F. All members of the audit committee are independent directors as defined in the NYSE corporate governance standards and Rule 10A-3 underthe Exchange Act.
Item 16B. Code of Ethics
Our board of directors has adopted a code of conduct that establishes the standards of ethical conduct applicable to all of our directors,officers, employees, consultants and contractors. The code addresses, among other things, competition and fair dealing, conflicts of interest, financialmatters and external reporting, compliance with applicable governmental laws, rules and regulations, company funds and assets, confidentiality andthe process for reporting violations of the code, employee misconduct, conflicts of interest or other violations. Any waiver of the code with respect toany director or executive officer will be promptly disclosed and posted on our website. Amendments to the code must be approved by our board ofdirectors and will be promptly disclosed and posted on our website.
The code is publicly available on our website at https://www.ardaghgroup.com/corporate/investors and in print to any shareholder whorequests a copy.
Item 16C. Principal Accountant Fees and Services
PricewaterhouseCoopers have acted as our principal accountants for the years ended December 31, 2020 and December 31, 2019.
The following table summarizes the total amounts for professional fees rendered in those periods:
Year endedDecember 31,
2020 2019(in $ millions)
Audit services fees 6 8Audit-related services fees 2 2Tax services fees 1 1Total 9 11
Table of Contents
Ardagh Group S.A.112
Audit Services Fees
Audit services are defined as standard audit work that needs to be performed each year in order to issue opinions on our consolidatedfinancial statements, to issue an attestation report on internal control required by Section 404 of the Sarbanes-Oxley Act of 2002 and to issue reportson our local financial statements.
Audit-Related Services Fees
Audit-related fees include services such as auditing of non-recurring transactions, reviews of quarterly financial results, consents andcomfort letters and any other audit services required for SEC or other regulatory filings.
Tax Services Fees
Tax services relate to the aggregated fees for services on tax compliance.
The Company’s audit committee approves all auditing services and permitted non-audit services performed for the Company by itsindependent auditor in advance of an engagement. All auditing services and permitted non-audit services (including the fees and terms thereof) to beperformed for the Company by its independent auditor must be approved by the audit committee in advance, subject to the de minimis exceptions fornon-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the audit committee prior to the completion of theaudit.
All audit-related service fees and tax service fees were approved by the audit committee.
Item 16D. Exemptions from the Listing Standards for Audit Committees
No exemptions from the listing standards for our audit committee
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable
Item 16F. Changes in Registrant’s Certifying Accountant
Not applicable
Item 16G. Corporate Governance
We are exempt from certain corporate governance requirements of the NYSE by virtue of being a “foreign private issuer.” Although ourforeign private issuer status exempts us from most of the NYSE’s corporate governance requirements, we intend to voluntarily comply with theserequirements, except those from which we would be exempt by virtue of being a “controlled company.” Our Parent Company controls, directly orindirectly, a majority of the voting power of our issued and outstanding shares and is a controlled company within the meaning of the NYSEcorporate governance standards (pursuant to Section 303A of the NYSE’s Listed Company Manual), entitled to certain limited corporate governanceexemptions. Under these NYSE standards, a company of which more than 50% of the voting power is held by another person or group of personsacting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including therequirements that:
● a majority of the board of directors consist of independent directors;
● the nominating and governance committee be composed entirely of independent directors with a written charter addressing thecommittee’s purpose and responsibilities;
Table of Contents
Ardagh Group S.A.113
● the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purposeand responsibilities; and
● there be an annual performance evaluation of the nominating and corporate governance and compensation committees.
As a controlled company, we utilize these exemptions, including the exemption from the requirement to have a board of directorscomposed of a majority of independent directors. In addition, although we have adopted charters for our audit, compensation and nominating andgovernance committees, our compensation and nominating and governance committees are not expected to be composed entirely of independentdirectors.
As a result of the foregoing exemptions, we can cease voluntary compliance at any time, and our shareholders may not have the sameprotections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.
Item 16H. Mine Safety Disclosure
Not applicable
Part III
Item 17. Financial Statements
See Item 18
Item 18. Financial Statements
See the Consolidated Financial Statements from F-1 – F-68.
Table of Contents
Ardagh Group S.A.114
Item 19. Exhibits
The following exhibits are filed as part of this annual report: Exhibit Index
1.1 Memorandum and articles of association
2.1 Description of Securities Registered pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 2.1 to our AnnualReport on Form 20-F, filed with the SEC on February 27, 2020)
4.1 Registration Rights Agreement (incorporated by reference to Exhibit 10.1 of Amendment No. 4 to our Registration Statement on Form F-1 filed with the SEC on March 1, 2017)
4.2 Shareholder Agreement (incorporated by reference to Exhibit 10.2 of Amendment No. 4 to our Registration Statement on Form F-1 filedwith the SEC on March 1, 2017)
4.3 Indemnification Agreement (incorporated by reference to Exhibit 10.3 of Amendment No. 3 to our Registration Statement on Form F-1filed with the SEC on February 23, 2017)
4.4+ Transaction Agreement, dated July 14, 2019, by and among Ardagh Group S.A., Element Holdings II L.P. and Trivium Packaging B.V.(incorporated by reference to Exhibit 4.4 to our Annual Report on Form 20-F, filed with the SEC on February 27, 2020)
4.5 Business Combination Agreement, dated as of February 22, 2021, by and among Gores Holdings V, Inc., Ardagh Metal Packaging S.A.,Ardagh Group S.A. and Ardagh MP MergeCo Inc. (incorporated by reference to Exhibit 2.1 to our Form 6-K, filed with the SEC onFebruary 23, 2021).
4.6 Form of Subscription Agreement, dated as of February 22, 2021, by and among Ardagh Metal Packaging S.A., Gores Holdings V andcertain investors (incorporated by reference to Exhibit 10.1 to our Form 6-K, filed with the SEC on February 23, 2021).
4.7 Form of Registration Rights and Lock-Up Agreement to be entered into by and among Ardagh Group S.A., Ardagh Metal PackagingS.A., Gores Holdings V Sponsor LLC and certain persons associated with Gores Holdings V Sponsor LLC (incorporated by reference toExhibit 10.2 to our Form 6-K, filed with the SEC on February 23, 2021).
4.8 Form of Warrant Assignment, Assumption and Amendment Agreement to be entered into by and among Ardagh Metal Packaging S.A.,Gores Holdings V, Inc. and Continental Stock Transfer & Trust Company, a New York corporation (incorporated by reference to Exhibit10.3 to our Form 6-K, filed with the SEC on February 23, 2021).
4.9 Transfer Agreement, dated February 22, 2021, by and between Ardagh Group S.A. and Ardagh Metal Packaging S.A.
8.1 Subsidiaries of Ardagh Group S.A.
12.1 Rule 13a-14(a)/15d-14(a) -– Section 302 - Certification of Chief Executive Officer
12.2 Rule 13a-14(a)/15d-14(a) -– Section 302 - Certification of Chief Financial Officer
13.1 18 U.S.C. SECTION 1350 - Section 906 - Certification of Chief Executive Officer
13.2 18 U.S.C. SECTION 1350 - Section 906 - Certification of Chief Financial Officer
Table of Contents
Ardagh Group S.A.115
99.1 Credit Agreement dated as of December 17, 2013 among: (i) Ardagh Holdings USA Inc. and Ardagh Packaging Finance S.A. (asBorrowers); (ii) Ardagh Packaging Holdings Limited (as Parent Guarantor); (iii) the Subsidiary Guarantors from time to time partythereto; (iv) the Lenders from time to time party thereto; (v) Citibank, N.A. (as Administrative Agent) and (vi) Citibank, N.A., LondonBranch (as Security Agent) (incorporated by reference to Exhibit 99.1 of our Registration Statement on Form F-1 filed with the SEC onNovember 17, 2016)
99.2 Indenture dated as of January 30, 2017 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghPackaging Holdings Limited (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent and TransferAgent); (iv) Citibank, N.A. (as U.S. Paying Agent); and (v) Citigroup Global Markets Deutschland AG (as Registrar) (incorporated byreference to Exhibit 99.8 of Amendment No. 2 to our Registration Statement on Form F-1 filed with the SEC on February 10, 2017)
99.3 Indenture dated as of June 12, 2017 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghGroup S.A. (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent and Transfer Agent); and (iv)Citigroup Global Markets Deutschland AG (as Registrar) (incorporated by reference to Exhibit 99.4 to our Annual Report on Form 20-F,filed with the SEC on February 27, 2020
99.4 Indenture dated as of August 12, 2019 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghGroup S.A. (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent, Transfer Agent and SecurityAgent); and (iv) Citigroup Global Markets Europe AG (as Registrar) (incorporated by reference to Exhibit 99.5 to our Annual Report onForm 20-F, filed with the SEC on February 27, 2020)
99.5 Indenture dated as of August 12, 2019 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghGroup S.A. (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent and Transfer Agent); and (iv)Citigroup Global Markets Europe AG (as Registrar) (incorporated by reference to Exhibit 99.6 to our Annual Report on Form 20-F, filedwith the SEC on February 27, 2020)
99.6 Indenture dated as of November 20, 2019 among: (i) ARD Finance S.A. (as Issuer); (ii) Citibank, N.A., London Branch (as Trustee,Principal Paying Agent, Transfer Agent and Security Agent); and (iii) Citigroup Global Markets Europe AG (as Registrar) (incorporatedby reference to Exhibit 99.7 to our Annual Report on Form 20-F, filed with the SEC on February 27, 2020)
99.7 Indenture dated as of April 8, 2020 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghGroup S.A. (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent and Transfer Agent); and (iv)Citigroup Global Markets Europe AG (as Registrar)
99.8 Indenture dated as of June 2, 2020 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghGroup S.A. (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent and Transfer Agent); and (iv)Citigroup Global Markets Europe AG (as Registrar)
99.9 Indenture dated as of June 10, 2020 among: (i) Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. (as Issuers); (ii) ArdaghGroup S.A. (as Parent Guarantor); (iii) Citibank, N.A., London Branch (as Trustee, Principal Paying Agent and Transfer Agent); and (iv)Citigroup Global Markets Europe AG (as Registrar)
101 Interactive Data Files (XBRL – Related Documents)
+ Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii)would be competitively harmful if publicly disclosed. Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of RegulationS-K and will be supplementally provided to the SEC upon request.
Table of Contents
Ardagh Group S.A.116
SIGNATURES
The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized theundersigned to sign this annual report on its behalf.
Date: March 8, 2021
Ardagh Group S.A. By: /s/ DAVID MATTHEWS Name: David Matthews Title: Chief Financial Officer
Table of Contents
Ardagh Group S.A.F-1
INDEX TO THE FINANCIAL STATEMENTS
Ardagh Group S.A.
Audited Financial Statements
Report of Independent Registered Public Accounting Firm F-2
Consolidated Income Statement for the years ended December 31, 2020, 2019 and 2018 F-5
Consolidated Statement of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018 F-6
Consolidated Statement of Financial Position at December 31, 2020 and 2019 F-7
Consolidated Statement of Changes in Equity for the years ended December 31, 2020, 2019 and 2018 F-8
Consolidated Statement of Cash Flows for the years ended December 31, 2020, 2019 and 2018 F-9Notes to the Consolidated Financial Statements F-10
Table of Contents
Ardagh Group S.A.F-2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Ardagh Group S.A.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statement of financial position of Ardagh Group S.A. and its subsidiaries (the“Company”) as of December 31, 2020 and 2019, and the related consolidated income statement, consolidated statement of comprehensive income,consolidated statement of changes in equity and consolidated statement of cash flows for each of the three years in the period ended December 31,2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internalcontrol over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period endedDecember 31, 2020 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Alsoin our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, basedon criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019,the manner in which it accounts for revenues from contracts with customers in 2018 and the manner in which it accounts for financial instruments in2018.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Reporton Internal Control over Financial Reporting appearing under Item 15 of Form 20-F. Our responsibility is to express opinions on the Company’sconsolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accountingfirm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect tothe Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, andwhether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of theconsolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includedexamining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control
Table of Contents
Ardagh Group S.A.F-3
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in thecircumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, andthat receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’sassets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements thatwas communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to theconsolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of criticalaudit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating thecritical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Assessment for the Glass Packaging North America Cash Generating Unit
As described in Note 2 and Note 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1,682million at December 31, 2020. The goodwill associated with the Glass Packaging North America Cash Generating Unit (“CGU”) was $560 millionand the recoverable amount was $86 million in excess of this. The Company performs its impairment test of goodwill annually following approval ofthe annual budget or whenever indicators suggest that impairment may have occurred. If an impairment indicator exists for a CGU, the Companyestablishes the recoverable amount being the higher of the value in use (“VIU”) model and fair value less costs of disposal (“FVLCD”) model whencompared to the carrying value of the CGU. At December 31, 2020, Management has determined the recoverable amount of the Glass PackagingNorth America CGU by assessing the FVLCD of the underlying assets using a market approach, on the basis that this gave a higher recoverableamount than an assessment based on Value in Use. Management’s FVLCD calculations for the Glass Packaging North America CGU includedsignificant estimates and assumptions relating to projected revenue volumes, cost savings and the effects of future restructuring as part of estimatingthe projected adjusted EBITDA from a market participant’s perspective. The market participant projected adjusted EBITDA was then multiplied bya multiple based on comparable companies.
The principal considerations for our determination that performing procedures relating to goodwill impairment assessment for the GlassPackaging North America CGU is a critical audit matter are first, that there was significant judgment exercised by management when developing therecoverable amount of the CGU and second, the limited excess of recoverable amount in the impairment model. This in turn led to a high degree ofauditor judgment, subjectivity, and
Table of Contents
Ardagh Group S.A.F-4
effort in performing procedures to evaluate management’s FVLCD calculations and significant assumptions, including projected revenue volumes,cost savings, the effects of future restructuring as part of estimating the projected adjusted EBITDA from a market participant’s perspective, and theEBITDA multiple used in the impairment test. In addition, the audit effort involved the use of professionals with specialized skill and knowledge toassist in performing these procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on theconsolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairmentassessment, including controls over management’s budgeting process used in the valuation of the Glass Packaging North America CGU and over theFVLCD model. These procedures also included, among others, testing management’s process for developing the recoverable amount; testing thecompleteness, accuracy, and relevance of the model,the underlying data used in the calculations and management’s disclosures; and evaluating thesignificant estimates used by management, including the projected revenue volumes, cost savings, the effects of future restructuring as part ofestimating the projected adjusted EBITDA from a market participant’s perspective, and the EBITDA multiple applied in the impairment calculation.Evaluating management’s estimates involved (i) performing a retrospective comparison of forecasted results to actual past performance, (ii)comparing significant estimates to external market and industry data, and (iii) assessing whether these assumptions were consistent with evidenceobtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the EBITDA multiple.
/s/PricewaterhouseCoopersDublin, Ireland
February 24, 2021
We have served as the Company’s auditor since at least 1968, which includes periods before the Company became subject to SEC reportingrequirements in 2017. We have not been able to determine the specific year we began serving as auditor of the Company or its predecessors.
Table of Contents
Ardagh Group S.A.F-5
ARDAGH GROUP S.A.CONSOLIDATED INCOME STATEMENT
Year ended December 31, 2020 Year ended December 31, 2019 Year ended December 31, 2018 Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptionalitems Items Total items Items Total items Items Total
Note $'m $'m $'m $'m $'m $'m $'m $'m $'m Note 4 Note 4 Note 4
Revenue 3 6,731 — 6,731 6,660 — 6,660 6,676 — 6,676Cost of sales (5,679) (19) (5,698) (5,595) (2) (5,597) (5,623) (108) (5,731)Gross profit 1,052 (19) 1,033 1,065 (2) 1,063 1,053 (108) 945Sales, general and administration expenses (350) (31) (381) (311) (51) (362) (300) (17) (317)Intangible amortization and impairment 9 (235) (8) (243) (233) — (233) (237) (186) (423)Operating profit 467 (58) 409 521 (53) 468 516 (311) 205Net finance expense 5 (264) (74) (338) (456) (203) (659) (457) (22) (479)Share of post-tax loss in equity accounted joint venture 12 (33) (15) (48) (10) (39) (49) — — —Profit/(loss) before tax 170 (147) 23 55 (295) (240) 59 (333) (274)Income tax charge 6 (63) 53 (10) (41) (3) (44) (67) 49 (18)Profit/(loss) from continuing operations 107 (94) 13 14 (298) (284) (8) (284) (292)Profit from discontinued operation 25 – 22 22 215 1,527 1,742 211 (13) 198Profit/(loss) for the year 107 (72) 35 229 1,229 1,458 203 (297) (94)
Profit/(loss) attributable to: Equity holders 35 1,458 (94)Non-controlling interests — — —Profit/(loss) for the year 35 1,458 (94)
Earnings/(loss) per share: Basic and diluted earnings/(loss) for the year attributable to equity holders 7 $ 0.15 $ 6.17 $ (0.40)
Earnings/(loss) per share from continuing operations:Basic and diluted earnings/(loss) per share from continuing operationsattributable to equity holders 7 $ 0.06 $ (1.20) $ (1.24)
The accompanying notes to the consolidated financial statements are an integral part of these consolidated financial statements.
Table of Contents
Ardagh Group S.A.F-6
ARDAGH GROUP S.A.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended December 31, 2020 2019 2018
Note $'m $'m $'m
Profit/(loss) for the year 35 1,458 (94)
Other comprehensive (expense)/income: Items that may subsequently be reclassified to income statement
Foreign currency translation adjustments: —Arising in the year (74) 47 75
(74) 47 75Effective portion of changes in fair value of cash flow hedges: —New fair value adjustments into reserve (24) 54 54—Movement out of reserve to income statement 53 (10) (73)—Movement in deferred tax (7) 1 5
22 45 (14)(Loss)/gain recognized on cost of hedging:—New fair value adjustments into reserve — (8) 15—Movement out of reserve — (12) (2)
— (20) 13
Share of other comprehensive income in equity accounted joint venture 12 26 5 —
Items that will not be reclassified to income statement —Re-measurement of employee benefit obligations 21 (68) (140) 11—Deferred tax movement on employee benefit obligations 24 32 (1)
(44) (108) 10
Share of other comprehensive income in equity accounted joint venture 12 3 2 —
Total other comprehensive (expense)/income for the year (67) (29) 84
Total comprehensive (expense)/income for the year (32) 1,429 (10)
Attributable to: Equity holders (32) 1,429 (10)Non-controlling interests — — —Total comprehensive (expense)/income for the year (32) 1,429 (10)
Attributable to equity holders:Continuing operations (54) (312) (173)Discontinued operation 22 1,741 163Total comprehensive (expense)/income for the year (32) 1,429 (10)
The accompanying notes to the consolidated financial statements are an integral part of these consolidated financial statements.
Table of Contents
Ardagh Group S.A.F-7
ARDAGH GROUP S.A.CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At December 31, 2020 2019
Note $'m $'m
Non-current assets Intangible assets 9 2,756 2,884Property, plant and equipment 10 2,945 2,677Derivative financial instruments 20 9 4Deferred tax assets 13 245 204Investment in material joint venture 12 390 375Other non-current assets 11 73 68
6,418 6,212Current assets Inventories 14 923 964Trade and other receivables 15 869 734Contract assets 16 139 151Derivative financial instruments 20 36 3Cash and cash equivalents 17 1,267 614
3,234 2,466TOTAL ASSETS 9,652 8,678
Equity attributable to owners of the parent Issued capital 18 23 23Share premium 1,292 1,292Capital contribution 485 485Other reserves 164 165Retained earnings (2,326) (2,181)
(362) (216)Non-controlling interests 1 1TOTAL EQUITY (361) (215)Non-current liabilities Borrowings 20 6,481 5,524Lease obligations 20 283 291Employee benefit obligations 21 811 716Derivative financial instruments 20 26 44Deferred tax liabilities 13 369 344Provisions 22 55 29
8,025 6,948Current liabilities Borrowings 20 14 22Lease obligations 20 83 73Interest payable 43 60Derivative financial instruments 20 104 17Trade and other payables 23 1,579 1,628Income tax payable 115 97Provisions 22 50 48
1,988 1,945TOTAL LIABILITIES 10,013 8,893TOTAL EQUITY and LIABILITIES 9,652 8,678
The accompanying notes to the consolidated financial statements are an integral part of these consolidated financial statements.
Table of Contents
Ardagh Group S.A.F-8
ARDAGH GROUP S.A.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the owner of the parent Foreign
currency Cash flow Cost of Non‑‑Share Share Capital translation hedge hedging Retained controlling Totalcapital premium contribution reserve reserve reserve earnings Total interests equity
$'m $'m $'m $'m $'m $'m $'m $'m $'m $'mNote 18
At January 1, 2018 (i) 23 1,290 485 11 (48) 18 (3,139) (1,360) 1 (1,359)Loss for the year — — — — — — (94) (94) — (94)Other comprehensive income/(expense) — — — 75 (14) 13 10 84 — 84Hedging gains transferred to cost of inventory — — — — (10) — — (10) — (10)Share issuance — 2 — — — — — 2 — 2Dividends paid (Note 26) — — — — — — (132) (132) — (132)At December 31, 2018 23 1,292 485 86 (72) 31 (3,355) (1,510) 1 (1,509)
At January 1, 2019 (ii) 23 1,292 485 86 (72) 31 (3,401) (1,556) 1 (1,555)Profit for the year — — — — — — 1,458 1,458 — 1,458Other comprehensive income/(expense) — — — 52 45 (20) (106) (29) — (29)Hedging losses transferred to cost of inventory — — — — 16 — — 16 — 16Recycle to income statement on disposal ofsubsidiary (Note 25) — — — 27 — — — 27 — 27Dividends paid (Note 26) — — — — — — (132) (132) — (132)At December 31, 2019 23 1,292 485 165 (11) 11 (2,181) (216) 1 (215)
At January 1, 2020 23 1,292 485 165 (11) 11 (2,181) (216) 1 (215)Profit for the year — — — — — — 35 35 — 35Other comprehensive (expense)/income — — — (54) 27 1 (41) (67) — (67)Hedging losses transferred to cost of inventory — — — — 25 — — 25 — 25Dividends paid (Note 26) — — — — — — (139) (139) — (139)At December 31, 2020 23 1,292 485 111 41 12 (2,326) (362) 1 (361)
The accompanying notes to the consolidated financial statements are an integral part of these consolidated financial statements.
(i) Retained earnings at January 1, 2018 were re-presented by $13 million reflecting $20 million in respect of the impact of the adoption of IFRS 15 “Revenue from contracts with customers”, partly offset by $7 million in respect of the adoption of IFRS 9 “Financial instruments”. Further, following the adoption of IFRS 9 “Financial instruments”, the cash flow hedge reserve was re-presented by $16 million, and cost of hedging reserve was re-presented to $18 million.
(ii) Retained earnings at January 1, 2019 have been re-presented by $46 million reflecting the impact of the adoption of IFRS 16 ‘Leases’. Please refer to Note 2 for further details inrespect of the impact of this recently adopted accounting standard.
Table of Contents
Ardagh Group S.A.F-9
ARDAGH GROUP S.A.CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended December 31, 2020 2019 2018
Note $'m $'m $'m
Cash flows from operating activities Cash generated from continuing operations 24 1,037 1,179 991Interest paid (296) (417) (414)Income tax paid (49) (64) (97)Net cash from operating activities - continuing operations 692 698 480Net cash from operating activities - discontinued operation (i) – 141 375Net cash from operating activities 692 839 855
Cash flows used in investing activities Purchase of property, plant and equipment (532) (498) (465)Purchase of intangible assets (12) (10) (12)Proceeds from disposal of property, plant and equipment 1 3 10Other non current asset investing cash flows (3) – –Investing cash flows used in continuing operations (546) (505) (467)Proceeds from disposal of discontinued operation, net of cash disposed of 32 2,539 –Investing cash flows used in discontinued operation – (107) (108)Net cash (used in)/from investing activities (514) 1,927 (575)
Cash flows from/(used in) financing activities Proceeds from borrowings 20 4,068 1,806 110Repayment of borrowings 20 (3,261) (4,088) (442)Early redemption premium paid (61) (165) (7)Deferred debt issue costs paid (39) (14) (5)Lease payments 20 (93) (78) (4)Dividends paid 26 (139) (132) (132)Consideration received/(paid) on extinguishment of derivative financial instruments 20 – 9 (44)Financing cash flows from/(used in) continuing operations 475 (2,662) (524)Financing cash flows from discontinued operation – – 3Net cash inflow/(outflow) from financing activities 475 (2,662) (521)
Net increase/(decrease) in cash and cash equivalents 653 104 (241)
Cash and cash equivalents at the beginning of the year 17 614 530 784Exchange losses on cash and cash equivalents – (20) (13)Cash and cash equivalents at the end of the year 17 1,267 614 530
The accompanying notes to the consolidated financial statements are an integral part of these consolidated financial statements.
(i) Operating cash flows for discontinued operation for the year ended December 31, 2019, include interest and income tax payments of $6 million and $15 million respectively(2018: $2 million and $8 million).
Table of Contents
Ardagh Group S.A.F-10
ARDAGH GROUP S.A.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Ardagh Group S.A. (the “Company”) was incorporated in Luxembourg on May 6, 2011. The Company’s registered office is 56, rue CharlesMartel, L-2134 Luxembourg, Luxembourg.
On March 20, 2017, the Company closed its initial public offering (“IPO”) of 18,630,000 Class A common shares on the New York StockExchange (“NYSE”).
Ardagh Group S.A. and its subsidiaries (together the “Group” or “Ardagh”) is a leading supplier of sustainable, innovative, value-addedrigid packaging solutions. The Group’s products include metal beverage cans, as well as glass containers primarily for beverage and food markets.End-use categories include beer, wine, spirits, carbonated soft drinks (“CSD”), energy drinks, juices and water, as well as food and pharmaceuticals.Ardagh also holds a stake of approximately 42% in Trivium Packaging B.V. (“Trivium”), a leading supplier of metal packaging in the form of cansand aerosol containers, serving a broad range of end-use categories, principally including food, seafood, pet food and nutrition, as well as beauty andpersonal care.
These consolidated financial statements reflect the consolidation of the legal entities forming the Group for the periods presented. Theprincipal operating legal entities forming the Group are listed in Note 27.
The principal accounting policies that have been applied to the consolidated financial statements are described in Note 2.
2. Summary of significant accounting policies
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with, and are in compliance with, InternationalFinancial Reporting Standards (“IFRS”) and related interpretations as adopted by the International Accounting Standards Board (“IASB”). IFRS iscomprised of standards and interpretations approved by the IASB and IFRS and interpretations approved by the predecessor InternationalAccounting Standards Committee that have been subsequently approved by the IASB and remain in effect. References to IFRS hereafter should beconstrued as references to IFRS as adopted by the IASB.
The consolidated financial statements, are presented in U.S. dollar, rounded to the nearest million and have been prepared under thehistorical cost convention except for the following:
● derivative financial instruments are stated at fair value; and
● employee benefit obligations are measured at the present value of the future estimated cash flows related to benefits earned and pensionassets valued at fair value.
The preparation of consolidated financial information in conformity with IFRS requires the use of critical accounting estimates andassumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgment inthe process of applying Group accounting policies. These estimates, assumptions and judgments are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances and are subject to continual re-evaluation.However, actual outcomes may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas whereassumptions and estimates are significant to the consolidated financial statements are discussed in the critical accounting estimates, assumptions andjudgments.
The consolidated financial statements for the Group were authorized for issue by the board of directors of Ardagh Group S.A. (the “Board”)on February 24, 2021.
Table of Contents
Ardagh Group S.A.F-11
Going concern
At the date that the audited consolidated financial statements were approved for issue by the board of directors, the Board has formed thejudgment that there is a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeablefuture. Accordingly, these audited consolidated financial statements have been prepared on a going concern basis. In assessing whether the goingconcern assumption is appropriate, the Board has taken into account all available information about a period, extending to at least, December 31,2021. In particular, the Board has considered the impact of COVID-19 and measures to prevent its spread being imposed by Governments in thecountries in which the Group, its suppliers and its customers operate as previously referred to. In arriving at its conclusion, the Board has takenaccount of the Group’s current and anticipated trading performance, together with current and anticipated levels of cash and net debt and theavailability of committed borrowing facilities and as a result it is the Board’s judgment that it is appropriate to prepare the audited consolidatedfinancial statements using the going concern basis.
Recently adopted accounting standards and changes in accounting policies
The impact of new standards, amendments to existing standards and interpretations issued and effective for annual periods beginning on orafter January 1, 2020 have been assessed by the Board as not having had a material impact on the Group.
Recent accounting pronouncements
The Board’s assessment of the impact of new standards, which are not yet effective and which have not been early adopted by the Group,on the consolidated financial statements and disclosures is on-going.
Basis of consolidation
(i) Subsidiaries
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date onwhich control ceases. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entitywhen 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 itspower to direct the activities of the entity.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is theconsideration given in exchange for control of the identifiable assets, liabilities and contingent liabilities of the acquired legal entities. Acquisition-related costs are expensed and included as exceptional items within sales, general and administration expenses. The acquired net assets are initiallymeasured at fair value. The excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill. Anygoodwill and fair value adjustments are recorded as assets and liabilities of the acquired legal entity in the currency of the primary economicenvironment in which the legal entity operates (the “functional currency”). If the cost of acquisition is less than the fair value of the Group’s share ofthe net assets of the legal entity acquired, the difference is recognized directly in the consolidated income statement. The Group considersobligations of the acquiree in a business combination that arise as a result of the change in control, to be cash flows arising from obtaining control ofthe controlled entity, and classifies these obligations as investing activities in the consolidated statement of cash flows.
(ii) Non-controlling interests
Non-controlling interests represent the portion of the equity of a subsidiary which is not attributable to the Group. Non-controlling interestsare presented separately in the consolidated financial statements. Changes in ownership of a subsidiary which do not result in a change in control aretreated as equity transactions.
Table of Contents
Ardagh Group S.A.F-12
(iii) Transactions eliminated on consolidation
Transactions, balances and unrealized gains or losses on transactions between Group companies are eliminated. Subsidiaries’ accountingpolicies have been changed where necessary to ensure consistency with the policies adopted by the Group.
Foreign currency
(i) Functional and presentation currency
The functional currency of the Company is euro. The consolidated financial statements are presented in U.S. dollar which is the Group’spresentation currency.
(ii) Foreign currency transactions
Items included in the financial statements of each of the Group’s entities are measured using the functional currency of that entity.
Transactions in foreign currencies are translated into the functional currency at the foreign exchange rate ruling at the date of thetransaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at theforeign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognized in the consolidated income statement,except: (i) differences on foreign currency borrowings that provide an effective hedge against a net investment in a foreign entity (“net investmenthedges”), which are taken to other comprehensive income until the disposal of the net investment, at which time they are recognized in theconsolidated income statement; and (ii) differences on certain derivative financial instruments discussed under “Derivative financial instruments”below.
(iii) Financial statements of foreign operations
The assets and liabilities of foreign operations are translated into euro at foreign exchange rates ruling at the reporting date. The revenuesand expenses of foreign operations are translated to euro at average exchange rates for the year. Foreign exchange differences arising on retranslationand settlement of such transactions are recognized in other comprehensive income. Gains or losses accumulated in other comprehensive income arerecycled to the consolidated income statement when the foreign operation is disposed of.
Non-monetary items measured at fair value in foreign currency are translated using the exchange rates as at the date when the fair value isdetermined.
Business combinations and goodwill
All business combinations are accounted for by applying the acquisition method of accounting. This involves measuring the cost of thebusiness combination and allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities assumed.Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value,and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs areexpensed as incurred and included in sales, general and administration expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation inaccordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Table of Contents
Ardagh Group S.A.F-13
Any contingent consideration is recognized at fair value at the acquisition date.
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at thedate of acquisition.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to those groups of cash-generating units (“CGUs”)that are expected to benefit from the business combination in which the goodwill arose for the purpose of assessing impairment. Goodwill is testedannually for impairment or whenever indicators suggest that impairment may have occurred.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with thedisposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in thesecircumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.
Joint ventures
The Group participates in a number of joint ventures where control is shared with one or more other parties. The Group’s investment andshare of results of joint ventures are shown within single line items in the consolidated statement of financial position and consolidated incomestatement respectively. The Group uses the equity method of accounting to account for its joint ventures. See Note 12 “Investment in material jointventure” to the consolidated financial statements.
Discontinued Operations
A discontinued operation is a component of the Group’s business that represents a separate major line of the business, geographical area ofoperations or is material to revenue or operating profit and has been disposed of or is held for sale. When an operation is classified as a discontinuedoperation, the comparative income statement is restated as if the operation had been discontinued from the start of the earliest period presented. Cashflows relating to discontinued operations are presented as a separate line item within each of the operating, investing and financing cash flow.
Intangible assets
Intangible assets are initially recognized at cost.
Intangible assets acquired as part of a business combination are capitalized separately from goodwill if the intangible asset is separable orarises from contractual or other legal rights. They are initially recognized at cost which, for intangible assets arising in a business combination, istheir fair value at the date of acquisition.
Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairmentlosses. The carrying values of intangible assets with finite useful lives are reviewed for indicators of impairment at each reporting date and aresubject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable.
The amortization of intangible assets is calculated to write off the book value of finite lived intangible assets over their useful lives on astraight-line basis on the assumption of zero residual value as follows:
Computer software 2 - 7 yearsCustomer relationships 5 - 15 yearsTechnology 5 - 15 years
Table of Contents
Ardagh Group S.A.F-14
(i) Computer software
Computer software development costs are recognized as assets. Costs associated with maintaining computer software programs arerecognized as an expense as incurred.
(ii) Customer relationships
Customer relationships acquired in a business combination are recognized at fair value at the acquisition date. Customer relationships havea finite useful economic life and are carried at cost less accumulated amortization.
(iii) Technology
Technology based intangibles acquired in a business combination are recognized at fair value at the acquisition date and reflect the Group’sability to add value through accumulated technological expertise surrounding product and process development.
(iv) Research and development costs
Research costs are expensed as incurred. Development costs relating to new products are capitalized if the new product is technically andcommercially feasible. All other development costs are expensed as incurred.
Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, except for land which isshown at cost less impairment. Spare parts which form an integral part of plant and machinery and which have an estimated useful economic lifegreater than one year are capitalized. Spare parts which do not form an integral part of plant and machinery and which have an estimated usefuleconomic life less than one year are included as consumables within inventory and expensed when utilized.
Where components of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plantand equipment.
(ii) Leased assets
Effective January 1, 2019 on adoption of IFRS 16
At the lease commencement date or the effective date of a lease modification, the Group recognizes a lease liability as the present value ofexpected future lease payments, discounted at the Group’s incremental borrowing rate unless the rate implicit in the lease is readily determinable,excluding any amounts which are variable based on the usage of the underlying asset and a right-of-use asset generally at the same amount plus anydirectly attributable costs. The incremental borrowing rate is the discount rate the Group would have to pay to borrow, over a similar term and with asimilar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The Groupcombines lease and non-lease components and accounts for them as a single lease component with the exception of the dunnage asset class.Extension options or periods after termination options are considered by management if it is reasonably certain that the lease will be extended or notterminated.
Table of Contents
Ardagh Group S.A.F-15
Effective prior to adoption of IFRS 16 on January 1, 2019
The determination of whether an arrangement is, or contains a lease, is based on the substance of the arrangement and requires anassessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets, and the arrangement conveys a right touse the asset.
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as financeleases.
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made underoperating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on a straight-line basis over theperiod of the lease.
(iii) Subsequent costs
The Group recognizes in the carrying amount of an item of property, plant and equipment, the cost of replacing the component of such anitem when that cost is incurred, if it is probable that the future economic benefits associated with the item will flow to the Group and the cost of theitem can be measured reliably. When a component is replaced the old component is de-recognized in the period. All other costs are recognized in theconsolidated income statement as an expense as incurred. When a major overhaul is performed, its cost is recognized in the carrying amount of theplant and equipment as a replacement if the recognition criteria above are met.
(iv) Depreciation
Depreciation is charged to the consolidated income statement on a straight-line basis over the estimated useful lives of each part of an itemof property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
Buildings 30 - 40 yearsPlant and machinery 3 - 40 yearsMolds 2 - 3 yearsOffice equipment and vehicles 3 - 10 years
Assets’ useful lives and residual values are adjusted if appropriate, at each balance sheet date.
Impairment of non-financial assets
Assets that have an indefinite useful economic life are not subject to amortization and are tested annually for impairment or wheneverindicators suggest that impairment may have occurred. Assets that are subject to amortization are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which theasset’s carrying amount exceeds its recoverable amount.
For the purposes of assessing impairment, assets excluding goodwill and long lived intangible assets, are grouped at the lowest levels atwhich cash flows are separately identifiable. Goodwill and long lived intangible assets are allocated to groups of CGUs. The groupings represent thelowest level at which the related assets are monitored for internal management purposes.
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reportingdate.
Table of Contents
Ardagh Group S.A.F-16
The recoverable amount of other assets is the greater of their value in use and fair value less costs to sell. In assessing value in use, theestimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the timevalue of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount isdetermined for the CGU to which the asset belongs.
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in, first-out basis andincludes expenditure incurred in acquiring the inventories and bringing them to their current location and condition. In the case of finished goods andwork-in-progress, cost includes direct materials, direct labor and attributable overheads based on normal operating capacity.
Net realizable value is the estimated proceeds of sale less all further costs to completion, and less all costs to be incurred in marketing,selling and distribution.
Spare parts which are deemed to be of a consumable nature, are included within inventories and expensed when utilized.
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, borrowings and trade and otherpayables. Non-derivative financial instruments are recognized initially at fair value plus any directly attributable transaction costs, except asdescribed below. Subsequent to initial recognition, non-derivative financial instruments are measured as described below.
(i) Trade and other receivables
Effective January 1, 2018 on adoption of IFRS 9
Trade and other receivables are recognized initially at the transaction price and are, thereafter measured at amortized cost using theeffective interest rate method less any provision for impairment, in accordance with the Group’s held to collect business model. The Group usesestimates based on expected credit losses and current information in determining the level of debts for which an allowance for impairment isrequired. For all other trade receivables, the Group uses an allowance matrix to measure the expected credit loss, based on historical actual creditloss experiences, adjusted for forward-looking information.
(ii) Securitized assets
The Group has entered into securitization transactions involving certain of its trade receivables. The securitized assets are recognized on theconsolidated statement of financial position, until all of the rights to the cash flows from those assets have expired or have been fully transferredoutside the Group, or until substantially all of the related risks, rewards and control of the related assets have been transferred to a third party.
The Group has also entered into a Global Asset Based Loan Facility (“ABL”) involving certain of its trade receivables and inventory. Thelenders under the ABL have security over those receivables, inventory and the bank accounts where the associated cash flows are received. Therisks, rewards and control of these assets are still retained by the Group and are, therefore, recognized on the statement of financial position.
(iii) Contract assets
Contract assets represent revenue required to be accelerated or recognized over time based on production completed in accordance with theGroup’s revenue recognition policy (as set out below). A provision for impairment of a
Table of Contents
Ardagh Group S.A.F-17
contract asset will be recognized when there is evidence that the revenue recognized will not be recoverable. The provision is measured based on anallowance matrix to measure the expected credit loss, based on historical actual credit loss experiences, adjusted for forward-looking information.
(iv) Cash and cash equivalents
Cash and cash equivalents include cash on hand and call deposits held with banks and restricted cash. Cash and cash equivalents are carriedat amortized cost.
Short term bank deposits of greater than three months’ maturity which do not meet the definition of cash and cash equivalents are classifiedas financial assets within current assets and stated at amortized cost.
Restricted cash comprises cash held by the Group but which is ring-fenced or used as security for specific financing arrangements, and towhich the Group does not have unfettered access. Restricted cash is measured at amortized cost.
(v) Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost;any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the Group’s consolidated income statementover the period of the borrowings using the effective interest rate method.
Borrowings are classified as current liabilities unless the Group, has an unconditional right to defer settlement of the liability for at leasttwelve months after the reporting date.
(vi) Trade and other payables
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest ratemethod.
Derivative financial instruments
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at theirfair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so,the nature of the item being hedged.
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 20. The full fair value of a hedgingderivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a currentasset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset orliability.
(i) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in othercomprehensive income, allocated between cash flow hedge gains or losses and cost of hedging gains or losses. For cash flow hedges whichsubsequently result in the recognition of a non-financial asset, the amounts accumulated in the cash flow hedge reserve are reclassified to the asset inorder to adjust its carrying value. Amounts accumulated in the cash flow hedge reserve and cost of hedging reserve, or as adjustments to carryingvalue of non-financial assets, are recycled to the consolidated income statement in the periods when the hedged item will affect profit or loss.
Table of Contents
Ardagh Group S.A.F-18
The gain or loss relating to the ineffective portion is recognized immediately in the consolidated income statement. When a hedginginstrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing at that timeremains in equity and is recognized in the consolidated income statement when the forecast cash flow arises. When a forecast transaction is nolonger expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the consolidated income statement.
(ii) Net investment hedges
Derivative financial instruments are classified as net investment hedges when they hedge changes in the Group’s net investments in itssubsidiaries due to exposure to foreign currency. Net investment hedges are accounted for in a similar manner to cash flow hedges. The gain or lossrelating to the ineffective portion of a net investment hedge is recognized immediately in the consolidated income statement within finance incomeor expense.
(iii) Fair value hedges
Derivative financial instruments are classified as fair value hedges when they hedge the Group’s exposure to changes in the fair value of arecognized asset or liability. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Group’sconsolidated income statement, together with any changes in the fair value of the hedged item that is attributable to the hedged risk. Changes in thefair value of derivatives relating to the cost of hedging are recognized in other comprehensive income.
The gain or loss relating to the effective portion of derivatives with fair value hedge accounting is recognized in the consolidated incomestatement within “net finance expense”. The gain or loss relating to the ineffective portion is also recognized in the consolidated income statementwithin “net finance expense”. If a hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged itemfor which the effective interest rate method is used is amortized to profit or loss over the period to maturity.
When a hedging instrument expires or is sold, or when a fair value hedge no longer meets the criteria for hedge accounting, any cumulativegain or loss existing at that time remains in equity and is recognized in the consolidated income statement when the forecast cash flow arises. Whena forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to theconsolidated income statement.
Fair value measurement
The Group measures financial instruments such as derivatives and pension assets at fair value at each balance sheet date. Fair value relateddisclosures for financial instruments and pension assets that are measured at fair value or where fair values are disclosed, are summarized in thefollowing notes:
● Disclosures for valuation methods, significant estimates and assumptions (Notes 20 and 21)
● Quantitative disclosures of fair value measurement hierarchy (Note 20)
● Financial instruments (including those carried at amortized cost) (Note 20)
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer theliability takes place either:
● in the principal market for the asset or liability; or
● in the absence of a principal market, in the most advantageous market for the asset or liability.
Table of Contents
Ardagh Group S.A.F-19
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset orliability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by usingthe asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fairvalue, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Employee benefits
(i) Defined benefit pension plans
Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on oneor more factors such as age, years of service and compensation.
The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value ofthe defined benefit obligation at the reporting date less the fair value of plan assets. The defined benefit obligation is calculated annually byindependent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting theestimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will bepaid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity inother comprehensive income in the period in which they arise. Past service costs and past service credits are recognized immediately in theconsolidated income statement.
(ii) Other long term employee benefits
The Group’s obligation in respect of other long term employee benefit plans represents the amount of future benefit that employees haveearned in return for service in the current and prior periods for post-retirement medical schemes, partial retirement contracts and long service awards.These are included in the category of employee benefit obligations on the consolidated statement of financial position. The obligation is computedon the basis of the projected unit credit method and is discounted to present value using a discount rate equating to the market yield at the reportingdate on high quality corporate bonds of a currency and term consistent with the currency and estimated term of the obligations. Actuarial gains andlosses are recognized in full in the Group’s consolidated statement of comprehensive income in the period in which they arise.
(iii) Defined contribution plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The contributions arerecognized as employee benefit expense when they are due.
Table of Contents
Ardagh Group S.A.F-20
Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that anoutflow of economic benefits will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate thatreflects current market assessments of the time value of money and the risks specific to the obligation.
Revenue recognition
Effective January 1, 2018 on adoption of IFRS 15
Our products include metal and glass containers primarily for food and beverage markets with consumer-driven demand. In addition tometal containers, within the Metal Beverage Europe and Metal Beverage Americas reportable segments, the Group manufactures and supplies awide range of can ends. Containers and ends are usually distinct items and can be sold separately from each other. A significant portion of our salesvolumes are supplied under contracts which include input cost pass-through provisions.
The Group usually enters into framework agreements with its customers, which establish the terms under which individual orders topurchase goods or services may be placed. As the framework agreements do not identify each party’s rights regarding the goods or services to betransferred, they do not create enforceable rights and obligations on a stand-alone basis. Therefore, the Group has concluded that only individualpurchase orders create enforceable rights and obligations and meet the definition of a contract. The individual purchase orders have, in general, aduration of one year or less and, as such, the Group does not disclose any information about remaining performance obligations under thesecontracts. The Group’s payment terms are in line with customary business practice, which can vary by customer and region. The Group has availedof the practical expedient from considering the existence of a significant financing component as, based on past experience, we expect that, atcontract inception, the period between when a promised good is transferred to the customer and when the customer pays for that good will be oneyear or less.
Revenue is recognized when control of a good or service has transferred to the customer. For certain contracts in the Metal BeverageEurope and Metal Beverage Americas reportable segments, the Group manufactures products for customers that have no alternative use and forwhich the Group has an enforceable right to payment for production completed to date. The Group has concluded that it has such enforceable right topayment plus a reasonable margin once it receives an individual purchase order. Therefore, for such products that have no alternative use and wherean enforceable right to payment exists, the Group will recognize revenue over time based on the units produced output method such that a portion ofrevenue, net of any related estimated rebates and cash discounts, excluding sales or value added tax, will be recognized prior to the dispatch of goodsas the Group satisfies the contractual performance obligations for those contracts. For all other contracts, the Group will continue to recognizerevenue primarily on dispatch of the goods, net of any related customer rebates and cash discounts, excluding sales and value added taxes.
The Business often sells products with rebates and cash discounts based on cumulative sales over a period. Such rebate and cash discountconsideration is only recognised when it is highly probable that it will not be subsequently reversed and is recognised using the most likely amountdepending on the individual contractual terms.
Exceptional items
The Group’s consolidated income statement, cash flow and segmental analysis separately identify results before specific items. Specificitems are those that in management’s judgment need to be disclosed by virtue of their size, nature or incidence to provide additional information.Such items include, where significant, restructuring, redundancy and other
Table of Contents
Ardagh Group S.A.F-21
costs relating to permanent capacity realignment or footprint reorganization, directly attributable acquisition costs and acquisition integration costs,and other transaction-related costs, profit or loss on disposal or termination of operations, start-up costs incurred in relation to and associated withplant builds, significant new line investments or furnaces, major litigation costs and settlements and impairments of non-current assets. In this regardthe determination of “significant” as included in our definition uses qualitative and quantitative factors. Judgment is used by the Group in assessingthe particular items, which by virtue of their scale and nature, are disclosed in the Group’s consolidated income statement, and related notes asexceptional items. Management considers columnar presentation to be appropriate in the consolidated income statement as it provides usefuladditional information and is consistent with the way that financial performance is measured by management and presented to the Board.Exceptional restructuring costs are classified as restructuring provisions and all other exceptional costs when outstanding at the balance sheet dateare classified as exceptional items payable.
Finance income and expense
Finance income comprises interest income on funds invested, gains on disposal of financial assets, ineffective portions of derivativeinstruments designated as hedging instruments and gains on derivative instruments that are not designated as hedging instruments and are recognizedin profit or loss.
Finance expense comprises interest expense on borrowings (including amortization of deferred debt issuance costs), interest cost on leases,certain net foreign currency translation related to financing, net interest cost on net pension plan liabilities, losses on extinguishment of borrowings,ineffective portions of derivative instruments designated as hedging instruments, losses on derivative instruments that are not designated as hedginginstruments and are recognized in profit or loss, and other finance expense.
The Group capitalizes borrowing costs directly attributable to the acquisition, construction or production of manufacturing plants thatrequire a substantial period of time to build that would have been avoided if the expenditure on the qualifying asset had not been made.
Costs related to the issuance of new debt are deferred and amortized within finance expense over the expected terms of the related debtagreements by using the effective interest rate method.
Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the consolidated incomestatement except to the extent that it relates to items recognized in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reportingdate and any adjustment to tax payable in respect of previous years.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets andliabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are generally not recognized if theyarise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in atransaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred incometax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply whenthe related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which thetemporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in subsidiaries andassociates, except for deferred income tax liability where the timing
Table of Contents
Ardagh Group S.A.F-22
of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in theforeseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current taxliabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the sametaxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Segment reporting
The Board has been identified as the Chief Operating Decision Maker (“CODM”) for the Group.
Operating segments are identified on the basis of the internal reporting regularly provided to the Board in order to allocate resources to thesegment and assess its performance.
Critical accounting estimates, assumptions and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of futureevents that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resultingaccounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causinga material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Estimated impairment of goodwill and other long lived assets
In accordance with IAS 36 “Impairment of assets” (“IAS 36”), the Group tests whether goodwill and other long lived assets have sufferedany impairment in accordance with the accounting policies stated. The determination of the recoverable amounts of goodwill requires the use ofestimates as outlined in Note 9. The Group’s judgments relating to the impairment of goodwill and other long lived assets are included in Notes 9and 10.
(ii) Lease term upon adoption of IFRS 16
Upon adoption of IFRS 16, several lease agreements included renewal and termination options. As part of the recognition of such leases,the Group assessed all facts and circumstances that created an economic incentive to exercise a renewal option, or not exercise a termination option.Renewal options (or periods after termination options) were only included in the lease term if the conclusion was that the lease was reasonablycertain to be renewed (or not terminated).
(iii) Income taxes
The Group is subject to income taxes in numerous jurisdictions and judgment is therefore required in determining the worldwide provisionfor income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course ofbusiness. The Group recognizes liabilities for anticipated tax audit matters based on estimates of whether additional taxes will be due. Where thefinal tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferredtax provisions in the period in which such determination is made.
(iv) Measurement of employee benefit obligations
The Group follows guidance of IAS 19(R) to determine the present value of its obligations to current and past employees in respect ofdefined benefit pension obligations, other long term employee benefits, and other end of service employee benefits which are subject to similarfluctuations in value in the long term. The Group values its liabilities, with the assistance of professional actuaries, to ensure consistency in thequality of the key assumptions underlying the valuations. The critical assumptions and estimates applied are discussed in detail in Note 21.
Table of Contents
Ardagh Group S.A.F-23
(v) Exceptional items
The consolidated income statement and segment analysis separately identify results before exceptional items. Exceptional items are thosethat in our judgment need to be disclosed by virtue of their size, nature or incidence.
The Group believes that this presentation provides additional analysis as it highlights exceptional items. The determination of “significant”as included in our definition uses qualitative and quantitative factors which remain consistent from period to period. Management uses judgment inassessing the particular items, which by virtue of their scale and nature, are disclosed in the consolidated income statement and related notes asexceptional items. Management considers the consolidated income statement presentation of exceptional items to be appropriate as it provides usefuladditional information and is consistent with the way that financial information is measured by management and presented to the Board. In thatregard, management believes it to be consistent with paragraph 85 of IAS 1 “Presentation of financial statements” (“IAS 1”), which permits theinclusion of line items and subtotals that improve the understanding of performance.
(vi) Business combinations and goodwill
Goodwill only arises in business combinations. The amount of goodwill initially recognized is dependent on the allocation of the purchaseprice to the fair value of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and liabilities isbased, to a considerable extent, on management’s judgment. Allocation of the purchase price affects the results of the Group as finite lived intangibleassets are amortized, whereas indefinite lived intangible assets, including goodwill, are not amortized and could result in differing amortizationcharges based on the allocation to indefinite lived and finite lived intangible assets.
3. Segment analysis
The Group’s operating and reportable segments, which are set out below, reflect the basis on which the Group’s performance is reviewedby management and regularly presented to the Board, which has been identified as the Chief Operating Decision Maker (“CODM”) for the Group.
● Metal Beverage Packaging Europe● Metal Beverage Packaging Americas● Glass Packaging Europe● Glass Packaging North America.
Performance of the business is assessed based on Adjusted EBITDA. Adjusted EBITDA is the profit or loss for the period before income tax chargeor credit, net finance expense, depreciation and amortization, exceptional operating items and share of profit or loss in equity accounted jointventure. Other items are not allocated to segments, as these are reviewed by the CODM on a group-wide basis. Segmental revenues are derived fromsales to external customers. Inter-segment revenue and revenue with joint ventures are not material.
Year ended December 31, 2020 2019 2018
$'m $'m $'mProfit/(loss) from continuing operations 13 (284) (292)Income tax charge (Note 6) 10 44 18Net finance expense (Note 5) 338 659 479Depreciation and amortization (Notes 9, 10) 688 652 599Exceptional operating items (Note 4) 58 53 311Share of post-tax loss in equity accounted joint venture (Note 12) 48 49 —Adjusted EBITDA 1,155 1,173 1,115
Table of Contents
Ardagh Group S.A.F-24
Segment results for the year ended December 31, 2020 are:
Metal MetalBeverage Beverage Glass Glass
Packaging Packaging Packaging PackagingEurope Americas Europe North America Group
Revenue 1,599 1,852 1,640 1,640 6,731Adjusted EBITDA 249 296 369 241 1,155Capital expenditure 101 167 145 130 543Segment assets (excluding Investment in material joint venture) 2,403 1,808 2,802 2,249 9,262
Segment results for the year ended December 31, 2019 are:Metal Metal
Beverage Beverage Glass GlassPackaging Packaging Packaging Packaging
Europe Americas Europe North America Group
Revenue 1,556 1,816 1,613 1,675 6,660Adjusted EBITDA 253 250 391 279 1,173Capital expenditure 95 110 163 137 505Segment assets (excluding Investment in material joint venture) 2,360 1,725 1,977 2,241 8,303
Segment results for the year ended December 31, 2018 are:Metal Metal
Beverage Beverage Glass GlassPackaging Packaging Packaging Packaging
Europe Americas Europe North America Group $'m $'m $'m $'m $'m
Revenue 1,616 1,742 1,623 1,695 6,676Adjusted EBITDA 270 230 358 257 1,115Capital expenditure 103 79 151 134 467Segment assets 2,274 1,549 1,916 2,197 7,936
No customer accounted for greater than 10% of total revenue of the Group in 2020 (2019: one; 2018: none).
Capital expenditure is the sum of purchases of property, plant and equipment and software and other intangibles, net of proceeds fromdisposal of property, plant and equipment, as per the consolidated statement of cash flows.
Segment assets consist of intangible assets, property, plant and equipment, derivative financial instrument assets, deferred tax assets, othernon-current assets, inventories, contract assets, trade and other receivables and cash and cash equivalents. The accounting policies of the segmentsare the same as those in the consolidated financial statements of the Group as set out in Note 2. Segment assets at December 31, 2020, in GlassPackaging Europe, include the Group’s increased cash and cash equivalents holdings. Please refer to Note 17 for more details
Total revenue from the Group in countries which account for more than 10% of total revenue, in the current or prior years presented, are asfollows:
Year ended December 31,2020 2019 2018
Revenue $'m $'m $'mU.S. 3,011 2,974 2,911United Kingdom 782 736 778
The revenue above is attributed to countries on a destination basis.
$'m $'m $'m $'m $'m
$'m $'m $'m $'m $'m
Table of Contents
Ardagh Group S.A.F-25
Non-current assets, excluding derivative financial instruments, taxes, pensions, investment in material joint venture and goodwill arising onacquisitions in countries which account for more than 10% of non-current assets are the U.S. 41% (2019: 40%), Germany 14% (2019: 13%) and theUnited Kingdom 12% (2019: 12%).
The Company is domiciled in Luxembourg. During the year the Group had revenues of $2 million (2019: $2 million, 2018: $2 million) withcustomers in Luxembourg. Non-current assets located in Luxembourg were $nil (2019: $nil).
Within each reportable segment our respective packaging containers have similar production processes and classes of customers. Further,they have similar economic characteristics, as evidenced by similar profit margins, similar degrees of risk and similar opportunities for growth.Based on the foregoing, we do not consider that they constitute separate product lines and therefore additional disclosures relating to product lines isnot necessary.
The following illustrates the disaggregation of revenue by destination for the year ended December 31, 2020:
North Rest of theEurope America world Total
$'m $'m $'m $'mMetal Beverage Packaging Europe 1,581 3 15 1,599Metal Beverage Packaging Americas 1 1,499 352 1,852Glass Packaging Europe 1,568 12 60 1,640Glass Packaging North America 2 1,637 1 1,640Group 3,152 3,151 428 6,731
The following illustrates the disaggregation of revenue by destination for the year ended December 31, 2019:
North Rest of theEurope America world Total
$'m $'m $'m $'mMetal Beverage Packaging Europe 1,541 5 10 1,556Metal Beverage Packaging Americas 2 1,419 395 1,816Glass Packaging Europe 1,554 7 52 1,613Glass Packaging North America – 1,674 1 1,675Group 3,097 3,105 458 6,660
The following illustrates the disaggregation of revenue by destination for the year ended December 31, 2018:
North Rest of theEurope America world Total
$'m $'m $'m $'mMetal Beverage Packaging Europe 1,601 2 13 1,616Metal Beverage Packaging Americas 1 1,339 402 1,742Glass Packaging Europe 1,572 9 42 1,623Glass Packaging North America – 1,687 8 1,695Group 3,174 3,037 465 6,676
The following illustrates the disaggregation of revenue based on the timing of transfer of goods and services:
Year ended December 31,2020 2019 2018
Over time 2,610 2,543 2,557Point in time 4,121 4,117 4,119Group 6,731 6,660 6,676
$'m $'m $'m
Table of Contents
Ardagh Group S.A.F-26
4. Exceptional itemsYear ended December 31,
2020 2019 2018 $'m $'m $'m
Start-up related costs 7 13 48Impairment - property, plant and equipment 6 5 5Past service charge/(credit) 5 (37) 5Restructuring and other costs 1 6 50Legal matter — 15 —Exceptional items - cost of sales 19 2 108Transaction-related and other costs 25 51 17Restructuring and other costs 6 — —Exceptional items - SGA expenses 31 51 17Impairment - other intangible assets 8 — —Impairment - goodwill — — 186Exceptional items - impairment of intangible assets 8 — 186Debt refinancing and settlement costs 74 200 16Loss on derivative financial instruments — 3 6Exceptional items - finance expense 74 203 22Share of exceptional items in material joint venture 15 39 —Exceptional items from continuing operations 147 295 333Exceptional income tax (credit)/charge (53) 3 (49)Exceptional items from continuing operations, net of tax 94 298 284Exceptional items from discontinued operation, net of tax (22) (1,527) 13Total exceptional charge/(credit), net of tax 72 (1,229) 297
Exceptional items are those that in management’s judgment need to be disclosed by virtue of their size, nature or incidence.2020
Exceptional items of $72 million have been recognized for the year ending December 31, 2020, primarily comprising:● $13 million related to the Group’s capacity realignment and investment programs, including start-up related costs in Metal Beverage
Packaging North America ($7 million) and property, plant and equipment impairment charges in Glass Packaging North America ($6million).
● $5 million pension costs recognized in Glass Packaging North America following the finalization of amendments to the pension schemeinitiated in 2019.
● $25 million transaction-related and other costs primarily comprised of costs relating to acquisition and other transactions, includingprofessional advisory fees, and other costs related to transformation initiatives.
● $7 million restructuring and other costs.● $8 million impairment of other intangible assets, following a review of the Group’s digital infrastructure and future investment plans.● $74 million debt refinancing and settlement costs related to the redemption of notes in May and June 2020 as described in Note 20,
including premium payable on the early redemption of the notes of $61 million, accelerated amortization of deferred finance costs, andinterest charges from the call date to date of redemption.
● $15 million charge from the share of exceptional items in the Trivium joint venture.● $53 million from tax credits including $15 million relating to U.S. tax reform and $13 million from debt refinancing and settlement costs
incurred in the period as described in Note 6.● $22 million credit in relation to the disposal of Food & Specialty Metal Packaging business including the finalization of the completion
accounts process.
Table of Contents
Ardagh Group S.A.F-27
2019
Exceptional items of $1,229 million have been recognized for the year ending December 31, 2019, primarily comprising:
● $15 million related to a provision for a court award and related interest, net of the tax adjusted indemnity receivable in respect of a U.S.glass business legal matter.
● $24 million related to the Group’s capacity realignment programs, including start-up related costs ($13 million), restructuring costs ($6million), property, plant and equipment impairment charges ($5 million). These costs were incurred in Glass Packaging North America($15 million), Glass Packaging Europe ($5 million), Metal Beverage Packaging America ($2 million) and Metal Beverage PackagingEurope ($2 million).
● $37 million pension service credit recognized in Glass Packaging North America following amendments to a pension scheme.● $51 million transaction-related costs, primarily comprising costs relating to the combination of the Food & Specialty Metal Packaging
business with the business of Exal Corporation to form Trivium.● $200 million debt refinancing and settlement costs related to the redemption of notes in August and November 2019 as described in Note
20, and includes, premium payable on the early redemption of the notes of $165 million, accelerated amortization of deferred finance costs,interest charges from the call date to date of redemption and $3 million exceptional loss on the termination of derivative financialinstruments.
● $39 million charge from the share of exceptional items in the Trivium joint venture.● $3 million from tax charge, as described in Note 6.● $1,527 million from discontinued operation, net of tax, primarily related to the gain, net of directly attributable disposal costs, on the
disposal of Food & Specialty Metal Packaging business.
2018
Exceptional items of $297 million have been recognized for the year ending December 31, 2018, primarily comprising:
● $103 million related to the Group’s capacity realignment programs, including start-up related costs ($48 million) restructuring costs ($50million), property, plant and equipment impairment charges ($5 million). These costs were incurred in Glass Packaging North America ($78million), Metal Beverage Packaging Europe ($24 million), Glass Packaging Europe ($5 million) and a cost reduction in Metal BeveragePackaging Americas ($4 million).
● $5 million pension service cost recognized in Metal Beverage Packaging Europe and Glass Packaging Europe following a High Court rulingin the U.K. in October 2018 in respect of GMP equalization.
● $17 million transaction-related costs, primarily comprised of costs relating to acquisition, integration and other transactions.● $186 million impairment of goodwill in Glass Packaging North America.● $16 million debt refinancing and settlement costs primarily relating to the redemption of the Group’s $440 million 6.000% Senior Notes due
2021 in July 2018, principally comprising an early redemption premium and accelerated amortization of deferred finance costs.● $6 million exceptional loss on the termination of the Group’s $440 million U.S. dollar to euro CCIRS in July 2018.● $49 million from tax credits, as described in Note 6.● $13 million related to exceptional items from discontinued operation, net of tax.
Table of Contents
Ardagh Group S.A.F-28
5. Finance income and expenseYear ended December 31,
2020 2019 2018
Senior secured and senior notes 259 367 421Other interest expense 43 40 22Interest expense 302 407 443Net pension interest cost (Note 21) 14 18 16Foreign currency translation (gain)/losses (42) 27 8(Gains)/loss on derivative financial instruments (3) 9 (10)Other finance income (7) (5) —Finance expense before exceptional items 264 456 457Exceptional finance expense (Note 4) 74 203 22Net finance expense 338 659 479
During the year ended December 31, 2020, the Group recognized $19 million (2019: $19 million) related to lease liabilities within otherinterest expense and interest paid in cash used in operating activities.
6. Income taxYear ended December 31,
2020 2019 2018
Current tax:Current tax for the year 78 70 73Adjustments in respect of prior years (64) 7 11Total current tax 14 77 84Deferred tax: Deferred tax for the year (36) (31) (58)Adjustments in respect of prior years 32 (2) (8)Total deferred tax (4) (33) (66)Income tax charge 10 44 18
Adjustments in respect of prior years includes tax credits relating to the carry back of net operating losses in the United States as a result ofthe enactment from March 27, 2020 of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, additional tax relief on finance expense,and the availability of tax credits relating to a historic divestment.
Reconciliation of income tax charge and the profit/(loss) before tax multiplied by the Group’s domestic tax rate for 2020, 2019 and 2018 isas follows:
Year ended December 31,2020 2019 2018
$'m $'m $'mProfit/(loss) before tax 23 (240) (274)
Profit/(loss) before tax multiplied by the standard rate of Luxembourg corporation tax: 24.94% (2019:24.94%; 2018: 26.01%) 6 (60) (71)Tax losses for which no deferred income tax asset was recognized 1 32 —Re-measurement of deferred taxes — (2) 1Adjustment in respect of prior years (32) 5 3Income subject to state and other local income taxes 5 11 12Income taxed at rates other than standard tax rates 5 7 5Non-deductible items 13 48 55Other 12 3 13Income tax charge 10 44 18
$'m $'m $'m
$'m $'m $'m
Table of Contents
Ardagh Group S.A.F-29
The total income tax charge outlined above for each year includes a tax credit of $53 million in 2020 (2019 tax charge of $3 million; 2018tax credit of $49 million) in respect of exceptional items, being the tax effect of the items set out in Note 4. The $53 million exceptional income taxcredit recognized in the year ended December 31, 2020 includes a credit of $15 million relating to tax benefits arising from the CARES Act.
Non-deductible items principally relate to non-deductible interest expense in Ireland. Income taxed at non-standard rates takes account offoreign tax rate differences (versus the Luxembourg standard 24.94% rate (26.01% in 2018)) on earnings.
The tax charge associated with discontinued operation is recognized separately in the results of discontinued operation. See Note 25 forfurther details.
7. Earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the profit/(loss) for the year attributable to equity holders by the weightedaverage number of common shares outstanding during the year.
The following table reflects the income statement profit/(loss) and share data used in the basic EPS calculations:
Year ended December 31,2020 2019 2018
$'m $'m $'m Profit/(loss) attributable to equity holders 35 1,458 (94)Weighted average number of common shares for EPS (millions) 236.4 236.4 236.3Earnings/(loss) per share $0.15 $6.17 ($0.40)
Year ended December 31,2020 2019 2018$'m $'m $'m
Earnings/(loss) from continuing operations attributable to equity holders 13 (284) (292)Weighted average number of common shares for EPS (millions) 236.4 236.4 236.3Earnings/(loss) per share from continuing operations $0.06 ($1.20) ($1.24)
Diluted earnings per share is consistent with basic earnings per share as there are no dilutive potential common shares.Please refer to Note 18 for any details of transactions involving ordinary shares for the years ended December 31, 2020 and 2019. See Note
25 for basic and diluted earnings per share from discontinued operation.
There have been no material transactions involving common shares or potential ordinary shares between the reporting date and theauthorization of these financial statements.
8. Employee costs
Year ended December 31,2020 2019 2018
$'m $'m $'mWages and salaries 1,089 1,048 962Social security costs 157 155 154Defined benefit plan pension costs/(credit) (Note 21) 23 (23) 48Defined contribution plan pension costs (Note 21) 47 40 32Group employee costs 1,316 1,220 1,196
Table of Contents
Ardagh Group S.A.F-30
At December 31,Employees 2020 2019 2018Production 14,528 14,463 14,666Administration 1,915 1,877 1,986Group 16,443 16,340 16,652
9. Intangible assets Customer Technology
Goodwill relationships and other Software Total$'m $'m $'m $'m $'m
2019Cost At January 1, 2019 1,970 2,300 255 110 4,635Additions — — 12 13 25Disposal of Food & Specialty (328) (203) (103) (44) (678)Disposal — — — (1) (1)Transfers — — (11) 11 —Exchange (18) (14) (3) (2) (37)At December 31, 2019 1,624 2,083 150 87 3,944Amortization At January 1, 2019 (817) (153) (64) (1,034)Charge for the year (214) (27) (8) (249)Disposal of Food & Specialty 146 60 6 212Disposal — — 1 1Exchange 5 3 2 10At December 31, 2019 (880) (117) (63) (1,060)Net book value At December 31, 2019 1,624 1,203 33 24 2,8842020Cost At January 1, 2020 1,624 2,083 150 87 3,944Additions — — 10 2 12Impairment (Note 4) — — (6) (2) (8)Transfers — — (6) 6 —Exchange 58 73 2 12 145At December 31, 2020 1,682 2,156 150 105 4,093Amortization At January 1, 2020 (880) (117) (63) (1,060)Charge for the year (206) (22) (7) (235)Exchange (33) (3) (6) (42)At December 31, 2020 (1,119) (142) (76) (1,337)Net book value At December 31, 2020 1,682 1,037 8 29 2,756
Amortization expense of $235 million (2019: $233 million, 2018: $237 million) has been charged to the consolidated income statement ofthe Group in respect of continuing operations. An amortization expense of $nil (2019: $16 million, 2018: $28 million) has been charged to theconsolidated income statement of the Group in respect of the discontinued operation.
Table of Contents
Ardagh Group S.A.F-31
Impairment
The Board has considered the carrying value of the Group’s intangible assets (excluding goodwill) and assessed for indicators ofimpairment as at December 31, 2020 in accordance with IAS 36. In the year ended December 31, 2020 an impairment charge of $8 million (2019:$nil; 2018: $nil) has been recognized, which relates to the impairment of certain technology and software assets as further described in Note 4.
Goodwill
Allocation of goodwill
Goodwill has been allocated to groups of CGUs for the purpose of impairment testing. The groupings represent the lowest level at whichthe related goodwill is monitored for internal management purposes. Goodwill acquired through business combination activity is allocated to CGUsthat are expected to benefit from synergies arising from that combination.
The lowest level within the Group at which the goodwill is monitored for internal management purposes and consequently the CGUs towhich goodwill is allocated is set out below. On this basis the Group’s CGUs are identified as follows:
At December 31,2020 2019
$'m $'mMetal Beverage Packaging Europe 618 566Metal Beverage Packaging Americas 437 437Glass Packaging Europe 67 61Glass Packaging North America 560 560Total Goodwill 1,682 1,624
Impairment tests for goodwill
The Group performs its impairment test of goodwill annually following approval of the annual budget or whenever indicators suggest thatimpairment may have occurred.
Recoverable amount and carrying amount
The Group uses the value in use (“VIU”) model for the purposes of goodwill impairment testing, as this reflects the Group’s intention tohold and operate the assets. However, if an impairment indicator exists for a CGU, the Group also uses the fair value less costs of disposal(“FVLCD”) model in order to establish the recoverable amount being the higher of the VIU model and FVLCD model when compared to thecarrying value of the CGU.
Impairment test for all CGU’s other than for Glass Packaging North America in 2020
For the 2020 and 2019 reporting periods, the recoverable amount of the cash-generating units (CGUs) was determined based on value-in-use calculations which require the use of assumptions. The recoverable amount of the Glass Packaging North America CGU has been determinedbased on the value-in-use calculation for the 2019 reporting period.
The VIU model used the 2021 budget approved by the Board and a three-year forecast for 2022 to 2024 (2019 two-year forecast period).The budget and forecast results were then extended for a further one year period (2019: two-year period) making certain assumptions, including theprofile between long-term depreciation and capital expenditure in addition to the how changes in input cost will impact customer pricing, in line withhistoric practice and contractual terms.
Cash flows considered in the VIU model included the cash inflows and outflows related to the continuing use of the assets over theirremaining useful lives, expected earnings, required maintenance capital expenditure, depreciation and working capital.
Table of Contents
Ardagh Group S.A.F-32
The discount rate applied to cash flows in the VIU model was estimated using our weighted average cost of capital as determined by theCapital Asset Pricing Model with regard to the risks associated with the cash flows being considered (country, market and specific risks of the asset).
The modelled cash flows take into account the Group’s established history of earnings, cash flow generation and the nature of the marketsin which we operate, where product obsolescence is low. The key assumptions employed in modelling estimates of future cash flows are subjectiveand include projected Adjusted EBITDA, discount rates and growth rates, replacement capital expenditure requirements, rates of customer retentionand the ability to maintain margin through the pass through of input cost inflation.
The terminal value assumed long-term growth based on a combination of factors including long-term inflation in addition to industry andmarket specific factors. The range of growth rates applied by management in respect of the terminal values applicable to all groups of CGU’s were1.0% - 1.5% (2019: 1.0% - 1.5%).
A sensitivity analysis was performed reflecting potential variations in terminal growth rate and discount rate assumptions. In all cases therecoverable values calculated were in excess of the carrying values of the CGUs. The variation applied to terminal value growth rates and discountrates was a 50 basis points decrease and increase respectively and represents a reasonably possible change to the key assumptions of the VIU model.Further, a reasonably possible change to the operating cash flows would not reduce the recoverable amounts below the carrying value of the CGUs.
Impairment test for Glass Packaging North America in 2020
Management has determined the recoverable amount of the Glass Packaging North America CGU by assessing the fair value less cost ofdisposal (FVLCD) of the underlying assets using a market approach, on the basis that this gave a higher recoverable amount than an assessmentbased on Value in Use. The valuation is considered to be level 3 in the fair value hierarchy due to unobservable inputs used in the valuation.
The key assumptions applied in the FVLCD calculation for the Glass Packaging North America CGU are, by their nature, subjective andinclude, FY21 projected revenue volumes, cost savings and the effects of future restructuring as part of estimating the projected Adjusted EBITDAfrom a market participant’s perspective. The market participant projected adjusted EBITDA was then multiplied by a multiple of 6.5x, based oncomparable companies and also based on market transactions, which was then adjusted for selling costs. The recoverable amount was then comparedto the carrying value of the Glass Packaging North America CGU, resulting in an excess of the recoverable amount on the carrying value goodwillallocated to Glass Packaging North America in the year ended December 31, 2020.
A sensitivity analysis was performed on the FVLCD calculation by increasing and decreasing the market participant projected adjustedEBITDA by 5% and also, the multiple which was applied to the market participant projected adjusted EBITDA by 25 basis points respectively. Theresults of the sensitivity analysis did not result in an impairment charge.
The additional disclosures required under IAS 36 in relation to significant goodwill amounts arising in the groups of CGUs are as follows:Metal Metal Glass
Beverage Beverage Glass PackagingPackaging Packaging Packaging North
Europe Americas Europe America$'m/% $'m/% $'m/% $'m/%
2020 Carrying amount of goodwill 618 437 67 560Excess of recoverable amount 1,950 1,732 4,244 86Pre-tax discount rate applied 5.1 7.9 6.5 N/A2019 Carrying amount of goodwill 566 437 61 560Excess of recoverable amount 2,109 1,581 3,842 158Pre-tax discount rate applied 5.1 8.5 6.5 7.2
Table of Contents
Ardagh Group S.A.F-33
10. Property, plant and equipment Office
equipment,Land and Plant and vehiclesbuildings machinery and other Total
$'m $'m $'m $'m2019Cost At January 1, 2019, as reported 1,044 4,298 94 5,436Impact of adoption of IFRS 16 on January 1, 2019 (Note 2) 193 78 19 290At January 1, 2019 1,237 4,376 113 5,726Additions 148 528 60 736Disposals (21) (194) (8) (223)Disposal of Food & Specialty (337) (1,443) (39) (1,819)Impairment (Note 4) — (5) — (5)Exchange (9) (26) — (35)At December 31, 2019 1,018 3,236 126 4,380Depreciation At January 1, 2019 (264) (1,750) (34) (2,048)Charge for the year (75) (363) (36) (474)Disposals 6 190 8 204Disposal of Food & Specialty 55 530 21 606Exchange 2 7 — 9At December 31, 2019 (276) (1,386) (41) (1,703)Net book value At December 31, 2019 742 1,850 85 2,6772020Cost At January 1, 2020 1,018 3,236 126 4,380Additions 69 507 51 627Impairment (Note 4) — (6) — (6)Disposals (2) (234) (11) (247)Exchange 55 116 5 176At December 31, 2020 1,140 3,619 171 4,930Depreciation At January 1, 2020 (276) (1,386) (41) (1,703)Charge for the year (89) (330) (34) (453)Disposals 1 234 11 246Exchange (19) (53) (3) (75)At December 31, 2020 (383) (1,535) (67) (1,985)Net book value At December 31, 2020 757 2,084 104 2,945
Depreciation expense of $438 million (2019: $408 million; 2018: $354 million) has been charged in cost of sales and $15 million (2019:$11 million; 2018: $8 million) in sales, general and administration expenses in respect of the continuing operations of the Group. Depreciationexpense of $nil (2019: $53 million, 2018: $86 million) has been charged in cost of sales and $nil (2019: $2 million. 2018: $1 million) in sales,general and administration expenses in respect of the discontinued operation of the Group.
Construction in progress at December 31, 2020 was $304 million (2019: $173 million).
Included in property, plant and equipment is an amount for land of $196 million (2019: $185 million).
Table of Contents
Ardagh Group S.A.F-34
Substantially all of the Group’s property, plant and equipment is pledged as security under the terms and conditions of the Group’sfinancing arrangements. No interest was capitalized in the year (2019: $nil).
Impairment
The Board has considered the carrying value of the Group’s property, plant and equipment and assessed the indicators of impairment as atDecember 31, 2020 in accordance with IAS 36. In the year ended December 31, 2020 an impairment charge of $6 million (2019: $5 million) hasbeen recognized, which relates to the impairment of plant and machinery in Glass Packaging North America. Please refer to Note 4.
Right of Use assets – Net Book Value, depreciation and variable lease expense
The following right-of-use assets were included in property, plant and equipment:
Office equipment,
Land and Plant and vehiclesbuildings machinery and other Total
Net book value $'m $'m $'m $'mAt December 31, 2020 181 63 75 319At December 31, 2019 178 71 66 315
The increase in the net carrying amount of the right-of use assets at December 31, 2020 is primarily the result of total additions to the right-of-use assets during the year ended December 31, 2020 of $87 million and exchange gains, offset by a depreciation charge of $93 million (Land andbuildings: $55 million, Plant and machinery: $23 million, Office equipment, vehicles and other: $15 million).
The increase in net carrying amount of the right-of use assets at December 31, 2019 is primarily the result of existing finance leases as atDecember 31, 2018 of $29 million, the impact of adoption of IFRS 16 on January 1, 2019 of $290 million, total additions to the right-of-use assetsduring the year ended December 31, 2019 of $169 million, offset by an amount of $74 million de-recognized on the disposal of Food & Specialtyand a depreciation charge of $76 million (Land and buildings: $41 million, Plant and machinery: $21 million, Office equipment, vehicles and other:$14 million).
During 2020, the continuing operations of the Group incurred variable lease expense of $64 million (2019: $67 million), primarily relatedto warehouse leases.
Operating lease commitments
The Group adopted IFRS 16 effective January 1, 2019, resulting in the majority of the Group’s operating leases being recognized on theconsolidated statement of financial position.
During 2018, the expense in respect of operating lease commitments was as follows:
Year endedDecember
31, 2018
$'mPlant and machinery 22Land and buildings 51Office equipment and vehicles 17
90
Table of Contents
Ardagh Group S.A.F-35
At December 31, 2018, the Group had total commitments under non-cancellable operating leases which expired:
AtDecember
31,2018
$'mNot later than one year 67Later than one year and not later than five years 150Later than five years 147
364Capital commitments
The following capital commitments in relation to property, plant and equipment were authorized by management, but have not beenprovided for in the consolidated financial statements:
At December 31,2020 2019 2018
Contracted for 148 77 118Not contracted for 227 82 76
375 159 194
11. Other non-current assets
At December 31, 2020, other non-current assets of $73 million (2019: $68 million) includes the receivable for the tax adjusted indemnity inrespect of a U.S. glass business legal matter.
Other non-current assets also include $8 million (2019: $6 million) primarily relating to certain of the Group’s investment in its jointventures, excluding the investment in Trivium, which is further discussed in Note 12.
12. Investment in material joint venture
Investment in material joint venture is comprised of the Group’s approximate 42% investment in Trivium, which is incorporated in theNetherlands, with corporate offices in Amsterdam. The remaining approximate 58% is held by Ontario Teachers’ Pension Plan Board (“OntarioTeachers”). As the Group jointly controls both the financial and operating policy decisions of Trivium, the investment is accounted for under theequity method. The shareholders of Trivium have entered into a Shareholders Agreement, dated October 31, 2019, which governs their relationshipas owners of Trivium, including in respect of the governance of Trivium and its subsidiaries, their ability to transfer their shares in Trivium and othercustomary matters.
The following table provides aggregated financial information for Trivium as it relates to the amounts recognized by Ardagh in the incomestatement, statement of comprehensive income and statement of financial position.
Period ended December 31,2020 2019$'m $'m
Investment in joint venture 390 375Loss for the period (48) (49)Other comprehensive income 29 7Total comprehensive loss (19) (42)
$'m $'m $'m
Table of Contents
Ardagh Group S.A.F-36
Summarized financial information, as of the date these consolidated financial statements were authorized for issue, for Trivium for thetwelve months ended and as at December 31, 2020 and for the two months ended and as at December 31, 2019, is set out below:
Period ended December 31,2020 (i) 2019 (ii)
$'m $'mRevenue 2,656 351Expenses (2,617) (408)Operating profit/(loss) 39 (57)Net finance expense (158) (56)Loss before tax (119) (113)Income tax credit/(expense) 5 (1)Loss after tax (114) (114)
(i) The income statement for the period ended December 31, 2020 includes exceptional items of $35 million, in accordance with Ardagh accounting policy, of which $2million is in respect of exceptional interest income. and $160 million of non-exceptional interest expense. Also included is depreciation and amortization of $285 million(inclusive of a measurement period adjustment of $19 million) and income tax credit of $5 million (inclusive of a measurement period adjustment of $6 million).
(ii) The income statement for the two-month period ended December 31, 2019 includes $92 million in relation to exceptional items of which $31 million is in respect ofexceptional interest expense. Also included is $25 million of non-exceptional interest expense.
At December 31,2020 2019$'m $'m
Non-current assets 4,644 4,109Current assets (iii) 891 924Total assets 5,535 5,033
Total equity 839 875Non-current liabilities (iv) 3,892 3,444Current liabilities (v) 804 714Total liabilities 4,696 4,158Total equity and liabilities 5,535 5,033
(iii) Includes cash and cash equivalents of $0.2 billion.
(iv) Includes non-current financial liabilities (excluding trade and other payables and provisions) of $3.8 billion.
(v) Includes current financial liabilities (excluding trade and other payables and provisions) of $0.1 billion.
As at December 31, 2020, Trivium had net debt of $2.9 billion (2019: $2.8 billion).
The reconciliation of summarized financial information presented to the carrying amount of the Group’s interest in Trivium is set outbelow.
2020 2019$'m $'m
Group's interest in net assets of joint venture at January 1, 2020 / November 1, 2019 (vi) 375 412Share of total comprehensive loss (19) (42)Exchange 34 5Carrying amount of interest in joint venture - December 31 390 375
(vi) The Group used a comparable market multiples approach as adjusted for debt in order to assess the fair value of its 42% initial equity investment in Trivium of $412million.
Table of Contents
Ardagh Group S.A.F-37
In respect of the Group’s equity accounted investment in Trivium, management has considered the carrying amount of the investment andconcluded that it is fully recoverable as at December 31, 2020.
During the year ended December 31, 2020, Trivium management has updated the provisional fair values and useful lives for property, plantand equipment and intangible assets acquired upon formation of Trivium on October 31, 2019, resulting in measurement period adjustments thatrequire recognition by Ardagh. As a result, the reported share of post-tax loss in equity accounted joint venture for the year ended December 31,2020, includes adjustments for the two months ended December 31, 2019 related to depreciation and amortization, net of tax, arising from therevised fair values and useful lives determined for property, plant and equipment and intangible assets acquired. The impacts of these adjustments,on the reported share of post-tax loss in equity accounted joint venture is $6 million for the year ended December 31, 2020.
The Group is party to a Mutual Services Agreement (“MSA”) with Trivium, pursuant to which the Group and Trivium provide services toeach other. The services generally relate to administrative support in respect of treasury activities, tax reporting, procurement and logistics, R&D andcertain IT services. The MSA provides for the sharing of certain facilities leased by the Group in connection with the provision of services, withappropriate segregation in place between the Group’s entities and Trivium.
The Group recognized net income of $19 million in respect of the MSA in the year ended December 31, 2020 respectively (December 31,2019: $3 million).
At December 31, 2020, the Group had no significant related party balances outstanding with Trivium reflected within trade and otherreceivables and trade and other payables.
At December 31, 2019, as previously reported, the Group had related party balances outstanding with Trivium reflected within trade andother receivables of $40 million and trade and other payables of $9 million.
In May 2020, the Group, as lender, entered into a credit facility (the “Trivium Credit Facility”) with Trivium, as borrower. The amountunder the Trivium Credit Facility is $57 million, which stepped down to $36 million on December 15, 2020. The Trivium Credit Facility matures onApril 30, 2021, with an option to extend to October 31, 2021. At December 31, 2020, the amount outstanding under the Trivium Credit Facility was$nil.
13. Deferred income tax
The movement in deferred tax assets and liabilities during the year was as follows:
Assets Liabilities Total$'m $'m $'m
At January 1, 2019 432 (721) (289)Impact of adopting IFRS 16 14 (1) 13Credited to the income statement (Note 6) 17 16 33Charged to the income statement (Discontinued operation) (12) (1) (13)Credited to other comprehensive income 30 3 33Exchange 1 3 4Disposal of Food & Specialty (76) 155 79At December 31, 2019 406 (546) (140)(Charged)/credited to the income statement (Note 6) (22) 26 4Credited/(charged) to other comprehensive income 23 (6) 17Exchange 13 (18) (5)At December 31, 2020 420 (544) (124)
Table of Contents
Ardagh Group S.A.F-38
The components of deferred income tax assets and liabilities are as follows:
At December 31, 2020 2019
$'m $'mTax losses 47 40Employee benefit obligations 168 142Depreciation timing differences 83 84Provisions 72 74Other 50 66
420 406Available for offset (175) (202)Deferred tax assets 245 204Intangible assets (265) (295)Accelerated depreciation and other fair value adjustments (239) (206)Other (40) (45)
(544) (546)Available for offset 175 202Deferred tax liabilities (369) (344)
The tax credit recognized in the consolidated income statement is analyzed as follows:
Year ended December 31,2020 2019 2018
$'m $'m $'mTax losses 4 (4) 18Employee benefit obligations (2) (11) 3Depreciation timing differences (5) 21 4Provisions (3) (2) (1)Other deferred tax assets (16) 1 12Intangible assets 40 19 52Accelerated depreciation and other fair value adjustments (27) (12) (20)Other deferred tax liabilities 13 8 (3)
4 20 65
Deferred tax assets are only recognized on tax loss carry forwards to the extent that the realization of the related tax benefit through futuretaxable profits is probable based on management’s forecasts. The Group did not recognize deferred tax assets of $33 million (2019: $37 million) inrespect of tax losses amounting to $131 million (2019: $146 million) that can be carried forward against future taxable income due to uncertaintyregarding their utilization.
No provision has been made for temporary differences applicable to investments in subsidiaries as the Group is in a position to control thetiming of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Given thatexemptions and tax credits would be available in the context of the Group’s investments in subsidiaries in the majority of jurisdictions in which itoperates, the aggregate amount of temporary differences in respect of which deferred tax liabilities have not been recognized would not be material.
Table of Contents
Ardagh Group S.A.F-39
14. Inventories
At December 31,
$'m $'mRaw materials and consumables 303 299Mold parts 52 50Work-in-progress 13 19Finished goods 555 596
923 964
Certain inventories held by the Group have been pledged as security under the Group’s Global Asset Based Loan Facility (Note 20). Theamount recognized as a write down in inventories or as a reversal of a write down in the year ended December 31, 2020 was not material (2019: notmaterial; 2018: not material).
At December 31, 2020, the hedging loss included in the carrying value of inventories, which will be recognized in the income statementwhen the related finished goods have been sold, is not material.
15. Trade and other receivables
At December 31, 2020 2019
$'m $'mTrade receivables 632 516Other receivables and prepayments 237 218
869 734
The fair values of trade and other receivables approximate the amounts shown above.
Movements on the provision for impairment of trade receivables are as follows:
2020 2019 2018$'m $'m $'m
At January 1, as reported 6 17 23Impact of adoption of IFRS 9 on January 1, 2018 — — (4)At January 1, 6 17 19Provision for receivables impairment 5 7 2Receivables written off during the year as uncollectible (1) — (3)Disposal of Food & Specialty — (18) —Exchange 1 — (1)At December 31, 11 6 17
The majority of the provision above relates to balances which are more than six months past due. The maximum exposure to credit risk atthe reporting date is the carrying value of each class of receivable set out above.
Provisions against specific balances
Significant balances are assessed for evidence of increased credit risk. Examples of factors considered are high probability of bankruptcy,breaches of contract or major concession being sought by the customer. Instances of significant single customer related bad debts are rare and thereis no significant concentration of risk associated with particular customers.
2020 2019
Table of Contents
Ardagh Group S.A.F-40
Providing against the remaining population of customers
The Group monitors actual historical credit losses and adjusts for forward-looking information to measure the level of expected losses.Adverse changes in the payment status of customers of the Group, or national or local economic conditions that correlate with defaults onreceivables owing to the Group, may also provide a basis for an increase in the level of provision above historic loss experience.
As of December 31, 2020, trade receivables of $19 million (2019: $34 million) were past due but not impaired. These relate to a number ofindependent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:
At December 31,
$'m $'mUp to three months past due 14 28Three to six months past due 4 1Over six months past due 1 5
19 3416. Contract assets
The following table provides information about significant changes in contract assets:2020 2019$'m $'m
At January 1, 151 160Transfers from contract assets recognized at beginning of year to receivables (148) (155)Increases as a result of new contract assets recognized during the year 133 175Decrease due to disposal of Food & Specialty — (32)Other (including exchange) 3 3At December 31, 139 151
17. Cash and cash equivalentsAt December 31,
$'m $'mCash at bank and in hand 382 598Short term bank deposits 879 11Restricted cash 6 5
1,267 614
18. Issued capital and reserves
Share capitalIssued and fully paid shares:
Class A common
shares (par value
€0.01)
Class B common
shares (par value
€0.10)Total
shares Total(million) (million) (million) $'m
At December 31, 2019 18.66 217.7 236.36 23Share issuance 0.01 – 0.01 –At December 31, 2020 18.67 217.7 236.37 23
There were no material share transactions in the years ended December 31, 2020 and December 31, 2019.
2020 2019
2020 2019
Table of Contents
Ardagh Group S.A.F-41
19. Financial risk factors
The Group’s activities expose it to a variety of financial risks: capital risk, interest rate risk, currency exchange risk, commodity price risk,credit risk, and liquidity risk.
Capital structure and risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and provide returns to itsshareholders. The Group funds its operations primarily from the following sources of capital: borrowings, cash flow and shareholders’ capital. TheGroup aims to achieve a capital structure that results in an appropriate cost of capital to accommodate material investments or acquisitions, whileproviding flexibility in short and medium term funding. The Group also aims to maintain a strong balance sheet and to provide continuity offinancing by having a range of maturities and borrowing from a variety of sources.
The Group’s overall treasury objectives are to ensure sufficient funds are available for the Group to carry out its strategy and to managecertain financial risks to which the Group is exposed, details of which are provided below. The Group’s finance committee reviews and monitors thecapital structure, financial policies and treasury function of the Company in addition to advising the board of directors on whether to approvefinancing agreements or arrangements.
Financial risks are managed on the advice of Group Treasury and senior management in conjunction with the finance committee. TheGroup does not permit the use of treasury instruments for speculative purposes, under any circumstances. Group Treasury regularly reviews the levelof cash and debt facilities required to fund the Group’s activities, plans for repayment and refinancing of debt, and identifies an appropriate amountof headroom to provide a reserve against unexpected funding requirements.
The Group’s long-term liquidity needs primarily relate to the servicing of our debt obligations. We expect to satisfy our future long-termliquidity needs through a combination of cash flow generated from operations and, where appropriate, to refinance our debt obligations in advance oftheir respective maturity dates as we have successfully done in the past and during the second quarter of 2020. The Group generates substantial cashflow from our operations on an annual basis. Cash and cash equivalents were increased during the second quarter and the Group also enhanced itscapital structure by refinancing certain debt obligations, resulting in the Group having no Senior Secured Notes or Senior Notes maturing before2025. The Group had $1,267 million in cash and cash equivalents and restricted cash as of December 31, 2020, as well as available but undrawnliquidity of $600 million under its credit facilities.
Additionally, financial instruments, including derivative financial instruments, are used to hedge exposure to interest rate, currencyexchange risk and commodity price risk.
One of the Group’s key metrics has been the ratio of consolidated external net debt as a multiple of Adjusted EBITDA. Adjusted EBITDAis the profit or loss for the period before income tax charge or credit, net finance expense, depreciation and amortization, exceptional operating itemsand share of profit or loss in equity accounted joint venture. As at December 31, 2020 the ratio was 4.9.x (2019: 4.5x; 2018: 5.0x).
Interest rate risk
The Board’s policy, in the management of interest rate risk, is to strike the right balance between the Group’s fixed and floating ratefinancial instruments, which occasionally includes the use of CCIRS. The balance struck by the Board is dependent on prevailing interest ratemarkets at any point in time.
At December 31, 2020, the Group’s external borrowings were 89.6% (2019: 88.1%) fixed, with a weighted average interest rate of 4.4%(2019: 4.6%; 2018: 5.4%). The weighted average interest rate for the Group for the year ended December 31, 2020 was 3.9% (2019: 4.0%; 2018:5.0%).
Holding all other variables constant, including levels of the Group’s external indebtedness, at December 31, 2020 a one percentage pointincrease in variable interest rates would increase interest payable by approximately $11 million (2019: $11 million).
Table of Contents
Ardagh Group S.A.F-42
Currency exchange risk
The Group presents its consolidated financial information in U.S. dollar. The functional currency of the Company is the euro.
The Group operates in 12 countries, across three continents and its main currency exposure in the year to December 31, 2020, from the eurofunctional currency, was in relation to the U.S. dollar, British pound, Swedish krona, Polish zloty, Danish krone and Brazilian real. Currencyexchange risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations.
As a result of the consolidated financial statements being presented in U.S dollar, the Group’s results are also impacted by fluctuations inthe U.S. dollar exchange rate versus the euro.
The Group has a limited level of transactional currency exposure arising from sales or purchases by operating units in currencies other thantheir functional currencies.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currencyexposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings and swaps denominated in theGroup’s principal foreign currencies.
Fluctuations in the value of these currencies with respect to the euro functional currency may have a significant impact on the Group’sfinancial condition and results of operations. The Group believes that a strengthening of the euro exchange rate (the functional currency) by 1%against all other foreign currencies from the December 31, 2020 rate would decrease shareholders’ equity by approximately $10 million (2019:$4 million decrease).
Commodity price risk
The Group is exposed to changes in prices of our main raw materials, primarily aluminum and energy. Production costs in our MetalBeverage Packaging division are exposed to changes in prices of our main raw materials, primarily aluminum. Aluminum ingot is traded daily as acommodity on the London Metal Exchange, which has historically been subject to significant price volatility. Because aluminum is priced in U.S.dollars, fluctuations in the U.S. dollar/ euro rate also affect the euro cost of aluminum ingot. The price and foreign currency risk on the aluminumpurchases in Metal Beverage Packaging Europe and Metal Beverage Packaging Americas are hedged by entering into swaps under which we payfixed euro and U.S. dollar prices, respectively. Furthermore, the relative price of oil and its by products may materially impact our business,affecting our transport, lacquer and ink costs.
Where we do not have pass through contracts in relation to the underlying metal raw material cost the Group uses derivative agreements tomanage this risk. The Group depends on an active liquid market and available credit lines with counterparty banks to cover this risk. The use ofderivative contracts to manage our risk is dependent on robust hedging procedures. Increasing raw material costs over time has the potential, if weare unable to pass on price increases, to reduce sales volume and could therefore have a significant impact on our financial condition. The Group isalso exposed to possible interruptions of supply of aluminum and steel or other raw materials and any inability to purchase raw materials couldnegatively impact our operations.
Production costs in our Glass Packaging division are sensitive to the price of energy. Our main energy exposure is to the cost of gas andelectricity. These energy costs have experienced significant volatility in recent years with a corresponding effect on our production costs. In terms ofgas, which represents 50% of our energy costs, there is a continuous de-coupling between the cost of gas and oil, whereby now only significantchanges in the price of oil have an impact on the price of gas. The volatility in gas pricing is driven by shale gas development (United States only),the availability of liquefied natural gas in Europe, as both Europe and Asia compete for shipments, and storage levels. Volatility in the price ofelectricity is caused by the German Renewable Energy policy, the phasing out of nuclear generating capacity, fluctuations in the price of gas andcoal and the influence of carbon dioxide costs on electricity prices.
Table of Contents
Ardagh Group S.A.F-43
As a result of the volatility of gas and electricity prices, the Group has either included energy pass through clauses in our sales contracts ordeveloped an active hedging strategy to fix a significant proportion of our energy costs through contractual arrangements directly with our suppliersand/or banks, where there is no energy clause in the sales contract.
Where pass through contracts do not exist, the Group policy is to purchase gas and electricity by entering into forward price fixingarrangements with suppliers for the bulk of our anticipated requirements for the year ahead. Such contracts are used exclusively to obtain delivery ofour anticipated energy supplies. The Group does not net settle, nor do we sell within a short period of time after taking delivery. The Group avails ofthe own use exemption and, therefore, these contracts are treated as executory contracts.
The Group typically builds up these contractual positions in tranches of approximately 10% of the anticipated volumes. Any gas andelectricity which is not purchased under forward price-fixing arrangements is purchased under index tracking contracts or at spot prices.
Credit risk
Credit risk arises from derivative contracts, cash and deposits held with banks and financial institutions, as well as credit exposures to theGroup’s customers, including outstanding receivables. Group policy is to place excess liquidity on deposit, only with recognized and reputablefinancial institutions. For banks and financial institutions, only independently rated parties with a minimum rating of “BBB+” from at least twocredit rating agencies are accepted, where possible. The credit ratings of banks and financial institutions are monitored to ensure compliance withGroup policy. Risk of default is controlled within a policy framework of dealing with high quality institutions and by limiting the amount of creditexposure to any one bank or institution.
Group policy is to extend credit to customers of good credit standing. Credit risk is managed on an on-going basis, by experienced peoplewithin the Group. The Group’s policy for the management of credit risk in relation to trade receivables involves periodically assessing the financialreliability of customers, taking into account their financial position, past experience and other factors. Provisions are made, where deemed necessary,and the utilization of credit limits is regularly monitored. Management does not expect any significant counterparty to fail to meet its obligations.The maximum exposure to credit risk is represented by the carrying amount of each asset. For the year ended December 31, 2020, the Group’s tenlargest customers accounted for approximately 45% of total revenues (2019: 47%; 2018: 48%). There is no recent history of default with thesecustomers.
Surplus cash held by the operating entities over and above the balance required for working capital management is transferred to GroupTreasury. Group Treasury invests surplus cash in interest-bearing current accounts, money market funds and bank time deposits with appropriatematurities to provide sufficient headroom as determined by the below-mentioned forecasts.
Liquidity risk
The Group is exposed to liquidity risk which arises primarily from the maturing of short term and long term debt obligations and from thenormal liquidity cycle of the business throughout the course of a year. The Group’s policy is to ensure that sufficient resources are available eitherfrom cash balances, cash flows or undrawn committed bank facilities, to ensure all obligations can be met as they fall due.
To effectively manage liquidity risk, the Group:
● has committed borrowing facilities that it can access to meet liquidity needs;
● maintains cash balances and liquid investments with highly-rated counterparties;
● limits the maturity of cash balances;
● borrows the bulk of its debt needs under long term fixed rate debt securities; and
● has internal control processes to manage liquidity risk.
Table of Contents
Ardagh Group S.A.F-44
Cash flow forecasting is performed in the operating entities of the Group and is aggregated by Group Treasury. Group Treasury monitorsrolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficientheadroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of itsborrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans.
20. Financial assets and liabilities
The Group’s net debt was as follows:At December 31,
$'m $'mLoan notes 6,483 5,529Other borrowings 378 381Net borrowings 6,861 5,910Cash and cash equivalents (1,267) (614)Derivative financial instruments used to hedge foreign currency and interest rate risk 105 32Net debt 5,699 5,328
The Group’s net borrowings of $6,861 million (2019: $5,910 million) are classified as non-current liabilities of $6,764 million (2019:$5,815 million) and current liabilities of $97 million (2019: $95 million) in the consolidated statement of financial position at December 31, 2020.
At December 31, 2020, the Group’s net debt and available liquidity was as follows:
Maximum Final amount maturity Facility Undrawn
Facility Currency drawable date type Amount drawn amountLocal Local
currency currency $'m $'mm m
5.250% Senior Secured Notes USD 700 30-Apr-25 Bullet 700 700 –4.125% Senior Secured Notes USD 1,215 15-Aug-26 Bullet 1,215 1,215 –2.125% Senior Secured Notes EUR 439 15-Aug-26 Bullet 439 539 –2.125% Senior Secured Notes EUR 790 15-Aug-26 Bullet 790 969 –6.000% Senior Notes USD 800 15-Feb-25 Bullet 800 826 –4.750% Senior Notes GBP 400 15-Jul-27 Bullet 400 546 –5.250% Senior Notes USD 800 15-Aug-27 Bullet 800 800 –5.250% Senior Notes USD 1,000 15-Aug-27 Bullet 1,000 1,000 –Global Asset Based Loan Facility USD 599 07-Dec-22 Revolving – – 599Lease obligations Various – Amortising – 366 –Other borrowings/credit lines Various – Rolling Amortising – 14 1Total borrowings / undrawn facilities 6,975 600Deferred debt issue costs and bond discounts/bond premium (114) –Net borrowings / undrawn facilities 6,861 600Cash and cash equivalents (1,267) 1,267Derivative financial instruments used to hedge foreign currency andinterest rate risk 105 –Net debt / available liquidity 5,699 1,867
Net debt includes the fair value of associated derivative financial instruments that are used to hedge foreign exchange and interest rate risksrelating to Group borrowings.
2020 2019
Table of Contents
Ardagh Group S.A.F-45
A number of the Group’s borrowing agreements contain certain covenants that restrict the Group’s flexibility in certain areas such asincurrence of additional indebtedness (primarily maximum borrowings to Adjusted EBITDA and a minimum Adjusted EBITDA to interest expense),payment of dividends and incurrence of liens. The Global Asset Based Loan Facility is subject to a fixed charge coverage ratio covenant if 90% ormore of the facility is drawn. The facility also includes cash dominion, representations, warranties, events of default and other covenants that aregenerally of a nature customary for such facilities.
At December 31, 2019, the Group’s net debt and available liquidity was as follows:
Maximum Finalamount maturity Facility Undrawn
Facility Currency drawable date type Amount drawn amount Local Local $'m $'m
currency currencym m
2.750% Senior Secured Notes EUR 741 15-Mar-24 Bullet 741 832 –4.250% Senior Secured Notes USD 695 15-Sep-22 Bullet 695 695 –2.125% Senior Secured Notes EUR 439 15-Aug-26 Bullet 439 493 –4.125% Senior Secured Notes USD 500 15-Aug-26 Bullet 500 500 –4.750% Senior Notes GBP 400 15-Jul-27 Bullet 400 528 –6.000% Senior Notes USD 1,700 15-Feb-25 Bullet 1,700 1,708 –5.250% Senior Notes USD 800 15-Aug-27 Bullet 800 800 –Global Asset Based Loan Facility USD 663 07-Dec-22 Revolving – – 663Lease obligations Various – Amortizing – 364 –Other borrowings/credit lines EUR/USD – Rolling Amortizing – 22 1Total borrowings / undrawn facilities 5,942 664Deferred debt issue costs and bond premium (32) –Net borrowings / undrawn facilities 5,910 664Cash and cash equivalents (614) 614Derivative financial instruments used to hedge foreigncurrency and interest rate risk 32 –Net debt / available liquidity 5,328 1,278
The following table summarizes movement in the Group’s net debt:
2020 2019$'m $'m
Net increase in cash and cash equivalents per consolidated statement of cash flows (653) (84)Increase/(decrease) in net borrowings and derivative financial instruments 1,024 (2,050)Increase/(decrease) in net debt 371 (2,134)Net debt at January 1, 5,328 7,462Net debt at December 31, 5,699 5,328
The increase in net borrowings and derivative financial instruments primarily includes proceeds from borrowings of $4.1 billion (2019:$1.8 billion), repayments of borrowings of $3.3 billion (2019: $4.1 billion), a fair value loss on derivative financial instruments used to hedgeforeign currency and interest rate risk of $0.1 billion (2019: gain of $0.1 billion), foreign exchange loss on borrowings of $0.2 billion (2019: loss of$0.1 billion) and movements in lease obligations of $nil (2019: $0.3 billion), partly offset by an increase to cash and cash equivalents of $0.7 billion(2019: increase of $0.1 billion).
Table of Contents
Ardagh Group S.A.F-46
Maturity Profile
The maturity profile of the Group’s Senior Secured Notes and Senior Notes is as follows:
At December 31, 2020 2019
$'m $'mWithin one year or on demand — —Between one and three years — 695Between three and five years 1,526 832Greater than five years 5,069 4,029Total Senior Secured Notes and Senior Notes 6,595 5,556
The maturity profile of the Group’s total borrowings is as follows:
At December 31, 2020 2019
$'m $'mWithin one year or on demand 97 95Between one and three years 113 802Between three and five years 1,588 900Greater than five years 5,177 4,145Total borrowings 6,975 5,942Deferred debt issue costs and bond discounts/bond premium (114) (32)Net Borrowings 6,861 5,910
The maturity profile of the contractual undiscounted cash flows related to the Group’s lease liabilities is as follows:
2020 2019$'m $'m
Not later than one year 99 88Later than one year and not later than five years 212 219Later than five years 152 159
463 466
The table below analyzes the Group’s financial liabilities (including interest payable) into relevant maturity groupings based on theremaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contracted undiscounted cashflows.
Derivative Trade andfinancial other
Borrowings instruments payablesAt December 31, 2020 $'m $'m $'mWithin one year or on demand 402 104 1,449Between one and three years 714 26 —Between three and five years 2,112 — —Greater than five years 5,467 — —
Table of Contents
Ardagh Group S.A.F-47
Derivative Trade andfinancial other
Borrowings instruments payablesAt December 31, 2019 $'m $'m $'m Within one year or on demand 363 17 1,519Between one and three years 1,328 9 —Between three and five years 1,345 35 —Greater than five years 4,426 — —
The carrying amount and fair value of the Group’s borrowings excluding lease obligations are as follows:
Carrying valueDeferred debt
Amount issue costs anddrawn premium Total Fair value
At December 31, 2020 $'m $'m $'m $'mLoan notes 6,595 (112) 6,483 6,784Global Asset Based Loan Facility and other borrowings 14 (2) 12 14
6,609 (114) 6,495 6,798
Carrying value Deferred debt
Amount issue costs anddrawn premium Total Fair value
At December 31, 2019 $'m $'m $'m $'mLoan notes 5,556 (27) 5,529 5,752Global Asset Based Loan Facility and other borrowings 22 (5) 17 22
5,578 (32) 5,546 5,774
Financing activity
2020
On April 8, 2020, the Group issued $500 million 5.250% Senior Secured Notes due 2025 and on April 9, 2020, the Group issued $200million add-on 5.250% Senior Secured Notes due 2025. Net proceeds from the issuance of the notes were used to redeem in full a $300 million termloan credit facility on April 8, 2020 and for general corporate purposes.
On June 2, 2020, the Group issued $1,000 million 5.250% Senior Notes due 2027. The notes are non-fungible mirror notes to the $800million 5.250% Senior Notes due 2027, issued in August, 2019. The net proceeds from the issuance of the notes were used to repurchase, by meansof a tender and consent offer, approximately $900 million of the $1,700 million 6.000% Senior Notes due 2025, together with applicable redemptionpremium and accrued interest.
On June 4, 2020, the Group issued $715 million add-on 4.125% Senior Secured Notes due 2026. The notes are an add-on to the $500million 4.125% Senior Secured Notes due 2026, issued in August, 2019. Proceeds from the issuance of the notes, net of expenses, were used toredeem in full the $695 million 4.250% Senior Secured Notes due 2022, together with applicable redemption premium and accrued interest.
On June 10, 2020, the Group issued €790 million 2.125% Senior Secured Notes due 2026. The notes are non-fungible mirror notes to the2.125% Senior Secured Notes due 2026, issued in August, 2019. Proceeds from the issuance of the notes, net of expenses, were used to redeem infull the €741 million 2.750% Senior Secured Notes due 2024, together with applicable redemption premium and accrued interest.
Table of Contents
Ardagh Group S.A.F-48
On October 23, 2020, the Group launched a consent solicitation for consents from holders of the £400m 4.750% Senior Notes due 2027, toapprove certain amendments to the Notes indentures. On November 4, 2020, the Group obtained majority consents in connection with this consentsolicitation.
Lease obligations at December 31, 2020, of $366 million primarily reflect $86 million of new lease liabilities and $9 million of unfavorableforeign currency movements, partly offset by $93 million of principal repayments in the year ended December 31, 2020.
At December 31, 2020 the Group had $599 million available under the Global Asset Based Loan Facility.
2019
On August 12, 2019, the Group issued €440 million 2.125% Senior Secured Notes due 2026, $500 million 4.125% Senior Secured Notesdue 2026, and $800 million 5.250% Senior Notes due 2027. The net proceeds from the issuance of these notes were used to redeem on August 13,2019 the $1,650 million 7.250% Senior Notes due 2024 and to pay applicable redemption premiums and accrued interest in accordance with theirterms.
Following the completion of the combination of its Food & Specialty Metal Packaging business with the business of Exal, on October 31,2019, the Group issued tender offers, at par, in respect of its $715 million 4.250% Senior Secured Notes due 2022, €750 million 2.750% SeniorSecured Notes due 2024, €440 million 2.125% Senior Secured Notes due 2026 and $500 million 4.125% Senior Secured Notes due 2026. Followingthe expiration of the offer on November 28, 2019 notice was given to repurchase the following amounts, $20 million of the $715 million 4.250%Senior Secured Notes due 2022, €9 million of the €750 million 2.750% Senior Secured Notes due 2024, and €1 million of the €440 million 2.125%Senior Secured Notes due 2026. On December 2, 2019, in accordance with the terms of the offer, the redemptions were completed.
On November 14, 2019, the Group redeemed $1,000 million 4.625% Senior Secured Notes due 2023 and €440 million 4.125% SeniorSecured Notes due 2023 and paid the applicable redemption premiums and accrued interest in accordance with their terms.
On November 29, 2019, the Group redeemed €750 million 6.750% Senior Notes due 2024 and paid the applicable redemption premium andaccrued interest in accordance with their terms.
Lease obligations of $364 million primarily reflect increases related to $349 million lease liabilities due to initial adoption of IFRS 16 as ofJanuary 1, 2019, as well as $169 million of new lease liabilities, partly offset by $84 million of lease liabilities divested at October 31, 2019, $78million of principal repayments in continuing operations and $14 million of principal repayments in discontinued operation in the year endedDecember 31, 2019.
As at December 31, 2019, the Group had $663 million available under the Global Asset Based Loan Facility. During 2019, the Groupreduced the facility size from $850 million to $700 million as a result of the disposal of the Food & Specialty Metal Packaging business.
Table of Contents
Ardagh Group S.A.F-49
Effective interest rates
The effective interest rates of borrowings at the reporting date are as follows:
2020 2019 USD EUR GBP USD EUR GBP
5.250% Senior Secured Notes due 2025 5.32 % — — — — —4.125% Senior Secured Notes due 2026 4.32 % — — 4.37 % — —2.125% Senior Secured Notes due 2026 — 2.33 % — — 2.33 % —2.125% Senior Secured Notes due 2026 — 3.29 % —6.000% Senior Notes due 2025 5.97 % — — 6.14 % — —4.750% Senior Notes due 2027 — — 4.99 % — — 4.99 %5.250% Senior Notes due 2027 5.50 % — — 5.50 % — —5.250% Senior Notes due 2027 6.42 % — — — — —2.750% Senior Secured Notes due 2024 — — — — 2.92 % —4.250% Senior Secured Notes due 2022 — — — 4.52 % — —
Various CurrenciesLease obligations 5.27 % 4.77 %
The carrying amounts of the Group’s net borrowings are denominated in the following currencies:
At December 31, 2020 2019
$'m $'m Euro 1,549 1,411U.S. dollar 4,687 3,909British pound 583 559Other 42 31
6,861 5,910
The Group has the following undrawn borrowing facilities:At December 31,
2020 2019$'m $'m
Expiring within one year 1 1Expiring beyond one year 599 663
600 664
Fair value methodology
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly(derived from prices).
Fair values are calculated as follows:
(i) Senior secured and senior notes - The fair value of debt securities in issue is based on valuation techniques in which all significant inputs arebased on observable market data and represent Level 2 inputs. In the year ended December 31, 2019 the classification for all senior secured andsenior notes was changed from Level 1 to Level 2 based on management’s assessment that quoted prices in the market for such debt securitiesare not regularly available.
Table of Contents
Ardagh Group S.A.F-50
(ii) Global Asset Based Loan facility and other borrowings - The estimated value of fixed interest bearing deposits is based on discounted cashflows using prevailing money-market interest rates for debts with similar credit risk and remaining maturity and represents Level 2 inputs.
(iii) Cross currency interest rate swaps (“CCIRS”) - The fair values of the CCIRS are based on quoted market prices and represent Level 2 inputs.(iv) Commodity and foreign exchange derivatives - The fair value of these derivatives are based on quoted market prices and represent Level 2
inputs.
Derivative financial instruments
Assets Liabilities
or notional or notionalFair values amounts Fair values amounts
$'m $'m $'m $'mFair value derivatives Metal forward contracts 29 233 6 113Cross currency interest rate swaps 10 233 115 1,300Forward foreign exchange contracts 5 356 9 326NYMEX gas swaps 1 12 — 10At December 31, 2020 45 834 130 1,749
Assets Liabilities Contractual Contractual
or notional or notionalFair values amounts Fair values amounts
$'m $'m $'m $'mFair value derivatives Metal forward contracts 4 100 10 252Cross currency interest rate swaps 3 600 35 913Forward foreign exchange contracts — 31 13 351NYMEX gas swaps — 3 3 24At December 31, 2019 7 734 61 1,540
Derivative instruments with a fair value of $9 million (2019: $4 million) are classified as non-current assets and $36 million (2019: $3million) as current assets in the consolidated statement of financial position at December 31, 2020. Derivative instruments with a fair value of $26million (2019: $44 million) are classified as non-current liabilities and $104 million (2019: $17 million) as current liabilities in the consolidatedstatement of financial position at December 31, 2020.
With the exception of interest on the CCIRS, all cash payments in relation to derivative instruments are paid or received when they mature.Bi-annual and quarterly interest cash payments and receipts are made and received in relation to the CCIRS.
The Group mitigates the counterparty risk for derivatives by contracting with major financial institutions which have high credit ratings.
Contractual Contractual
Table of Contents
Ardagh Group S.A.F-51
Cross currency interest rate swaps
2020The Group hedges certain of its external borrowings and interest payable thereon using CCIRS, with a net liability at December 31, 2020 of
$105 million (December 31, 2019: $32 million net liability).
2019
The Group hedges certain of its external borrowings and interest payable thereon using CCIRS, with a net liability at December 31, 2019 of$32 million (December 31, 2018: $113 million net liability).
On February 15, 2019 the Group’s $200 million U.S dollar to euro CCIRS matured. The fair value of these swaps at maturity was $14million and the cash settlement of these swaps was $14 million. The Group entered into new $200 million U.S dollar to euro CCIRS on March 1,2019.
On August 12, 2019, the Group terminated a number of CCIRS. The total fair value of these swaps at termination was $17 million and thecash receipt on these swaps was $23 million. The Group entered into a new $500 million U.S dollar to euro CCIRS on August 12, 2019.
Net investment hedge in foreign operations
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currencyexposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreigncurrencies.
Hedges of net investments in foreign operations are accounted for whereby any gain or loss on the hedging instruments relating to theeffective portion of the hedge is recognized in other comprehensive income. The gain or loss relating to an ineffective portion is recognizedimmediately in the consolidated income statement within finance income or expense respectively. Gains and losses accumulated in othercomprehensive income are recycled to the consolidated income statement when the foreign operation is disposed of. The amount that has beenrecognized in the consolidated income statement due to ineffectiveness is $1 million (2019: $1 million; 2018: $nil).
Metal forward contracts
The Group hedges a substantial portion of its anticipated metal purchases. Excluding conversion and freight costs, the physical metaldeliveries are priced based on the applicable indices agreed with the suppliers for the relevant month.
Fair values have been based on quoted market prices and are valued using Level 2 valuation inputs. The fair value of these contracts wheninitiated is $nil; no premium is paid or received.
Forward foreign exchange contracts
The Group operates in a number of currencies and, accordingly, hedges a portion of its currency transaction risk. The fair values are basedon Level 2 valuation techniques and observable inputs including the contract prices. The fair value of these contracts when initiated is $nil; nopremium is paid or received.
NYMEX gas swaps
The Group hedges a portion of its Glass Packaging North America anticipated energy purchases on the New York Mercantile Exchange(“NYMEX”).
Fair values have been based on NYMEX-quoted market prices and Level 2 valuation inputs have been applied. The fair value of thesecontracts when initiated is $nil; no premium is paid or received.
Table of Contents
Ardagh Group S.A.F-52
21. Employee benefit obligations
The Group operates defined benefit or defined contribution pension schemes in most of its countries of operation and the assets are held inseparately administered funds. The principal funded defined benefit schemes, which are funded by contributions to separately administered funds,are in the United States and the United Kingdom.
Other defined benefit schemes are unfunded, and the provision is recognized in the consolidated statement of financial position. Theprincipal unfunded schemes are in Germany.
The contribution rates to the funded plans are agreed with the Trustee boards, plan actuaries and the local pension regulators periodically.The contributions paid in 2020 were those recommended by the actuaries.
In addition, the Group has other employee benefit obligations in certain territories.
Total employee obligations recognized in the consolidated statement of financial position of $811 million (2019: $716 million) includesother employee benefit obligations of $117 million (2019: $101 million).
The employee obligations and assets of the defined benefit schemes included in the consolidated statement of financial position areanalyzed below:
U.S. Germany UK Other Total2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
$'m $'m $'m $'m $'m $'m $'m $'m $'m $'mObligations (1,403) (1,318) (194) (176) (892) (830) (29) (25) (2,518) (2,349)Assets 1,151 1,139 — — 663 585 10 10 1,824 1,734Net obligations (252) (179) (194) (176) (229) (245) (19) (15) (694) (615)
Defined benefit pension schemes
The amounts recognized in the consolidated income statement are:
Year ended December 31,2020 2019 2018
Current service cost and administration costs: Cost of sales - current service cost (Note 8) (27) (28) (38)Cost of sales - past service credit/(charge) (Note 8) 8 54 (6)SGA - current service cost (Note 8) (4) (3) (4)
(23) 23 (48)Finance expense (Note 5) (14) (18) (16)
(37) 5 (64)Discontinued operation — 1 —
(37) 6 (64)
$'m $'m $'m
Table of Contents
Ardagh Group S.A.F-53
The amounts recognized in the consolidated statement of comprehensive income are:
Year ended December 31,2020 2019 2018
Re-measurement of defined benefit obligation: Actuarial gain/(loss) arising from changes in demographic assumptions 38 (4) 18Actuarial (loss)/gain arising from changes in financial assumptions (250) (272) 116Actuarial gain/(loss) arising from changes in experience 9 (23) 19
(203) (299) 153Re-measurement of plan assets: Actual return/(loss) less expected return on plan assets 147 203 (144)Actuarial (loss)/gain for the year on defined benefit pension schemes (56) (96) 9Actuarial (loss)/gain on other long term and end of service employee benefits (12) (6) 6
(68) (102) 15Discontinued operation — (38) (4)
(68) (140) 11
The actual return on plan assets was a gain of $191 million in 2020 (2019: $271 million gain; 2018: $96 million loss).
Movement in the defined benefit obligations and assets:
At December 31,Obligations Assets
2020 2019 2020 2019 $'m $'m $'m $'m
At January 1, (2,349) (2,503) 1,734 1,673Interest income — — 44 54Current service cost (25) (28) — —Past service credit - net 3 62 — —Interest cost (56) (72) — —Administration expenses paid from plan assets — — (1) (1)Re-measurements (203) (351) 147 217Obligations/(assets) extinguished on reclassification 32 — (32) —Employer contributions — — 40 47Benefits paid 130 151 (130) (151)Disposal of Food & Specialty — 408 — (123)Exchange (50) (16) 22 18At December 31, (2,518) (2,349) 1,824 1,734
The defined benefit obligations above include $203 million (2019: $182 million) of unfunded obligations. Interest income and interest costabove does not include interest cost of $2 million (2019: $3 million; 2018: $4 million) relating to other employee benefit obligations. Current servicecosts above do not include current service costs of $6 million (2019: $7 million) relating to other employee benefit obligations.
During the year ended December 31, 2019, as part of the 2019 Collective Bargaining Agreement, Glass Packaging North Americasuccessfully negotiated a process involving the hourly defined benefit pension plan, moving to a future service only plan. This resulted in therecognition of an exceptional gain of $37 million within the income statement for the year ended December 31, 2019. During December, 31 2020,the Group recognized an exceptional expense of $5 million in relation to the final step of the pension plan actions taken in the prior year.
$'m $'m $'m
Table of Contents
Ardagh Group S.A.F-54
There was also an $8 million past service credit recognized in October 2019 in respect of the second step in the redesign of the pensionscheme in Germany with the first step being in the year ended December 2018 where the Group elected to re-design one of its pension schemes inGermany, moving from a defined benefit pension scheme to a contribution orientated system.
During the year ended December 31, 2019, the net defined benefit obligations above also include a movement of $17 million relating to thedisposed Food & Specialty Metal Packaging business which had a net defined obligation of $285 million at October 31, 2019. The above movementsinclude $3 million current service costs, $8 million of a past service credit, $4 million net interest expense, $38 million of remeasurement losses and$14 million of benefits paid relating to the Food & Specialty Metal Packaging business.
During the year ended December 31, 2019, the Group elected to re-design the pension plans in Metal Beverage Packaging Germany,moving from a current defined benefit scheme into a contribution orientated scheme. This resulted in the recognition of a past service credit of $17million in the year within the income statement. During the year ended December 31, 2020, the Group recognized an $8 million past service credit inrespect of the second step of this redesign.
Plan assets comprise:
At December 31,2020 2020 2019 2019
$'m % $'m %Equities / multi strategy 1,121 61 1,107 65Target return funds 256 14 267 15Bonds 229 13 178 10Cash/other 218 12 182 10
1,824 100 1,734 100
The pension assets do not include any of the Company’s ordinary shares, securities or other Group assets.
Investment strategy
The choice of investments takes account of the expected maturity of the future benefit payments. The plans invest in diversified portfoliosconsisting of an array of asset classes that attempt to maximize returns while minimizing volatility. The asset classes include national andinternational equities, fixed income government and non-government securities and real estate, as well as cash.
Characteristics and associated risks
Glass Packaging North America and Metal Beverage Packaging Americas sponsor a defined benefit pension plan which is subject toFederal law (“ERISA”), reflecting regulations issued by the Internal Revenue Service (“IRS”) and the U.S. Department of Labor.
The Glass Packaging North America plan covers both hourly and salaried employees. The plan benefits are determined using a formulawhich reflects an employee’s years of service and either their final average salary or a dollar per month benefit level. The plan is governed by aFiduciary Benefits Committee (“the Committee”) which is appointed by the Company and contains only employees of Ardagh Group. TheCommittee is responsible for the investment of the plan’s assets, which are held in a trust for the benefit of employees, retirees and theirbeneficiaries, and which can only be used to pay plan benefits and expenses.
The defined benefit pension plan is subject to IRS funding requirements with actuaries calculating the minimum and maximum allowablecontributions each year. The defined benefit pension plan currently has no cash contribution requirement due to the existence of a credit balancefollowing a contribution of approximately $200 million made in 2014
Table of Contents
Ardagh Group S.A.F-55
in connection with the acquisition of Verallia North America. The Pension Benefit Guaranty Corporation (“PBGC”) protects the pension benefits ofemployees and retirees when a plan sponsor becomes insolvent and can no longer meet its obligation. All plan sponsors pay annual PBGC premiumsthat have two components: a fixed rate based on participant count and a variable rate which is determined based on the amount by which the plan isunderfunded.
The Metal Beverage Packaging Americas plan covers hourly employees only. Plan benefits are determined using a formula which reflectsthe employees’ years of service and is based on a final average pay formula.
The Group operates a number of defined benefit pension schemes in Germany. The pension plans in Germany operate under the frameworkof German Company Pension Law (BetrAVG) and general regulations based on German labor law. The entitlements of the plan members dependon years of service and final salary. Furthermore, the plans provide lifelong pensions. No separate assets are held in trust, i.e. the plans are unfundeddefined benefit plans. During the years ended December 31, 2019 and 2018, the Group elected to re-design its pension scheme in Germany, movingto a contribution orientated scheme.
The U.K. pension plans are trust-based U.K. funded final salary defined benefit schemes providing pensions and lump sum benefits tomembers and dependents. There is one pension plan in place relating to Metal Beverage Packaging Europe. It is closed to new entrants and wasclosed to future accrual effective December 31, 2018. For this plan, pensions are calculated based on service to retirement, with members’ benefitsbased on final career earnings. There are two pension plans in place in Glass Packaging Europe. The pension plans relating to Glass PackagingEurope have been closed to future accrual from March 31, 2013 and September 30, 2015 respectively. The U.K. pension plans are each governed bya board of trustees, which includes members who are independent of the Company. The trustees are responsible for managing the operation, fundingand investment strategy. The U.K. pension plans are subject to the U.K. regulatory framework, the requirements of the Pensions Regulator and aresubject to a statutory funding objective.
Assumptions and sensitivities
The principal pension assumptions used in the preparation of the financial statements take account of the different economic circumstancesin the countries of operations and the different characteristics of the respective plans, including the duration of the obligations. The ranges of theprincipal assumptions applied in estimating defined benefit obligations were:
U.S. Germany UK2020 2019 2020 2019 2020 2019
% % % % % %Rates of inflation 2.50 2.50 1.50 1.50 2.75 2.90Rates of increase in salaries 3.00 3.00 2.50 2.50 2.25 2.00Discount rates 2.55 3.40 0.84 - 1.08 1.20 - 1.48 1.45 - 1.50 2.10 - 2.15
Assumptions regarding future mortality experience are based on actuarial advice in accordance with published statistics and experience.
These assumptions translate into the following average life expectancy in years for a pensioner retiring at age 65. The mortalityassumptions for the countries with the most significant defined benefit plans are set out below:
U.S. Germany UK2020 2019 2020 2019 2020 2019
Years Years Years Years Years YearsLife expectancy, current pensioners 22 21 22 22 20 21Life expectancy, future pensioners 23 23 25 24 22 22
If the discount rate were to decrease by 50 basis points from management estimates, the carrying amount of the pension obligations wouldincrease by an estimated $204 million (2019: $186 million). If the discount rate were to increase
Table of Contents
Ardagh Group S.A.F-56
by 50 basis points, the carrying amount of the pension obligations would decrease by an estimated $182 million (2019: $166 million).
If the inflation rate were to decrease by 50 basis points from management estimates, the carrying amount of the pension obligations woulddecrease by an estimated $65 million (2019: $56 million). If the inflation rate were to increase by 50 basis points, the carrying amount of the pensionobligations would increase by an estimated $68 million (2019: $63 million).
If the salary increase rate were to decrease by 50 basis points from management estimates, the carrying amount of the pension obligationswould decrease by an estimated $67 million (2019: $61 million). If the salary increase rate were to increase by 50 basis points, the carrying amountof the pension obligations would increase by an estimated $71 million (2019: $69 million).
The impact of increasing the life expectancy by one year would result in an increase in the Group’s liability of $80 million at December 31,2020 (2019: $68 million), holding all other assumptions constant.
The Group’s best estimate of contributions expected to be paid to defined benefit plans in 2021 is $27 million (2020: $30 million).
The principal defined benefit schemes are described briefly below:
Metal Beverage Packaging Glass PackagingEurope Europe North Europe Europe North
UK Germany America UK Germany AmericaNature of the schemes Funded Unfunded Funded Funded Unfunded Funded2020 Active members — 856 829 — 922 3,462Deferred members 808 195 58 1,240 682 2,631Pensioners including dependents 475 121 59 815 779 6,689Weighted average duration (years) 20 20 21 21 19 122019 Active members — 893 822 — 977 3,827Deferred members 808 198 44 1,240 689 2,638Pensioners including dependents 475 117 41 815 783 6,571Weighted average duration (years) 19 21 20 21 17 12
The expected total benefit payments over the next five years are:
Subsequent2021 2022 2023 2024 2025 five years$'m $'m $'m $'m $'m $'m
Benefits 133 130 132 135 137 654
The Group also has defined contribution plans; the contribution expense associated with these plans for 2020 was $47 million (2019:$40 million; 2018: $32 million). The Group’s best estimate of the contributions expected to be paid to these plans in 2021 is $50 million (2020: $44million).
Table of Contents
Ardagh Group S.A.F-57
Other employee benefits
At December 31,
$'m $'mEnd of service employee benefits 3 2Post-employment benefits 114 99
117 101
End of service employee benefits principally comprise amounts due to be paid to employees leaving the Group’s service in Poland andItaly.
Post-employment benefit obligations comprise amounts due to be paid under post-retirement medical schemes in Glass Packaging NorthAmerica and Metal Beverage Packaging Americas, partial retirement contracts in Germany and other obligations to pay benefits primarily related tolong service awards.
22. Provisions
At December 31,2020 2019
$'m $'mCurrent 50 48Non-current 55 29
105 77
Other TotalRestructuring provisions provisions
$'m $'m $'mAt January 1, 2019 20 101 121Provided 16 90 106Released (1) (18) (19)Paid (21) (89) (110)Disposal of Food & Specialty (9) (11) (20)Exchange — (1) (1)At December 31, 2019 5 72 77Provided 1 49 50Released (1) (7) (8)Paid (1) (15) (16)Exchange — 2 2At December 31, 2020 4 101 105
The restructuring provision relates to redundancy and other restructuring costs. Other provisions relate to probable environmental claims,customer quality claims, tax deferrals arising from the CARES Act and specifically in Glass Packaging North America, workers’ compensationprovisions. In addition to the aforementioned, provisions also include non-current amounts in respect of annual, long-term (three-year), cash bonusincentive programs for senior management of the Group, of approximately $17 million. Current amounts in respect of long term incentive programsare included in trade and other payables.
The provisions classified as current are expected to be paid in the next twelve months. The majority of the restructuring provision isexpected to be paid in 2021. The remaining balance represents longer term provisions for which the timing of the related payments is subject touncertainty.
2020 2019
Table of Contents
Ardagh Group S.A.F-58
23. Trade and other payables
At December 31,2020 2019
$'m $'mTrade payables 1,137 1,166Other payables and accruals 275 288Other tax and social security payable 130 109Payables and accruals for exceptional items 37 65
1,579 1,628
The fair values of trade and other payables approximate the amounts shown above.
Other payables and accruals mainly comprise accruals for operating expenses, deferred income and value added tax payable.
24. Cash generated from operating activities
Year ended December 31,2020 2019 2018
Profit/(loss) from continuing operations 13 (284) (292)Income tax charge (Note 6) 10 44 18Net finance expense (Note 5) 338 659 479Depreciation and amortization (Notes 9, 10) 688 652 599Exceptional operating items (Note 4) 58 53 311Share of post-tax loss in equity accounted joint venture (Note 12) 48 49 —Movement in working capital (31) 105 (9)Transaction-related, start-up and other exceptional costs paid (86) (87) (92)Exceptional restructuring paid (1) (12) (23)Cash generated from continuing operations 1,037 1,179 991
$'m $'m $'m
Table of Contents
Ardagh Group S.A.F-59
25. Business combinations and disposals
On October 31, 2019, the Group completed the combination of Food & Specialty Metal Packaging business with the business of Exal toform Trivium. Consequently, Food & Specialty Metal Packaging business has been accounted for as a discontinued operation in the year endedDecember 31, 2020 and 2019 and the previous year has been represented accordingly below.
Results of discontinued operation
Year ended December 31, 2020 2019 2018
$'m $'m $'mRevenue – 2,003 2,421Expenses – (1,769) (2,197)Profit before tax – 234 224Income tax charge – (19) (26)Profit from discontinued operation after tax – 215 198Gain on disposal of discontinued operation, net of costs of disposal and tax 22 1,527 –Profit from discontinued operation 22 1,742 198
Total comprehensive income from discontinued operation 22 1,741 163
Basic and diluted earnings per share from discontinued operation $0.09 $7.37 $0.84
In 2019, the Group recognized a significant gain on the transaction on closing, which is detailed below. During the year ended December31, 2020, the Group recognized a credit of $22 million, primarily as a result of a gain arising from the remeasurement of consideration for thedisposal.
The cash consideration and the net assets disposed in the transaction were as follows:
Year endedDecember
31,2019$'m
Cash consideration 2,57342% equity investment in Trivium 412
2,985
Non-current assets 1,717Current assets 805Total assets 2,522
Non-current liabilities 542Current liabilities 555Total liabilities 1,097Net assets disposed (1,425)
Cumulative foreign currency translation adjustments (27)Gain on disposal of discontinued operation 1,533
Table of Contents
Ardagh Group S.A.F-60
The net cash flow relating to the disposal is summarized below:
2020 2019$'m $'m
Cash consideration 32 2,573Cash and cash equivalents disposed – (18)Net proceeds from disposal * 32 2,555
* Please refer to the proceeds from disposal of discontinued operation, net of cash disposed of, as presented on the consolidated statementof cash flows.
26. Dividends
Year ended December 31,2020 2019 2018
$'m $'m $'mCash dividends on common shares declared and paid:Interim dividend: $0.14 per share (Prior years: $0.14 per share) (33) (33) (33)Interim dividend: $0.15 per share (Prior years: $0.14 per share) (36) (33) (33)Interim dividend: $0.15 per share (Prior years: $0.14 per share) (35) (33) (33)Interim dividend: $0.15 per share (Prior years: $0.14 per share) (35) (33) (33)
(139) (132) (132)
● On February 19, 2020, the Company declared a cash dividend of $0.14 per common share. The dividend of $33 million was paid on April 1,2020 to shareholders of record on March 18, 2020.
● On April 22, 2020, the Company declared a cash dividend of $0.15 per common share. The dividend of $36 million was paid on June 17, 2020to shareholders of record on June 3, 2020.
● On July 22, 2020 the Company declared a cash dividend of $0.15 per common share. The dividend of $35 million was paid on October 1,2020 to shareholders of record on September 17, 2020.
● On October 21, 2020 the Company declared a cash dividend of $0.15 per common share. The dividend of $35 million was paid on December16, 2020 to shareholders of record on December 2, 2020.
● On February 15, 2021, the Company approved a cash dividend of $0.15 per common share. The dividend of $35 million will be payable onApril 1, 2021 to shareholders of record on March 18, 2021.
27. Related party information
(i) Interests of Paul Coulson
As of February 24, 2021, the approval date of these financial statements, a company owned by Paul Coulson owns approximately 25% ofthe issued share capital of ARD Holdings S.A., the ultimate parent company. Through its non-controlling interest in the Yeoman group ofcompanies, this company has an interest in a further approximate 34% of the issued share capital of ARD Holdings S.A..
(ii) Yeoman Capital S.A.
At December 31, 2020, Yeoman Capital S.A. owned approximately 34% of the ordinary shares of ARD Holdings S.A..
Table of Contents
Ardagh Group S.A.F-61
(iii) Common directorships
Four of the ARD Holdings S.A. directors (Paul Coulson, Brendan Dowling, Gerald Moloney and Hermanus Troskie) also serve as directorsin the Yeoman group of companies. With the exception of Abigail Blunt, Oliver Graham, The Rt. Hon. the Lord Hammond of Runnymede, DamienO’Brien and Edward White, all of the directors of Ardagh Group S.A. are members of the board of directors of ARD Holdings S.A..
(iv) Joint ventures
The Group’s interests held in joint ventures are related parties and these are set out in further detail in notes 11 and 12. Transactions withjoint ventures were not material for any of the years presented.
(v) Key management compensation
Key management are those persons who have the authority and responsibility for planning, directing and controlling the activities of theGroup. Key management is comprised of the members who served on the Board and the Group’s executive leadership team during the reportingperiod. The amount outstanding at year end was $8 million (2019: $5 million, 2018: $1 million).
Year ended December 31,2020 2019 2018
$'m $'m $'mSalaries and other short-term employee benefits 18 14 10Post-employment benefits 1 — 1
19 14 11Other compensation 1 6 —
20 20 11
(vi) Pension schemes
The Group’s pension schemes are related parties. For details of all transactions during the year, please see Note 21.
(vii) Related party balances
With the exception of the balances outlined in (i) to (vi) above, there are no material balances outstanding with related parties at December31, 2020.
(viii) Toggle / PIK Notes
In November 2019, ARD Finance S.A. issued the Toggle Notes to, among other things, refinance certain toggle notes issued by it inSeptember 2016 (the "September 2016 Toggle Notes") and certain PIK notes issued by ARD Securities Finance SARL in January 2018 (“January2018 PIK Notes”). Certain directors of the Company that held September 2016 Toggle Notes and January 2018 PIK Notes prior to the refinancingacquired and hold Toggle Notes issued in the refinancing.
Table of Contents
Ardagh Group S.A.F-62
(ix) Subsidiaries
The following table provides information relating to our principal operating subsidiaries, all of which are wholly owned, at December 31,2020.
Country ofCompany incorporation ActivityArdagh Metal Beverage Manufacturing Austria GmbH Austria Metal Beverage PackagingArdagh Metal Beverage Trading Austria GmbH Austria Metal Beverage PackagingLatas Indústria de Embalagens de Alumínio do Brasil Ltda. Brazil Metal Beverage PackagingArdagh Indústria de Embalagens de Metálicas do Brasil Ltda. Brazil Metal Beverage PackagingArdagh Glass Holmegaard A/S Denmark Glass PackagingArdagh Metal Beverage Trading France SAS France Metal Beverage PackagingArdagh Metal Beverage France SAS France Metal Beverage PackagingArdagh Glass GmbH Germany Glass PackagingHeye International GmbH Germany Glass EngineeringArdagh Metal Beverage Trading Germany GmbH Germany Metal Beverage PackagingArdagh Metal Beverage Germany GmbH Germany Metal Beverage PackagingArdagh Glass Sales Limited Ireland Glass PackagingArdagh Glass Italy S.r.l. Italy Glass PackagingArdagh Glass Dongen B.V. Netherlands Glass PackagingArdagh Glass Moerdijk B.V. Netherlands Glass PackagingArdagh Metal Beverage Trading Netherlands B.V. Netherlands Metal Beverage PackagingArdagh Metal Beverage Netherlands B.V. Netherlands Metal Beverage PackagingArdagh Glass S.A. Poland Glass PackagingArdagh Metal Beverage Trading Poland Sp. z o.o Poland Metal Beverage PackagingArdagh Metal Beverage Poland Sp. z o.o Poland Metal Beverage PackagingArdagh Metal Beverage Trading Spain SL Spain Metal Beverage PackagingArdagh Metal Beverage Spain SL Spain Metal Beverage PackagingArdagh Glass Limmared AB Sweden Glass PackagingArdagh Metal Beverage Europe GmbH Switzerland Metal Beverage PackagingArdagh Glass Limited United Kingdom Glass PackagingArdagh Metal Beverage Trading UK Limited United Kingdom Metal Beverage PackagingArdagh Metal Beverage UK Limited United Kingdom Metal Beverage PackagingArdagh Metal Beverage USA Inc. United States Metal Beverage PackagingArdagh Glass Inc. United States Glass PackagingArdagh Glass Packaging USA Inc. * United States Glass Packaging
*Ardagh Glass Packaging Inc. is the Group’s subsidiary which is acquiring the Longhorn glass manufacturing facility located in Houston,Texas. The transaction is subject to regulatory approval and is expected to complete in the first quarter of 2021.
Table of Contents
Ardagh Group S.A.F-63
28. Contingencies
Environmental issues
The Group is regulated under various national and local environmental, occupational health and safety and other governmental laws andregulations relating to:
● the operation of installations for manufacturing of metal packaging and surface treatment using solvents;
● the operation of installations for manufacturing of container glass;
● the generation, storage, handling, use and transportation of hazardous materials;
● the emission of substances and physical agents into the environment;
● the discharge of waste water and disposal of waste;
● the remediation of contamination;
● the design, characteristics, collection and recycling of its packaging products; and
● the manufacturing, sale and servicing of machinery and equipment for the container glass and metal packaging industry.
The Group believes, based on current information that it is in substantial compliance with applicable environmental laws and regulationsand permit requirements. It does not believe it will be required, under existing or anticipated future environmental laws and regulations, to expendamounts, over and above the amounts accrued, which will have a material effect on its business, financial condition or results of operations or cashflows. In addition, no material proceedings against the Group arising under environmental laws are pending.
Legal matters
In 2015, the German competition authority (the Federal Cartel Office) initiated an investigation of the practices in Germany of metalpackaging manufacturers, including Ardagh’s Food & Specialty Metal Packaging business which was sold to Trivium. In 2018, the EuropeanCommission took over this investigation and the German investigation is, as a result, at an end. Ardagh has agreed to provide an indemnity in respectof certain losses that Trivium might incur in connection with this investigation. The European Commission’s investigation is ongoing, and there is, atthis stage no certainty as to the extent of any charge which may arise. Accordingly, no provision or indemnification liability has been recognized.
With the exception of the above legal matters, the Group is involved in certain other legal proceedings arising in the normal course of itsbusiness. The Group believes that none of these proceedings, either individually or in aggregate, are expected to have a material adverse effect on itsbusiness, financial condition, results of operations or cash flows.
29. Other information
COVID-19
The COVID-19 global pandemic and measures to prevent its spread, including restrictions on travel, imposition of quarantines andprolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation ofevents, has impacted our business in a number of ways including as a result of the impact of reduced global economic activity which resulted inlower demand for some of our customers’ products and, therefore, certain of the products we manufacture.
Table of Contents
Ardagh Group S.A.F-64
During the year ended December 31, 2020 our Glass business, in particular, was affected, and experienced reductions in customer demandand therefore revenue as a direct consequence of the various global lockdowns and the related impact to “on-premise” sales. The impact wasparticularly evident in the second quarter of the year. Gradual relaxation of governmental measures to prevent the spread of the virus, in the secondhalf of the year ended December 31, 2020 resulted in a sequential improvement in customer demand for our Glass packaging products.
COVID-19 may continue to have an adverse affect on our business and operations, including potential disruptions to our supply chain andworkforce. Although our production has not been significantly impacted to date, our plants may be required to curtail or cease production in order torespond to any future measures which may arise in order to prevent the spread of COVID-19. In addition, the pandemic may in the future impact oncapital markets which could impact our cost of borrowing. During the year ended December 31, 2020, incremental COVID-19 related costs,including safety and cleaning costs, were incurred throughout the Group.
The ultimate significance of the disruptions arising as a result of COVID-19, including the extent of their adverse impact on our financialand operational results, will be determined by the duration of the ongoing pandemic, its severity in the markets that we serve and the nature andefficacy of government and other regulatory responses, protective measures and vaccination programs and the related impact on macroeconomicactivity and consumer behavior.
Our response to the COVID-19 pandemic across our business operations can be summarized as follows, in addition to our assessment ofGoing Concern and availability liquidity as outlined in Note 2 and Note 19, respectively:
Business Continuity
We are a leading supplier of consumer packaging solutions, comprising metal beverage cans and glass containers, primarily for thebeverage and food end markets in Europe, North America and Brazil. In the markets we operate in, Ardagh is an essential provider of packaging tothe beverage and food supply chain. Our people are deemed “Essential Critical Infrastructure Workers” under the guidance of the U.S. Departmentof Homeland Security, as are our customers. Where other governments issued guidance, we received equivalent designations in all other countrieswhere we operate. We have and will continue to manage our capacity in response to the evolution of demand for the products we manufacture.
Employee health and safety
The health and safety of our 16,400 employees and their families and communities, as well as our contractors, suppliers and customers hasbeen our highest priority since the outbreak of COVID-19. We established a Group-wide task force to ensure an effective and consistent responseacross our business. Regular updates have been issued and a dedicated intranet site established to facilitate effective communication ofrecommendations, policies and procedures. Communication with all stakeholders has been a core element in our response. Measures continue toevolve in line with best practice and with recommendations by national health authorities and the World Health Organization. Initiatives introducedto date have included: enhanced hygiene procedures in all locations, including temperature screening and increased cleaning in our productionfacilities; increased investment in personal protective equipment; adapting work practices and routines to ensure social distancing; establishingprocedures for self-isolation; travel advisories including restrictions on all non-essential travel, prior to broader restrictions on any travel; restrictionson visitors to our production facilities or by our employees to external facilities; actively encouraging and ultimately requiring remote working fornon-operational personnel, and enhancing our IT capability to facilitate increased remote working.
Table of Contents
Ardagh Group S.A.F-65
30. Events after the reporting period
Combination of Ardagh Metal Packaging with Gores Holdings V
On February 22, 2021, the Group entered into a business combination agreement with Gores Holdings V Inc., a special purpose acquisitioncompany sponsored by an affiliate of The Gores Group (“Gores Holdings V”) for the purpose of effecting a merger, acquisition, or similar businesscombination, under which Gores Holdings V will combine with Ardagh’s metal packaging business that will be held by an Ardagh wholly ownedsubsidiary, Ardagh Metal Packaging S.A. (“Ardagh Metal Packaging” or “AMP”) to create an independent, pure-play beverage can business, publiccompany. AMP also announced its intention to apply to list its shares on the NYSE.
AMP will hold Ardagh’s metal packaging business, which is a leading supplier of beverage cans globally, with a particular focus on TheAmericas and Europe. Headquartered, in Luxembourg, the business supplies sustainable and infinitely-recyclable metal packaging to a diversifiedcustomer base of leading global, regional and national beverage producers. Ardagh’s metal packaging business operates 23 production facilities inEurope and the Americas, employs approximately 4,900 people and recorded revenues of $3.5 billion in 2020. AMP will be a global leader in thesupply of sustainable and infinitely-recyclable beverage cans that has a leading presence in the Americas and Europe and is the second-largestbeverage can producer in Europe and the third-largest in North America and Brazil.
Additional investors have committed to participate in the proposed business combination by purchasing 60 million shares of AMP for anaggregate purchase price of $600 million in a private placement at $10.00. In connection with the transactions, AMP intends to raise new debt ofapproximately $2.65 billion, (approximately $2.3 billion net). Assuming no share redemptions by the public stockholders of Gores Holdings V,approximately $525 million in cash held in Gores Holdings V’s trust account, together with the $600 million in private placement proceeds andapproximately $2.3 billion of the new debt raised by AMP, will be used to pay up to $3.4 billion in cash to Ardagh, as well as to pay transactionexpenses. Upon closing of the transactions, assuming no redemptions by Gores Holdings V’s public stockholders, Ardagh will retain an equityinterest in the Company of approximately 80%, the investors in the private placement will hold approximately 10% and Gores Holdings V’sstockholders and its sponsor will hold approximately 10%. Ardagh intends to remain a committed, long-term majority shareholder of AMP. The cashproceeds from the transactions will be used to reduce net debt at Ardagh.
The proposed business combination, which has been unanimously approved by the boards of directors of both Ardagh and Gores HoldingsV, is expected to close in the second quarter of 2021, subject to receipt of Gores Holdings V stockholder approval, approval of AMP’s shares forlisting on the NYSE, the satisfaction of the condition to Ardagh’s obligations that it receives at least $3 billion in cash from the transactions and thesatisfaction or waiver of other customary closing conditions.
Dividend Declared
On February 15, 2021, the Company approved a cash dividend of $0.15 per common share. Please see Note 26.
Table of Contents
Ardagh Group S.A.F-66
31. Company financial information
This note has been included in these financial statements in accordance with the requirements of Regulation S-X rule 12.04 Condensedfinancial information of registrant. The financial information provided below relates to the individual company financial statements for ArdaghGroup S.A. as presented in accordance with IFRS as issued by the IASB.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with International FinancialReporting Standards have been condensed or omitted. The footnote disclosures contain supplemental information only and, as such, these statementsshould be read in conjunction with the notes to the accompanying consolidated financial statements.
The company financial information has been prepared using the same accounting policies as set out in the consolidated financialstatements, except that investments in subsidiaries and joint ventures are included at cost less any provision for impairment in value.
The functional currency of the Company is euro and accordingly, the company financial information set out below is presented in euro.
i) Statement of financial position
At December 31,2020 2019
€'m €'mNon-current assetsInvestments in subsidiary undertakings 2,484 2,484Investments in joint venture 371 371
2,855 2,855Current assets Amounts receivable from subsidiary undertakings 13 88
13 88Total assets 2,868 2,943Equity attributable to owners of the parent Issued capital 22 22Share premium 1,092 1,092Legal reserve 2 2Capital contribution 431 431Retained earnings 1,307 1,394Total equity 2,854 2,941Current liabilities Amounts payable to subsidiary undertakings 12 —Other payables 2 2
14 2Total liabilities 14 2Total equity and liabilities 2,868 2,943
Table of Contents
Ardagh Group S.A.F-67
ii) Statement of comprehensive income
Year ended December 31,2020 2019 2018
` €'m €'m €'mDividend income 15 89 110Other external charges (2) (3) (1)Finance expense (1) (1) (1)Profit before tax and gain on disposal of investment 12 85 108Income tax — — —Gain on disposal of investment * 23 1,164 —Profit and total comprehensive income for the year 35 1,249 108
* The gain recognized in the Company for the years ended December 31, 2020 and 2019, relates to the divestment of the Food & Specialty Metal Packagingbusiness completed on October 31, 2019 and the recognition of shares issued to the Company by Trivium Packaging B.V. as part consideration for the disposal.See Note 25 to the consolidated financial statements for further detail.
iii)Statement of cash flows
Year ended December 31,2020 2019 2018
€'m €'m €'mCash flows from operating activitiesCash used in operations (2) (3) (1)Tax paid — — (1)Increase/(decrease) in payables — 1 (6)Net cash used in operating activities (2) (2) (8)Cash flows from investing activities Proceeds from disposal of investment 34 2,307 —Receipt/(repayment) of loans from subsidiary undertakings 75 (1,601) 9Contribution to subsidiary undertaking ** — (675) —Dividends received 15 89 110Net cash received from investing activities 124 120 119Cash flows from financing activities Dividends paid (122) (118) (112)Net cash outflow from financing activities (122) (118) (112)Net decrease in cash and cash equivalents — — (1)Cash and cash equivalents at the beginning of the year — — 1Cash and cash equivalents at the end of the year — — —
** In November 2019, the company made a capital contribution of €675 million into Ardagh Packaging Group Limited, a wholly ownedsubsidiary. Ardagh Packaging Group Limited is an Irish registered company that acts as an intermediate holding company for theArdagh Group.
iv) Amounts payable to subsidiary undertakingsAmounts payable to subsidiary undertakings at December 31, 2020 are unsecured, interest free and payable on demand (2019: nil).
v) Maturity analysis of the Company’s borrowingsAt December 31, 2020, the Company had €nil borrowings (2019: €nil).
vi)Distributions paid and received
Table of Contents
Ardagh Group S.A.F-68
During the year ended December 31, 2020 the Company received a dividend of €15 million (2019: €89 million, 2018: €110 million) from asubsidiary company. The Company also paid a dividend to its equity holders of €122 million (2019: €118 million, 2018: €112 million).
vii)Commitments and contingencies
The Company has guaranteed certain liabilities of a number of its subsidiaries for the year ended December 31, 2019 including guaranteesunder Section 357 of the Irish Companies Act, 2014 and Section 264 of the German Commercial Code. Furthermore, the Company has assumedjoined and several liability in accordance with Section 403, Book 2 of the Dutch Civil Code for the liabilities of a number of its Dutch subsidiaries.
With exception of the above guarantees the Company had no commitments and contingencies at December 31, 2020 (2019: €nil).
viii)Additional information
The following reconciliations are provided as additional information to satisfy the Schedule I SEC Requirements for parent-only financialinformation and are presented in both euro and U.S. dollars.
Year ended December 31,2020 2019 2018
€'m €'m €'mIFRS profit/(loss) reconciliation:Parent only—IFRS profit for the year 35 1,249 108Additional (loss)/gain if subsidiaries had been accounted for using the equity method of accounting asopposed to cost (4) 78 (191)Consolidated IFRS profit/(loss) for the year 31 1,327 (83)
At December 31,2020 2019 2018
IFRS equity reconciliation:Parent only—IFRS equity 2,854 2,941 1,808Additional loss if subsidiaries had been accounted for using the equity method of accounting as opposed tocost (3,149) (3,128) (3,127)Consolidated—IFRS equity (295) (187) (1,319)
Year ended December 31,2020 2019 2018
IFRS profit/(loss) reconciliation:Parent only—IFRS profit for the year 40 1,400 128Additional (loss)/gain if subsidiaries had been accounted for using the equity method of accounting asopposed to cost (5) 58 (222)Consolidated IFRS profit/(loss) for the year 35 1,458 (94)
At December 31,2020 2019 2018
IFRS equity reconciliation:Parent only—IFRS equity 3,502 3,304 2,064Additional loss if subsidiaries had been accounted for using the equity method of accounting as opposed tocost (3,864) (3,520) (3,574)Consolidated—IFRS equity (362) (216) (1,510)
€'m €'m €'m
$'m $'m $'m
$'m $'m $'m
Statuts coordonnés de Ardagh Group S.A. - 1 | P a g e
Page 1 of 36
Ardagh Group S.A.
Société anonyme
Siège social : L-2134 Luxembourg, 56, Rue Charles Martel
R.C.S. Luxembourg section B numéro 160804
**************************************************
STATUTS COORDONNÉS AU
18 DECEMBRE 2020
**************************************************
Statuts coordonnés de Ardagh Group S.A. - 2 | P a g e
Page 2 of 36
TABLE OF CONTENTS
INTERPRETATION
1. Definitions
FORM, NAME, DURATION AND REGISTERED OFFICE
2. Form and Name
3. Duration
4. Registered Office
CORPORATE OBJECTS
5. Corporate Objects
SHARES
6. Share Capital and Rights Attaching to Shares
7. Power to Issue Shares
8. Variation of Rights Attaching to Shares
9. Power of the Company to Purchase or otherwise Acquire its own Shares
10. Suspension and/or Waiver of Voting Right; Voting by Incapacitated Holders
11. Statements of Share Ownership
REGISTRATION OF SHARES
12. Register of Shareholders
13. Transfer of Shares
14. Conversion of Class B Common Shares
15. Compulsory Transfer of Shares
ALTERATION OF SHARE CAPITAL
16. Power to Alter Capital
DIVIDENDS AND LEGAL RESERVE
17. Dividends
18. Legal Reserve
MEETINGS OF SHAREHOLDERS
19. General Meetings
20. Record Date For Shareholder Notice; Voting.
21. Convening of General Meetings
22. Participation by telephone or video conference
23. Quorum at General Meetings
24. Voting on Ordinary and Special Resolutions
25. Instrument of Proxy
26. Adjournment of General Meeting
DIRECTORS AND OFFICERS
Statuts coordonnés de Ardagh Group S.A. - 3 | P a g e
Page 3 of 36
27. Number of Directors
28. Election of Directors
29. Classes of Directors
30. Term of Office of Directors
31. Removal of Directors
32. Vacancy in the Office of Director
33. Remuneration of Directors
34. Directors to Manage Business
35. Powers of the Board of Directors
36. Appointment of Chairman and Secretary
37. Appointment, Duties and Remuneration of Officers
38. Indemnification of Directors and Officers
39. Binding Signatures
MEETINGS OF THE BOARD OF DIRECTORS
40. Board Meetings
41. Notice of Board Meetings
42. Participation by telephone or video conference
43. Quorum at Board Meetings
44. Board to Continue in the Event of Vacancy
45. Written Resolutions
46. Validity of Acts of Directors
CORPORATE RECORDS
47. Minutes of the Meetings of the Shareholders
48. Minutes of the Meetings of the Board
49. Place Where Corporate Records Kept
50. Service of Notices
FINANCIAL YEAR
51. Financial Year
AUDITOR
52. Appointment of Auditor
VOLUNTARY WINDING-UP AND DISSOLUTION
53. Winding-Up
CHANGES TO CONSTITUTION
54. Changes to Articles
55. Governing Law
Statuts coordonnés de Ardagh Group S.A. - 4 | P a g e
Page 4 of 36
INTERPRETATION
1. Definitions
1.1 In these Articles, the following words and expressions shall, where not inconsistent with the context, have the following
meanings, respectively:
Acquiror has the meaning ascribed in Article 15.1;
Acquiror Expert has the meaning ascribed in Article 15.1;
Acquiror Purchase Price has the meaning ascribed in Article 15.2;
Act the Luxembourg law of 10 August 1915 pertaining to commercial companies, as amended from time to time;
Affected Class B common share has the meaning ascribed in Article 14.4;
Affiliate with respect to a person, means any person directly or indirectly controlling, controlled by or under common control with
such person;
Articles means these articles, as amended from time to time in accordance with Article 54;
Article 15 Notice has the meaning ascribed in Article 15.1;
Auditor means one or more independent auditors (réviseurs d’enterprises) appointed in accordance with these Articles and includes an
individual, company or partnership;
Board the board of directors appointed or elected from time to time pursuant to these Articles;
Chairman the chairman of the Board;
Class A common shares has the meaning ascribed in Article 6.1;
Class B common shares has the meaning ascribed in Article 6.1;
clear days in relation to the period of a notice, that period excluding the day when the notice is given or deemed to be given and the day
for which it is given or on which it is to take effect;
Common Shares has the meaning ascribed in Article 6.1;
Company the company for which these Articles are approved and confirmed;
Compulsory Acquisition Notice has the meaning ascribed in Article 15.2;
Control with respect to any person, means the possession, directly or indirectly, by another person of the power to direct or cause the
direction of the management and policies of such first person, whether through the ownership of voting securities, by contract or otherwise;
Conversion has the meaning ascribed in Article 14.2;
Conversion Trigger has the meaning ascribed in Article 14.3;
Depository has the meaning ascribed in Article 12.4;
Director a director of the Company;
EUR the single currency of participating member states of the European Union and the lawful currency for the time being of
Luxembourg;
Fair Market Value has the meaning ascribed in Article 9.6;
Statuts coordonnés de Ardagh Group S.A. - 5 | P a g e
Page 5 of 36
Family Member with respect to any natural person who is a Pre-IPO Equity Interest Holder, such person’s spouse, domestic partner,
parents, stepparents, grandparents, lineal descendants, siblings and lineal descendants of siblings. Lineal descendants include adopted persons
and stepchildren;
Indemnified party has the meaning ascribed in Article 38.1;
Luxembourg has the meaning ascribed in Article 4.1;
notice written notice as further provided in these Articles unless otherwise specifically stated;
Notice of Objection has the meaning ascribed in Article 15.3;
notice to the Company written notice addressed to the Secretary or another officer identified by the Company to Shareholders from
time to time, delivered to the registered office of the Company by hand or mail, or to the Company by facsimile or electronic mail (with
customary proof of confirmation that such notice has been transmitted);
Officer any person appointed as an officer of the Company by the Board, with such title, powers and duties as designated by resolution
of the Board in accordance with Article 37;
Ordinary Resolution a resolution adopted at an ordinary general meeting (including the annual general meeting) with the quorum set
forth in Article 23.1 and the majority set forth in Article 24.1;
Parent ARD Holdings S.A. and any successors thereto;
Permitted Entity (a) a Permitted Trust solely for the benefit of (i) a Pre-IPO Equity Interest Holder, (ii) one or more Family Members
of such Pre-IPO Equity Interest Holder and/or (iii) any other Permitted Entity of such Pre-IPO Equity Interest Holder;
(b) any general partnership, limited partnership, limited liability company, corporation or other entity exclusively owned by (i) a Pre-
IPO Equity Interest Holder, (ii) one or more Family Members of such Pre-IPO Equity Interest Holder and/or (iii) any other Permitted Entity of
such Pre-IPO Equity Interest Holder;
(c) the personal representative of the estate of a Pre-IPO Equity Interest Holder upon the death of such Pre-IPO Equity Interest Holder
solely to the extent such individual or entity is acting in the capacity as personal representative of such estate;
(d) a revocable living trust, which revocable living trust is itself a Permitted Trust, following the death of the natural person grantor of
such trust, solely to the extent that such shares are held in such trust pending distribution to the beneficiaries designated in such trust, all of
whom are Qualified Holders; and
(e) a guardian or conservator of a Qualified Holder who has been adjudged disabled, incapacitated, incompetent or otherwise unable to
manage his own affairs by a court of competent jurisdiction, solely in that guardian's or conservator's capacity as such.
Except as explicitly provided for in these Articles, a Permitted Entity of a Pre-IPO Equity Interest Holder shall not cease to be a
Permitted Entity of that Pre-IPO Equity Interest Holder solely by reason of his death;
Permitted Transfer any transfer of a Class B common share to a Qualified Holder;
Statuts coordonnés de Ardagh Group S.A. - 6 | P a g e
Page 6 of 36
Permitted Trust a trust where each trustee is (a) a Pre-IPO Equity Interest Holder, (b) a Family Member of a Pre-IPO Equity Interest
Holder, or (c) a professional (including an attorney or accountant) in the business of providing trustee services, including private professional
fiduciaries, trust companies and bank trust departments.
person any individual, corporation, partnership, joint venture, limited liability company, trust or other incorporated or unincorporated
organisation or any other entity, including a governmental entity or authority;
Pre-IPO Equity Interest a beneficial direct or indirect equity interest in (i) Parent, including as a holder of a beneficial equity interest
in any corporation, partnership, limited liability company or similar business entity that holds the beneficial interest in shares in Parent, or (ii)
any Subsidiary of Parent, including as a holder of a beneficial equity interest in any corporation, partnership, limited liability company or
similar business entity that holds the beneficial interest in shares in such Subsidiary;
Pre-IPO Equity Interest Holder a person who, as of the date of the closing of the initial public offering of Class A common shares, is
a beneficial owner (and thus ignoring and excluding any holder who is a nominee for the benefit of a beneficial owner, no such nominee being
a Pre-IPO Equity Interest Holder for these purposes) of a Pre-IPO Equity Interest, including any natural person who has transferred his Pre-
IPO Equity Interest to a Permitted Entity as of such date;
Purchase Price has the meaning ascribed in Article 15.3;
Qualified Holder (i) Parent or any Subsidiary of Parent (or any successor to Parent or any of its Subsidiaries), or (ii) any Pre-IPO
Equity Interest Holder or any Family Member or Permitted Entity of such Pre-IPO Equity Interest Holder;
Register of Shareholders the register of shareholders referred to in these Articles;
Relevant Shareholder has the meaning ascribed in Article 14.5;
Remaining Holder Expert has the meaning ascribed in Article 15.3;
Reorganisation Event an event in which the shareholders of Parent and/or other Subsidiaries of Parent (or any successors thereto) will
receive direct ownership in a number of Class B common shares or Class A common shares (in proportion to their respective ownership
interest in Parent and/or other Subsidiaries of Parent), whether by dividend, distribution, exchange offer or other means; provided that the
aggregate number of Class B common shares received by such shareholders in such event shall be substantially the same as or fewer than
(adjusting for fractional shares) the number of the Class B common shares owned by Parent and any Subsidiaries of Parent (or any successors
thereto) immediately prior to the date of such event;
Remaining Holders has the meaning ascribed in Article 15.1;
Remaining Shares has the meaning ascribed in Article 15.1;
Secretary the person appointed as secretary of the Company by the Board, including any deputy or assistant secretary and any person
appointed by the Board to perform any of the duties set forth in Article 36.2 and specifically entrusted by resolution to the Secretary;
Statuts coordonnés de Ardagh Group S.A. - 7 | P a g e
Page 7 of 36
Share Capital in Issue the sum of the aggregate par value of the issued Common Shares, taking into account that the par value of each
Class A common share is EUR 0.01 and the par value of each Class B common share is EUR 0.10;
Shareholder any person registered in the Register of Shareholders as the holder of shares in the Company;
Special Resolution a resolution adopted at an extraordinary general meeting with the quorum set forth in Article 23.2 and the majority
set forth in Article 24.2;
Subsidiary an incorporated or unincorporated entity in which another person (i) has a majority of the shareholders' or members' voting
rights or (ii) has the right to appoint or remove a majority of the members of the administrative, management or supervisory body and is at the
same time a shareholder in or member of such entity;
Transfer has the meaning ascribed in Article 13.6; and
Treasury Share a share of the Company that was or is treated as having been acquired and held by the Company and has been held (or
is treated as having been held) continuously by the Company since it was so acquired and has not been cancelled.
1.2 In these Articles, where not inconsistent with the context:
(a) words denoting the plural number include the singular number and vice versa;
(b) words denoting the masculine gender include the feminine and neuter genders;
(c) the word:
(i) "may" shall be construed as permissive;
(ii) "shall" shall be construed as imperative; and
(iii) "including" shall be deemed to be followed by the words "without limitation";
(d) a reference to statutory provision shall be deemed to include any amendment or re-enactment thereof;
(e) the word "corporation" means a legal entity (personne morale);
(f) unless otherwise provided herein, words or expressions used in these Articles and defined in the Act shall bear the same
meaning in these Articles as in the Act.
1.3 In these Articles expressions referring to writings shall, unless the contrary intention appears, include facsimile, printing,
lithography, photography, electronic mail and other modes of representing words in visible form.
1.4 Headings used in these Articles are for convenience only and are not to be used or relied upon in the construction hereof.
Statuts coordonnés de Ardagh Group S.A. - 8 | P a g e
Page 8 of 36
FORM, NAME, DURATION AND REGISTERED OFFICE
2. Form and Name
The Company’s legal name is "Ardagh Group S.A." and it is a public limited liability company (société anonyme).
3. Duration
The Company is incorporated for an unlimited duration.
4. Registered Office
4.1 The registered office of the Company is established in the City of Luxembourg, Grand Duchy of Luxembourg
("Luxembourg"). It may be transferred within Luxembourg by a resolution of the Board, which may amend the Articles accordingly.
4.2 If the Board determines that extraordinary political or military developments or events have occurred or are imminent and
that these developments or events would interfere with the normal activities of the Company at its registered office, or with the ease of
communication between such office and persons abroad, the registered office may be temporarily transferred abroad until the complete
cessation of these extraordinary circumstances. Such temporary measures shall have no effect on the nationality of the Company which,
notwithstanding the temporary transfer of its registered office, will remain a Luxembourg incorporated company. Such temporary measures
will be taken by the Board and notified to the Shareholders of the Company.
CORPORATE OBJECTS
5. Corporate Objects
5.1 The corporate objects of the Company are to hold, directly or indirectly, equity or other interests in other persons, including
its Subsidiaries, and take all actions as are necessary or useful to realise these objects.
5.2 The Company has the power to carry out the following actions:
(a) the acquisition, holding, management and disposal, in any form, by any means, directly or indirectly, of participations, rights
and interests in, and obligations of, Luxembourg and non-Luxembourg companies, partnerships or other incorporated or non-incorporated
entities;
(b) the acquisition by purchase, subscription, assumption or in any other manner and the transfer by sale, exchange or in any
other manner of equity securities, bonds, debentures, notes and other securities or financial instruments of any kind and contracts thereon or
related thereto;
(c) the ownership, administration, development and management of a portfolio of assets, including real estate assets and the
assets referred to in paragraphs (a) and (b) above;
(d) the holding, acquisition, disposal, development, licensing or sublicensing, and management of, or the investment in, any
patents or other intellectual property rights of any nature or origin as well as the rights deriving therefrom;
(e) the issuance of debt and equity securities in any currency and in any form including by way of:
Statuts coordonnés de Ardagh Group S.A. - 9 | P a g e
Page 9 of 36
(i) the issue of shares, notes, bonds, debentures or any other form of debt or equity security and in any manner, whether by way
of private placement, public offering or otherwise; and
(ii) borrowing from any third party, including banks, financial institutions, or other person whether or not affiliated with the
Company;
(f) to the extent permitted under Luxembourg law, the provision of any form of equity or debt funding or any other form of
financial assistance in any currency and whether or not financed by any of the methods mentioned in (e) above and whether subordinated or
unsubordinated, to any person including to the Company’s subsidiaries, Affiliates and/or any other persons that may or may not be
Shareholders or Affiliates of the Company;
(g) the giving of guarantees or the creation of any form of encumbrance or security over all or any of its assets to guarantee or
secure its own obligations or those obligations and undertakings of any other companies or persons that may or may not be Shareholders or
Affiliates, and, generally, for its own benefit and/or the benefit of any other persons that may or may not be Shareholders or Affiliates of the
Company; and
(h) taking any actions designed or intended to protect the Company against credit, currency exchange, interest rate or other risks.
5.3 The objects and powers described in this Article 5 are to be interpreted in their broadest sense and any transaction or
agreement which is entered into by the Company that is not inconsistent with the foregoing objects or powers will be deemed to be within the
scope of such objects or powers.
SHARES
6. Share Capital and Rights Attaching to Shares
6.1 The authorised share capital of the Company is EUR 55,000,000, divided into (i) 1,000,000,000 Class A common shares,
with a par value of EUR 0.01 each (the "Class A common shares”), and (ii) 450,000,000 of Class B common shares, with a par value of EUR
0.10 per share (the “Class B common shares,” and, together with the Class A common shares, the “Common Shares”). The Company shall at
all times reserve and keep available out of its authorised but unissued share capital such number of Class A common shares as shall from time
to time be sufficient to affect the conversion of all Class B common shares outstanding from time to time in accordance with Article 14.
6.2 the Share Capital in issue of the company amounts to twenty one million nine hundred and fifty six thousand three hundred
and five Euro and fifty five Cents (EUR 21,956,305.55) divided into eighteen million six hundred seventy thousand five hundred and fifty five
(18,670,555) Class A common shares, with a par value of one Euro Cents (EUR 0.01) each, and two hundred seventeen million six hundred
ninety six thousand (217,696,000) Class B common shares with a par value of ten Euro Cents (EUR 0.10) each. The Company may issue
additional shares, including Class A common shares, in accordance with these Articles.
6.3 The holders of Class A common shares shall, subject to these Articles:
(a) be entitled to one vote per Class A common share (being one vote per EUR 0.01 of the share capital);
Statuts coordonnés de Ardagh Group S.A. - 10 | P a g e
Page 10 of 36
(b) not be entitled to convert the Class A common shares into any other class of shares;
(c) be entitled, with holders of Class B common shares in accordance with Article 17.2, to such dividends or other distributions
as the Company may from time to time declare;
(d) in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a
reorganisation or otherwise, be entitled, with holders of Class B common shares in accordance with Article 53.2, to the surplus assets of the
Company; and
(e) generally be entitled to enjoy all of the rights attaching to shares.
6.4 The holders of Class B common shares shall, subject to these Articles:
(a) be entitled to ten votes per Class B common share (being one vote per EUR 0.01 of the share capital as each Class B
common share has a par value of EUR 0.10);
(b) (i) be entitled, at the option of the holder exercised in accordance with Article 14, to convert each Class B common share into
one Class A common share at any time, and (ii) be subject to mandatory conversion, as provided in Article 14;
(c) be entitled, with holders of Class A common shares in accordance with Article 17.2, to such dividends or other distributions
as the Company may from time to time declare;
(d) in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a
reorganisation or otherwise be entitled, with holders of Class A common shares in accordance with Article 53.2, to the surplus assets of the
Company; and
(e) generally be entitled to enjoy all of the rights attaching to shares.
6.5 The holders of Class A common shares and Class B common shares will vote together on all matters, unless otherwise
required by the Act or these Articles.
7. Power to Issue Shares
7.1 Without prejudice to any special rights conferred on the Shareholders of any existing shares or class of shares (which special
rights shall not be affected, modified or abrogated except with such consent or sanction as is provided in these Articles), and subject to the
provisions of the Act, any share may be issued either at par or at a premium and with such rights and/or restrictions, whether in respect of
dividends, voting, return of capital, transferability or otherwise, as the Company may from time to time direct.
7.2 Any share premium created upon the issue of shares pursuant to Article 7.1 shall be available for repayment to the
Shareholders, the payment of which shall be within the absolute discretion of the Board. Without limiting the foregoing, the Board is
authorised to use any share premium for the purpose of making any share premium repayment to Shareholders or repurchasing shares of the
Company.
7.3 (a) The Board is generally and unconditionally authorised for a period of five years from 3 March 2017, to issue
Common Shares, to grant options to subscribe for Common Shares and to issue any other instruments convertible into Common Shares up to a
maximum of the authorised but as yet unissued share capital of the Company to such persons and on such terms as the Board determines in its
absolute discretion.
Statuts coordonnés de Ardagh Group S.A. - 11 | P a g e
Page 11 of 36
The Board may set the subscription price for the Common Shares so issued, as well as determining the form of consideration to be paid for any
such Common Shares which may include (i) cash, including the setting off of claims against the Company that are certain, due and payable, (ii)
payment in kind, and (iii) reallocation of the share premium, profit reserves or other reserves of the Company. The Board is also authorised to
issue Common Shares free of charge within the limitations of Article 32-3 (5bis) of the Act.
(b) Notwithstanding the foregoing, the Board may not pursuant to Article 7.3(a) issue Class B common shares in excess of the
1,111,120 Class B common shares issued on 3 March 2017 except:
(i) in connection with stock splits or share dividends (also known as bonus issues) being made to all holders of outstanding Common
Shares in accordance with Article 17.2; or
(ii) in connection with a Reorganisation Event, provided that the number of Class B common shares issued in such Reorganisation
Event is substantially the same as or less than the number of Class B common shares received by the Company in such Reorganisation Event
as treasury shares which are to be cancelled by the Company in due course; or
(iii) in connection with the conversion, prior to initial public offering of the Company’s Class A common shares, of the Convertible
Loan Note that the Company issued to ARD Group Finance Holdings S.A., on 16 September 2016.
The Board is authorised to withdraw or limit the Luxembourg statutory preemption provisions upon the issuance of Common Shares
pursuant to the authority conferred by Article 7.3.
7.4 The Board shall be authorised to appoint, in its absolute discretion, a representative, to appear before a public notary in
Luxembourg for the purpose of amending the Articles to reflect the changes resulting from the increases to the issued share capital of the
Company in accordance with Article 7.3.
8. Variation of Rights Attaching to Shares
Where a resolution of an extraordinary general meeting is such as to change the respective rights of the Class A common shares or the
Class B common shares, the Special Resolution must, in order to be valid, fulfil the quorum and majority requirements with respect to each
such class of shares.
9. Power of the Company to Purchase or otherwise Acquire its own Shares
9.1 The Company may purchase, acquire or receive its own shares for cancellation or to hold them as Treasury Shares within the
limits, and subject to the conditions, set forth in the Act and other applicable laws and regulations.
9.2 Pursuant to and in conformity with the provisions of Article 49-2 of the Act, and in conformity with all other applicable laws
and regulations, (including any rules and regulations of any stock market, exchange or securities settlement system on which the shares are
traded, as may be applicable to the Company), the Company is authorised to purchase, acquire, receive and/or hold shares, including the
Common Shares, from time to time, provided that:
(a) the shares hereby authorised to be purchased shall all be fully paid-up issued shares in the Company;
Statuts coordonnés de Ardagh Group S.A. - 12 | P a g e
Page 12 of 36
(b) the maximum number of shares purchased, acquired or received by the Company shall be such that the aggregate nominal
value or the aggregate accounting par value of the shares held by persons other than the Company does not fall below the minimum issued
share capital prescribed by the Act;
(c) the maximum price which may be paid for each share shall not exceed the Fair Market Value (as defined in Article 9.6);
(d) the minimum price which may be paid for each share shall be the par value of the share;
(e) the acquisitions, including the shares previously acquired by the Company and held by it, and shares acquired by a person
acting in his own name but on the Company’s behalf, may not have the effect of reducing the net assets of the Company below the amount
mentioned in paragraphs (1) and (2) of Article 72-1 of the Act.
9.3 This authority, (unless previously revoked, varied or renewed by the general meeting) is granted for a period of five years
from 3 March 2017.
9.4 This authority relates only to:
(a) one or more market purchases (being a purchase of Class A common shares by the Company of shares offered for sale by any
Shareholder on any stock exchange on which the Class A common shares are traded), as the Board shall determine without such acquisition
offer having to be made to all Shareholders; and
(b) purchases effected in circumstances other than those referred to in Article 9.4(a), where an offer on the same terms has been
made by the Company to all Shareholders in a similar situation.
9.5 The Board shall be authorised to appoint, in its absolute discretion, a representative, to appear before a public notary in
Luxembourg for the purpose of amending the Articles to reflect the changes resulting from the cancellation of any shares repurchased in
accordance with the terms of this Article 9, if such election is made to cancel the shares.
9.6 For the purposes of this Article 9, "Fair Market Value" means, in respect of any share:
(a) the actual price at which the Company effects a purchase of its own shares pursuant to an announced open market repurchase
program on the New York Stock Exchange or, if the Company's shares are not listed on the New York Stock Exchange, on such other
securities exchange on which the Company's shares are then listed or traded; or
(b) in the case of any repurchase of shares that is not affected pursuant to an announced open market repurchase program on the
New York Stock Exchange or another securities exchange, the fair market value determined in good faith by an independent auditor (réviseur
d'entreprises) appointed by the Board on the basis of such information and facts as available to, and deemed relevant by, the independent
auditor.
9.7 Voting rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds such
Treasury Shares and, except where required by the Act, all Treasury Shares shall be excluded from the calculation of any percentage or
fraction of the share capital, or shares, of the Company for determining the quorum and majority requirements of any general meeting. The
aforementioned
Statuts coordonnés de Ardagh Group S.A. - 13 | P a g e
Page 13 of 36
restrictions on voting rights shall apply to shares issued by the Company and held by direct and indirect subsidiaries, in accordance with
Article 49bis of the Act.
10. Suspension and/or Waiver of Voting Right; Voting by Incapacitated Holders
10.1 The Board may suspend the right to vote of any Shareholder if such Shareholder does not fulfil his obligations under the
Articles (as in effect on 3 March 2017) or any deed of subscription or deed of commitment entered into by such Shareholder.
10.2 Any Shareholder may individually decide not to exercise, temporarily or definitively, such Shareholder’s right to vote all or
any of such Shareholder’s shares. Any such Shareholder shall be bound by such waiver, which shall be enforceable by the Company from the
date of the Company’s receipt of notice from such Shareholder of such waiver.
10.3 If the voting rights of one or more Shareholders are suspended in accordance with this Article 10 or a Shareholder has
temporarily or permanently waived such Shareholder’s voting right in accordance with this Article 10, such Shareholders shall receive notice
of and may attend any general meeting of Shareholders but the shares with respect to which such Shareholder does not have, or has waived,
voting rights in accordance with this Article 10 shall not be taken into account for determining whether the quorum and majority vote
requirements are satisfied.
10.4 A Shareholder of unsound mind, or in respect of whom an order has been made by any court having jurisdiction (whether in
Luxembourg or elsewhere) in matters concerning mental disorder, may vote, by such Shareholder’s committee, receiver, guardian or other
person appointed by that court and any such committee, receiver, guardian or other person may vote by proxy. Evidence to the satisfaction of
the Board of the authority of the person claiming to exercise the right to vote shall be deposited at the registered office of the Company or at
such other place as is specified in accordance with these Articles for the deposit of proxies, not less than forty-eight (48) hours before the time
appointed for holding the meeting or adjourned meeting at which the right to vote is exercised, failing which the right to vote shall not be
exercised.
11. Statements of Share Ownership
At the request of a Shareholder, the Company shall issue a statement of share ownership evidencing the number of Common Shares
registered in such Shareholder’s name in the Register of Shareholders on the date of such statement.
Statuts coordonnés de Ardagh Group S.A. - 14 | P a g e
Page 14 of 36
REGISTRATION OF SHARES
12. Register of Shareholders
12.1 The shares are and will remain in registered form (actions nominatives) and the Shareholders are not permitted to request the
conversion of their shares into bearer form.
12.2 The Board shall cause to be kept a Register of Shareholders and shall enter therein the particulars required by the Act.
12.3 The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall
not be bound to recognise any equitable claim or other claim to, or interest in, such share on the part of any other person.
12.4 Where shares are recorded in the Register of Shareholders on behalf of one or more persons in the name of a securities
settlement system or the operator of such system, or in the name of a professional depository of securities, or any other depository (such
system, professional or other depository, being referred to as "Depository") or of a sub-depository designated by one or more Depositories, the
Company, subject to it having received from the Depository with which those shares are kept in account satisfactory evidence of the
underlying ownership of Common Shares by those persons and their authority to vote the shares, will permit those persons to exercise the
rights attaching to those shares, including admission to and voting at general meetings. A notice may be given by the Company to the holders
of shares held through a Depository by giving such notice to the Depository whose name is listed in the Register of Shareholders in respect of
the shares, and any such notice shall be regarded as proper notice to all underlying holders of shares. Notwithstanding the foregoing, the
Company shall make payments, by way of dividends or otherwise, in cash, shares or other assets as permitted pursuant to these Articles, only
to the Depository or sub-depository recorded in the Register of Shareholders or in accordance with its instructions, and such payment by the
Company shall release the Company from any and all obligations in respect of such payment.
12.5 In the case of joint holders of shares, the Company shall treat the first named holder on the Register of Shareholders as
having been appointed by the joint holders to receive all notices and to give a binding receipt for any dividend(s) payable in respect of such
share(s) on behalf of all joint holders, without prejudice to the rights of the other holders to information as set out in the Act.
13. Transfer of Shares
13.1 Any Shareholder may, subject to the provisions of the Act and the restrictions contained in these Articles, transfer all or any
of such Shareholder’s shares by written instrument of transfer; provided that shares listed or admitted to trading on a stock exchange may be
transferred in accordance with the rules and regulations of such exchange.
13.2 Any Transfer (as defined below) of a Class B common share that is not first determined by the Board to be a Permitted
Transfer shall be a breach of these Articles with the effect that (i) such Class B common share shall immediately be deemed to be an Affected
Class B common share with respect to which a Conversion Trigger described in Article 14.3(a)(ii) occurred at the time of the Transfer and (ii)
the Board may suspend the
Statuts coordonnés de Ardagh Group S.A. - 15 | P a g e
Page 15 of 36
voting rights of such Class B common share until such Class B common share is converted in accordance with Article 14.5.
13.3 At such time as a Qualified Holder of a Class B common share ceases to be a Qualified Holder without first effecting a
conversion of such Class B common share into a Class A common share, there shall be a breach of these Articles with the effect that (i) such
Class B common share shall immediately be considered an Affected Class B common share with respect to which a Conversion Trigger
described in Article 14.3(a)(ii) occurred at the time such person ceased to be a Qualified Holder and (ii) the Board may suspend the voting
rights of such Class B common share until such Class B common share is converted in accordance with Article 14.5.
13.4 If a holder of Class B common shares wishes to Transfer any such shares, he shall provide notice to the Company, (a)
specifying the number of Class B common shares he wishes to Transfer and the identity of the transferee(s) of such shares (which shall not
exceed four (4) transferees for any one share), (b) representing to the Company that the proposed Transfer is a Permitted Transfer and (c)
describing such holder’s basis for such representation. In determining whether any such Transfer is a Permitted Transfer, the Board may
request such additional information from the holder of such Class B common share as it determines is reasonably necessary to enable the
Board to make such determination. The Board shall determine whether such Transfer meets (or does not meet) the definition of a Permitted
Transfer, which determination will be final and binding on the holder of such share. The Board shall not be required to give any reasons for its
determination, and the Company shall not be held liable for any losses resulting from any such determination or any delay by the Board in
making such determination.
13.5 The Board may, from time to time, establish such additional policies and procedures (not in violation of the Act or applicable
laws or regulations, including these Articles) relating to the Transfer of Class B common shares as the Board may determine necessary or
advisable in connection therewith.
13.6 For purposes of this Article 13, a “Transfer” of any Class B common share (a) means any direct or indirect sale, assignment,
transfer, conveyance or other transfer or disposition of such Class B common share or any legal or beneficial interest in such share, whether or
not for value and whether voluntary or involuntary or by operation of law, including the transfer of voting control with respect to such share by
proxy or otherwise, and (b) shall be deemed to occur with respect to a Class B common share held by a Qualified Holder if there occurs any act
or circumstance that would result in such person ceasing to be a Qualified Holder, including as a result of the transfer, in one transaction or a
series of transactions, of voting securities in such person or the right to elect or appoint the directors or managers of such person to persons
who are not otherwise Qualified Holders. “Transferred” shall have a correlative meaning.
Notwithstanding the foregoing, the following shall not be considered a “Transfer” for such purposes:
(a) the granting of a revocable proxy to directors or officers of the Company in connection with actions to be taken at general
meetings of the Company;
Statuts coordonnés de Ardagh Group S.A. - 16 | P a g e
Page 16 of 36
(b) the entering into a voting trust, agreement or arrangement solely with other holders of Class B common shares, which voting
trust, agreement or arrangement is disclosed in writing to the Secretary of the Company;
(c) any change in the trustees or the persons having or exercising voting control over Class B common shares held by any
Permitted Entity, so long as, after such change, such Permitted Entity continues to be a Qualified Holder;
(d) the pledging or granting of a security interest over a Class B common share in connection with a bona fide loan or
indebtedness transaction and, following acceleration but prior to enforcement, the exercise of or entitlement to voting rights in respect of such
share, by the pledgee or holder of such other security interest to the extent provided for in such pledge or security interest, excluding, for the
avoidance of doubt, any sale, assignment, transfer, conveyance or other transfer or disposition of such Class B common share as a result of the
enforcement of such pledges or security interests;
(e) any existing or replacement pledges of or security interests in Class B common Shares by Parent or any Subsidiary of Parent
pursuant to the security documents relating to the 7.125%/7.875% Senior Secured Toggle Notes due 2023 and the 6.625%/7.375% Senior
Secured Toggle Notes due 2023 issued by ARD Finance S.A. (or any renewal, extension, substitution, refinancing or replacement of such
notes) and, following acceleration but prior to enforcement, the exercise of or entitlement to voting rights in respect of such Class B common
shares, by the pledgee or holder of such other security interest to the extent provided for in such pledge or security interest, excluding, for the
avoidance of doubt, any sale, assignment, transfer, conveyance or other transfer or disposition of such Class B common shares as a result of the
enforcement of such pledges or security interests;
(f) a transfer to the Acquiror pursuant to Article 15; or
(g) any transfer to the Company.
14. Conversion of Class B Common Shares
14.1 All Class B common shares are issued as repurchasable shares (actions rachetables) pursuant to the terms of Article 49-8 of
the Act.
14.2 Following the occurrence of a Conversion Trigger, each Class B common share will be converted into one Class A common
share at the time and in accordance with the procedures set forth in this Article 14 (the "Conversion").
14.3 For purposes of this Article 14, a “Conversion Trigger” will occur:
(a) with respect to any Class B common share, (i) at any time at the option of the holder of such Class B common share,
exercised by notice to the Company, or (ii) upon the holder of such Class B common share ceasing to be a Qualified Holder; or
(b) with respect to all Class B common shares, at such time as the Register of Shareholders reflects (or the Board otherwise
determines) that Qualified Holders cease to own, directly or indirectly, in the aggregate,
Statuts coordonnés de Ardagh Group S.A. - 17 | P a g e
Page 17 of 36
Class B common shares constituting at least ten per cent (10%) of the aggregate number of then issued Common Shares, excluding for
purposes of such calculation any Treasury Shares.
14.4 The Board shall effect the Conversion of any Class B common share in respect of which a Conversion Trigger shall have
occurred (the “Affected Class B common share”) no later than 14 days following the receipt by the Company of notice to the Company (in
the case of the Conversion Trigger described in Article 14.3(a)) or the Company becoming aware of the occurrence of the Conversion Trigger
(in the case of a Conversion Trigger described in Article 14.3(b)), provided that the Company shall not be liable for any losses incurred by any
person resulting from any delay in effecting any Conversion.
14.5 The Conversion will be implemented in the following manner:
(a) each Affected Class B common share will be repurchased by the Company for its par value, with no cash payment being
made to a Shareholder whose Class B common share is being so repurchased (the “Relevant Shareholder”);
(b) the Company shall issue one Class A common share to the Relevant Shareholder for each Affected Class B common share
repurchased and the purchase price for each Affected Class B common share shall remain outstanding as a claim of the Relevant Shareholder
against the Company which claim will be set off against the subscription price payable by the Relevant Shareholder for each Class A common
share;
(c) upon set-off of the claim pursuant to Article 14.5(b) in satisfaction of the subscription price in respect of each Class A
common share the Company shall credit EUR 0.09 to the share premium account of the Company and EUR 0.01 to the share capital account of
the Company in respect of each Class A common share; and
(d) each Affected Class B common share that is repurchased by the Company will be cancelled by the Company and not
available for reissuance.
14.6 In furtherance (but not in limitation) of the provisions of this Article 14, the Chairman for the time being (or some other
person appointed by the Company for this purpose) shall be deemed to have been appointed attorney of each of the Relevant Shareholders with
full power to execute, complete and deliver, in the name and on behalf of each Relevant Shareholder any closing documents and deliverables
as the Board may reasonably require so as to implement a Conversion.
14.7 The Board shall be authorised to appoint, in its absolute discretion, a representative, to appear before a public notary in
Luxembourg for the purpose of amending the Articles to reflect the changes resulting from the cancellation of any Class B common shares
repurchased, and the corresponding issue of any Class A common shares issued, in accordance with the terms of this Article 14.
14.8 The Company may, from time to time, establish such additional policies and procedures (not in violation of the Act or
applicable laws or regulations, including these Articles) relating to the conversion of Class B common shares as the Board may determine
necessary or advisable in connection therewith.
Statuts coordonnés de Ardagh Group S.A. - 18 | P a g e
Page 18 of 36
15. Compulsory Transfer of Shares
15.1 If, at any time, a person is or becomes, directly or indirectly, the owner of seventy-five per cent (75%) or more of the number
of issued shares of the Company, such person (the “Acquiror”) may require the holders (the “Remaining Holders”) of the remaining issued
shares of the Company (the “Remaining Shares”) to sell their shares to him. The Acquiror shall exercise his right to acquire such shares by
giving notice to the Company (an "Article 15 Notice") that specifies: (a) the identity and contact details of the Acquiror, (b) the price that the
Acquiror will pay for the Remaining Shares (being the fair market value thereof as determined in accordance with this Article 15) or, if not yet
determined, the identity of the independent investment banking firm of international reputation that will be engaged by the Acquiror (the
“Acquiror Expert”) to determine the fair market value of the Remaining Shares; (c) the Acquiror’s sources of payment of the purchase price
for the Remaining Shares (which payment must be in the form of cash), and evidence that the Acquiror has secured funds sufficient to make
such payment; and (d) subject to this Article 15, any other conditions governing the purchase of the shares.
15.2 Promptly (but, in any event, within fourteen (14) days) following receipt by the Company of an Article 15 Notice, the
Company shall (a) serve notice in writing on all the Remaining Holders (the "Compulsory Acquisition Notice"), indicating that the Acquiror
has served an Article 15 Notice and outlining the consequences of such service pursuant to this Article 15, (b) the name of the Acquiror Expert
retained by the Acquiror to determine the fair market value of the Remaining Shares, and (c) if the Acquiror has so notified the Company, the
price determined by the Acquiror Expert as the fair market value of the Remaining Shares (the “Acquiror Purchase Price”). If the Acquiror
Purchase Price has not been determined by the Acquiror Expert on the date of the delivery by the Acquiror of the Article 15 Notice, the
Acquiror shall cause the Acquiror Expert to determine the Acquiror Purchase Price within 21 days of such date, and shall promptly (but in any
event within three (3) days)) following such determination, give notice to the Company thereof. The Company shall promptly thereafter serve
notice in writing on all the Remaining Holders indicating the Acquiror Purchase Price.
15.3 If Remaining Holders holding at least 10% of the Remaining Shares object to the Acquiror Purchase Price, such Remaining
Holders may provide written notice of such objection to the Acquiror (the “Notice of Objection”), with a copy to the Company, no later than
10 days after the date on which the Company notified the Remaining Holders of the Acquiror Purchase Price. If no Notice of Objection is
provided to the Acquiror within such time period, the Acquiror Purchase Price shall be final and binding on the Acquiror and all the Remaining
Holders and shall be the “Purchase Price” for purposes of this Article 15. The Acquiror and the objecting Remaining Holders may attempt to
agree on the fair market value of the Remaining Shares, and any fair market value agreed by the Acquiror and Remaining Holders holding a
majority of the Remaining Shares held by all objecting Remaining Holders shall be final and binding on the Acquiror and all the Remaining
Holders and shall the “Purchase Price” for purposes of this Article 15. Failing agreement on such fair market value within 15 days of the date
of the Notice of Objection, the objecting Remaining Holders may engage, at the expense of the Company, an investment banking firm of
international reputation (the “Remaining Holder
Statuts coordonnés de Ardagh Group S.A. - 19 | P a g e
Page 19 of 36
Expert”) to determine the fair market value of the Remaining Shares. The Remaining Holder Expert shall determine such fair market value
within 35 days of the date of the Notice of Objection. If the difference between the fair market value determined by the Remaining Holder
Expert and the Acquiror Purchase Price is not more than 10% of the higher valuation, the purchase price for the Remaining Shares shall be the
average of the Acquiror Purchase Price and the fair market value determined by the Remaining Holder Expert. If the difference between the
fair market value determined by the Remaining Holder Expert and the Acquiror Purchase Price is greater than 10% of the higher valuation, the
Acquiror Expert and the Remaining Holder Expert shall select and engage, at the expense of the Company, a third investment banking firm of
international reputation to determine the fair market value of the Remaining Shares within 65 days of the date of the Notice of Objection. The
fair market value of the Remaining Shares shall be the average of the fair market value of the two (2) closest valuations of the three (3)
investment banking firms, and such valuation shall be final and binding on the Acquiror and all the Remaining Holders (the fair market value
as determined by the Acquiror Expert, as agreed by the Acquiror and the objecting Remaining Holders in accordance with the second sentence
of this Article 15.3 or as determined by the investment banking firms in accordance with this Article 15.3, the “Purchase Price”). Subject to
execution by the Acquiror Expert, the Remaining Holder Expert and the third investment banking firm of customary confidentiality
agreements, the Company shall provide each of them with such financial and other information as they reasonably request to enable them to
make their determinations under this Article 15; provided that all three (3) investment banking firms shall receive the same financial and other
information. Promptly following the determination of the Purchase Price, the Company shall serve notice in writing on all the Remaining
Holders indicating the Purchase Price.
15.4 Upon the service of the Compulsory Acquisition Notice, or, if later, the date on which the Remaining Holders are notified by
the Company of the Purchase Price, subject to Article 15.5, each of the Remaining Holders shall be required to sell all of the Remaining Shares
held by them to the Acquiror, and, subject to Article 15.4, Article 15.5 and the conditions set forth in the Article 15 Notice, the Acquiror shall
be bound to acquire all of such shares, for the Purchase Price, and, in furtherance thereof, pay to the Company at the closing of the sale and
purchase of the Remaining Shares, for remittance to the Remaining Holders, the consideration to be paid by the Acquiror for all the Remaining
Shares.
15.5 In selling his Remaining Shares to the Acquiror and accepting the Purchase Price therefor, each Remaining Holder shall
represent (or be deemed by virtue of Article 15.7 to represent) to the Acquiror that (i) he has full right, title and interest to such shares, (ii) has
all necessary power and authority, and has taken all necessary actions to sell such shares to the Acquiror, and (iii) such shares are free and clear
of all liens or encumbrances except those imposed by applicable law or these Articles. Other than the foregoing representations, no Remaining
Holder shall be required to make any representations to the Acquiror in connection with the sale of his Remaining Shares under this Article 15.
If any Remaining Holder does not (or cannot) make any such representations, or the Acquiror determines before or after its acquisition of the
Remaining Shares held by such Remaining Holder that such representations are incorrect, then the Acquiror
Statuts coordonnés de Ardagh Group S.A. - 20 | P a g e
Page 20 of 36
may, at his option, determine not to acquire such Remaining Holder’s Remaining Shares or, if he has already acquired such shares, pursue any
remedies he has against such Remaining Holder for breach of such representations, as applicable.
15.6 The closing of such sale and purchase shall occur as promptly as practicable after the service of the Compulsory Acquisition
Notice or the determination of the Purchase Price (whichever is later), provided that no Remaining Holder shall be required to sell, and the
Acquiror shall not be required to purchase, any Remaining Shares if such purchase or sale would violate any applicable law, regulation or
order.
15.7 Upon the service of the Compulsory Acquisition Notice, the Company shall be required to take all such actions as may
reasonably be requested by the Acquiror to enable it to implement the acquisition by it, and registration in the Register of Shareholders in its
name (and/or those of its designee(s)), of all of the Remaining Shares on the terms and conditions set forth in this Article 15.
15.8 In furtherance (but not in limitation) of the provisions of this Article 15, the Chairman for the time being (or some other
person appointed by the Company for this purpose) shall be deemed to have been appointed attorney of each of the Remaining Holders with
full power (and obligation, if so requested by the Acquiror) to execute, complete and deliver, in the name and on behalf of each Remaining
Holder (a) a transfer in favor of the Acquiror and/or its designee(s) of all of the shares held by such Remaining Holder against delivery to the
Company of the Purchase Price for such Remaining Holder’s remaining Shares and (b) subject to Article 15.4, such other closing documents
and deliverables as the Acquiror may reasonably require so as to vest all rights and entitlements in or in respect of the shares held by such
Remaining Holder in the Acquiror and/or its designee(s) (including a power of attorney in favor of the Acquiror and/or its designee(s) to vote
and exercise all rights in respect of such shares pending the registration in the Register of Shareholders of the Acquiror and/or its designee(s) as
the holder(s) of such shares).
15.9 The Acquiror, on delivery to the Company of the consideration to which the Remaining Holders are entitled in accordance
with this Article 15, shall be deemed to have obtained a good discharge for such consideration and, on delivery of such consideration and
execution and delivery of the closing documents required to be executed by the Acquiror to effect its purchase of the Remaining Shares, the
Acquiror shall be entitled to require the Company to register its name (or that of its designee) in the Register of Shareholders as the holder by
transfer of each of the Remaining Shares.
15.10 The Company shall, as soon as practicable after its receipt of the consideration for the Remaining Shares and the other
closing documents and deliverables required to effect the transfer of such shares, deliver to each Remaining Holder the consideration to which
such Remaining Holder is entitled in accordance with this Article 15 or, if in the opinion of the Board it is not reasonably practical to do so at
such time, pay the same into a separate bank account, in the name of the Company and shall hold such consideration in trust for the applicable
Remaining Holder until such time as the Board considers it appropriate to release such consideration.
15.11 If, at the end of the 180th day after delivery by the Acquiror of the Article 15 Notice, the sale of all of the Remaining Shares
has not been completed because of the failure of the Acquiror to take any action
Statuts coordonnés de Ardagh Group S.A. - 21 | P a g e
Page 21 of 36
required to effect such sale within such time period, the Article 15 Notice shall be deemed null and void, the Acquiror shall no longer have the
right (or obligation) to purchase the Remaining Shares under this Article 15, and each Remaining Holder and the Company shall be released
from their obligations under this Article 15 in respect of the sale of the Remaining Shares.
ALTERATION OF SHARE CAPITAL
16. Power to Alter Capital
16.1 The Company may from time to time by Special Resolution and subject to Articles 8 and 54.3 and to any greater quorum or
majority requirements as may be provided for in the Act, increase, divide, consolidate, subdivide, change the currency denomination of,
diminish or otherwise alter or reduce its share capital in any manner permitted by the Act or these Articles, provided that nothing herein shall
affect or diminish the authority granted to the Board under Article 7, Article 9 or Article 14.
16.2 If, following any alteration or reduction of share capital, a Shareholder would receive a fraction of a share, the Board may,
subject to the Act, address such issue in such manner as it thinks fit, including by disregarding such fractional entitlement.
DIVIDENDS, OTHER DISTRIBUTIONS AND LEGAL RESERVE
17. Dividends and Other Distributions
17.1 Subject to the provisions of the Act, the general meeting may declare dividends by Ordinary Resolution, but no dividend
shall exceed the amount recommended by the Board.
17.2 No dividend or other distribution may be declared or paid in respect of Class B common shares unless a dividend or
distribution in the same amount per share is declared or paid at the same time in respect of the Class A common shares, and vice versa, without
regard to the par value of the shares. With respect to share dividends (also known as bonus issues), holders of Class B common shares shall
receive a relevant number of Class B common shares corresponding to the amount of the dividend and holders of Class A common shares shall
receive a relevant number of Class A common shares corresponding to the amount of the dividend.
17.3 The Board may, subject to these Articles and in accordance with the Act, declare an interim dividend (acompte sur
dividendes) if it determines that it is appropriate to pay such an interim dividend based on the amount of distributable reserves of the Company.
Any such interim dividend will be paid to the Shareholders, in proportion to the number of shares held by them, in accordance with Article
17.2, and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie
of any assets. Any interim dividends declared by the Board and paid during a financial year will be put to the Shareholders at the following
general meeting to be declared as final. The Company shall not be required to pay interest with respect to any dividend or distribution declared
by the Company, regardless of when or if paid.
Statuts coordonnés de Ardagh Group S.A. - 22 | P a g e
Page 22 of 36
17.4 Subject to applicable laws and regulations, in order for the Company to determine which Shareholders shall be entitled to
receipt of any dividend, the Board may fix a record date, which record date will be the close of business (or such other time as the Board may
determine) on the date determined by the Board. In the absence of a record date being fixed, the record date for determining Shareholders
entitled to receipt of any dividend shall the close of business in Luxembourg on the day the dividend is declared.
17.5 The Board may propose to the general meeting such other distributions (in cash or in specie) to the Shareholders as may be
lawfully made out of the assets of the Company.
17.6 Any dividend or other payment to any particular Shareholder or Shareholders may be paid in such currency or currencies as
may from time to time be determined by the Board and any such payment shall be made in accordance with such rules and regulations
(including in relation to the conversion rate or rates) as may be determined by the Board in relation thereto.
17.7 Any dividend or other payment which has remained unclaimed for five (5) years from the date the dividend or other payment
became due for payment shall, if the Board so resolves, be forfeited and cease to remain owing by the Company. The payment by the Board of
any unclaimed dividend or other moneys payable in respect of a share into a separate account shall not constitute the Company a trustee in
respect thereof.
18. Legal Reserve
The Company shall be required to allocate a sum of at least five per cent (5%) of its annual net profit to a legal reserve, until such time
as the legal reserve amounts to ten per cent (10%) of the Share Capital in Issue. If and to the extent that this legal reserve falls below such ten
per cent (10%) amount, the Company shall allocate a sum of at least five per cent (5%) of its annual net profit to restore the legal reserve to the
minimum amount required by law.
MEETINGS OF SHAREHOLDERS
19. General Meetings
19.1 An annual general meeting shall be held in each year within six (6) months following the end of the financial year at the
Company’s registered office or at such other place in Luxembourg as may be specified in the convening notice.
19.2 For at least eight (8) days prior to the annual general meeting, each Shareholder may obtain a copy of the annual accounts of
the Company for the preceding financial year at the registered office of the Company and inspect all documents of the Company required by
the Act to be made available by the Company for their inspection.
19.3 Other general meetings may be held at such place and time as may be specified in the respective convening notices of the
meeting whenever such a meeting is necessary.
20. Record Date For Shareholder Notice; Voting.
20.1 In order for the Company to determine which Shareholders are entitled to notice of or to vote at any meeting of Shareholders
or any adjournment thereof, the Board may fix, in advance, a record date, which
Statuts coordonnés de Ardagh Group S.A. - 23 | P a g e
Page 23 of 36
shall not be more than sixty (60) days before the date of such meeting. If the Board does not fix a record date, the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business in Luxembourg on the day that is not
a Saturday, Sunday or Luxembourg public holiday next preceding the day on which notice is given.
20.2 A determination of Shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board may, acting in its sole discretion, fix a new record date for the adjourned
meeting.
21. Convening of General Meetings
21.1 The Board may convene a general meeting whenever in its judgment such a meeting is necessary. The Board may delegate
its authority to call the general meeting to the Chairman or any committee of the Board or to one or more board members by resolution. The
convening notice for every general meeting shall contain the agenda, be communicated to Shareholders in accordance with the provisions of
the Act on at least eight (8) clear days’ notice, unless otherwise provided in the Act, and specify the time and place of the meeting and the
general nature of the business to be transacted. The convening notice need not bear the signature of any Director or Officer of the Company.
21.2 The Board shall convene a general meeting within a period of one month upon notice to the Company from Shareholders
representing at least ten per cent (10%) of the Share Capital in Issue on the date of such notice. In addition, one or more Shareholders who
together hold at least ten per cent (10%) of the Share Capital in Issue on the date of the notice to the Company may require that the Company
include on the agenda of such general meeting one or more additional items. Such notice to the Company shall be sent at least five (5) clear
days prior to the holding of such general meeting. The rights of Shareholders under this Article 21.2 to require that a general meeting be
convened or an item be included on the agenda for a general meeting shall be subject to compliance by such Shareholders with Article 21.3.
21.3 To be in proper form for purposes of the actions to be taken pursuant to Article 21.2, the notice to the Company given
pursuant to Article 21.2 must set forth as to each Shareholder(s) requesting the general meeting or the addition of an item to the agenda for a
general meeting: (i) a brief description of, as applicable, the purpose of the general meeting or the business desired to be brought before the
general meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that
such business includes a proposal to amend these Articles, the language of the proposed amendment) and the reasons for conducting such
business at the general meeting; (ii) the name and record address of such Shareholder(s) and the name and address of the beneficial owner, if
any, on whose behalf the business is being proposed, and (iii) the class or series and number of shares of the Company which are registered in
the name of or beneficially owned by such Shareholder(s) or beneficial owner (including any shares as to which such Shareholder(s) or
beneficial owner has a right to acquire ownership at any time in the future); (iv) a description of all derivatives, swaps or other transactions or
series of transactions engaged in, directly or indirectly, by such Shareholder(s) or beneficial owner, the purpose or effect of which is to give
such Shareholder(s) or beneficial
Statuts coordonnés de Ardagh Group S.A. - 24 | P a g e
Page 24 of 36
owner economic risk similar to ownership of shares of the Company; and (v) a description of all agreements, arrangements, understandings or
relationships between such Shareholder(s) or beneficial owner and any other person or persons (including their names) in connection with the
proposal of such business by such Shareholder(s) and any material interest of such Shareholder(s) or beneficial owner in such business.
21.4 No business may be transacted at a general meeting, other than business that is properly brought before the general meeting
by or at the direction of the Board, including upon the request of any Shareholder or Shareholders in accordance with the Act or these Articles.
Except as otherwise provided by law, the chairman of the general meeting at which the business proposed by a Shareholder is to be transacted
shall have the power and duty to determine whether such Shareholder has complied with this Article 21 in proposing such business, and if any
such proposal was not made in accordance with this Article 21, to declare that such proposed business shall not be transacted.
22. Participation by telephone or video conference
The Board may organise participation of the Shareholders in general meetings by telephone or video conference and participation in
such a meeting shall constitute presence in person at such meeting. The participation in a meeting by these means is deemed equivalent to a
participation in person at the general meeting.
23. Quorum at General Meetings
23.1 At any ordinary general meeting (including the annual general meeting) the holders of in excess of one-third (1/3) of the
Share Capital in Issue present in person or by proxy shall form a quorum for the transaction of business.
23.2 At any extraordinary general meeting the holders of in excess of one half (1/2) of the Share Capital in Issue present in person
or by proxy shall form a quorum for the transaction of business.
24. Voting on Ordinary and Special Resolutions
24.1 Subject to the Act, any question proposed for the consideration of the Shareholders at any ordinary general meeting shall be
decided by the affirmative votes of a simple majority of the votes validly cast on such resolution by Shareholders entitled to vote in accordance
with these Articles and in the case of an equality of votes the resolution shall fail.
24.2 Subject to the Act, any question proposed for the consideration of the Shareholders at any extraordinary general meeting
shall be decided by the affirmative votes of at least two-thirds (2/3) of the votes validly cast on such resolution by Shareholders entitled to vote
in accordance with these Articles.
25. Instrument of Proxy
25.1 A Shareholder may appoint a proxy by an instrument in writing in such form as the Board may approve from time to time
and make available to Shareholders to represent such Shareholder at the general meetings of Shareholders.
25.2 The Shareholders may vote in writing (by way of a voting form provided by the Company) on resolutions submitted to the
general meeting, provided that the voting form includes (a) the name, first name,
Statuts coordonnés de Ardagh Group S.A. - 25 | P a g e
Page 25 of 36
address and the signature of the relevant Shareholder, (b) the indication of the shares for which the Shareholder will exercise such right, (c) the
agenda as set forth in the convening notice and (d) the voting instructions (approval, refusal, abstention) for each point of the agenda.
25.3 The appointment of a proxy or submission of a completed voting form must be received by the Company no later than forty-
eight (48) hours prior to the scheduled meeting date (or such other time as may be determined by the Company and notified in writing to the
Shareholders) at the registered office or at such other place or in such manner as is specified in the notice convening the meeting or in any
instrument of proxy or voting form sent out by the Company in relation to the meeting at which the person named in the appointment proposes
to vote, and appointment of a proxy or the submission of a voting form which is not received in the manner so permitted shall be invalid.
25.4 A Shareholder who is the holder of two or more shares may appoint more than one proxy to represent such Shareholder and
vote on his behalf in respect of different shares.
25.5 The decision of the chairman of any general meeting as to the validity of any appointment of a proxy or any voting form shall
be final.
26. Adjournment of General Meeting
26.1 The chairman of a general meeting is entitled, at the request or with the authorisation of the Board, to adjourn a general
meeting, while in session, for four (4) weeks. The chairman shall so adjourn the meeting at the request of one or more Shareholders
representing at least one tenth (1/10) of the Share Capital in Issue. No general meeting may be adjourned more than once. Any adjournment of
a general meeting shall cancel any resolution passed at such meeting prior to such adjournment.
26.2 Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, which date,
place and time will be publicly announced by the Company, fresh notice of the date, place and time for the resumption of the adjourned
meeting shall be given to each Shareholder entitled to attend and vote at the meeting in accordance with these Articles. No business shall be
transacted at any adjourned meeting other than business which might properly have been transacted at the meeting had the adjournment not
taken place.
DIRECTORS AND OFFICERS
27. Number of Directors
The Board shall consist of no fewer than three (3) Directors and no more than fifteen (15) Directors, with the number of Directors
within that range being determined by the Board from time to time. The Board consists of twelve (12) Directors as of 3 March 2017.
28. Election of Directors
28.1 The Board or one or more Shareholders who together hold at least ten per cent (10%) of the Share Capital in Issue on the date
of the notice to the Company may nominate any person for election as a Director. Where any person, other than a person proposed for re-
election or election as a Director by the Board,
Statuts coordonnés de Ardagh Group S.A. - 26 | P a g e
Page 26 of 36
is to be nominated for election as a Director, notice to the Company, complying with the requirements of this Article 28.1, must be given of the
intention to nominate such person. Where a person is nominated for election as a Director other than by the Board:
(a) such notice to the Company must set forth: (i) in respect of each person whom the Shareholder proposes to nominate for
election as a Director, (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of
the person, (C) the class or series and number of shares of the Company owned beneficially or of record by the person and (D) any other
information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection
with solicitations of proxies for election of Directors pursuant to applicable laws or regulations or that the Company may reasonably request in
order to determine the eligibility of such person to serve as a Director of the Company; (ii) the name and record address of each Shareholder
giving the notice and the name and address of the beneficial owner, if any, on whose behalf the person is being nominated; and (iii) the class or
series and number of shares of the Company which are registered in the name of or beneficially owned by such Shareholder or beneficial
owner (including any shares as to which any such Shareholder or beneficial owner has a right to acquire ownership at any time in the future);
(iv) a description of all derivatives, swaps or other transactions or series of transactions engaged in, directly or indirectly, by such Shareholder
or beneficial owner, the purpose or effect of which is to give such Shareholder or beneficial owner economic risk similar to ownership of
shares of the Company; and (v) a description of all agreements, arrangements, understandings or relationships between such Shareholder or
beneficial owner and any other person or persons (including their names) in connection with the proposed nomination by such Shareholder and
any material relationship between such Shareholder or beneficial owner and the person proposed to be nominated for election; and
(b) such notice must be accompanied by a written consent of each person whom the Shareholder proposes to nominate for
election as a Director to being named as a nominee and to serve as a Director if elected.
28.2 Except as otherwise provided by law, the chairman of the general meeting at which Directors are to be elected shall have the
power and duty to determine whether a proposal to elect Directors made by a Shareholder was made in accordance with this Article 28, and if
any such proposal was not made in accordance with this Article 28, to declare that such proposal shall be disregarded.
28.3 Except in the case of a vacancy in the office of Director filled by the Board, as provided for in Article 32, the Company may
elect Directors by Ordinary Resolution. In a contested election where the number of persons validly proposed for election or re-election to the
Board exceeds the number of seats to be filled on the Board at the applicable general meeting, Directors shall be elected by the votes cast by
Shareholders present in person or by proxy at such meeting, such that the persons receiving the most affirmative votes (up to the number of
Directors to be elected) shall be elected as Directors at such general meeting, and the affirmative vote of a simple majority of the votes cast by
Shareholders present in person or by proxy at such meeting shall not be required to elect Directors in such circumstance. Shareholders shall not
be entitled to cumulate their votes in such circumstance, but may only cast a for or against vote for each candidate for each share they own.
Statuts coordonnés de Ardagh Group S.A. - 27 | P a g e
Page 27 of 36
29. Classes of Directors
The Directors shall be divided into three (3) classes designated Class I, Class II and Class III. The Board shall designate the Directors
who will initially serve in each of Class I, Class II and Class III. Each class of Directors shall consist, as nearly as possible, of one third (1/3) of
the total number of Directors constituting the entire Board.
30. Term of Office of Directors
At the first general meeting which is held after the date of adoption of these Articles for the purpose of electing Directors, the Class I
Directors shall be elected for a three (3) year term of office, the Class II Directors shall be elected for a two (2) year term of office and the
Class III Directors shall be elected for a one (1) year term of office. At each succeeding annual general meeting, successors to the class of
Directors whose term expires at that annual general meeting shall be elected for a three (3) year term of office. If the number of Directors is
changed, any increase or decrease shall be apportioned by the Board among the classes so as to maintain the number of Directors in each class
as near to equal as possible, and any Director of any class elected to fill a vacancy shall hold office for a term that shall coincide with the
remaining term of the other Directors of that class, but in no case shall a decrease in the number of Directors shorten the term of any Director
then in office. A Director shall hold office until the annual general meeting for the year in which his term expires, subject to his office being
vacated pursuant to Article 32.
31. Removal of Directors
31.1 The mandate of any Director may be terminated, at any time and with or without cause, by the general meeting of
Shareholders by means of an Ordinary Resolution in favour of such termination.
31.2 If a Director is removed from the Board under Article 31.1, the Shareholders may by means of an Ordinary Resolution fill
the vacancy at the meeting at which such Director is removed, provided that any nominee for the vacancy who is proposed by Shareholders
shall be proposed in accordance with Article 28.1.
32. Vacancy in the Office of Director
32.1 The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Articles or is prohibited from being a Director by law;
(b) is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;
(c) is or becomes of unsound mind or dies; or
(d) resigns his office by notice to the Company.
32.2 The Board shall have the power to appoint any person as a Director to fill a vacancy on the Board occurring for any reason
other than where the appointment of a Director to fill a vacancy has been made by the Shareholders in accordance with Article 31.2. A
Director so appointed shall be appointed to the class of Directors that the Director he is replacing belonged to, provided that such Director shall
hold office only until ratification by the Shareholders of his appointment at the next following general meeting and, if such general meeting
does not ratify the appointment, such Director shall vacate his office at the conclusion thereof.
Statuts coordonnés de Ardagh Group S.A. - 28 | P a g e
Page 28 of 36
33. Remuneration of Directors
The remuneration (if any) of the Directors shall be determined by the Board subject to ratification by Shareholders at a general meeting
of Shareholders. Such remuneration shall be deemed to accrue from day to day. Any Director who holds an executive office (including for this
purpose the office of Chairman) or who serves on any Board committee, or who otherwise performs services that in the opinion of the Board
are outside the scope of the ordinary duties of a director, may be paid such additional remuneration for such additional services as the Board
may determine. The Directors may also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from
Board meetings or general meetings, or in connection with the business of the Company or their duties as Directors generally.
34. Directors to Manage Business
The business of the Company shall be managed and conducted by or under the direction of the Board. In managing the business of the
Company, the Board may exercise all such powers of the Company as are not, by the Act or by these Articles, required to be exercised by the
Company in general meeting.
35. Powers of the Board of Directors
Without limiting the powers of the Board as described in Article 34, the Board shall represent and bind the Company vis-à-vis third
parties and may:
(a) appoint, suspend, or remove any manager, secretary, clerk, agent or employee of the Company and may fix their
remuneration and determine their duties;
(b) exercise all the powers of the Company to borrow money and to mortgage or charge or otherwise grant a security interest in
its undertaking, property and uncalled capital, or any part thereof, and may authorise the issuance by the Company of debentures, debenture
stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;
(c) appoint one or more persons to the office of chief executive officer of the Company, who shall, subject to the control of the
Board, supervise and administer all of the general business and affairs of the Company;
(d) appoint a person to act as manager of the Company's day-to-day business (délégué à la gestion journalière) and may entrust
to and confer upon such manager such powers and duties as it deems appropriate for the management and conduct of such daily management
and affairs of the Company;
(e) by power of attorney, appoint any one or more persons, whether nominated directly or indirectly by the Board, to be an
attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by
the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions
for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such
attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney;
(f) delegate any of its powers (including the power to sub-delegate) to one or more committees of one or more persons appointed
by the Board which may consist partly of non-Directors, provided that every such
Statuts coordonnés de Ardagh Group S.A. - 29 | P a g e
Page 29 of 36
committee shall consist of a majority of Directors and shall conform to such directions as the Board shall impose on them, and the meetings
and proceedings of any such committee shall be governed by the provisions of these Articles regulating the meetings and proceedings of the
Board, so far as the same are applicable and are not superseded by directions imposed by the Board;
(g) delegate any of its powers (including the power to sub-delegate) to any person on such terms and in such manner as the
Board may see fit (not exceeding those vested in or exercisable by the Board);
(h) present any petition and make any application in connection with the liquidation or reorganisation of the Company, take any
action, both as plaintiff and as defendant before any court, obtain any judgments, decrees, decisions, awards and proceed therewith to
execution, acquiesce in settlement, compound and compromise any claim in any manner determined by the Board to be in the interest of the
Company;
(i) in connection with the issue of any share, pay such commission and brokerage as may be permitted by law;
(j) subject to the provisions of Article 33, provide benefits, whether by way of pensions, gratuities or otherwise, for any
Director, former Director or other officer or former officer of the Company or to any person who holds or has held any employment with the
Company or any of its Subsidiaries or associated companies or any predecessor of the Company or of any such Subsidiary or associated
company and to any member of his family or any person who is or was dependent on him, and may set up, establish, support, alter, maintain
and continue any scheme for providing all or any such benefits, and for such purposes any Director may be, become or remain a member of, or
rejoin, any scheme and receive or retain for his own benefit all benefits to which such Director may be or become entitled thereunder, and the
Board may authorise the payment out of the funds of the Company of any premiums, contributions or sums payable by the Company under the
provisions of any such scheme in respect of any of the persons described in this Article 35(j); and
(k) authorise any person or persons to act on behalf of the Company for any specific purpose and in connection therewith to
execute any deed, agreement, document or instrument on behalf of the Company.
36. Appointment of Chairman and Secretary
36.1 A Chairman may be appointed by the Board from among its members from time to time for such term as the Board deems fit.
Unless otherwise determined by the Board, the Chairman shall preside at all meetings of the Board and the Shareholders. In the absence of the
Chairman from any meeting of the Board or the Shareholders, the Board shall designate an alternative person to serve as the chairman of such
meeting.
36.2 A Secretary may be appointed by the Board from time to time for such term as the Board deems fit. The Secretary need not
be a Director and shall be responsible for (i) sending convening notices of general meetings as per the instruction of the Board, (ii) calling
Board meetings as per the instruction of the Chairman, (iii) keeping the minutes of the meetings of the Board and of the Shareholders and (iv)
any other duties entrusted from time to time to the Secretary by the Board.
Statuts coordonnés de Ardagh Group S.A. - 30 | P a g e
Page 30 of 36
37. Appointment, Duties and Remuneration of Officers
37.1 The Board may appoint such Officers (who may or may not be Directors) as the Board may determine for such terms as the
Board deems fit.
37.2 The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as
may be designated by resolution of the Board from time to time.
37.3 The Officers shall receive such remuneration as the Board may determine.
38. Indemnification of Directors and Officers
38.1 The Directors, Chairman, Secretary and other Officers (such term to include any person appointed to any committee by the
Board) acting in their capacities as such or, at the request of the Company, as a director, officer, employee or agent of another person,
including any Subsidiary of the Company, or as the liquidator or trustee (if any) for the Company or any Subsidiary thereof, and every one of
them (whether for the time being or formerly), and their heirs, executors and administrators (each, an "indemnified party"), shall, to the extent
possible under applicable law, be indemnified and held harmless by the Company from and against all actions, costs, charges, losses, damages
and expenses which any of them incur or sustain by or by reason of any act performed or omitted to be performed by any Director, Chairman,
Secretary or Officer in their capacities as such or in the other capacities described above, and, to the extent possible under applicable law, no
Director, Chairman, Secretary or Officer shall be liable for the actions, omissions or defaults of any other indemnified party, or for the actions
of any advisors to the Company or any other persons, including financial institutions, with whom any moneys or assets belonging to the
Company are lodged or deposited for safe custody, or for insufficiency or deficiency of any security received by the Company in respect of any
of its moneys or assets, or for any other loss, misfortune or damage which may happen in the course of their serving as a Director, Chairman,
Secretary or Officer of the Company or, at the request of the Company, as a director, officer, employee or agent of another person, including
any Subsidiary of the Company, or as the liquidator or trustee (if any) for the Company or any Subsidiary thereof, or in connection therewith,
provided that these indemnity and exculpation provisions shall not extend to any matter in respect of any fraud or dishonesty, gross negligence,
wilful misconduct or action giving rise to criminal liability in relation to the Company which may attach to any of the indemnified parties.
Each Shareholder agrees to waive any claim or right of action such Shareholder might have, whether individually or by or in the right of the
Company, against any Director, Chairman, Secretary or Officer on account of any action taken by such person, or the failure of such person to
take any action in the performance of his duties with or for the Company or, at the request of the Company, any other person, provided that
such waiver shall not extend to any matter in respect of any fraud or dishonesty, gross negligence, wilful misconduct or action giving rise to
criminal liability in relation to the Company which may attach to such person.
38.2 The Company may, to the extent possible under applicable law, purchase and maintain insurance for the benefit of any
Director or Officer against any liability (to the extent permitted by law) incurred by him under the Act in his capacity as a Director or Officer
or indemnifying such Director or Officer in respect
Statuts coordonnés de Ardagh Group S.A. - 31 | P a g e
Page 31 of 36
of any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of
trust of which the Director or Officer may be guilty in relation to the Company or any Subsidiary thereof.
38.3 The Company may, to the extent possible under applicable law, advance moneys to an indemnified party for the costs,
charges and expenses incurred by such indemnified party in defending any civil or criminal proceedings against such person, on condition that
such indemnified party shall repay the advance if any allegation of fraud or dishonesty in relation to the Company is proved against such
person.
38.4 The rights conferred on indemnified parties under this Article 38 are contract rights, and any right to indemnification or
advancement of expenses under this Article 38 shall not be eliminated or impaired by an amendment to these Articles after the occurrence of
the act or omission with respect to which indemnification or advancement of expenses is sought.
38.5 The Company is authorised to enter into agreements with any indemnified party providing indemnification or advance of
expenses rights to any such person, to the extent possible under applicable law.
39. Binding Signatures
Towards third parties, the Company is in all circumstances committed either by the joint signatures of any two (2) Directors or by the
sole signature of the delegate of the Board acting within the limits of his powers.
MEETINGS OF THE BOARD OF DIRECTORS
40. Board Meetings
40.1 The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit. Each Director
shall have one (1) vote, and a resolution put to the vote at a Board meeting shall be carried by the affirmative votes of a majority of the votes
cast and in the case of an equality of votes, the resolution shall fail and the Chairman of the meeting shall not have a casting vote.
40.2 Each Director present at a meeting of the Board shall, in addition to his or her own vote, be entitled to one (1) vote in respect
of each other Director not present at the meeting who shall have authorised such Director in respect of such meeting to vote for such other
Director in the absence of such other Director.
40.3 Any such authority may relate generally to all meetings of the Board or to any specified meeting or meetings and must be in
writing and may be sent by mail, facsimile or electronic mail (with customary proof of confirmation that such notice has been transmitted) or
any other means of communication approved by the Board and may bear a printed or facsimile signature of the Director giving such authority.
The authority must be delivered to the Company for filing prior to or must be produced at the meeting at which a vote is to be cast pursuant
thereto.
41. Notice of Board Meetings
A Director may, and the Secretary on the requisition of a Director shall, at any time convene a Board meeting. Notice of a Board
meeting shall be deemed to be duly given to a Director if it is given to such Director verbally (including in person or by telephone) or
otherwise communicated or sent to such Director by mail or
Statuts coordonnés de Ardagh Group S.A. - 32 | P a g e
Page 32 of 36
facsimile or electronic mail (with customary proof of confirmation that such notice has been transmitted) at such Director's last known address
or in accordance with any other instructions given by such Director to the Company for this purpose.
42. Participation by telephone or video conference
Directors may participate in any meeting by video conference or by such telephonic or other communication facilities or means as
permit all persons participating in the meeting to communicate with each other simultaneously, and participation in such a meeting shall
constitute presence in person at such meeting.
43. Quorum at Board Meetings
The quorum necessary for the transaction of business at a Board meeting shall be two (2) Directors present in person.
44. Board to Continue in the Event of Vacancy
The Board may act notwithstanding any vacancy in its number, provided that, if the number of Directors is less than the number fixed
by the Act as the minimum number of directors, the continuing Director(s) shall, on behalf of the Board, summon a general meeting for the
purpose of appointing new Directors to fill the vacancies or for the purpose of adopting any measures within the competence of the general
meeting.
45. Written Resolutions
A resolution signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a Board meeting duly
called and constituted, such resolution to be effective on the date on which the resolution is signed by the last Director.
46. Validity of Acts of Directors
All actions taken at any meeting of the Board or by any Director, notwithstanding that it is subsequently discovered that there was a
defect in the appointment of a Director or that a Director was disqualified from holding office or had vacated office, shall be as valid as if such
Director had been duly appointed, was qualified or had continued to be a Director and had been entitled to take any such action.
CORPORATE RECORDS
47. Minutes of the Meetings of the Shareholders
47.1 The minutes of general meetings of Shareholders shall be drawn up and shall be signed by the Chairman of the general
meeting.
47.2 Copies of or extracts from the minutes of the general meeting of Shareholders may be certified by the Chairman or the
Secretary.
48. Minutes of the Meetings of the Board
The minutes of any meeting of the Board, or extracts thereof, shall be signed by the Chairman or the member of the Board who presided
at such meeting.
Statuts coordonnés de Ardagh Group S.A. - 33 | P a g e
Page 33 of 36
49. Place Where Corporate Records Kept
Minutes prepared in accordance with the Act and these Articles shall be kept by the Secretary at the registered office of the Company.
50. Service of Notices
50.1 A notice (including a notice convening a general meeting) or any other document to be served or delivered by the Company
to Shareholders pursuant to these Articles may be served on or delivered to any Shareholder by the Company:
(a) by hand delivery to such Shareholder or his authorised agent (and in the case of a notice convening a general meeting, only if
such Shareholder has individually agreed to receive notice in such manner);
(b) by mailing such notice or document to such Shareholder at his address as recorded in the Register of Shareholders (and in the
case of a notice convening a general meeting, only if such Shareholder has individually agreed to receive notice in such manner);
(c) by facsimile telecommunication, when directed to a number at which such Shareholder has individually consented in writing
to receive notices or documents from the Company (including a notice convening a general meeting);
(d) by electronic mail, when directed to an electronic mail address at which such Shareholder has individually consented in
writing to receive notice or documents from the Company (including a notice convening a general meeting); or
(e) by registered letter to such Shareholder at his address as recorded in the Register of Shareholders in respect of a notice
convening a general meeting in circumstances where a Shareholder has not individually consented to receiving notice by other means of
communication.
50.2 Where a notice or document is served or delivered pursuant to Article 50.1(a), the service or delivery thereof shall be deemed
to have been affected at the time such notice or document was delivered to the Shareholder or his authorised agent.
50.3 Where a notice or document is served or delivered pursuant to Article 50.1(b), service or delivery thereof shall be deemed to
have been affected at the expiration of forty-eight (48) hours after such notice or document was mailed. In proving service or delivery it shall
be sufficient to prove that the envelope containing such notice or document was properly addressed, stamped and mailed.
50.4 Where a notice or document is served or delivered pursuant to Article 50.1(c) or Article 50.1(d), service or delivery thereof
shall be deemed to be affected at the time the facsimile or electronic mail was sent, as evidenced by the records of the Company generated at
such time and available to the recipient of such electronically transmitted notice or document upon his request.
50.5 Without prejudice to the provisions of Articles 50.1(b) and 50.3, if at any time by reason of the suspension or curtailment of
postal services within Luxembourg, the Company is unable to convene a general
Statuts coordonnés de Ardagh Group S.A. - 34 | P a g e
Page 34 of 36
meeting by notices sent through the mail, a general meeting may be convened by a notice advertised in at least one (1) leading national daily
newspaper in Luxembourg, filed with the register of commerce and companies and published on the Recueil Electronique des Sociétés et
Associations at least fifteen days before the affected general meeting. In such case, such notice shall be deemed to have been duly served on all
Shareholders entitled thereto at noon on the day on which such advertisement shall appear. In any such case the Company shall send, from
Luxembourg or elsewhere (as the Board in its opinion considers practical), confirmatory copies of the notice convening the general meeting at
least eight (8) days before the meeting by mail (or by facsimile or electronic mail in the case of Shareholders who have consented in writing to
receive notices by facsimile or electronic mail as described in Article 50.1(c) and Article 50.1(d)) to those Shareholders whose registered
addresses are outside Luxembourg or are in areas of Luxembourg unaffected by such suspension or curtailment of postal services. If at least
eight (8) days prior to the time appointed for the holding of the general meeting, the mailing of notices to Shareholders in Luxembourg, or any
part thereof that was previously affected, has again (in the opinion of the Board) become practical, to the extent such Shareholders have not
received notices convening such meeting by facsimile or electronic mail, the Company shall send confirmatory copies of the notice by mail to
such Shareholders. The accidental omission to give any such confirmatory copy of a notice of a general meeting to, or the non-receipt of any
such confirmatory copy by, any Shareholder (whether by mail or, if applicable, facsimile or electronic mail) shall not invalidate the
proceedings at such general meeting, and no proof need be given that this formality has been complied with.
50.6 Notwithstanding anything contained in this Article 50, the Company shall not be obliged to take account of or make any
investigations as to the existence of any suspension or curtailment of postal services within or in relation to all or any part of any jurisdiction or
other area other than Luxembourg.
FINANCIAL YEAR
51. Financial Year
The financial year of the Company shall begin on 1 January and shall end on 31 December in each year.
AUDITOR
52. Appointment of Auditor
52.1 The operations of the Company shall be supervised by one or several approved statutory auditors (réviseur(s) d'entreprises
agréé) as applicable.
52.2 Subject to the Act, the Shareholders shall appoint the auditor(s) selected by the audit committee of the Company to hold
office for such term as the Shareholders deem fit but not exceeding six (6) years or until a successor is appointed. The auditor shall be eligible
for re-appointment.
52.3 The Auditor may be a Shareholder but no Director, Officer or employee of the Company shall, during his continuance in
office, be eligible to act as an Auditor of the Company.
Statuts coordonnés de Ardagh Group S.A. - 35 | P a g e
Page 35 of 36
VOLUNTARY WINDING-UP AND DISSOLUTION
53. Winding-Up
53.1 The Company may be dissolved at any time by the Shareholders by means of a Special Resolution. In the event of dissolution
of the Company, liquidation shall be carried out by one or more liquidators, who may be natural or legal persons, appointed by the general
meeting, which shall determine the powers and remuneration of such liquidators.
53.2 If the Company shall be dissolved and the assets available for distribution among the Shareholders shall be insufficient to
repay the total paid up share capital of the Class A common shares and one-tenth (1/10) of the paid up share capital of the Class B common
shares, such assets shall be distributed to the Shareholders in proportion to the number of shares held by them, without regard to the par value
of their shares. If in a dissolution the assets available for distribution among the Shareholders shall be more than sufficient to repay the total
paid up share capital of the Class A common shares and one-tenth (1/10) of the paid up share capital of the Class B common shares at the
commencement of the dissolution, the excess shall be distributed among the Shareholders in proportion to the number of shares held by them at
the commencement of the dissolution, without regard to the par value of their shares.
53.3 The liquidator may, with the sanction of the Shareholders by means of an Ordinary Resolution, divide amongst the
Shareholders in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or
not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided as aforesaid and, subject to these
Articles and the rights attaching to each share, may determine how such division shall be carried out as between the Shareholders or different
classes of Shareholders. The determinations of the liquidator in respect of the distributions described in Article 53.2 and this Article 53.3 shall
be final.
CHANGES TO CONSTITUTION
54. Changes to Articles
54.1 No Article may be rescinded, altered or amended and no new Article may be made save in accordance with the Act and until
it has been approved by the Shareholders by means of a Special Resolution or approved by the Board in accordance with these Articles.
54.2 The following provisions of these Articles may not be rescinded, altered or amended until such rescission, alteration or
amendment has been approved by the affirmative vote of a simple majority of the votes validly cast by holders of Class A common shares
voting as a class at an ordinary general meeting at which the holders of in excess of one-third (1/3) of the Class A common shares are present
in person or by proxy and subject to any applicable greater quorum or majority requirements as may be provided for in the Act: Articles 6.4
and 6.5, Article 7.3(b), Article 10.1, Article 13, Article 14, Article 15, Article 17.2 and this Article 54, including in each case any related
definitions, except to the extent any such rescission, alteration or amendment is intended to correct a manifest error or otherwise would not
adversely affect the holders of Class A common shares.
Statuts coordonnés de Ardagh Group S.A. - 36 | P a g e
Page 36 of 36
54.3 Notwithstanding Article 7.1, except as provided in clauses (i) and (ii) of Article 7.3(b), Shareholders shall not, whether by
granting authorisation to the Board to do so from authorised share capital or resolving upon such issuance at a general meeting, approve the
issuance by the Company of Class B common shares unless such authorisation or issuance has been approved by the affirmative vote of a
simple majority of the votes validly cast by holders of Class A common shares voting as a class at an ordinary general meeting at which the
holders of in excess of one-third (1/3) of the Class A common shares are present in person or by proxy, subject to any applicable greater
quorum or majority requirements as may be provided for in the Act.
55. Governing Law
55.1 All matters not governed by these Articles shall be determined in accordance with the laws of Luxembourg.
55.2 Notwithstanding anything contained in these Articles, the provisions of these Articles are subject to any applicable law and
legislation, including the Act, except where these Articles contain provisions which are stricter than those required pursuant to any applicable
law and legislation, including the Act.
55.3 Should any clause of these Articles be declared null and void, this shall not affect the validity of the other clauses of these
Articles.
55.4 In the case of any divergences between the English and the French text, the English text will prevail.
TRANSFER AGREEMENT
by and between
ARDAGH GROUP S.A.
and
ARDAGH METAL PACKAGING S.A.
Dated as of February 22, 2021
Exhibit 4.9Execution Version
Table of Contents
Page
ARTICLE I DEFINITIONS 2
SECTION 1.1 Certain Defined Terms 2SECTION 1.2 Other Defined Terms 5SECTION 1.3 Interpretation and Rules of Construction 6
ARTICLE II AMP TRANSFER 7
SECTION 2.1 AMP Transfer 7SECTION 2.2 Transfer of Assets and Liabilities; Delayed Transfers 7SECTION 2.3 Wrong Pockets 9
ARTICLE III INDEMNIFICATION 10
SECTION 3.1 Indemnification by AGSA 10SECTION 3.2 Indemnification by AMPSA 11SECTION 3.3 Limitations on Indemnification 11SECTION 3.4 Procedures for Indemnification 12SECTION 3.5 Taxes 13
ARTICLE IV EMPLOYEE MATTERS 13
SECTION 4.1 Transfer of Employment or Engagement; Collective Bargaining Agreements13
SECTION 4.2 Transfer of Plans 14SECTION 4.3 Transfer of Liabilities 15SECTION 4.4 Terms and Conditions of Employment 15SECTION 4.5 No Third Party Beneficiaries; No Amendment 16
ARTICLE V CERTAIN OTHER MATTERS 16
SECTION 5.1 Access to Information 16SECTION 5.2 Privileged Matters 17SECTION 5.3 EAPA and Cross-License Assignment and Assumption 17SECTION 5.4 Litigation Cooperation 18SECTION 5.5 Insurance Matters 18SECTION 5.6 Intercompany Accounts 18SECTION 5.7 Hedging Arrangements 19SECTION 5.8 Credit and Performance Support Obligations 19SECTION 5.9 Further Actions 20SECTION 5.10 Non-Competition; Non-Solicitation 20SECTION 5.11 No Right to SetOff 21
EXHIBIT
A AMP Entities
ARTICLE VI DISCLAIMER 21
SECTION 6.1 Disclaimer 21SECTION 6.2 Limitation of Liability 22
ARTICLE VII GENERAL PROVISIONS. 22
SECTION 7.1 Expenses 22SECTION 7.2 Notices 22SECTION 7.3 Severability 23SECTION 7.4 Entire Agreement 23SECTION 7.5 Assignment 23SECTION 7.6 Amendment 23SECTION 7.7 Waiver 23SECTION 7.8 No ThirdParty Beneficiaries 23SECTION 7.9 Specific Performance 24SECTION 7.10 Governing Law 24SECTION 7.11 Termination 24SECTION 7.12 Counterparts 24
TRANSFER AGREEMENT
TRANSFER AGREEMENT, dated as of February 22, 2021, by and between Ardagh Group S.A., apublic limited liability company (société anonyme) organized under the laws of the Grand Duchy of Luxembourgwith its registered office at 56, Rue Charles Martel, L-2134 Luxembourg, Luxembourg and registered with theLuxembourg Trade and Companies Register under registration number B160804 (“AGSA”), and Ardagh MetalPackaging S.A., a public limited liability company (société anonyme) organized under the laws of the Grand Duchyof Luxembourg with its registered office at 56, Rue Charles Martel, L-2134 Luxembourg, Luxembourg andregistered with the Luxembourg Trade and Companies Register under registration number B251465 (“AMPSA”).
WHEREAS, as of the date hereof, AGSA, indirectly through the AMP Entities (other than AMPSA),is engaged in the business of developing, manufacturing, marketing and selling metal beverage cans and ends andproviding related technical and customer services (the “AMP Business”);
WHEREAS, AMPSA is a newly formed wholly-owned subsidiary of AGSA;
WHEREAS, AGSA, AMPSA, Gores Holdings V, Inc., a Delaware corporation (“GHV”), and ArdaghMP MergeCo Inc., a Delaware corporation and a wholly owned subsidiary of AMPSA, have entered into a BusinessCombination Agreement, dated as of the date hereof (the “BCA”), which, among other things, provides that, as acondition to GHV’s obligations to close the transactions contemplated by the BCA, the AMP Transfer and the othertransactions contemplated by this Agreement shall have been completed;
WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, AGSA and itsSubsidiaries will effect the AMP Transfer through a series of transactions in accordance with the Steps Plan (asdefined in the BCA), that will result in all of the AMP Equity Interests being directly or indirectly owned byAMPSA in exchange for aggregate consideration consisting of (a) $2,315,000,000, payable in cash (in USD or theEUR equivalent thereof (based on an exchange rate as of a date to be agreed by the parties hereto) or both) in aseries of transactions, including contributions for shares and the repayment of intercompany payables,(b) 484,956,250 shares, each with a par value of EUR 0.01, of AMPSA to be issued against contributions in kindmade by AGSA to AMPSA (“Shares”), (c) a promissory note issued by a Subsidiary of AMPSA in the amount of$1,085,000,000, and (d) if the transactions contemplated by the BCA are consummated, a contingent right to receivean additional 60,730,000 Shares in accordance with the terms and subject to the conditions set forth in Section 3.6 ofthe BCA or if the transactions contemplated by the BCA are not consummated, such other consideration in form andamount as agreed by the parties hereto (the consideration set forth in clauses (a), (b), (c) and (d), the “AGSAConsideration”); and
WHEREAS, in connection with the AMP Transfer, AGSA will cause (a) the AGSA RetainedSubsidiaries to transfer to one or more AMP Entities any assets and Liabilities held by the AGSA RetainedSubsidiaries that are primarily related to the conduct of the AMP Business or that will be used by the AMP Entitiesto provide services to the AGSA Entities following the AMP Closing Date under the Services Agreement, and (b)the AMP Entities to transfer to one or more
AGSA Retained Subsidiaries any assets and Liabilities held by the AMP Entities that are primarily related to theconduct of the AGSA Retained Business or that will be used by the AGSA Entities to provide services to the AMPEntities following the AMP Closing Date under the Services Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the covenants and agreementscontained in this Agreement, and intending to be legally bound hereby, the parties hereto hereby agree as follows.
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. Capitalized terms used in this Agreement have themeanings set forth below:
“Action” means any action, suit, proceeding, arbitration, claim, demand, litigation, prosecution,contest, investigation, inquiry, hearing, inquest, audit, complaint, dispute or other legal recourse, in each case, by orbefore a Governmental Authority or arbitration tribunal, whether civil, criminal, administrative, disciplinary orotherwise.
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectlycontrolling or controlled by, or under common control with, such specified Person; provided, that, for the purposesof this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under commoncontrol with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to director cause the direction of the management and policies of such Person, whether through the ownership of votingsecurities, by Contract or otherwise.
“Agreement” means this Transfer Agreement between the parties hereto and all amendments heretomade in accordance with the provisions of Section 7.6.
“AMP Employee” means each employee or service provider (who is a natural person) of any AMPEntity, other than any Specified Employee.
“AMP Employee Liabilities” means all Liabilities of any AGSA Entity or AMP Entity with respect toany current or former AMP Employee and his or her dependents and beneficiaries deriving from the AMPEmployee’s employment with any AGSA Entity or AMP Entity, whether or not such Liabilities arose pursuant to aPlan, applicable Law or otherwise, including any such Liabilities under any AGSA Retained Plan or any Plansponsored or maintained by any third parties.
“AMP Entities” means the Persons set forth on Exhibit A and any other Subsidiaries of AMPSA,from time to time.
“AMP Equity Interests” means all of the equity and other ownership interests in the Persons set forthon Exhibit A, other than AMPSA.
“AMP Plan” means a Plan sponsored or maintained by an AMP Entity (and not sponsored ormaintained by an AGSA Entity), other than any Specified Plan.
“AGSA Entities” means, for purposes of this Agreement, AGSA and its Affiliates, other than anyAMP Entity.
“AGSA Retained Business” means the businesses of AGSA (other than the AMP Business).
“AGSA Retained Employee” means (i) each employee or service provider (who is a natural person)of any AGSA Entity and (ii) each Specified Employee.
“AGSA Retained Employee Liabilities” means all Liabilities of any AGSA Entity or AMP Entitywith respect to any current or former AGSA Retained Employee and his or her dependents and beneficiariesderiving from the AGSA Retained Employee’s employment with any AGSA Entity or AMP Entity, whether or notsuch Liabilities arose pursuant to a Plan, applicable Law or otherwise, including any such Liabilities under any AMPPlan or any Plan sponsored or maintained by any third parties.
“AGSA Retained Plan” means (i) each Plan that is sponsored or maintained by any AGSA Entity and(ii) each Specified Plan.
“AGSA Retained Subsidiaries” means the Subsidiaries of AGSA, other than the AMP Entities.
“Applicable Transfer Regulations” means the European Communities (Protection of Employees onTransfer of Undertakings) Regulations 2003 of Ireland (or any similar legislation governing the automatic transfer ofemployment in other jurisdictions).
“BCA Closing Date” shall have the meaning ascribed to “Closing Date” in the BCA.
“Business Day” means a day other than (i) a Saturday or Sunday or (ii) any other day on which bankslocated in Luxembourg City, Luxembourg are required or authorized by Law to be closed for business.
“Collective Bargaining Agreement” means any written agreement with an Employee RepresentativeBody impacting the terms, conditions or liabilities of, to or in connection with, the AMP Employees.
“Contract” means any legally-binding contract, agreement, indenture, note, bond, loan or creditagreement, instrument, lease, commitment, mortgage, deed of trust, license, power of attorney, guaranty or otherarrangement or obligation, whether written or oral, in each case, as amended and supplemented from time to timeand including all schedules, annexes and exhibits thereto.
“Employee Representative Body” means any works’ council, labor union, trade union or similaremployee representative body in any jurisdiction.
“Encumbrance” means any encumbrance, mortgage, fixed or floating charge, pledge, lien, restriction,guarantee, trust, right to acquire, option or right of pre-emption or first refusal, assignment, hypothecation, securityinterest, title retention, legal or equitable third party right or interest, including any assignment by way of security ortrust arrangement for the purpose of providing security, encroachment, deed of trust or deed to secure debt, recordedor unrecorded easement, right of way, covenant, condition, license, reservation, subdivision and other defects of titleof any kind or rights of others for rights of way, utilities and similar purposes that adversely affect real property, or,in any case, any agreement to create any of the foregoing.
“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.
“Governmental Authority” means any national, federal, state, local, supranational, regional, orprovincial government or any court of competent jurisdiction, administrative or regulatory agency, board, bureau,arbitrator, tribunal, or arbitral body or commission or other national, state, local, supranational, regional orprovincial governmental authority or instrumentality entitled to exercise any administrative, executive, judicial,legislative, police, regulatory or taxing authority or power.
“Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determinationor award, in each case, entered by any Governmental Authority.
“Group” means the AGSA Entities, on the one hand, or the AMP Entities, on the other hand, as thecase may be.
“Indemnified Party” means an AGSA Indemnified Party or an AMPSA Indemnified Party, as the casemay be.
“Indemnifying Party” means AGSA pursuant to Section 3.1 or AMPSA pursuant to Section 3.2, asthe case may be.
“Law” means any national, federal, state, provincial, local or supranational law (including commonlaw), statute, code, Governmental Order, consent decree, doctrine, ordinance, rule, regulation, treaty or other legalrequirement of any Governmental Authority.
“Liabilities” means any and all debts, liabilities and obligations, whether accrued or unaccrued, fixedor variable, known or unknown, absolute or contingent, matured or unmatured or determined or determinable,including those arising under any Law, Action or Governmental Order and those arising under any contract, lease,agreement, arrangement, commitment or undertaking.
“Local Conveyances” means the sale and purchase agreements, share transfer agreements, bills ofsale, deeds, assignment and assumption agreements and other documents between AGSA (or the applicable AGSARetained Subsidiaries), on the one hand, and AMPSA (or its designated Subsidiary), on the other hand, pursuant towhich the applicable AMP Equity Interests will be transferred to, or assumed by, AMPSA or its designatedSubsidiary.
“Person” means any individual, corporation, partnership, limited partnership, limited liabilitycompany, syndicate, person, trust, association or entity or Governmental Authority or any political subdivision,agency or instrumentality thereof.
“Plan” means each employment, compensation, benefits, severance or termination, consulting, bonus,deferred compensation, equity, phantom-equity, or equity-based award, retention, relocation, vacation, change incontrol, transaction bonus, salary continuation, hospitalization, medical, dental, vision, life insurance, disability orsick leave benefit, profit-sharing, pension or retirement or other fringe benefit or compensatory plan, program,agreement or arrangement, whether or not in writing and whether or not funded, including any “employee benefitplan” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA).
“Services Agreement” means the Services Agreement to be entered into by AGSA and AMPSA on orprior to the AMP Closing Date pursuant to which the AGSA Entities and the AMP Entities will provide services toeach other after the AMP Closing.
“Specified Employee” means any employee or other service provider of an AMP Entity who isprimarily employed or engaged in the conduct of the AGSA Retained Business and who is identified by the partieshereto as an employee or service provider whose employment or engagement, as applicable, will be transferred (ornovated) to an AGSA Retained Subsidiary in connection with the AMP Transfer.
“Specified Plan” means any Plan identified by the parties hereto as a Plan that will be transferred toan AGSA Retained Subsidiary in connection with the AMP Transfer.
“Subsidiary” of any Person means another Person, of which at least a majority of the outstandingsecurities or ownership interests having, by their terms, ordinary voting power to elect (or direct the election of) amajority of the board of directors or other persons performing similar functions is owned or controlled directly orindirectly by such first Person or by one or more of its Subsidiaries.
SECTION 1.2 Other Defined Terms. The following terms have the meanings set forth in theSections set forth below:
Defined Term Location of Definition
PreambleRecitals§ 5.7(a)
§ 3.2§ 5.4(b)
§ 4.2(c)(i)§ 5.4(a)Recitals§ 2.1(a)§ 2.1(a)§ 2.1(a)
AGSAAGSA ConsiderationAGSA Hedging ArrangementsAGSA Indemnified PartiesAGSA Retained ActionsAGSA US DB PlanAMP ActionsAMP BusinessAMP ClosingAMP Closing DateAMP Transfer
Defined Term Location of Definition§ 4.2(c)
Preamble§ 3.1
§ 4.2(c)(i)Recitals
§ 3.4§ 5.3
§ 3.4(b)(i)§ 2.2(c)
§ 5.3§ 5.8(b)Recitals
§ 3.4§ 3.1
§ 5.10(a)§ 5.10(a)Recitals§ 3.4(a)§ 5.8(a)
SECTION 1.3 Interpretation and Rules of Construction. In this Agreement, except to the extentotherwise provided or that the context otherwise requires:
(a) when a reference is made in this Agreement to an Article, Section or Exhibit, such reference isto an Article or Section of, or an Exhibit to, this Agreement;
(b) the table of contents and headings for this Agreement are for reference purposes only and donot affect in any way the meaning or interpretation of this Agreement;
(c) whenever the words “include,” “includes” or “including” are used in this Agreement, they aredeemed to be followed by the words “without limitation”;
(d) the word “or” is not exclusive and is deemed to have the meaning “and/or”;
(e) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in thisAgreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;
(f) all terms defined in this Agreement have the defined meanings when used in any certificate orother document delivered or made available pursuant hereto, unless otherwise defined therein;
(g) where used with respect to information, the phrases “delivered” or “made available” shallmean that the information referred to has been physically or electronically delivered to the relevant parties or theirrespective Representatives;
AMP US DB PlanAMPSAAMPSA Indemnified PartiesAMP US DB PlanBCAClaim NoticeCross-LicenseDefense NoticeDelayed Transfer AssetsEAPAExcluded GuaranteesGHVIndemnity ClaimLossesNon-Compete PeriodNon-Solicit PeriodSharesThird Party ClaimTransferred Guarantees
(h) the definitions contained in this Agreement are applicable to the singular as well as the pluralforms of such terms;
(i) references to a Person are also to its successors and permitted assigns; and
(j) references to sums of money are expressed in Euros or in U.S. Dollars, as applicable, and“EUR” or “€” refers to Euros, and “USD” or “$” refers to U.S. dollars.
ARTICLE II
AMP TRANSFER
SECTION 2.1 AMP Transfer.
(a) Transfer of AMP Equity Interests. Subject to the terms and conditions of this Agreement,including the delivery of the reports contemplated by Section 2.1(c), on or prior to April 1, 2021, or such other dateas is agreed by AGSA and AMPSA, AGSA shall, and shall cause the applicable AGSA Retained Subsidiaries andAMP Entities to, take actions substantially as described in the Steps Plan to cause the AMP Equity Interests to be,and with the result that the AMP Equity Interests will be, owned, directly or indirectly, by AMPSA, free and clear ofall Encumbrances other than those (i) incurred in connection with any debt financings of the AMP Entities or (ii)imposed by applicable securities Laws (such actions, the “AMP Transfer,” the time at which all of the AMP EquityInterests become owned by AMPSA, the “AMP Closing” and such date, the “AMP Closing Date”). Asconsideration for the AMP Transfer, AMPSA shall deliver, or cause to be delivered, to AGSA the AGSAConsideration.
(b) Local Conveyances. In furtherance of the assignment, transfer, conveyance and delivery ofthe AMP Equity Interests, each of AGSA and AMPSA shall cause their respective Subsidiaries to execute anddeliver Local Conveyances as and to the extent necessary to evidence the assignment, transfer, conveyance anddelivery of such equity interests to the applicable AMP Entity.
(c) AMPSA Auditor Report. In connection with clause (b) of the definition of “AGSAConsideration,” a Luxembourg independent statutory auditor (réviseur d’entreprises agréé) of AMPSA shall haveissued a report on the contribution in kind relating to the Shares to be issued to AGSA on or before the AMP ClosingDate in accordance with this Agreement, prepared in accordance with and at the times required under article 420-10or article 1010-1 (2), 2° of the Luxembourg Law of 10 August 1915 on commercial companies, as amended.
SECTION 2.2 Transfer of Assets and Liabilities; Delayed Transfers.
(a) Transfer of Assets and Liabilities. The parties hereto agree that prior to, on or as promptly aspracticable following the AMP Closing (but in any event, prior to the BCA Closing Date, subject only to the termsof this Agreement), the AGSA Entities will hold the assets and Liabilities primarily related to or used in the conductof the AGSA Retained Business, and the AMP Entities will hold the assets and Liabilities primarily related to orused in the conduct of the AMP Business, together with, in each case, the assets that the members of each Group willuse to provide services to the members of the other Group pursuant to the Services Agreement. In
furtherance of the foregoing, and subject to this Section 2.2(a) and Section 2.3, (i) AGSA hereby conveys, transfers,contributes and assigns, and shall cause the applicable AGSA Retained Subsidiaries to, effective as of the AMPClosing Date, convey, transfer, contribute and assign to the applicable AMP Entities (and shall cause such Persons toaccept) all of AGSA’s and the AGSA Retained Subsidiaries’ respective rights, title and interest in, to and under allassets owned, held, leased or licensed by AGSA or any of the AGSA Retained Subsidiaries (as applicable) and usedin or related to the conduct of the AMP Business or that will be used by any of the AMP Entities to provide anyservices to the AGSA Entities under the Services Agreement following the AMP Transfer, (ii) AGSA shall cause theapplicable AMP Entities, effective as of the AMP Closing Date, to convey, transfer, contribute, and assign to theapplicable AGSA Retained Subsidiaries (and shall cause such Persons to accept), all of the AMP Entities’ respectiverights, title and interest in, to and under any assets owned, held, leased or licensed by any of the AMP Entities andused in or related to the conduct of the AGSA Retained Business or that will be used by any of the AGSA RetainedSubsidiaries to provide any services to the AMP Entities under the Services Agreement following the AMP Transfer,and (iii) in connection with the transfers described in the foregoing clauses (i) and (ii), AGSA shall cause theapplicable AGSA Retained Subsidiaries and AMP Entities to assume the respective Liabilities related to or arisingfrom such assets transferred to such AGSA Retained Subsidiaries or such AMP Entities, as the case may be. Theassets transferred pursuant to this Section 2.2(a) shall be transferred free and clear of all Encumbrances, other thanPermitted Encumbrances (as defined in the BCA) or those imposed, with respect to assets transferred to an AMPEntity, in connection with any indebtedness of any AMP Entity, and with respect to assets transferred to an AGSARetained Subsidiary, in connection with any indebtedness of any AGSA Retained Subsidiary. In furtherance of theassignment, transfer, contribution, conveyance and delivery of the assets and Liabilities pursuant to this Section2.2(a), each of AGSA and AMPSA shall cause their respective Subsidiaries to execute and deliver LocalConveyances as and to the extent necessary to evidence the assignment, transfer, contribution, conveyance anddelivery of such assets and Liabilities to the applicable transferee.
(b) Approvals and Consents. Prior to the AMP Closing Date, AGSA shall, and shall cause theAGSA Retained Subsidiaries and AMP Entities to, use commercially reasonable efforts to promptly give all noticesto, and obtain all consents, authorizations, approvals and waivers from, all third parties whose consent,authorization, approval or waiver is required in connection with the conveyance, transfer, contribution or assignmentof any asset contemplated by Section 2.2(a) to be transferred to an AMP Entity or an AGSA Retained Subsidiary. To the extent not obtained prior to the AMP Closing Date, following the AMP Closing Date, AGSA shall, and shallcause the AGSA Retained Subsidiaries to, and AMPSA shall, and shall cause the other AMP Entities to, usecommercially reasonable efforts to promptly give all notices to, and obtain all consents, authorizations, approvalsand waivers from, all third parties whose consent, authorization, approval or waiver is required in connection withthe conveyance, transfer, contribution or assignment of any asset contemplated by Section 2.2(a) to be transferred toan AMP Entity or an AGSA Retained Subsidiary, as applicable. AGSA shall not, and shall cause the AGSARetained Subsidiaries not to, and AMPSA shall not, and shall cause the other AMP Entities not to, intentionally takeany action that will have the effect of delaying, impairing or impeding the receipt of any required consents,authorizations, approvals or waivers.
(c) Delayed Transfers. In the event that any consent, authorization, approval or waiver oramendment is required from any unaffiliated third party in order to convey, transfer,
contribute or assign (as the case may be) any asset contemplated by Section 2.2(a) to be transferred to an AMPEntity or to an AGSA Retained Subsidiary and such consent, approval, waiver or amendment is not obtained prior tothe AMP Closing (such assets, “Delayed Transfer Assets”), then, following the AMP Closing, to the extent notspecifically addressed in the Services Agreement, (i) AGSA shall cause the applicable AGSA Retained Subsidiariesto use their reasonable best efforts to (A) continue to hold in trust for the applicable AMP Entities, and to the extentrequired by the terms applicable to such Delayed Transfer Assets, operate such Delayed Transfer Assets in allmaterial respects in the ordinary course of business consistent with past practice (subject to the terms of the ServicesAgreement) and (B) cooperate in any arrangement, reasonable and lawful as to the applicable Persons, designed toprovide to the applicable AMP Entities the benefits arising under such Delayed Transfer Assets, and (ii) AMPSAshall cause the applicable AMP Entities to use their commercially reasonable efforts to (A) continue to hold in trustfor the applicable AGSA Retained Subsidiaries, and to the extent required by the terms applicable to such DelayedTransfer Assets, operate such Delayed Transfer Assets in all material respects in the ordinary course of businessconsistent with past practice (taking into account the terms of the Services Agreement) and (B) cooperate in anyarrangement, reasonable and lawful as to the applicable Persons, designed to provide to the applicable AGSARetained Subsidiaries the benefits arising under such Delayed Transfer Assets. In furtherance of clause (i) of thisSection 2.2(c), AGSA shall cause the applicable AGSA Retained Subsidiaries to, without further considerationtherefor, pay and remit to AMPSA (or its designees) promptly all monies, rights and other consideration received bythem, net of any reasonable and documented out-of-pocket costs payable to a third party, in respect of suchperformance, and in furtherance of clause (ii) of this Section 2.2(c), AMPSA shall cause the applicable AMP Entitiesto, without further consideration therefor, pay and remit to AGSA (or its designees) promptly all monies, rights andother consideration received by them, net of any reasonable and documented out-of-pocket costs payable to a thirdparty, in respect of such performance.
(d) Shared Contracts. If an AGSA Retained Subsidiary or an AMP Entity is a party to anyContract that is related to both the AGSA Retained Business and the AMP Business, AGSA and AMPSA shallcooperate with each other to determine the optimal treatment of such Contract, including whether such Contractshould be (i) split so that the portion of such Contract that relates to the AGSA Retained Business is assigned to orretained by, as applicable, an AGSA Retained Subsidiary, and the portion of such Contract that relates to the AMPBusiness is assigned to retained by, as applicable, an AMP Entity, (ii) the subject of an agency, subcontracting orsimilar arrangement so that the applicable Person receives the benefits and bears the burden of the portion of suchContract applicable to its business, or (iii) addressed under the Services Agreement. AGSA and AMPSA shall, andshall cause their applicable Subsidiaries to use, their commercial reasonable efforts to cause the agreed upontreatment of such Contract to be implemented.
SECTION 2.3 Wrong Pockets.
(a) If, following the AMP Closing (including following the completion of the conveyance,transfer, contribution or assignment of a Delayed Transfer Asset), any right, property, asset or Liability is found tohave been transferred to an AMP Entity in error, AMPSA shall cause the applicable AMP Entity to transfer, atAGSA’s cost, such right, property, asset (and any related Liability) or Liability as soon as reasonably practicable tothe AGSA Retained Subsidiary designated by AGSA, and AGSA shall cause the applicable AGSA RetainedSubsidiary to accept
such right, property, asset (and any related Liability) or Liability, as applicable. If, following the AMP Closing(including following the completion of the conveyance, transfer, contribution or assignment of a Delayed TransferAsset), any right, property, asset or Liability is found to have been retained by any AGSA Retained Subsidiary inerror, AGSA shall, or shall cause the applicable AGSA Retained Subsidiary to, transfer, at AGSA’s cost, such right,property, asset (and any related Liability) or Liability as soon as reasonably practicable to the AMP Entitydesignated by AMPSA, and AMPSA shall cause the applicable AMP Entity to accept such right, property, asset (andany related Liability) or Liability, as applicable. Each party hereto shall give prompt written notice to the other partyhereto if any AGSA Retained Subsidiary, on the one hand, or any AMP Entity, on the other hand, discovers that anysuch right, property or Liability has been transferred to an AMP Entity in error or retained by an AGSA RetainedSubsidiary in error.
(b) If, following the AMP Closing (including following the completion of the conveyance,transfer, contribution or assignment of a Delayed Transfer Asset), any right, property, asset or Liability is found tohave been transferred to an AGSA Retained Subsidiary in error, AGSA shall cause the applicable AGSA RetainedSubsidiary to transfer, at AGSA’s cost, such right, property, asset (and any related Liability) or Liability as soon asreasonably practicable to the AMP Entity designated by AMPSA, and AMPSA shall cause the applicable AMPEntity to accept such right, property, asset (and any related Liability) or Liability, as applicable. If, following theAMP Closing (including following the completion of the conveyance, transfer, contribution or assignment of aDelayed Transfer Asset), any right, property, asset or Liability is found to have been retained by any AMP Entity inerror, AMPSA shall, or shall cause the applicable AMP Entity to, transfer, at AGSA’s cost, such right, property,asset (and any related Liability) or Liability as soon as reasonably practicable to the AGSA Retained Subsidiarydesignated by AGSA, and AGSA shall cause the applicable AGSA Retained Subsidiary to accept such right,property, asset (and any related Liability) or Liability, as applicable. Each party hereto shall give prompt writtennotice to the other party hereto if any AMP Entity, on the one hand, or any AGSA Retained Subsidiary, on the otherhand, discovers that any such right, property or Liability has been transferred to an AGSA Entity in error or retainedby an AMP Entity in error.
(c) Following the AMP Closing (including following the completion of the conveyance, transfer,contribution or assignment of a Delayed Transfer Asset), unless otherwise provided in the Services Agreement, eachof AGSA and AMPSA shall cause the AGSA Retained Subsidiaries or the AMP Entities, respectively, to promptlypay or deliver to the other party hereto (or its designees) any monies, deposits, checks or other receivables that arereceived by such party (or the AGSA Retained Subsidiaries or AMP Entities, as applicable) to the extent they are (orrepresent the proceeds of) the AMP Business (to the extent received by an AGSA Retained Subsidiary) or the AGSARetained Business (to the extent received by an AMP Entity).
ARTICLE III
INDEMNIFICATION
SECTION 3.1 Indemnification by AGSA. From and after the AMP Closing Date, AGSA shallindemnify and hold harmless each AMP Entity and each of their respective equityholders, directors, managers,officers, employees, agents, successors and assigns (other than any AGSA Entity) (collectively, the “AMPSAIndemnified Parties”) from and against any and all
Liabilities, claims, losses, damages, costs, expenses, interest, awards, judgments and penalties (including reasonableattorneys’ and consultants’ fees and expenses) actually suffered or incurred by them (collectively, “Losses”) (otherthan any Transaction Expenses (as defined in the BCA)) to the extent arising out of or resulting from (a) any of theAGSA Retained Business, the AGSA Retained Employees, the AGSA Retained Plans (except any AMP EmployeeLiabilities) or the AGSA Retained Employee Liabilities, whether arising before, on or following the AMP ClosingDate, and including any Losses arising out of or resulting from any failure by AGSA, AMPSA or any AGSA Entity(including any AGSA Retained Subsidiary) or AMP Entity to comply with the requirements of the ApplicableTransfer Regulations in relation to the transfer of the Specified Employees under Section 4.1(a) or (b) a Third PartyClaim to the extent that the facts of such Action arise out of or are based upon the actions of any AGSA Entity withrespect to the AGSA Retained Business, but, in each case, excluding any Losses to the extent arising out of orresulting from any action taken by any AMP Entity with respect to the AGSA Retained Business following the AMPClosing, other than pursuant to a Contract between an AMP Entity and any AGSA Entity or with the written consentof an AGSA Entity.
SECTION 3.2 Indemnification by AMPSA. From and after the AMP Closing Date, AMPSAshall indemnify and hold harmless each AGSA Entity and each of their respective equityholders, directors,managers, officers, employees, agents, successor and assigns (collectively, the “AGSA Indemnified Parties”) fromand against any and all Losses to the extent arising out of or resulting from (a) any of the AMP Business, the AMPEmployees, the AMP Plans (except any AGSA Retained Employee Liabilities) or the AMP Employee Liabilities,whether arising before, on or following the AMP Closing Date, or (b) a Third Party Claim to the extent that the factsof such Action arise out of or are based upon the actions of any AMP Entity (including any of their predecessors)with respect to the AMP Business, but, in each case, excluding any Losses to the extent arising out of or resultingfrom any action taken by any AGSA Entity with respect to the AMP Business following the AMP Closing, otherthan pursuant to a Contract between an AGSA Entity and any AMP Entity or with the written consent of an AMPEntity.
SECTION 3.3 Limitations on Indemnification.
(a) For all purposes of this Article III, “Losses” shall be net of (i) any recovery or benefit(including insurance and indemnification, but not including taxes) actually received by the Indemnified Party or anymember of its Group, net of reasonable expenses incurred in obtaining such recovery or benefit, in connection withsuch Losses and, if the Indemnified Party or any member of its Group receives such recovery or benefit after receiptof payment from the Indemnifying Party, then the amount of such recovery or benefit, net of reasonable expensesincurred in obtaining such recovery or benefit, shall be promptly paid to the Indemnifying Party; and (ii) any taxbenefit actually realized by the Indemnified Party or any member of its Group arising as a result of the accrual,incurrence or payment of any such Losses, reduced by any tax detriment resulting from the receipt or accrual of therelated indemnification payment hereunder.
(b) Each party hereto shall, and shall cause any member of its Group that is an Indemnified Partyto, take commercially reasonable steps to mitigate its Losses upon and after becoming aware of any event that couldreasonably be expected to give rise to any Losses, and indemnification shall not be available with respect to anyportion of any Loss to the extent such portion of such Loss is attributable to a failure by a party to take (or cause itsRepresentatives to
take) commercially reasonable steps to mitigate such Loss after becoming aware of such event that could reasonablybe expected to give rise to such Loss. Neither party hereto shall be entitled to any payment, adjustment orindemnification more than once with respect to the same matter.
(c) The indemnification provisions in this Article III will not require any party hereto toindemnify the other for Losses arising out of or resulting from the performance (or non-performance) of any otherContract between an AGSA Entity, on the one hand and an AMP Entity, on the other, which matters will beaddressed in the applicable Contract.
SECTION 3.4 Procedures for Indemnification.
(a) Any Person seeking any indemnification under this Article III (an “ Indemnified Party”),acting through AGSA or AMPSA, as applicable, shall give the Party from which indemnification is being sought (an“Indemnifying Party”) prompt notice (a “Claim Notice”) of any matter which such Indemnified Party hasdetermined has given or could give rise to a right of indemnification under this Article III; provided, however, that ifan Indemnified Party shall receive written notice of any third party claim (a “Third Party Claim”), the IndemnifiedParty shall give the Indemnifying Party a Claim Notice within twenty (20) days after receipt by the IndemnifiedParty of such notice. The Claim Notice shall (i) indicate whether the matter for which indemnification is sought (an“Indemnity Claim”) results from or arises out of a Third Party Claim or a direct claim, (ii) describe with reasonablespecificity the nature of the Indemnity Claim and (iii) state the amount of Losses sought pursuant to such IndemnityClaim to the extent then known. The failure to deliver or timely deliver the Claim Notice shall not affect the rightsof the Indemnified Party to indemnification under this Article III, except and only to the extent that the IndemnifyingParty shall have been actually and materially prejudiced by reason of such failure.
(b) Third Party Claims.
(i) The Indemnifying Party shall have the right to conduct, at its sole cost and expense,the defense of a Third Party Claim, upon delivery of written notice to the Indemnified Party (the “DefenseNotice”) within twenty (20) days after the Indemnifying Party’s receipt of the Claim Notice (or sooner if thenature of the Third Party Claim so requires); provided that the Defense Notice shall specify the counsel theIndemnifying Party will appoint to defend such Third Party Claim (such counsel to be reasonably satisfactoryto the Indemnified Party). The Indemnified Party shall be entitled to be indemnified in accordance with theterms of this Agreement for the reasonable fees and expenses of counsel for any period during which theIndemnifying Party has not assumed the defense of any such Third Party Claim in accordance herewith. Ifthe Indemnifying Party timely delivers a Defense Notice and thereby elects to conduct the defense of theThird Party Claim, (A) the Indemnifying Party shall keep the Indemnified Party apprised of all materialdevelopments with respect to such Third Party Claim and (B) the Indemnified Party will cooperate with andmake available to the Indemnifying Party such assistance and materials as the Indemnifying Party mayreasonably request, all at the sole expense of the Indemnifying Party, and the Indemnified Party shall havethe right at its expense to participate in the defense assisted by counsel of its own choosing.
(ii) The Indemnifying Party shall not be entitled to control the defense of any Third PartyClaim if (A) such Third Party Claim is with respect to a criminal proceeding, action, indictment, allegation orinvestigation, (B) it fails to actively and diligently conduct its defense of such Third Party Claim, (C) theIndemnified Party has been advised by counsel that a reasonable likelihood exists of a material conflict ofinterest between the Indemnifying Party and the Indemnified Party with respect to such Third Party Claim or(D) such Third Party Claim seeks an injunction or other equitable relief against the Indemnified Party. In theevent of any of the foregoing circumstances and the Indemnified Party has nonetheless permitted theIndemnifying Party to control the defense of such Third Party Claim, and the Indemnifying Party desires toso control such defense, the Indemnified Party shall be entitled to retain its own counsel, and theIndemnifying Party shall pay the reasonable and documented fees and expenses of one counsel (in addition toany required local counsel) of the Indemnified Party.
(iii) The Indemnifying Party shall not, without the prior written consent of the IndemnifiedParty, (A) settle or compromise a Third Party Claim or consent to the entry of any order which does notinclude an unconditional written release by the claimant or plaintiff of the Indemnified Party from all liabilityin respect of the Third Party Claim, (B) settle or compromise any Third Party Claim if the settlement imposesequitable or other non-monetary remedies or other obligations on the Indemnified Party or (C) settle orcompromise any Third Party Claim if the result is to admit civil or criminal liability or culpability on the partof the Indemnified Party that gives rise to criminal liability with respect to the Indemnified Party. No ThirdParty Claim which is being defended by the Indemnifying Party in accordance with the terms of thisAgreement shall be settled or compromised by the Indemnified Party without the prior written consent of theIndemnifying Party (such consent not to be unreasonably conditioned, withheld or delayed).
SECTION 3.5 Taxes. For the avoidance of doubt, this Article III does not apply to taxes, theindemnification for which shall be governed by the terms of the BCA.
ARTICLE IV
EMPLOYEE MATTERS
SECTION 4.1 Transfer of Employment or Engagement; Collective Bargaining Agreements.
(a) Transfer of Employment or Engagement. On or prior to the AMP Closing Date, AGSA andAMPSA will take all actions required to be taken by them to effect the transfer of the employment or novation of theengagement, as applicable (save for any Specified Employee who submits a valid objection to such transfer inaccordance with and subject to the Applicable Transfer Regulations), of each Specified Employee to an AGSARetained Subsidiary designated by AGSA.
(b) Collective Bargaining Agreements. AGSA shall cause the AMP Entities to assume or retain,as the case may be, each Collective Bargaining Agreement and, to the extent
applicable, recognize (to the extent not yet recognized) each Employee Representative Body covering AMPEmployees.
SECTION 4.2 Transfer of Plans.
(a) General. Effective as of the AMP Closing, AGSA and AMPSA shall cause (i) the AMPEntities to, assume or retain, as the case may be, all obligations with respect to each AMP Plan and honor anddischarge all obligations under each AMP Plan and (ii) the AGSA Entities to, assume or retain, as the case may be,all obligations with respect to each AGSA Retained Plan and honor and discharge all obligations under each AGSARetained Plan.
(b) Certain Incentive Compensation. AGSA’s Annual Incentive Bonus Plan and the Long TermIncentive Plan (which, for the avoidance of doubt, is in effect prior to the date hereof and is not the Executive LongTerm Incentive Plan) shall be AGSA Retained Plans; provided that (i) the amount of any payments due to current orformer AMP Employees under the Annual Incentive Bonus Plan and the AGSA Long Term Incentive Plan shall bedetermined under the plans, and in the ordinary course of business, consistent with past practice, and in consultationwith AMPSA and (ii) the cost of any payments due to current or former AMP Employees under the AnnualIncentive Bonus Plan and the AGSA Long Term Incentive Plan shall be borne by an AMP Entity.
(c) Defined Benefit Pension Plans.
(i) In the event AGSA and AMPSA mutually determine or are otherwise required byapplicable Law to separate the AGSA North America Retirement Plan (the “AGSA US DB Plan”), AMPSAand AGSA shall cooperate and use their respective reasonable best efforts to cause their applicableSubsidiaries to transfer all of the AGSA US DB Plan assets and Liabilities, including any related fundingobligations, related to current or former AMP Employees out of the AGSA US DB Plan into anotherappropriate arrangement established by an AMP Entity designated by AMPSA and separate from the AGSAUS DB Plan (the “AMP US DB Plan”). Any transfer of assets and Liabilities from the AGSA US DB Planto the AMP US DB Plan shall be in accordance with applicable accounting standards and ERISA and otherapplicable Law, and AGSA and AMPSA shall cooperate to make such transfer tax efficient, to the extentreasonably possible. To the extent any assets are transferred from the AGSA US DB Plan to the AMP USDB Plan in excess of assets contributed to the AGSA US DB Plan on behalf of current or former AMPEmployees, AMPSA will or will cause an AMP Entity to promptly reimburse AGSA in an amount equal tosuch excess on a tax-effected basis (such that the excess will be reduced by any tax benefit in respect ofcontribution of such assets to the AGSA US DB Plan). The AMP US DB Plan, if established, shall be anAMP Plan. AMPSA or an AMP Entity shall make the required minimum funding contributions to the AMPUS DB Plan in relation to the separation from the AGSA US DB Plan. The AGSA US DB Plan will beoperated in good faith with respect to AMPSA. No AMP Employee shall accrue any additional benefitsunder the AGSA US DB Plan following the time of the separation of the AMP US DB Plan; instead, AMPEmployees, if eligible, shall accrue benefits under the AMP US DB Plan to the extent provided in the AMPUS DB Plan. AGSA and AMPSA, as applicable, shall timely provide notices, if any, required under Law
to the affected AMP Employees, and to the Pension Benefit Guaranty Corporation. AGSA’s actuary shallprovide all certifications required for the transfers of assets and Liabilities contemplated under this Section4.2(c).
(ii) Determinations under Section 4.2(c)(i) shall be made using reasonable assumptionsthat are consistent with past practice, to the extent applicable, and agreed upon by certified actuaries retainedby each of AGSA and AMPSA. All calculations of assets and Liabilities, and methodologies related thereto,shall be proposed by AGSA’s certified actuary and shall be subject to review and approval by AMPSA’scertified actuary. In the event of a dispute regarding the calculation or allocation of assets and Liabilities orfunding obligations, or the methodologies or assumptions used for such calculations or allocations, in eachcase under this Section 4.2(c), such dispute shall be exclusively and finally determined, at the request ofeither party, by an independent certified actuary at a nationally recognized actuarial or accounting firm. Suchindependent actuary shall be selected by mutual agreement of the parties, and all fees of such independentactuary shall be shared equally by AGSA and AMPSA. The parties agree to comply with any determinationmade by such independent actuary.
SECTION 4.3 Transfer of Liabilities. Without limiting the generality of Section 3.2, effective asof the AMP Closing, AGSA and AMPSA shall cause (i) the AMP Entities to, assume or retain, as the case may be,and be responsible for all obligations with respect to (and indemnify, defend and hold harmless the AGSA Entitiesfrom and against) any and all AMP Employee Liabilities, whether arising before, on or after the AMP Closing, and(ii) the AGSA Entities to, assume or retain, as the case may be, and be responsible for all obligations with respect to(and indemnify, defend and hold harmless the AMP Entities from and against) any and all AGSA RetainedEmployee Liabilities, whether arising before, on or after AMP Closing. Upon request by AMPSA, AGSA shallpromptly provide financial and other reasonable information regarding AMP Employee Liabilities to AMPSA.
SECTION 4.4 Terms and Conditions of Employment.
(a) AMPSA will cause the other AMP Entities to undertake commercially reasonable efforts to (i)comply with any obligations or standards arising under applicable Laws governing the terms and conditions of theemployment of AMP Employees and (ii) provide terms and conditions of employment in a manner that does notunreasonably result in any obligation, contingent or otherwise, of any AGSA Entity to pay any severance, vacationpayout, termination indemnity, termination related payment or other similar benefit (including such benefits requiredunder applicable Laws) to any AMP Employee.
(b) AGSA will cause the other AGSA Entities to undertake commercially reasonable efforts to (i)comply with any obligations or standards arising under applicable Laws governing the terms and conditions of theemployment of AGSA Retained Employees and (ii) provide terms and conditions of employment in a manner thatdoes not unreasonably result in any obligation, contingent or otherwise, of any AMP Entity to pay any severance,vacation payout, termination indemnity, termination related payment or other similar benefit (including such benefitsrequired under applicable Laws) to any AGSA Retained Employee.
SECTION 4.5 No Third Party Beneficiaries; No Amendment. Without limiting the generality ofSection 7.8, all provisions contained in this Article IV are included for the sole benefit of the parties hereto, andnothing in this Agreement, whether express or implied, shall create any third party beneficiary or other rights (a) inany other Person, including any employees, former employees, any participant in any Plan or any dependent orbeneficiary thereof (including any AMP Employee or AGSA Retained Employee), or (b) to continued employmentwith any AGSA Retained Subsidiary or any AMP Entity. Nothing contained herein, whether express or implied,shall be treated as an amendment or other modification or adoption of any Plan or Collective Bargaining Agreement,or shall limit the right of any AGSA Entity or any AMP Entity to amend, terminate or otherwise modify any Plan orCollective Bargaining Agreement following the AMP Closing in accordance with its terms. In the event that (i) aparty other than the parties hereto makes a claim or takes other action to enforce any provision in this Agreement asan amendment to any Plan or Collective Bargaining Agreement, and (ii) such provision is deemed in any judicialproceeding to be an amendment to such Plan or Collective Bargaining Agreement even though not explicitlydesignated as such in this Agreement, then such provision, to the extent covered by such deemed amendment, shalllapse retroactively and shall have no amendatory effect.
ARTICLE V
CERTAIN OTHER MATTERS
SECTION 5.1 Access to Information.
(a) In order to facilitate the resolution of any claims made against, or incurred by, any AGSAEntity relating to the AMP Business and for purposes of compliance with securities, environmental, employment andother Laws, until the later of the seventh (7th) anniversary of the AMP Closing Date or the expiration of the relevantperiod of the applicable statute of limitations (including any extension thereof), AMPSA shall, and shall cause theother AMP Entities to (i) retain the books and records and financial and operational data relating to the AMPBusiness for periods prior to the AMP Closing Date (to the extent in AMPSA’s or the other AMP Entities’possession); and (ii) upon reasonable advance notice, afford the Representatives of the AGSA Entities reasonableaccess (including the right to make, at AGSA’s expense, copies), during normal business hours, to such books andrecords. After the expiration of such period, AMPSA shall offer to turn over possession of such books and recordsto AGSA at least sixty (60) days prior to disposing of or destroying any of such books and records.
(b) In order to facilitate the resolution of any claims made against, or incurred by, any AMPEntity relating to the AMP Business and for purposes of compliance with securities, environmental, employment andother Laws, until the later of the seventh (7th) anniversary of the AMP Closing Date or the expiration of the relevantperiod of the applicable statute of limitations (including any extension thereof), AGSA shall, and shall cause theAGSA Retained Subsidiaries to (i) retain the books and records and financial and operational data relating to theAMP Business for periods prior to the AMP Closing Date, to the extent such books, records and other data andinformation were in the possession or control of the AGSA Retained Subsidiaries prior to the AMP Closing and havenot been delivered to the AMP Entities; and (ii) upon reasonable notice, afford the Representatives of the AMPEntities reasonable access (including the right to make, at AMPSA’s expense, copies), during normal business hours,to such books and records. After the
expiration of such period, AGSA shall offer to turn over possession of such books and records to AMPSA at leastsixty (60) days prior to disposing of or destroying any of such books and records.
SECTION 5.2 Privileged Matters.
(a) The parties hereto acknowledge and agree that the AGSA Entities’ and the AMP Entities’attorney-client privilege, attorney work-product protection and expectation of client confidence with respect to anycommunications concerning any proposed transfer of the AMP Business or any other transaction contemplated bythis Agreement, the BCA, the Services Agreement or any Local Conveyance document, and all information anddocuments covered by such privilege, protection or expectation shall be retained and controlled by AGSA, and maybe waived only by AGSA. AGSA and AMPSA acknowledge and agree that (i) the foregoing attorney-clientprivilege, work product protection and expectation of client confidence shall not be controlled, owned, used, waivedor claimed by the AMP Entities upon consummation of the AMP Closing; and (ii) in the event of a dispute betweenan AMP Entity, on the one hand, and a third party, on the other hand, or any other circumstance in which a thirdparty requests or demands that an AMP Entity produce privileged materials or attorney work-product of AGSA oranother AGSA Entity (including the privileged communications and attorney work-product covered by this Section5.2(a)), AMPSA shall, and shall cause such AMP Entity to assert such attorney-client privilege on behalf of AGSAor the applicable AGSA Entity to prevent disclosure of privileged communications or attorney work-product to suchthird party.
(b) Notwithstanding anything to the contrary set forth in this Agreement, the parties heretoacknowledge and agree that the attorney-client privilege, attorney work-product protection and expectation of clientconfidence with respect to any communications concerning general business matters related to the AMP Businessand the AMP Entities and arising prior to the AMP Closing Date for the benefit of both the AGSA Entities and theAMP Entities shall be subject to a joint privilege and protection between AGSA, on the one hand, and AMPSA, onthe other hand, and AGSA and AMPSA shall, on behalf of their applicable Group members, have equal right toassert such joint privilege and protection and no such joint privilege or protection may be waived by (i) any AGSAEntity without the prior written consent of AMPSA; or (ii) any AMP Entity without the prior written consent ofAGSA; provided that any such privileged communications or attorney-work product, whether arising prior to, orafter the AMP Closing Date, with respect to any matter for which a party hereto has an indemnification obligationhereunder, shall be subject to the sole control of such party with respect to such matter giving rise to suchindemnification obligation, which shall be solely entitled to control the assertion or waiver of the privilege orprotection in connection with such matter, whether or not such communications or work product is in the possessionof or under the control of such party.
SECTION 5.3 EAPA and Cross-License Assignment and Assumption. Effective as of the AMPClosing (a) AGSA hereby assigns and transfers to AMPSA, and AMPSA hereby accepts and assumes, all ofAGSA’s rights and obligations under (i) that certain Equity and Asset Purchase Agreement, dated as of April 22,2016, by and among AGSA, Ball Corporation and Rexam PLC (the “EAPA”) and (ii) that certain IntellectualProperty Cross-License Agreement, dated October 31, 2019, by and between AGSA and Trivium Packaging B.V.(the “Cross-License”), in each case, without any representation, warranty, recourse or covenant of any kind or naturewhatsoever, each of which is expressly disclaimed by each of the parties hereto, and (b) without limiting thegenerality of
Section 3.2, AMPSA hereby agrees to indemnify and hold harmless AGSA and each other AGSA Entity from anyand all Losses arising from the EAPA or the Cross-License, whether arising before, on or after the AMP Closing.
SECTION 5.4 Litigation Cooperation.
(a) Effective as of the AMP Closing Date, the applicable AMP Entities shall assume andthereafter be responsible for all Liabilities that may result from any Actions to the extent related to the AMPBusiness (the “AMP Actions”) and, subject to Section 3.4, all fees and costs relating to the defense of the AMPActions, including attorneys,’ accountants,’ consultants’ and other professionals’ fees and expenses that have beenincurred prior to the AMP Closing Date and are unpaid as of the AMP Closing Date, or that are incurred on or afterthe AMP Closing Date.
(b) Effective as of the AMP Closing Date, the applicable AGSA Retained Subsidiaries shallassume and thereafter be responsible for all Liabilities that may result from any Actions to the extent related to theAGSA Retained Business (the “AGSA Retained Actions”) and, subject to Section 3.4, all fees and costs relating tothe defense of the AGSA Retained Actions, including attorneys,’ accountants,’ consultants’ and other professionals’fees and expenses that have been incurred prior to the AMP Closing Date and are unpaid as of or after the AMPClosing Date, or that are incurred on or after the AMP Closing Date.
(c) The parties hereto agree that at all times from and after the AMP Closing Date, if an Actionrelates to the AMP Business and the AGSA Retained Business or is commenced by a third party naming an AMPEntity (with respect to any Action related to the AGSA Retained Business) or an AGSA Entity (with respect to anyAction related to the AMP Business) as a defendant thereto, then the parties hereto shall cooperate and consult to theextent necessary or advisable with respect to the defense of such Action.
(d) Each party hereto shall use reasonable efforts to make available to the other party hereto andits attorneys, accountants, consultants and other designated representatives, upon written request, its directors,managers, officers, employees and representatives as witnesses, and shall otherwise cooperate with the other partyhereto, to the extent reasonably requested in connection with any Action, the facts of which arise prior to the AMPClosing Date in which the requesting party hereto may from time to time be involved.
SECTION 5.5 Insurance Matters. Unless otherwise agreed by the parties or provided in theServices Agreement the AMP Business shall, pursuant to and in accordance with the terms of the ServicesAgreement, continue to be insured by insurance policies held by the AGSA Entities or by any of their self-insuredprograms.
SECTION 5.6 Intercompany Accounts. All intercompany receivables, payables and loansbetween any AGSA Retained Subsidiary, on the one hand, and any AMP Entity, on the other hand, other than theAGSA Hedging Arrangements or receivables or payables in respect of ordinary course of business transactions onarms’ length terms, shall, prior to the AMP Closing or as promptly as reasonably practicable thereafter, be settled,paid, capitalized, contributed to the capital of the applicable Person, distributed or otherwise terminated, in eachcase, as determined by AGSA, and AGSA and, if applicable, AMPSA, shall cause the applicable AGSA RetainedSubsidiaries and
AMP Entities to make all payments, capital contributions, transfers or distributions necessary or appropriate toeffectuate such settlement, payment, capitalization, contribution, distribution or other termination of suchintercompany receivables, payables and loans with the result that there shall not be any material intercompanyreceivables, payables and loans between any AGSA Retained Subsidiary, on the one hand, and any AMP Entity, onthe other hand, after the AMP Closing Date. Notwithstanding the foregoing, the parties hereto agree that certainpayments in respect of intercompany payables arising in connection with the AMP Transfer will be made followingthe BCA Closing Date or, if applicable, at such other times contemplated by the Steps Plan.
SECTION 5.7 Hedging Arrangements.
(a) From and after AMP Closing, AGSA shall cause each applicable AGSA Retained Subsidiaryto maintain all currency and commodity hedging that such Person has entered into for the benefit of an AMP Entityfor purposes of such AMP Entity receiving the economic benefits, and being subject to the economic risks, of suchhedging arrangements (such arrangements the “AGSA Hedging Arrangements”) at the direction of AMPSApursuant to and in accordance with the Services Agreement, and AGSA and AMPSA shall implement arrangementsreasonably acceptable to each of them to both (i) provide the applicable AMP Entity, to the fullest extent practicable,with all claims, rights and benefits under the AGSA Hedging Arrangements, including, for the avoidance of doubt,the mark-to-market position existing on the AMP Closing Date and (ii) cause the applicable AMP Entity to bear allLiabilities thereunder, including, for the avoidance of doubt, the mark-to-market position existing on the AMPClosing Date. Upon maturity of any AGSA Hedging Arrangements (or earlier crystallization of a hedge position),AGSA shall remit funds to AMPSA (or its designee) in respect of any such hedging arrangements that are in-the-money and AMPSA will remit funds to AGSA (or its designee) in respect of any such hedging arrangements that areout-of-the money, in each case, on the relevant date of settlement in accordance with market convention.
(b) Either AGSA or AMPSA may request cash collateral in respect of open trades where the netmark to market position across all open trades is greater than a $10,000,000 margin call tolerance limit. The amountof such cash collateral to be paid shall be any amount above the margin call tolerance limit. Any such cash collateralpaid may be netted against future settlements of trades as agreed between AGSA and AMPSA.
SECTION 5.8 Credit and Performance Support Obligations.
(a) AGSA and AMPSA shall cooperate and use their commercially reasonable efforts to causeeach AGSA Retained Subsidiary to be, prior to the AMP Closing Date, replaced or removed as a guarantor orobligor under, and released or relieved from any Liability arising out of, any letters of credit, performance bonds,corporate guarantees, statutory guarantees or obligations and other similar obligations outstanding in favor of a thirdparty in connection with the AMP Business (together the “Transferred Guarantees”). Without limiting the generalityof Section 3.3, from and after the AMP Closing, AMPSA shall indemnify each AGSA Entity against any Lossesarising from or relating to any Transferred Guarantees. AGSA and AMPSA shall cooperate and use theircommercially reasonable efforts after the AMP Transfer to relieve, remove, release or replace each AGSA RetainedSubsidiary from any remaining Transferred Guarantees.
(b) AGSA shall use its commercially reasonable efforts to cause each AMP Entity to be, prior tothe AMP Closing Date, replaced or removed as a guarantor or obligor under, and released or relieved from anyLiability arising out of, any letters of credit, performance bonds, corporate guarantees, statutory guarantees orobligations, collateral or security agreements or arrangements and other similar obligations in favor of a third partyin connection with the AGSA Retained Business (together, the “Excluded Guarantees”); provided, thatnotwithstanding the foregoing, prior to, or substantially concurrently with, the AMP Closing Date, AGSA shallcause (i) each AMP Entity to be released from all guarantees of the Ardagh Existing Indebtedness (as defined in theBCA) and all other obligations and liabilities of the AMP Entities in respect of the Ardagh Existing Indebtedness, tobe terminated and released and (ii) all Encumbrances granted by the AMP Entities, or otherwise existing withrespect to the assets of the AMP Entities or the AMP Business, securing any Ardagh Existing Indebtedness orguarantees or other obligations or liabilities with respect to Ardagh Existing Indebtedness, to be released, in the caseof each of the foregoing (i) and (ii), pursuant to documentation in form and substance reasonably satisfactory toGHV as set forth in the BCA. Without limiting the generality of Section 3.1, from and after the AMP Transfer,AGSA shall indemnify and hold harmless each AMP Entity against any Losses arising from or relating to theExcluded Guarantees. AGSA and AMPSA shall use their commercially reasonable efforts after the AMP Transferto relieve, remove, release or replace each AMP Entity from any remaining Excluded Guarantees.
SECTION 5.9 Further Actions. From time to time after the AMP Closing, without additionalconsideration, each party hereto shall, and shall cause its Subsidiaries to, execute and deliver such furtherinstruments and take such other action as may be necessary or is reasonably requested by another party hereto tomake effective the transactions contemplated by this Agreement. Without limiting the foregoing, reasonablypromptly following the AMP Closing, AGSA shall, and shall cause the AGSA Retained Subsidiaries to, take allaction necessary, including by filing all necessary documentation with the applicable Governmental Authority (orInternet domain name registrar, in the case of Internet domain names), to cause AMPSA or one of the other AMPEntities designated by AMPSA to be the legal, beneficial and record owner of each item of Registered OwnedIntellectual Property (as defined in the BCA) set forth or required to be set forth on Section 4.14(b) of the AGSADisclosure Schedule, and AGSA shall reasonably promptly deliver evidence of the foregoing to GHV.
SECTION 5.10 Non-Competition; Non-Solicitation.
(a) For a period from the BCA Closing Date until the earlier of (i) the fifth (5th) anniversary ofthe BCA Closing Date or (ii) the date on which AGSA no longer, directly or indirectly, is the beneficial owner ofmore than fifty percent (50%) of the voting stock of AMPSA (such period, the “Non-Compete Period”), none ofAGSA or its Subsidiaries (excluding any AMP Entity) shall, directly or indirectly, and except with respect to theAMP Entities, engage in the development, manufacture, marketing or sale of metal beverage cans and ends(excluding, in each case, kegs and aluminum bottles) or the provision of related technical and customer services, ineach case, as developed, manufactured, marketed, sold or provided by the AMP Business on the date hereof. Exceptas otherwise contemplated by Section 3.3 of the Services Agreement, for a period from the BCA Closing Date untilthe earlier of (A) the second (2nd) anniversary of the BCA Closing Date, or (B) the date on which AGSA no longer,directly or indirectly, is the beneficial owner of more than fifty percent (50%) of the voting stock of AMPSA (suchperiod, the
“Non-Solicit Period”), none of AGSA or its Subsidiaries (excluding any AMP Entity) shall, directly or indirectly,solicit for employment or hire, or cause to be solicited or hired, any AMP Employee with an annual base salary orwages greater than €150,000; provided that this Agreement shall not prohibit any (1) advertisement, generalsolicitation or search firm engagement (or hiring as a result thereof) that is not specifically targeted at such personsor (2) direct solicitation of any AMP Employee whose employment by or term in office with any AMP Entity isterminated prior to the date of the applicable solicitation.
(b) For the duration of the Non-Compete Period, no AMP Entity shall, directly or indirectly (butexcluding any services provided to the AGSA Entities pursuant to the Services Agreement), engage in the AGSARetained Business as it is conducted by the AGSA Entities on the date hereof. Except for AMP Employees andexcept as otherwise contemplated by Section 3.3 of the Services Agreement, for the duration of the Non-SolicitPeriod, the AMP Entities shall not, directly or indirectly, solicit for employment or hire, or cause to be solicited orhired, any AGSA Retained Employee with an annual base salary or wages greater than €150,000, provided that thisAgreement shall not prohibit any (i) advertisement, general solicitation or search firm engagement (or hiring as aresult thereof) that is not specifically targeted at such persons or (ii) direct solicitation of any AGSA RetainedEmployee whose employment by or term in office with any AGSA Entity is terminated prior to the date of theapplicable solicitation.
(c) The covenants and undertakings in this Section 5.10 relate to matters which are of a special,unique and extraordinary character and a violation of any of the terms of this Section 5.10 will cause irreparableinjury to the AGSA Entities or the AMP Entities, as applicable, the amount of which will be impossible to estimateor determine and which cannot be adequately compensated. Accordingly, the remedy at law for any breach of thisSection 5.10 will be inadequate. Therefore, AGSA and AMPSA, as applicable, will be entitled to seek a temporaryand permanent injunction, restraining order or other equitable relief from any court of competent jurisdiction in theevent of any breach of this Section 5.10 without the necessity of proving actual damage or posting any bondwhatsoever. The rights and remedies provided by this Section 5.10(c) are cumulative and in addition to any otherrights and remedies which AGSA or AMPSA, as applicable, may have hereunder at law or in equity.
SECTION 5.11 No Right to Set-Off. Neither party hereto shall have any right to set off anypayments payable to the other party under this Agreement (including any payments required to be made pursuant toSection 2.3(c) or Article III) against any payments to be made by such party pursuant to this Agreement or any otheragreement between the parties hereto and no party hereto may withhold any such funds pursuant to this Agreementin the event there is a dispute regarding any other matter set forth in this Agreement or the Services Agreement.
ARTICLE VI
DISCLAIMER
SECTION 6.1 Disclaimer. EXCEPT AS MAY EXPRESSLY BE SET FORTH IN THISAGREEMENT, THE SERVICES AGREEMENT OR ANY LOCAL CONVEYANCE, ALL INTERESTS ANDASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS.
SECTION 6.2 Limitation of Liability. IN NO EVENT SHALL ANY PARTY BE LIABLE TOANY OTHER PARTY FOR PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES,INCLUDING LOSS OF FUTURE PROFITS, REVENUE OR INCOME, DIMINUTION IN VALUE OR LOSS OFBUSINESS REPUTATION OR OPPORTUNITY, HOWEVER CAUSED AND ON ANY THEORY OFLIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT,REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR SUCH PARTY HAS BEENADVISED OF THE POSSIBILITY OF SUCH DAMAGES EXCEPT TO THE EXTENT ACTUALLYAWARDED TO A THIRD PARTY BY A COURT OF COMPETENT JURISDICTION.
ARTICLE VII
GENERAL PROVISIONS.
SECTION 7.1 Expenses. Except as otherwise specified in this Agreement, all costs and expenses,including fees and disbursements of counsel, financial and other advisors and accountants, incurred in connectionwith this Agreement and the transactions contemplated by this Agreement shall be borne by AMPSA. For theavoidance of doubt, this Section 7.1 does not apply to taxes, the allocation of which shall be governed by the termsof the BCA.
SECTION 7.2 Notices. All notices, requests, claims, demands and other communicationshereunder shall be in writing and shall be given or made by delivery in person, by e-mail or other means ofelectronic transmission, and by internationally recognized courier service, and shall become effective: (a) ondelivery if given in person; (b) on the date of transmission if sent by email, or other means of electronic transmission(provided that no “bounceback” or notice of non-delivery is received); or (c) two (2) Business Days after delivery tothe courier service. Notices shall be given to the respective parties hereto at the following addresses (or at suchother address for a party hereto as shall be specified in a notice given in accordance with this Section 7.2):
If to AGSA to:
56, Rue Charles MartelL-2134 LuxembourgLuxembourgAttention: Hermanus Troskie
Torsten SchoenEmail: [email protected]
If to AMPSA to:
56, Rue Charles MartelL-2134 LuxembourgLuxembourg
Attention: Oliver GrahamDavid Bourne
Email: [email protected]@ardaghgroup.com
SECTION 7.3 Severability. If any term or other provision of this Agreement is declared invalid,illegal or incapable of being enforced by any Governmental Authority, all other terms and provisions of thisAgreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of thetransactions contemplated by this Agreement is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, theparties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the partieshereto as closely as possible in a mutually acceptable manner in order that the transactions contemplated by thisAgreement are consummated as originally contemplated to the greatest extent possible.
SECTION 7.4 Entire Agreement. This Agreement, and, to the extent applicable hereto, the BCA,the Services Agreement and the Local Conveyances constitute the entire agreement of the parties hereto with respectto the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral,among the parties hereto with respect to the subject matter hereof and thereof.
SECTION 7.5 Assignment. This Agreement and the rights and obligations hereunder may not beassigned by operation of Law or otherwise without the express written consent of AGSA and AMPSA, as the casemay be (which consent may be granted or withheld in the sole discretion of AGSA or AMPSA, as applicable), andany attempted assignment that is not in accordance with this Section 7.5 shall be null and void.
SECTION 7.6 Amendment. This Agreement may not be amended or modified except by aninstrument in writing signed by, or on behalf of, each party hereto that expressly references the Section of thisAgreement to be amended or by a waiver in accordance with Section 7.7.
SECTION 7.7 Waiver. Either party to this Agreement may (a) extend the time for theperformance of any of the obligations or other acts of the other party; (b) waive any inaccuracies in therepresentations and warranties of the other party contained herein or in any document delivered by the other partypursuant to this Agreement; or (c) waive compliance with any of the agreements of the other party or conditions tosuch obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument inwriting signed by the parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by any partyhereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercisethereof preclude any other or future exercise of any other right hereunder. Any waiver of any term or conditionhereof shall not be construed as a waiver of any subsequent breach or as a subsequent waiver of the same term orcondition, or a waiver of any other term or condition of this Agreement.
SECTION 7.8 No Third-Party Beneficiaries. This Agreement shall be binding upon and inuresolely to the benefit of, and be enforceable by, only the parties hereto and their
respective successors and permitted assigns and nothing herein, express or implied, is intended to, or shall conferupon, any other Person any right, benefit or remedy of any nature whatsoever, including any rights of employmentfor any specified period, under or by reason of this Agreement; provided, that the other AMP Entities and the AGSARetained Subsidiaries, as applicable, shall be intended third party beneficiaries of the terms of this Agreementapplicable to such Persons.
SECTION 7.9 Specific Performance. The parties hereto acknowledge and agree that the partieshereto would be irreparably damaged if any of the provisions of this Agreement are not performed in accordancewith their specific terms or are otherwise breached and that any non-performance or breach of this Agreement byeither party hereto could not be adequately compensated by monetary damages alone and that the parties heretowould not have any adequate remedy at law. Accordingly, in addition to any other right or remedy to which eitherparty hereto may be entitled, at law or in equity (including monetary damages), such party shall be entitled to seek toenforce any provision of this Agreement by a decree of specific performance and to seek temporary, preliminary andpermanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement,without posting any bond or other undertaking. The parties hereto agree that they will not contest theappropriateness of specific performance as a remedy.
SECTION 7.10 Governing Law. This Agreement, and all claims or causes of action based upon,arising out of, or related to this Agreement shall be governed by, and construed in accordance with, the Laws of theGrand Duchy of Luxembourg. Any Action arising in connection with this Agreement shall be submitted to thejurisdiction of the courts of Luxembourg City.
SECTION 7.11 Termination. This Agreement may be terminated at any time by the mutual writtenconsent of AGSA and AMPSA.
SECTION 7.12 Counterparts. This Agreement may be executed in multiple counterparts, each ofwhich when executed and delivered shall thereby be deemed to be an original and all of which taken together shallconstitute one and the same instrument. Any party hereto may execute and deliver signed counterparts of thisAgreement to the other parties hereto by electronic mail or other electronic transmission in portable documentformat (.PDF).
[Signature page follows]
IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement as of the datefirst written above.
ARDAGH GROUP S.A.
By: /s/ Hermanus Troskie Name: Hermanus Troskie Title: Director
ARDAGH METAL PACKAGING S.A.
By: /s/ Yves Elsen Name: Yves Elsen Title: Director
Exhibit A
AMP Entities
Exhibit 8.1
SUBSIDIARIES OF ARDAGH GROUP S.A.
The following table provides information relating to our principal operating subsidiaries, all of which are wholly owned, at December 31, 2020.
Country ofCompany incorporation ActivityArdagh Metal Beverage Manufacturing Austria GmbH Austria Metal Beverage PackagingArdagh Metal Beverage Trading Austria GmbH Austria Metal Beverage PackagingLatas Indústria de Embalagens de Alumínio do Brasil Ltda. Brazil Metal Beverage PackagingArdagh Indústria de Embalagens de Metálicas do Brasil Ltda. Brazil Metal Beverage PackagingArdagh Glass Holmegaard A/S Denmark Glass PackagingArdagh Metal Beverage Trading France SAS France Metal Beverage PackagingArdagh Metal Beverage France SAS France Metal Beverage PackagingArdagh Glass GmbH Germany Glass PackagingHeye International GmbH Germany Glass EngineeringArdagh Metal Beverage Trading Germany GmbH Germany Metal Beverage PackagingArdagh Metal Beverage Germany GmbH Germany Metal Beverage PackagingArdagh Glass Sales Limited Ireland Glass PackagingArdagh Glass Italy S.r.l. Italy Glass PackagingArdagh Glass Dongen B.V. Netherlands Glass PackagingArdagh Glass Moerdijk B.V. Netherlands Glass PackagingArdagh Metal Beverage Trading Netherlands B.V. Netherlands Metal Beverage PackagingArdagh Metal Beverage Netherlands B.V. Netherlands Metal Beverage PackagingArdagh Glass S.A. Poland Glass PackagingArdagh Metal Beverage Trading Poland Sp. z o.o Poland Metal Beverage PackagingArdagh Metal Beverage Poland Sp. z o.o Poland Metal Beverage PackagingArdagh Metal Beverage Trading Spain SL Spain Metal Beverage PackagingArdagh Metal Beverage Spain SL Spain Metal Beverage PackagingArdagh Glass Limmared AB Sweden Glass PackagingArdagh Metal Beverage Europe GmbH Switzerland Metal Beverage PackagingArdagh Glass Limited United Kingdom Glass PackagingArdagh Metal Beverage Trading UK Limited United Kingdom Metal Beverage PackagingArdagh Metal Beverage UK Limited United Kingdom Metal Beverage PackagingArdagh Metal Beverage USA Inc. United States Metal Beverage PackagingArdagh Glass Inc. United States Glass PackagingArdagh Glass Packaging USA Inc. * United States Glass Packaging
*Ardagh Glass Packaging Inc. is the Group’s subsidiary which is acquiring the Longhorn glass manufacturing facility located in Houston, Texas. Thetransaction is subject to regulatory approval and is expected to complete in the first quarter of 2021.
Exhibit 12.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul Coulson, certify that:1. I have reviewed this annual report on Form 20-F of Ardagh Group S.A.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the company as of,and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the company, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;
c. Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and
d. Disclosed in this report any change in the company’s internal control over financial reporting that occurredduring the period covered by the annual report that has materially affected, or is reasonably likely to materiallyaffect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the company’s auditors and the audit committee of the company’s board ofdirectors (or persons performing the equivalent functions):a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant rolein the company’s internal control over financial reporting.
Date: March 8, 2021
Ardagh Group S.A. By: /s/ PAUL COULSON Name: Paul Coulson Title: Chief Executive Officer
Exhibit 12.2
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David Matthews, certify that:1. I have reviewed this annual report on Form 20-F of Ardagh Group S.A.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the company as of,and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the company, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;
c. Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and
d. Disclosed in this report any change in the company’s internal control over financial reporting that occurredduring the period covered by the annual report that has materially affected, or is reasonably likely to materiallyaffect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the company’s auditors and the audit committee of the company’s board ofdirectors (or persons performing the equivalent functions):a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant rolein the company’s internal control over financial reporting.
Date: March 8, 2021
Ardagh Group S.A. By: /s/ DAVID MATTHEWS Name: David Matthews Title: Chief Financial Officer
Exhibit 13.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report on Form 20-F of Ardagh Group S.A. (the “Company”) for the period endingDecember 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), theundersigned hereby certify that to the best of our knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company.
Date: March 8, 2021
Ardagh Group S.A. By: /s/ PAUL COULSON Name: Paul Coulson Title: Chief Executive Officer
Exhibit 13.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report on Form 20-F of Ardagh Group S.A. (the “Company”) for the period endingDecember 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), theundersigned hereby certify that to the best of our knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company.
Date: March 8, 2021
Ardagh Group S.A. By: /s/ DAVID MATTHEWS Name: David Matthews Title: Chief Financial Officer
Exhibit 99.7EXECUTION VERSION
ARDAGH PACKAGING FINANCE PLC
AND
ARDAGH HOLDINGS USA INC. AS ISSUERS,
ARDAGH GROUP S.A., AS PARENT GUARANTOR,
CITIBANK, N.A., LONDON BRANCH, AS TRUSTEE, PRINCIPAL PAYING AGENT, TRANSFER AGENT AND SECURITY AGENT,
AND
CITIGROUP GLOBAL MARKETS EUROPE AG, AS REGISTRAR
_____________________________
INDENTURE
Dated as of April 8, 2020
_____________________________
5.250% SENIOR SECURED NOTES DUE 2025
-i-
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
ARTICLE TWO THE NOTES
ARTICLE THREE REDEMPTION; OFFERS TO PURCHASE
ARTICLE FOUR COVENANTS
SECTION 1.01. Definitions 1SECTION 1.02. Other Definitions 30SECTION 1.03. Rules of Construction 31SECTION 1.04. Financial Calculations 31SECTION 1.05. Agency of Irish Issuer 32
SECTION 2.01. The Notes 32SECTION 2.02. Execution and Authentication 33SECTION 2.03. Registrar, Transfer Agent and Paying Agent 34SECTION 2.04. Paying Agent to Hold Money 34SECTION 2.05. Holder Lists 35SECTION 2.06. Transfer and Exchange 35SECTION 2.07. Replacement Notes 37SECTION 2.08. Outstanding Notes 38SECTION 2.09. Notes Held by Issuers 38SECTION 2.10. Certificated Notes 38SECTION 2.11. Cancellation 39SECTION 2.12. Defaulted Interest 39SECTION 2.13. Computation of Interest 40SECTION 2.14. ISIN and CUSIP Numbers 40SECTION 2.15. Issuance of Additional Notes 40
SECTION 3.01. Right of Redemption 40SECTION 3.02. Notices to Trustee 40SECTION 3.03. Selection of Notes to Be Redeemed 41SECTION 3.04. Notice of Redemption 41SECTION 3.05. Deposit of Redemption Price 42SECTION 3.06. [Reserved] 42SECTION 3.07. Payment of Notes Called for Redemption 42SECTION 3.08. Notes Redeemed in Part 43
SECTION 4.01. Payment of Notes 43SECTION 4.02. Corporate Existence 43SECTION 4.03. Maintenance of Properties 43SECTION 4.04. Insurance 44SECTION 4.05. Statement as to Compliance 44
ARTICLE FIVE CONSOLIDATION, MERGER AND SALE OF ASSETS
ARTICLE SIX DEFAULTS AND REMEDIES
ARTICLE SEVEN TRUSTEE AND SECURITY AGENT
SECTION 4.06. Limitation on Debt 44SECTION 4.07. Limitation on Liens 48SECTION 4.08. Limitation on Restricted Payments 49SECTION 4.09. Limitation on Sale of Certain Assets 53SECTION 4.10. Limitation on Transactions with Affiliates 55SECTION 4.11. Purchase of Notes upon a Change of Control 57SECTION 4.12. Additional Amounts 59SECTION 4.13. Additional Intercreditor Agreements. 61SECTION 4.14. Additional Subsidiary Guarantees and Security Interests 62SECTION 4.15. Limitation on Guarantees of Debt by Restricted Subsidiaries 62SECTION 4.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries 64SECTION 4.17. Designation of Unrestricted and Restricted Subsidiaries 66SECTION 4.18. Payment of Taxes and Other Claims 67SECTION 4.19. Reports to Holders 67SECTION 4.20. Further Instruments and Acts 68SECTION 4.21. Security Confirmations 68SECTION 4.22. Suspension of Covenants 68
SECTION 5.01. Consolidation, Merger and Sale of Assets 68SECTION 5.02. Successor Substituted 70
SECTION 6.01. Events of Default 71SECTION 6.02. Acceleration 73SECTION 6.03. Other Remedies 74SECTION 6.04. Waiver of Past Defaults 74SECTION 6.05. Control by Majority 74SECTION 6.06. Limitation on Suits 75SECTION 6.07. Unconditional Right of Holders to Bring Suit for Payment 75SECTION 6.08. Collection Suit by Trustee 75SECTION 6.09. Trustee May File Proofs of Claim 76SECTION 6.10. Application of Money Collected 76SECTION 6.11. Undertaking for Costs 77SECTION 6.12. Restoration of Rights and Remedies 77SECTION 6.13. Rights and Remedies Cumulative 77SECTION 6.14. Delay or Omission Not Waiver 77SECTION 6.15. Record Date 77SECTION 6.16. Waiver of Stay or Extension Laws 77
SECTION 7.01. Duties of Trustee and the Security Agent 78SECTION 7.02. Certain Rights of Trustee and the Security Agent 79SECTION 7.03. Individual Rights of Trustee and the Security Agent 82
ARTICLE EIGHT DEFEASANCE; SATISFACTION AND DISCHARGE
ARTICLE NINE AMENDMENTS AND WAIVERS
ARTICLE TEN GUARANTEE
SECTION 7.04. Disclaimer of Trustee and Security Agent 83SECTION 7.05. Compensation and Indemnity 83SECTION 7.06. Replacement of Trustee or Security Agent 84SECTION 7.07. Successor Trustee or Security Agent by Merger 85SECTION 7.08. Appointment of Security Agent and Supplemental Security Agents 86SECTION 7.09. Eligibility; Disqualification 87SECTION 7.10. Appointment of Co-Trustee 87SECTION 7.11. Resignation of Agents 88SECTION 7.12. Agents General Provisions 89
SECTION 8.01. Issuers’ Option to Effect Defeasance or Covenant Defeasance 90SECTION 8.02. Defeasance and Discharge 90SECTION 8.03. Covenant Defeasance 90SECTION 8.04. Conditions to Defeasance 91SECTION 8.05. Satisfaction and Discharge of Indenture 92SECTION 8.06. Survival of Certain Obligations 93SECTION 8.07. Acknowledgment of Discharge by Trustee 93SECTION 8.08. Application of Trust Money 93SECTION 8.09. Repayment to Issuers 93SECTION 8.10. Indemnity for Government Securities 94SECTION 8.11. Reinstatement 94
SECTION 9.01. Without Consent of Holders 94SECTION 9.02. With Consent of Holders 96SECTION 9.03. Effect of Supplemental Indentures 97SECTION 9.04. Notation on or Exchange of Notes 97SECTION 9.05. [Reserved] 97SECTION 9.06. Notice of Amendment or Waiver 97SECTION 9.07. Trustee to Sign Amendments, Etc. 97SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount 98
SECTION 10.01. Notes Guarantees 98SECTION 10.02. Subrogation 99SECTION 10.03. Release of Subsidiary Guarantees 99SECTION 10.04. Limitation and Effectiveness of Guarantees 100SECTION 10.05. Notation Not Required 100SECTION 10.06. Successors and Assigns 100SECTION 10.07. No Waiver 100SECTION 10.08. Modification 100SECTION 10.09. Trustee and Security Agent to Effectuate Subordination of Heye International GmbH Subsidiary
Guarantee 100
ARTICLE ELEVEN SECURITY
ARTICLE TWELVE MISCELLANEOUS
Schedules
Schedule I - Agreed Security Principles
Exhibits
Exhibit A - Form of NotesExhibit B - Form of Transfer Certificate for Transfer from Restricted Global Note to Regulation S Global NoteExhibit C - Form of Transfer Certificate for Transfer from Regulation S Global Note to Restricted Global Note
SECTION 11.01. Security; Security Documents 101SECTION 11.02. Authorization of Actions to Be Taken by the Security Agent Under the Security Documents 102SECTION 11.03. Authorization of Receipt of Funds by the Security Agent Under the Security Documents 102SECTION 11.04. Release of the Collateral 103SECTION 11.05. Parallel Debt 104
SECTION 12.01. Release of U.S. Issuer’s Obligations 105SECTION 12.02. Notices 106SECTION 12.03. Certificate and Opinion as to Conditions Precedent 107SECTION 12.04. Statements Required in Certificate or Opinion 108SECTION 12.05. Rules by Trustee, Paying Agent and Registrar 108SECTION 12.06. Legal Holidays 108SECTION 12.07. Governing Law 108SECTION 12.08. Jurisdiction 108SECTION 12.09. No Recourse Against Others 109SECTION 12.10. Successors 109SECTION 12.11. Multiple Originals 109SECTION 12.12. Table of Contents, Cross-Reference Sheet and Headings 109SECTION 12.13. Severability 110SECTION 12.14. Currency Indemnity 110SECTION 12.15. Contractual Recognition of Bail-In 110
INDENTURE dated as of April 8, 2020 among Ardagh Packaging Finance plc, a public limited companyincorporated under the laws of Ireland (the “Irish Issuer”), Ardagh Holdings USA Inc., a Delaware corporation (the “U.S.Issuer” and, together with the Irish Issuer, the “Issuers”), Ardagh Group S.A. (the “Parent Guarantor”), Citibank, N.A.,London Branch, as trustee (the “Trustee”), as principal paying agent (the “Principal Paying Agent”) and as Transfer Agent,Citibank, N.A., London Branch, as security agent (the “Security Agent”), and Citigroup Global Markets Europe AG, asRegistrar.
RECITALS OF THE ISSUERS AND THE PARENT GUARANTOR
The Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance of their5.250% Senior Secured Notes due 2025 issued on the date hereof (the “Original Notes”) and any additional notes (the“Additional Notes”) that may be issued after the Issue Date. The Original Notes and Additional Notes together are the“Notes”. The Issuers and the Parent Guarantor have received good and valuable consideration for the execution and deliveryof this Indenture. The Parent Guarantor will derive substantial direct and indirect benefits from the issuance of the Notes. Allnecessary acts and things have been done to make (i) the Notes, when duly issued and executed by the Issuers andauthenticated and delivered hereunder, the legal, valid and binding obligations of the Issuers and (ii) this Indenture(including the Guarantees included herein) a legal, valid and binding agreement of the Issuers and the Parent Guarantor inaccordance with the terms of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutuallycovenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
“£” means the lawful currency of the United Kingdom of Great Britain and Northern Ireland.
“Acquired Debt” means Debt of a Person:
(a) existing at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with theParent Guarantor or any Restricted Subsidiary; or
(b) assumed in connection with the acquisition of assets from any such Person;
provided, in each case, that such Debt was not incurred in connection with, or in contemplation of, such Person becoming aRestricted Subsidiary or such acquisition, as the case may be.
Acquired Debt will be deemed to be incurred on the date the acquired Person becomes a Restricted Subsidiary or thedate of the related acquisition of assets from any such Person.
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling orcontrolled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, “control,” when used with respect to any specified Person, means the power todirect or cause the direction of the management and policies of such Person, directly or indirectly, whether through theownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meaningscorrelative to the foregoing.
-2-
“Agreed Security Principles” means the Agreed Security Principles as set forth on Schedule I hereto.
“Applicable Law” means any competent regulatory, prosecuting, Tax or governmental authority in any jurisdiction.
“Asset Sale” means any sale, issuance, conveyance, transfer, lease or other disposition (including, withoutlimitation, by way of merger, consolidation or sale and leaseback transaction) (collectively, a “transfer”), directly orindirectly, in one or a series of related transactions, of:
(a) any Capital Stock of any Restricted Subsidiary (other than directors’ qualifying shares or shares required byapplicable law to be held by a Person other than the Parent Guarantor or a Restricted Subsidiary);
(b) all or substantially all of the properties and assets of any division or line of business of the Parent Guarantoror any Restricted Subsidiary; or
(c) any other of the Parent Guarantor’s or any Restricted Subsidiary’s properties or assets.
Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:
(i) any transfer or disposition of assets that is governed by the provisions of Article Five and Section 4.11 orany transfer or disposition of assets consummated in connection with a Permitted Reorganization;
(ii) any transfer or disposition of assets by the Parent Guarantor to the Issuers or any Restricted Subsidiary, orby any Restricted Subsidiary to the Parent Guarantor, the Issuers or any Restricted Subsidiary in accordancewith the terms of this Indenture;
(iii) any transfer or disposition of obsolete or permanently retired equipment or facilities that are no longer usefulin the conduct of the Parent Guarantor’s and any Restricted Subsidiary’s business and that are disposed of inthe ordinary course of business;
(iv) any disposition of accounts receivable and related assets in a Permitted Receivables Financing;
(v) the disposition of receivables in connection with the compromise, settlement or collection thereof in theordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similararrangements;
(vi) the foreclosure, condemnation or any similar action with respect to any property or other assets;
(vii) any unwinding or termination of hedging obligations not for speculative purposes;
(viii) any single transaction or series of related transactions that involves assets or Capital Stock having a FairMarket Value of less than the greater of $50,000,000 and 0.75% of Total Assets;
(ix) for the purposes of Section 4.09 only, the making of a Permitted Investment or a disposition permitted underSection 4.08; or, solely for the purposes Section 4.09(b), asset sales, the
-3-
proceeds of which are used within 540 days of receipt of such proceeds to make such Restricted Payments,Permitted Payments or Permitted Investments;
(x) the sale, lease or other disposition of equipment, inventory, property or other assets in the ordinary course ofbusiness;
(xi) the lease, assignment or sublease of any real or personal property in the ordinary course of business;
(xii) an issuance of Capital Stock by a Restricted Subsidiary to the Parent Guarantor or to another RestrictedSubsidiary;
(xiii) a Permitted Investment or a Restricted Payment (or a transaction that would constitute a Restricted Paymentbut for the exclusions from the definition thereof) that is not prohibited by Section 4.08;
(xiv) any disposition of Capital Stock, Debt or other securities of any Unrestricted Subsidiary or a Permitted JointVenture;
(xv) sales of assets received by the Parent Guarantor or any Restricted Subsidiary upon the foreclosure on a Liengranted in favor of the Parent Guarantor or any Restricted Subsidiary;
(xvi) sales or grants of licenses to use the patents, trade secrets, know-how and other intellectual property of theParent Guarantor or any of its Restricted Subsidiaries to the extent that such license does not prohibit theParent Guarantor or any of its Restricted Subsidiaries from using the technologies licensed (other thanpursuant to exclusivity or non-competition arrangements negotiated on an arm’s-length basis) or require theParent Guarantor or any of its Restricted Subsidiaries to pay any fees for any such use;
(xvii) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort orother claims in the ordinary course of business; or
(xviii) sales, issuances, conveyances, transfers, leases or other dispositions to the extent constituting PermittedLiens.
“Authority” means any competent regulatory, prosecuting, Tax or governmental authority in any jurisdiction.
“August 2019 Notes” shall mean the August 2019 Secured Notes and the August 2019 Senior Notes.
“August 2019 Secured Notes” shall mean the existing $500,000,000 aggregate principal amount of 4.125% SeniorSecured Notes due 2026 and the existing €440,000,000 aggregate principal amount of 2.125% Senior Secured Notes due2026 issued by the Issuers on August 12, 2019.
“August 2019 Senior Notes” shall mean the existing $800,000,000 aggregate principal amount of 5.250% SeniorNotes due 2027 issued by the Issuers on August 12, 2019.
“Average Life” means, as of the date of determination with respect to any Debt, the quotient obtained by dividing:
-4-
(a) the sum of the products of:
(i) the numbers of years from the date of determination to the date or dates of each successivescheduled principal payment of such Debt; multiplied by
(ii) the amount of each such principal payment;
by
(b) the sum of all such principal payments.
“Bankruptcy Law” means any law relating to bankruptcy, insolvency, receivership, moratorium, winding-up,liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law, including,without limitation, (i) bankruptcy law of Ireland, (ii) bankruptcy law of The Netherlands, (iii) bankruptcy law of England,(iv) bankruptcy law of Germany, (v) bankruptcy law of Sweden, (vi) bankruptcy law of Denmark, (vii) bankruptcy law ofPoland, (viii) bankruptcy law of Italy or (ix) bankruptcy law of Luxembourg or (x) Title 11, United States Bankruptcy Codeof 1978, as amended.
“Board of Directors” means (i) with respect to any corporation, the board of directors or managers, as applicable, ofthe corporation, or any duly authorized committee thereof; (ii) with respect to any partnership, the board of directors or othergoverning body of the general partner, as applicable, of the partnership or any duly authorized committee thereof; (iii) withrespect to a limited liability company, the managing member or members or any duly authorized controlling committeethereof; and (iv) with respect to any other Person, the board or any duly authorized committee of such Person serving asimilar function. Whenever any provision of this Indenture requires any action or determination to be made by, or anyapproval of, a Board of Directors (including for the avoidance of doubt any committee thereof), such action, determinationor approval shall be deemed to have been taken or made if approved by the necessary directors or members of any suchBoard of Directors (whether or not such action or approval is taken as part of a formal board meeting or as a formal boardapproval), including for the avoidance of doubt any committee thereof. Unless the context requires otherwise, Board ofDirectors means the Board of Directors of the Parent Guarantor.
“Book-Entry Interest” means a beneficial interest in a Global Note held through and shown on, and transferred onlythrough, records maintained in book-entry form by DTC and its nominees and successors.
“Business Day” means a day of the year on which banks are not required or authorized by law to close in Dublin,New York City or London.
“Capital Stock” means, with respect to any Person, any and all shares, interests, partnership interests (whethergeneral or limited), participations, rights in or other equivalents (however designated) of such Person’s equity, any otherinterest or participation that confers the right to receive a share of the profits and losses, or distributions of assets of, suchPerson and any rights (other than debt securities convertible into or exchangeable for Capital Stock), warrants or optionsexchangeable for or convertible into such Capital Stock, whether now outstanding or issued after the Issue Date.
“Capitalized Lease Obligation” means, with respect to any Person, any obligation of such Person under a lease of (orother agreement conveying the right to use) any property (whether real, personal or mixed), which obligation is required tobe classified and accounted for as a capital lease obligation under IFRS, and, for purposes of this Indenture, the amount ofsuch obligation at any date will be the capitalized amount thereof at such date, determined in accordance with IFRS and theStated Maturity thereof will be
-5-
the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may beterminated without penalty.
“Cash Equivalents” means any of the following:
(a) any evidence of Debt with a maturity of 180 days or less from the date of acquisition issued or directly andfully guaranteed or insured by a member state of the European Union or European Economic Area, theUnited Kingdom, the United States of America, any state thereof or the District of Columbia, Canada,Switzerland, Australia or any agency or instrumentality thereof (each, an “Approved Jurisdiction”);
(b) time deposit accounts, certificates of deposit, money market deposits or bankers’ acceptances with amaturity of 180 days or less from the date of acquisition issued by a bank or trust company having combinedcapital and surplus and undivided profits of not less than €500,000,000, whose debt has a rating, at the timeany investment is made therein, of at least BBB+ or the equivalent thereof by S&P and at least Baa1 or theequivalent thereof by Moody’s;
(c) commercial paper with a maturity of 180 days or less from the date of acquisition issued by a corporationthat is not either Issuer’s or any Restricted Subsidiary’s Affiliate and is at the time of acquisition, rated atleast A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s;
(d) repurchase obligations with a term of not more than seven days for underlying securities of the typedescribed in clause (a) or (b) above entered into with a financial institution meeting the qualificationsdescribed in clause (b) above;
(e) investments in money market mutual funds at least 95% of the assets of which constitute Cash Equivalentsof the kind described in clauses (a) through (d) above; or
(f) any investments classified as cash equivalents under IFRS.
“Change of Control” means the occurrence of any of the following events:
(a) the consummation of any transaction (including a merger or consolidation) the result of which is that (i) anyperson or group, other than one or more Permitted Holders, is or as a result of such transaction becomes, thebeneficial owner, directly or indirectly, of more than 50% (or so long as any of the Existing Ardagh Bondsother than the August 2019 Notes remain outstanding, 35%) of the total voting power of the Voting Stock ofthe Parent Guarantor and (ii) the Permitted Holders, individually or in the aggregate, do not beneficiallyown, directly or indirectly, a larger percentage of the total voting power of such Voting Stock than suchother person or group;
(b) the sale, transfer, conveyance or other disposition (other than by way of merger, consolidation or transfer ofthe Parent Guarantor’s Voting Stock or in connection with a Permitted Reorganization) of all orsubstantially all of the assets (other than Capital Stock, Debt or other securities of any UnrestrictedSubsidiary) of the Parent Guarantor, the Issuers and the Restricted Subsidiaries, on a consolidated basis, toany person or group other than one or more Permitted Holders;
-6-
(c) the Parent Guarantor or either Issuer is liquidated or dissolved or adopts a plan of liquidation or dissolutionother than in a transaction which does not violate the provisions described under Article Five or inconnection with a Permitted Reorganization; or
(d) the Parent Guarantor or any Surviving Entity ceases to beneficially own, directly or indirectly, 100% of theVoting Stock of either Issuer, other than director’s qualifying shares and other shares required to be issuedby law.
For the purposes of this definition, (i) “person” and “group” have the meanings they have in Sections 13(d) and14(d) of the Exchange Act; (ii) “beneficial owner” is used as defined in Rules 13d-3 and 13d-5 under the Exchange Act,except that a person shall be deemed to have “beneficial ownership” of all securities that such Person has the right toacquire, whether such right is exercisable immediately or only after the passage of time; and (iii) a Person or group will bedeemed to beneficially own all Voting Stock of an entity held by a parent entity, if such Person or group is or becomes thebeneficial owner, directly or indirectly, of more than 35% of the total voting power of the Voting Stock of such parent entityand the Permitted Holders, individually or in the aggregate, do not beneficially own, directly or indirectly, a largerpercentage of the total voting power of such Voting Stock than such Person or group.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means the collateral that secures the obligations of the Issuers and the Guarantors under the Notes andthis Indenture pursuant to the Security Documents.
“Commission” means the U.S. Securities and Exchange Commission.
“Commodity Hedging Agreements” means any type of commodity hedging agreement (including emissionshedging) designed to protect against or manage exposure to fluctuations in commodity prices and entered into in good faithfor such purposes.
“Consolidated Adjusted Net Income” means, for any period, the Parent Guarantor’s and the Restricted Subsidiaries’consolidated net income (or loss) for such period as determined in accordance with IFRS, adjusted by excluding (to theextent included in such consolidated net income or loss), without duplication:
(a) any net after-tax extraordinary gains or losses;
(b) any net after-tax gains or losses attributable to sales of assets of the Parent Guarantor or any RestrictedSubsidiary that are not sold in the ordinary course of business;
(c) the portion of net income or loss of any Person (other than the Parent Guarantor or a Restricted Subsidiary),including Unrestricted Subsidiaries, in which the Parent Guarantor or any Restricted Subsidiary has anequity ownership interest, except that the Parent Guarantor’s or a Restricted Subsidiary’s equity in the netincome of such Person for such period shall be included in such Consolidated Adjusted Net Income to theextent of the aggregate amount of dividends or other distributions actually paid to the Parent Guarantor orany Restricted Subsidiary in cash dividends or other distributions during such period;
(d) the net income or loss of any Restricted Subsidiary to the extent that the declaration or payment of dividendsor similar distributions by such Restricted Subsidiary is not at the date of determination permitted, directlyor indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order,statute, rule or
-7-
governmental regulation applicable to such Restricted Subsidiary or its shareholders (other than restrictionscontained in the Credit Facilities and related agreements permitted by Section 4.06(b)(ii));
(e) any extraordinary, exceptional, unusual or nonrecurring loss, expense or charge (including severance,relocation, plant closure, operational improvement or restructuring costs or reserves or provisions therefor)relating to, or directly or indirectly resulting from, or incurred in connection with, any Asset Sale,Investment, acquisition, reorganization, restructuring or operational improvement initiative, or offering orrefinancing of debt or equity securities;
(f) the non-cash accounting effects of any acquisition, purchase, merger, reorganization or other similartransaction, including any increase in amortization or depreciation resulting from adjustments to tangible orintangible assets, the consequence of any revaluation of inventory or other non-cash charges or effects(including losses on derivatives);
(g) the cumulative effect of a change in accounting principles after the Issue Date;
(h) any charge or expense recorded for non-cash or capitalized interest on Deeply Subordinated Funding;
(i) net after tax gains or losses attributable to (i) the termination of pension plans, (ii) the acquisition ofsecurities or the extinguishment of debt or (iii) currency exchange transactions that are not in the ordinarycourse of business;
(j) net income or loss attributable to discontinued operations; and
(k) any restoration to net income of any contingency reserve, except to the extent it was provided for in a priorperiod.
“Consolidated Fixed Charge Coverage Ratio” of the Parent Guarantor means, for any period, the ratio of:
(a) the sum of Consolidated Adjusted Net Income, plus in each case to the extent deducted in computingConsolidated Adjusted Net Income for such period:
(i) Consolidated Net Interest Expense;
(ii) Consolidated Tax Expense; and
(iii) Consolidated Non-cash Charges, less all non-cash items increasing Consolidated Adjusted NetIncome for such period and less all cash payments during such period relating to non-cash chargesthat were added back to Consolidated Adjusted Net Income in determining the Consolidated FixedCharge Coverage Ratio in any prior period;
(b) to the sum of:
(i) Consolidated Net Interest Expense; and
-8-
(ii) cash and non-cash dividends due (whether or not declared) on the Parent Guarantor’s and anyRestricted Subsidiary’s Preferred Stock (to any Person other than the Parent Guarantor and anyWholly Owned Restricted Subsidiary), in each case for such period;
provided that in calculating the Consolidated Fixed Charge Coverage Ratio or any element thereof for any period, pro formaeffect will be given to any realized or expected synergies, cost efficiencies and cost savings relating to, or directly orindirectly resulting from, or associated with, any Asset Sale, Investment, acquisition, reorganization, restructuring oroperational improvement initiative that has occurred during the period included in the calculation or any prior period orwould reasonably be expected to occur in connection with an acquisition or other transaction in relation to which “proforma” effect is given as if such synergies, cost efficiencies or cost savings had been effective throughout the periodincluded in the calculation; provided, further, without limiting the application of the previous proviso, that:
(i) if the Parent Guarantor or any Restricted Subsidiary has incurred any Debt since the beginning of suchperiod that remains outstanding or if the transaction giving rise to the need to calculate the ConsolidatedFixed Charge Coverage Ratio is an incurrence of Debt or both, Consolidated Adjusted Net Income andConsolidated Net Interest Expense for such period shall be calculated after giving effect on a pro formabasis to such Debt as if such Debt had been incurred on the first day of such period and the discharge of anyother Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as ifsuch discharge had occurred on the first day of such period;
(ii) if, since the beginning of such period, the Parent Guarantor or any Restricted Subsidiary shall have madeany Asset Sale, Consolidated Adjusted Net Income for such period shall be reduced by an amount equal tothe Consolidated Adjusted Net Income (if positive) directly attributable to the assets which are the subject ofsuch Asset Sale for such period, or increased by an amount equal to the Consolidated Adjusted Net Income(if negative) directly attributable thereto, for such period and the Consolidated Net Interest Expense for suchperiod shall be reduced by an amount equal to the Consolidated Net Interest Expense directly attributable toany Debt of the Parent Guarantor or of any Restricted Subsidiary repaid, repurchased, defeased or otherwisedischarged with respect to the Parent Guarantor and the continuing Restricted Subsidiaries in connectionwith such Asset Sale for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, theConsolidated Net Interest Expense for such period directly attributable to the Debt of such RestrictedSubsidiary to the extent the Parent Guarantor and the continuing Restricted Subsidiaries are no longer liablefor such Debt after such sale);
(iii) if, since the beginning of such period, the Parent Guarantor or any Restricted Subsidiary (by merger orotherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes aRestricted Subsidiary) or an acquisition of assets, including any acquisition of an asset occurring inconnection with a transaction causing a calculation to be made hereunder, which constitutes all orsubstantially all of an operating unit of a business, Consolidated Adjusted Net Income and Consolidated NetInterest Expense for such period shall be calculated after giving pro forma effect thereto (including theincurrence of any Debt) as if such Investment or acquisition occurred on the first day of such period;
(iv) if, since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or wasmerged with or into the Parent Guarantor or any Restricted Subsidiary since the beginning of such period)shall have made any Asset Sale or any Investment or
-9-
acquisition of assets that would have required an adjustment pursuant to clause (ii) or (iii) above if made bythe Parent Guarantor or a Restricted Subsidiary during such period, Consolidated Adjusted Net Income andConsolidated Net Interest Expense for such period shall be calculated after giving pro forma effect thereto asif such Asset Sale or Investment or acquisition occurred on the first day of such period; and
(v) that the pro forma calculation shall not give effect to: (i) any amounts under clause (b) above attributable toDebt or Preferred Stock incurred on such determination date pursuant to Section 4.06(b) (other than amountsattributable to Debt or Preferred Stock incurred pursuant to Section 4.06(b)(xix)) or (ii) amounts attributableto any Debt or Preferred Stock discharged on such determination date to the extent that such dischargeresults from the proceeds incurred pursuant to Section 4.06(b) (other than amounts attributable to Debt orPreferred Stock discharged on such determination date using proceeds of Debt Preferred Stock incurredpursuant to Section 4.06(b)(xix)).
If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debtshall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period(taking into account any Interest Rate Agreement applicable to such Debt for a period equal to the remaining term of suchInterest Rate Agreement).
“Consolidated Leverage Ratio” of the Parent Guarantor means, as of the date of determination, the ratio of (a) (i) thesum of consolidated Debt of the Parent Guarantor (other than working capital and other than Debt described in clause (f) ofthe definition of “Debt”) less (ii) cash and Cash Equivalents on the most recent consolidated balance sheet of the ParentGuarantor which has been delivered in accordance with Section 4.19 to (b) the aggregate consolidated EBITDA of theParent Guarantor for the period of the most recent four consecutive quarters for which financial statements are availableunder Section 4.19, in each case with such pro forma adjustments to consolidated Debt and consolidated EBITDA as areappropriate and consistent with the pro forma provisions set forth in the definition of “Consolidated Fixed Charge CoverageRatio”.
“Consolidated Net Interest Expense” means, for any period, without duplication and in each case determined on aconsolidated basis in accordance with IFRS, the sum of:
(a) the Parent Guarantor’s and the Restricted Subsidiaries’ total interest expense for such period, including,without limitation:
(i) amortization of debt discount;
(ii) the net costs of Commodity Hedging Agreements, Interest Rate Agreements and CurrencyAgreements (including amortization of fees and discounts);
(iii) commissions, discounts and other fees and charges owed with respect to letters of credit andbankers’ acceptance financing and similar transactions; and
(iv) the interest portion of any deferred payment obligation and amortization of debt issuance costs; plus
(b) the interest component of the Parent Guarantor’s and the Restricted Subsidiaries’ Capitalized LeaseObligations accrued and/or scheduled to be paid or accrued during such period other than the interestcomponent of Capitalized Lease Obligations between or
-10-
among the Parent Guarantor and any Restricted Subsidiary or between or among Restricted Subsidiaries;plus
(c) the Parent Guarantor’s and the Restricted Subsidiaries non-cash interest expenses and interest that wascapitalized during such period; plus
(d) the interest expense on Debt of another Person to the extent such Debt is guaranteed by the Parent Guarantoror any Restricted Subsidiary or secured by a Lien on the Parent Guarantor’s or any Restricted Subsidiary’sassets, but only to the extent that such interest is actually paid by the Parent Guarantor or such RestrictedSubsidiary; minus
(e) the interest income of the Parent Guarantor and the Restricted Subsidiaries during such period.
Notwithstanding any of the foregoing, Consolidated Net Interest Expense shall not include any of the following:
(a) interest accrued, capitalized or paid in respect of Deeply Subordinated Funding;
(b) gains, losses, expenses or charges associated with refinancing of debt;
(c) gains, losses, expenses or charges associated with the total or partial extinguishment of debt;
(d) gains, losses, expenses or charges resulting from “mark to market” provisions or fair value charges appliedto or resulting from derivatives; or
(e) any non-cash pension expense.
“Consolidated Non-cash Charges” means, for any period, the aggregate depreciation, amortization and other non-cash expenses of the Parent Guarantor and the Restricted Subsidiaries for such period, determined on a consolidated basis inaccordance with IFRS (excluding any such non-cash charge that requires an accrual of or reserve for cash charges for anyfuture period).
“Consolidated Secured Debt Leverage Ratio” of the Parent Guarantor means, as of the date of determination, theratio of (a) (i) the sum of consolidated Debt of the Parent Guarantor secured by Liens ranking equal to (by law or contract)the Liens on the Collateral securing the Notes on all or any portion of the Collateral (other than Debt incurred pursuant toclause (b)(ii) and clause (b)(xiii) of Section 4.06 and other than Debt described in clause (f) of the definition of “Debt”) less(ii) cash and Cash Equivalents on the most recent consolidated balance sheet of the Parent Guarantor which has beendelivered in accordance with Section 4.19 to (b) the aggregate consolidated EBITDA of the Parent Guarantor for the periodof the most recent four consecutive quarters for which financial statements are available under Section 4.19 in each casewith such pro forma adjustments to consolidated Debt and consolidated EBITDA as are appropriate and consistent with thepro forma provisions set forth in the definition of “Consolidated Fixed Charge Coverage Ratio”.
“Consolidated Tax Expense” means, for any period with respect to any Relevant Taxing Jurisdiction, the provisionfor all national, local and foreign federal, state or other income taxes of the Parent Guarantor and the Restricted Subsidiariesfor such period as determined on a consolidated basis in accordance with IFRS.
-11-
“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has notbeen cured or waived.
“Contribution Debt” means Debt of the Parent Guarantor or any Restricted Subsidiary in an aggregate principalamount not greater than the aggregate amount of cash contributions (other than Excluded Contributions and any such cashcontributions that have been used to make a Restricted Payment or a Permitted Investment) made to the equity (other thanthrough the issuance of Redeemable Capital Stock) of the Parent Guarantor or in the form of Deeply Subordinated Funding,in each case, after the Issue Date; provided that (without prejudice to the rights of the Parent Guarantor and the RestrictedSubsidiaries, including the right to divide and/or classify and/or reclassify as described in Section 4.06) such ContributionDebt is so designated as Contribution Debt pursuant to an Officer’s Certificate on the incurrence date thereof.
“Credit Facility” or “Credit Facilities” means one or more debt facilities, indentures or other arrangements withbanks, insurance companies, other financial institutions or investors providing for revolving credit loans, term loans, notes,receivables financings, letters of credit or other forms of guarantees and assurances, or other Debt, including overdrafts, ineach case, as amended, restated, modified, renewed, refunded, replaced, restructured, repaid or refinanced (and whether inwhole or in part and whether or not with the original administrative agent or lenders or another administrative agent oragents or other bank or institutions and whether provided under one or more other credit or other agreements, indentures,financing agreements or otherwise) and, for the avoidance of doubt, includes any agreement extending the maturity of,refinancing or restructuring all or any portion of the indebtedness under such agreements or any successor agreements.
“Currency Agreements” means, in respect of a Person, any spot or forward foreign exchange agreements andcurrency swap, currency option or other similar financial agreements or arrangements designed to protect such Personagainst or manage exposure to fluctuations in foreign currency exchange rates.
“Custodian” means any receiver, trustee, assignee, liquidator, custodian, administrator or similar official under anyBankruptcy Law.
“Debt” means, with respect to any Person, without duplication:
(a) all liabilities of such Person for borrowed money (including overdrafts) or for the deferred purchase price ofproperty or services, excluding any trade payables and other accrued current liabilities incurred in theordinary course of business;
(b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments;
(c) all obligations, contingent or otherwise, of such Person in connection with any letters of credit, bankers’acceptances, receivables facilities or other similar facilities;
(d) all indebtedness of such Person created or arising under any conditional sale or other title retentionagreement with respect to property acquired by such Person (even if the rights and remedies of the seller orlender under such agreement in the event of default are limited to repossession or sale of such property), butexcluding trade payables arising in the ordinary course of business;
(e) all Capitalized Lease Obligations of such Person;
-12-
(f) all obligations of such Person under or in respect of Commodity Hedging Agreements, Interest RateAgreements and Currency Agreements; and
(g) all Redeemable Capital Stock of such Person valued at the greater of its voluntary maximum fixedrepurchase price and involuntary maximum fixed repurchase price plus accrued and unpaid dividends;
if and to the extent any of the preceding items would appear as debt on a balance sheet (excluding the footnotes thereto) ofthe specified Person prepared in accordance with IFRS; provided that the term “Debt” shall not include (i) non-interestbearing installment obligations and accrued liabilities incurred in the ordinary course of business that are not more than90 days past due; (ii) Debt in respect of the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt inrespect of standby letters of credit, performance bonds or surety bonds provided by the Parent Guarantor or any RestrictedSubsidiary in the ordinary course of business to the extent such letters of credit or bonds are not drawn upon or, if and to theextent drawn upon are honored in accordance with their terms and if, to be reimbursed, are reimbursed no later than the fifthBusiness Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit orbond; (iii) anything accounted for as an operating lease in accordance with the Election Option; (iv) any pension obligationsof the Parent Guarantor or a Restricted Subsidiary; (v) Debt incurred by the Parent Guarantor or one of the RestrictedSubsidiaries in connection with a transaction where (x) such Debt is borrowed from a bank or trust company having acombined capital and surplus and undivided profits of not less than €500,000,000, whose debt has a rating immediately priorto the time such transaction is entered into, of at least A or the equivalent thereof by S&P and A2 or the equivalent thereofby Moody’s and (y) a substantially concurrent Investment is made by the Parent Guarantor or a Restricted Subsidiary in theform of cash deposited with the lender of such Debt, or a Subsidiary or Affiliate thereof, in amount equal to such Debt; and(vi) Deeply Subordinated Funding. In addition, “Debt” of the specified Person shall include all Debt of another Personsecured by a Lien on any asset of the specified Person (whether or not such Debt is assumed by the specified Person) and, tothe extent not otherwise included, the guarantee by the specified Person of Debt of another Person, and Preferred Stock ofany Restricted Subsidiary.
For purposes of this definition, the “maximum fixed repurchase price” of any Redeemable Capital Stock that doesnot have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of suchRedeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Debt will be requiredto be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value of suchRedeemable Capital Stock, such Fair Market Value will be determined in good faith by the Board of Directors of the issuerof such Redeemable Capital Stock; provided, that if such Redeemable Capital Stock is not then permitted to be redeemed,repaid or repurchased, the redemption, repayment or repurchase price shall be the book value of such Redeemable CapitalStock as reflected in the most recent financial statements of such Person.
“Deeply Subordinated Funding” means any funds provided to the Parent Guarantor pursuant to an agreement, note,security or other instrument, other than Capital Stock, that (i) is subordinated in right of payment to all Debt of the ParentGuarantor, (ii)(A) does not mature or require any amortization, redemption or other repayment of principal, (B) does notrequire payment of any cash interest or any similar cash amounts, and (C) contains no change of control or similarprovisions and does not accelerate and has no right to declare a default or event of default or take any enforcement action orotherwise require any cash payment (other than as a result of insolvency proceedings of the Parent Guarantor), in each caseprior to the 90th day following the repayment in full of the Notes and all other amounts due under this Indenture, (iii) doesnot provide for or require any security interest or encumbrance over any asset of the Parent Guarantor or any RestrictedSubsidiary and (iv) does not contain any covenants (financial or otherwise) other than a covenant to pay such DeeplySubordinated Funding.
-13-
“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.
“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by theParent Guarantor or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cashConsideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, executed by the principalfinancial officer of the Parent Guarantor, less the amount of Cash Equivalents received in connection with a subsequent sale,redemption, repurchase of, or collection or payment on, such Designated Non-cash Consideration.
“Disinterested Director” means, with respect to any transaction or series of related transactions, a member of theParent Guarantor’s Board of Directors who does not have any material direct or indirect financial interest in or with respectto such transaction or series of related transactions or is not an Affiliate, or an officer, director or employee of any Person(other than the Parent Guarantor or any Restricted Subsidiary) who has any direct or indirect financial interest in or withrespect to such transaction or series of related transactions; provided that no member of the Parent Guarantor’s Board ofDirectors shall be deemed to have any such direct or indirect financial interest solely as a result of such member’s ownershipof Capital Stock of the Parent Guarantor or any successor or any company holding shares, directly or indirectly, in theParent Guarantor or such member’s serving on the Board of Directors of any company holding shares, directly or indirectly,in the Parent Guarantor.
“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any timefor the determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in suchcomputation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency aspublished under “Currency Rates” in the section of the Financial Times entitled “Currencies, Bonds & Interest Rates” on thedate that is two Business Days prior to such determination.
“DTC” means The Depository Trust Company, its nominees and successors.
“euro” or “€” means the lawful currency of the member states of the European Union who have agreed to share acommon currency in accordance with the provisions of the Maastricht Treaty dealing with European monetary union.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, or any successor statute, and therules and regulations promulgated by the Commission thereunder.
“Excluded Contribution” means Net Cash Proceeds or property or assets received by the Parent Guarantor as capitalcontributions (other than Contribution Debt and any contributions used to make a Restricted Payment or a PermittedInvestment) to the equity (other than through the issuance of Redeemable Capital Stock) of the Parent Guarantor or in theform of Deeply Subordinated Funding, in each case of such capital contribution or Deeply Subordinated Funding, after theIssue Date or from the issuance or sale (other than to a Restricted Subsidiary or an employee stock ownership plan or trustestablished by the Parent Guarantor or any Subsidiary of the Parent Guarantor for the benefit of its employees to the extentfunded by the Parent Guarantor or any Restricted Subsidiary) of Capital Stock (other than Redeemable Capital Stock) of theParent Guarantor, in each case, to the extent designated as an Excluded Contribution pursuant to an Officer’s Certificate ofthe Parent Guarantor.
“Existing Ardagh Bonds” means (i) the Existing Secured Notes and (ii) the Existing Unsecured Notes and any otherinternational debt securities of the Parent Guarantor or any of its Restricted Subsidiaries outstanding on the Issue Date.
-14-
“Existing Debt” means all Debt of the Parent Guarantor and its Restricted Subsidiaries outstanding on the Issue Dateafter giving effect to the issue of the Notes and the use of proceeds therefrom.
“Existing Secured Notes” means the March 2017 Secured Notes and the August 2019 Secured Notes.
“Existing Unsecured Notes” means the January 2017 Senior Notes, the June 2017 Senior Notes and the August 2019Senior Notes.
“Fair Market Value” means, with respect to any asset or property, the sale value that would be obtained in an arm’s-length free market transaction between an informed and willing seller under no compulsion to sell and an informed andwilling buyer under no compulsion to buy, as determined in good faith by the Parent Guarantor’s Board of Directors.
“FATCA Withholding” means any withholding or deduction required pursuant to an agreement described in section1471(b) of the Code, or otherwise imposed pursuant to sections 1471 through 1474 of the Code, any regulations oragreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
“Guarantee” means any guarantee of the Issuers’ obligations under this Indenture and the Notes by the ParentGuarantor, any Restricted Subsidiary or any other Person in accordance with the provisions of this Indenture, including theGuarantees by the Guarantors dated as of the Issue Date. When used as a verb, “Guarantee” shall have a correspondingmeaning.
“guarantees” means, as applied to any obligation,
(a) a guarantee (other than by endorsement of negotiable instruments for collection or deposit in the ordinarycourse of business), direct or indirect, in any manner, of any part or all of such obligation; and
(b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any waythe payment or performance (or payment of damages in the event of non-performance) of all or any part ofsuch obligation, including, without limiting the foregoing, by the pledge of assets and the payment ofamounts drawn down under letters of credit.
“Guarantor” means the Parent Guarantor and the Subsidiary Guarantors, together, and any other Person that is aguarantor of the Notes, including any Person that is required after the Issue Date to execute a guarantee of the Notespursuant to Section 4.14 or Section 4.15 until a successor replaces such party pursuant to the applicable provisions of thisIndenture and, thereafter, shall mean such successor.
“Holder” means the Person in whose name a Note is registered on the Registrar’s books.
“IFRS” means International Financial Reporting Standards (formerly International Accounting Standards) endorsedfrom time to time by the European Union or any variation thereof with which the Parent Guarantor or its RestrictedSubsidiaries are, or may be, required to comply, as in effect on the Issue Date or, with respect to Section 4.19 as in effectfrom time to time. Except as otherwise set forth in this Indenture, all ratios and calculations based on IFRS (or, asapplicable, GAAP) contained in this Indenture shall be computed in accordance with IFRS as in effect on the Issue Date (or,as applicable, GAAP as in effect at the date specified by the Parent Guarantor in its election to adopt GAAP in accordancewith the fourth sentence of this definition). At any time after the Issue Date, the Parent Guarantor may elect to
-15-
implement any new measures or other changes to IFRS (or, as applicable, GAAP) in effect on or prior to the date of suchelection; provided that any such election, once made, shall be irrevocable. At any time after the Issue Date, the ParentGuarantor may elect to apply GAAP accounting principles in lieu of IFRS and, upon any such election, references herein toIFRS shall thereafter be construed to mean GAAP (except as otherwise provided in this Indenture), including as to theability of the Parent Guarantor to make an election pursuant to the previous sentence; provided that any such election, oncemade, shall be irrevocable; provided, further, that any calculation or determination in this Indenture that requires theapplication of IFRS for periods that include fiscal quarters ended prior to the Parent Guarantor’s election to apply GAAPshall remain as previously calculated or determined in accordance with IFRS; provided, further again, that the ParentGuarantor may only make such election if it also elects to report any subsequent financial reports required to be made by theParent Guarantor. The Parent Guarantor shall give notice of any such election made in accordance with this definition to theTrustee and the Holders. Notwithstanding any of the foregoing, (i) in relation to the making of any determination orcalculation under this Indenture, the Parent Guarantor shall be required to elect (the “Election Option”), from time to timeand each time, either (A) to apply IFRS 16 (Leases) or (B) to apply IAS 17 (Leases) (or, in each case, the equivalentmeasure under GAAP) to the making of such determination or calculation; provided that, if such determination orcalculation involves more than one element (including for the calculation of a financial ratio), such selected accountingstandard shall be consistently applied to each element of such determination or calculation (other than, for the avoidance ofdoubt, in relation to Section 4.19); and (ii) any adverse impact directly or indirectly relating to or resulting from theimplementation of IFRS 15 (Revenue from Contracts with Customers) and any successor standard thereto (or any equivalentmeasure under GAAP) shall be disregarded with respect to all ratios, calculations and determinations based upon IFRS to becalculated or made, as the case may be, pursuant to this Indenture (other than, for the avoidance of doubt, in relation toSection 4.19).
“Indenture” means this instrument as originally executed or as it may from time to time be supplemented oramended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
“Intercreditor Agreement” means the Intercreditor Agreement entered into on December 7, 2010, as amended andrestated most recently on March 21, 2017 and from time to time among, inter alios, Ardagh Group S.A. and certain of itssubsidiaries and Citibank, N.A., London Branch, in its capacity as security agent thereunder and trustee for the ExistingSecured Notes.
“Interest Payment Date” means the Stated Maturity of an installment of interest on the Notes.
“Interest Rate Agreements” means, in respect of a Person, any interest rate protection agreements and other types ofinterest rate hedging agreements (including, without limitation, interest rate swaps, caps, floors, collars and similaragreements) designed to protect such Person against or manage exposure to fluctuations in interest rates.
“Investment” means, with respect to any Person, any direct or indirect advance, loan or other extension of credit(including guarantees) or capital contribution to (by means of any transfer of cash or other property to others or any paymentfor property or services for the account or use of others), or any purchase, acquisition or ownership by such Person of anyCapital Stock, bonds, notes, debentures or other securities or evidences of Debt issued or owned by, any other Person and allother items that would be classified as investments on a balance sheet prepared in accordance with IFRS. In addition, theportion (proportionate to the Parent Guarantor’s equity interest in such Restricted Subsidiary) of the Fair Market Value ofthe net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an UnrestrictedSubsidiary will be deemed to be an “Investment” that the Parent Guarantor made in such Unrestricted Subsidiary at suchtime. The portion (proportionate to the Parent Guarantor’s equity interest
-16-
in such Restricted Subsidiary) of the Fair Market Value of the net assets of any Unrestricted Subsidiary at the time that suchUnrestricted Subsidiary is designated a Restricted Subsidiary will be considered a reduction in outstanding Investments.“Investments” excludes extensions of trade credit on commercially reasonable terms in accordance with normal tradepractices.
“Investment Grade Status” shall occur when the Notes receive both of the following:
(1) a rating of “BBB-” or higher from S&P; and
(2) a rating of “Baa3” or higher from Moody’s;
or the equivalent of such rating by either such rating organization or, if no rating of Moody’s or S&P then exists, theequivalent of such rating by any other Nationally Recognized Statistical Rating Organization.
“IP Cross License Agreement” means an intellectual property cross license agreement entered into between theParent Guarantor and Trivium Packaging B.V.
“Issue Date” means April 8, 2020.
“Issuers Order” means a written order signed in the name of the Issuers by any Person authorized by a resolution ofthe Board of Directors of each Issuer.
“January 2017 Senior Notes” means the existing $1,000,000,000 aggregate principal amount of 6.000% SeniorNotes and $700,000,000 aggregate principal amount of 6.000% additional Senior Notes due 2025 issued by the Issuers.
“June 2017 Senior Notes” means the existing £400,000,000 aggregate principal amount of 4.750% Senior Notes due2027 issued by the Issuers on June 12, 2017.
“Lien” means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest,hypothecation, assignment for security, standard security, assignation in security claim, or preference or priority or otherencumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned orhereafter acquired. A Person shall be deemed to own subject to a Lien any property which such Person has acquired or holdssubject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retentionagreement.
“March 2017 Secured Notes” means the existing $715,000,000 aggregate principal amount of 4.250% SeniorSecured Notes due 2022 and the existing €750,000,000 aggregate principal amount of 2.750% Senior Secured Notes due2024 issued by the Issuers on March 8, 2017.
“Material Subsidiary” means any Restricted Subsidiary or group of Restricted Subsidiaries (taken together) thatwould be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to theSecurities Act, as such regulation is in effect on the Issue Date, measured, as of the last day of the most recent fiscal quarterfor which financial statements are available or for the four fiscal quarters ended most recently for which financial statementsare available, as the case may be.
“Maturity” means, with respect to any indebtedness, the date on which any principal of such indebtedness becomesdue and payable as therein or herein provided, whether at the Stated Maturity with respect to such principal or by declarationof acceleration, call for redemption or purchase or otherwise.
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
-17-
“Mutual Services Agreement” means the mutual services agreement dated October 31, 2019 among the ParentGuarantor and Trivium Packaging B.V.
“Nationally Recognized Statistical Rating Organization” means a nationally recognized statistical ratingorganization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.
“Net Cash Proceeds” means:
(a) with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including(x) payments in respect of deferred payment obligations when received in the form of, or stock or otherassets when disposed for, cash or Cash Equivalents (except to the extent that such obligations are financedor sold with recourse to the Parent Guarantor or any Restricted Subsidiary) and (y) any cash or CashEquivalents received upon the sale or other disposition of any Designated Non-cash Consideration receivedin any Asset Sale, net of:
(i) brokerage commissions and other fees and expenses (including, without limitation, fees andexpenses of legal counsel, accountants, investment banks and other consultants) related to suchAsset Sale;
(ii) provisions for all taxes paid or payable, or required to be accrued as a liability under IFRS as a resultof such Asset Sale;
(iii) all distributions and other payments required to be made to any Person (other than the ParentGuarantor or any Restricted Subsidiary) owning a beneficial interest in the assets subject to theAsset Sale; and
(iv) appropriate amounts required to be provided by the Parent Guarantor or any Restricted Subsidiary,as the case may be, as a reserve in accordance with IFRS against any liabilities associated with suchAsset Sale and retained by the Parent Guarantor or any Restricted Subsidiary, as the case may be,after such Asset Sale, including, without limitation, pension and other post-employment benefitliabilities, liabilities related to environmental matters and liabilities under any indemnificationobligations associated with such Asset Sale, all as reflected in an Officer’s Certificate delivered tothe Trustee; and
(b) with respect to any capital contributions, issuance or sale of Capital Stock or options, warrants or rights topurchase Capital Stock, or debt securities or Capital Stock that have been converted into or exchanged forCapital Stock as referred to in Section 4.08, the proceeds of such issuance or sale in the form of cash or CashEquivalents, payments in respect of deferred payment obligations when received in the form of, or stock orother assets when disposed of for, cash or Cash Equivalents (except to the extent that such obligations arefinanced or sold with recourse to the Parent Guarantor or any Restricted Subsidiary), net of attorney’s fees,accountant’s fees and brokerage, consultation, underwriting and other fees and expenses actually incurred inconnection with such issuance or sale and net of taxes paid or payable as a result thereof.
“Offering Memorandum” means the confidential final offering memorandum of the Issuers, dated April 3, 2020relating to the Notes.
-18-
“Officer’s Certificate” means a certificate signed by an officer of the Parent Guarantor, either Issuer, a Guarantor ora Surviving Entity, as the case may be, and delivered to the Trustee.
“Opinion of Counsel” means a written opinion from legal counsel. The counsel may be an employee of or counsel tothe Issuers.
“Pari Passu Debt” means (a) any Debt of the applicable Issuer that ranks equally in right of payment with the Notesor (b) with respect to any Guarantee, any Debt that ranks equally in right of payment to such Guarantee.
“Parties” means the Issuers, the Parent Guarantor, the Trustee, the Principal Paying Agent and the Security Agentand any other party from time to time hereto (each, a “Party”).
“Permitted Collateral Lien” means the following types of Liens:
(a) Liens securing the Notes issued on the Issue Date, the Existing Secured Notes and, in each case, anyPermitted Refinancing Debt incurred to refinance any of the foregoing;
(b) Liens on the Collateral to secure Debt permitted under Section 4.06; provided that the assets and propertiessecuring such Debt will also secure the Notes on a first ranking basis; and provided, further, that, followingthe incurrence of such Debt secured by such Liens on the Collateral and giving effect to the application ofthe proceeds thereof, on a pro forma basis, the Consolidated Secured Debt Leverage Ratio for the four fullfiscal quarters for which financial statements are available immediately preceding the incurrence of suchDebt, taken as one period, would be less than 3.50 to 1.0;
(c) Liens on the Collateral to secure Debt permitted under clauses (ii), (iv), (v) (to the extent such guarantee isin respect of Debt otherwise permitted to be secured and is specified in this definition of “PermittedCollateral Liens”), (vi), (viii), (ix),(x), (xv), (xviii) and (xix) in Section 4.06(b) (provided, however, that atthe time of incurrence of such Debt secured by such Liens on the Collateral and giving effect to theapplication of the proceeds thereof, on a pro forma basis, (1) the Consolidated Secured Debt Leverage Ratiofor the four fiscal quarters for which financial statements are available immediately preceding the incurrenceof such Debt, taken as one period, would be less than 3.50 to 1.0 or (2) the Consolidated Secured DebtLeverage Ratio of the Parent Guarantor and its Restricted Subsidiaries would not be greater than it wasimmediately prior to giving effect to such acquisition or other transaction), Section 4.06(b)(xx) and Section4.06(b)(xxi);
(d) Liens on Collateral to secure Debt permitted under Section 4.06(b)(xiii); provided that such Liens do notextend to assets other than the accounts receivable (and related assets) that are the subject of the relatedPermitted Receivables Financing;
(e) Liens of the type described in clauses (g), (h), (i), (j), (k), (l), (m), (n), (o), (q), (r) and (v) of the definition of“Permitted Liens”; and
(f) any extension, renewal or replacement, in whole or in part, of any Lien described in the foregoingclauses (a) through (e); provided that any such extension, renewal or replacement will be of the samepriority and be no more restrictive in any material respect than the Lien so extended, renewed or replacedand will not extend in any material respect to any additional property or assets.
-19-
“Permitted Debt” has the meaning given to such term under Section 4.06(b).
“Permitted Holders” means (a) Yeoman Capital S.A., (b) any of Paul Coulson, Brendan Dowling, Houghton Fry,Edward Kilty, John Riordan or Niall Wall, and any trust created for the benefit of one or more of the foregoing or theirrespective natural person Affiliates, or the estate, executor, administrator, committee or beneficiaries of any thereof, and(c) any of their respective Affiliates.
“Permitted Investments” means any of the following:
(a) Investments in cash or Cash Equivalents;
(b) intercompany Debt to the extent permitted under clause (iv) of the definition of “Permitted Debt”;
(c) Investments in (i) the form of loans borrowed by or advances to, or debt securities issued by, the ParentGuarantor, (ii) a Restricted Subsidiary or (iii) another Person if as a result of such Investment such otherPerson becomes a Restricted Subsidiary or such other Person is merged or consolidated with or into, ortransfers or conveys all or substantially all of its assets to, the Parent Guarantor or a Restricted Subsidiary;
(d) Investments made by the Parent Guarantor or any Restricted Subsidiary as a result of or retained inconnection with an Asset Sale that does not violate Section 4.09;
(e) expenses or advances to cover payroll, travel, entertainment, moving, other relocation and similar matters;
(f) Investments in the Notes and the Existing Ardagh Bonds;
(g) Investments existing at the Issue Date and any Investment consisting of an extension, modification orrenewal of any Investment existing on, or made pursuant to a binding commitment existing on, the IssueDate; provided that the amount of any such Investment may be increased as required by the terms of suchInvestment existing on the Issue Date;
(h) Investments in Commodity Hedging Agreements, Interest Rate Agreements and Currency Agreementspermitted under Section 4.06(b)(viii), Section 4.06(b)(ix) and Section 4.06(b)(x);
(i) Investments made in the ordinary course of business, the Fair Market Value of which in the aggregate doesnot exceed $15,000,000 in any fiscal year in any transaction or series of related transactions;
(j) loans and advances (or guarantees to third-party loans) to directors, officers or employees of the ParentGuarantor or any Restricted Subsidiary made in the ordinary course of business and consistent with theParent Guarantor’s past practices or past practices of the Restricted Subsidiaries, as the case may be, in anamount outstanding not to exceed at any one time the greater of $30,000,000 and 0.5% of Total Assets;
(k) Investments in a Person to the extent that the consideration therefor consists of the issue and sale (other thanto any Subsidiary) of shares of the Parent Guarantor’s Qualified Capital Stock or Deeply SubordinatedFunding or the net proceeds thereof (other than any Excluded Contribution or the proceeds of anyContribution Debt); provided that the net
-20-
proceeds of such sale have been excluded from, and shall not have been included in, the calculation of theamount determined under clause (b)(iii)(B) of Section 4.08;
(l) pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course ofbusiness;
(m) Investments of the Parent Guarantor or the Restricted Subsidiaries described under item (v) to the proviso tothe definition of “Debt”;
(n) Investments, the amount of which, measured by reference to the Fair Market Value of each such Investmenton the date it was made, not to exceed the sum of (x) the greater of $300,000,000 and 4.0% of Total Assetsin the aggregate outstanding at any one time and (y) the sum of (i) the aggregate net after-tax amountreturned in cash or through interest payments, principal payments, dividends or other distributions orpayments on account of such Investment and (ii) the net after-tax cash proceeds received by the ParentGuarantor or any Restricted Subsidiary from the disposition of all or any portion of such Investments (otherthan to a Subsidiary); provided, however, that such net after-tax amounts have not been included inConsolidated Adjusted Net Income for the purpose of calculating clause (b)(iii)(A) of Section 4.08;
(o) Investments resulting from the acquisition of a Person that at the time of such acquisition held instrumentsconstituting Investments that were not acquired in contemplation of the acquisition of such Person;
(p) Investments by the Parent Guarantor or any Restricted Subsidiary in connection with a PermittedReceivables Financing;
(q) loans or advances to (i) directors, officers or employees of the Parent Guarantor or any Restricted Subsidiaryto pay for the purchase of Capital Stock of the Parent Guarantor or any direct or indirect parent companythereof pursuant to management equity plans or similar management or employee benefit arrangement or(ii) stock option plans, trust and similar asset pools to pay for the purchase of Capital Stock of the ParentGuarantor or any direct or indirect parent company thereof not to exceed the greater of $30,000,000 and0.5% of Total Assets in the aggregate outstanding at any one time;
(r) (i) stock, obligations or securities received in satisfaction of judgments, foreclosure of liens, or settlement ofdebts or arbitration awards, and (ii) any Investments received in compromise of obligations of such personsincurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course ofbusiness, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy orinsolvency of any trade creditor or customer;
(s) any Investments received in comprise or resolution of litigation, arbitration or other disputes;
(t) any guarantee of Debt permitted to be incurred by Section 4.06, performance guarantees and contingentobligations incurred in the ordinary course of business and creation of Liens on the assets of the ParentGuarantor or any Restricted Subsidiary in compliance with Section 4.07;
-21-
(u) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance withSection 4.10(b) (except transactions described in sub-clauses (ii), (v) and (x) thereof);
(v) advances, loans, rebates and extensions of credit (including the creation of receivables) to suppliers,customers and vendors, and advance payment made and deferred consideration and performance guarantees,in each case in the ordinary course of business; and
(w) any Investment in any Subsidiary or any joint venture in connection with intercompany cash managementarrangements or related activities arising in the ordinary course of business.
“Permitted Joint Venture” means any joint venture or similar combinations or other transaction pursuant to whichthe Parent Guarantor or any Restricted Subsidiary enters into, acquires or subscribes for any shares, stock, securities or otherinterest in or transfers any assets to any joint venture; provided, however, that the primary business of such joint venture is aSimilar Business.
“Permitted Liens” means the following types of Liens:
(a) Liens existing as of the Issue Date;
(b) Liens on any property or assets of the Parent Guarantor or a Restricted Subsidiary to secure Debt permittedto be incurred pursuant to Section 4.06(b)(ii);
(c) Liens on assets given, disposed of, or otherwise transferred in connection with a Permitted ReceivablesFinancing permitted to be incurred pursuant to Section 4.06(b)(xiii);
(d) Liens on any property or assets of a Restricted Subsidiary granted in favor of the Parent Guarantor or anyRestricted Subsidiary;
(e) Liens on any of the Parent Guarantor’s or any Restricted Subsidiary’s property or assets securing the Notesor any Guarantees;
(f) any interest or title of a lessor under any Capitalized Lease Obligation and Liens to secure Debt (includingCapitalized Lease Obligations) permitted under Section 4.06 covering only the assets acquired with suchDebt;
(g) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale ofgoods entered into by the Parent Guarantor or any Restricted Subsidiary in the ordinary course of business;
(h) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen,employees, pension plan administrators or other like Liens arising in the ordinary course of business andwith respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings orLiens arising solely by virtue of any statutory or common law provisions relating to attorney’s liens orbankers’ liens, rights of set-off or similar rights and remedies as to deposit accounts or other fundsmaintained with a creditor depositary institution;
(i) Liens for taxes, assessments, government charges or claims that are not yet delinquent or that are beingcontested in good faith by appropriate proceedings for which a reserve or
-22-
other appropriate provision, if any, as shall be required in conformity with IFRS shall have been made;
(j) Liens incurred or deposits made to secure the performance of tenders, bids or trade or government contracts,or to secure leases, statutory or regulatory obligations, surety or appeal bonds, performance bonds or otherobligations of a like nature incurred in the ordinary course of business (other than obligations for thepayment of money);
(k) zoning restrictions, easements, licenses, reservations, title defects, rights of others for rights-of-way, utilities,sewers, electrical lines, telephone lines, telegraph wires, restrictions, encroachments and other similarcharges, encumbrances or title defects and incurred in the ordinary course of business that do not in theaggregate materially interfere with in any material respect the ordinary conduct of the business of the ParentGuarantor and its Restricted Subsidiaries on the properties subject thereto, taken as a whole;
(l) Liens arising by reason of any judgment, decree or order of any court so long as such Lien is adequatelybonded and any appropriate legal proceedings that may have been duly initiated for the review of suchjudgment, decree or order shall not have been finally terminated or the period within which suchproceedings may be initiated shall not have expired;
(m) Liens on property existing at the time such property is acquired or on property of, or on shares of CapitalStock or Debt of, any Person existing at the time such Person is acquired by, merged with or into orconsolidated with, the Parent Guarantor or any Restricted Subsidiary; provided that such Liens (i) do notextend to or cover any property or assets of the Parent Guarantor or any Restricted Subsidiary other than(A) the property or assets acquired or (B) the property or assets of the Person acquired, merged with or intoor consolidated with the Parent Guarantor or Restricted Subsidiary and (ii) were created prior to, and not inconnection with or in contemplation of such acquisition, merger or consolidation;
(n) Liens securing the Parent Guarantor’s or any Restricted Subsidiary’s obligations under Commodity HedgingAgreements, Interest Rate Agreements or Currency Agreements permitted under Sections 4.06(b)(viii),4.06(b)(ix) and 4.06(b)(x) or any collateral for the Debt to which such Commodity Hedging Agreements,Interest Rate Agreements or Currency Agreements relate;
(o) Liens incurred or deposits made in the ordinary course of business in connection with workers’compensation, unemployment insurance and other types of social security or other insurance (includingunemployment insurance) or deposits to secure public or statutory obligations of such Person or deposits ofcash or government bonds to secure performance, bid, surety or appeal bonds and completion bonds andguarantees to which such Person is a party, or deposits as security for contested taxes or import duties or forthe payment of rent, in each case incurred in the ordinary course of business;
(p) Liens incurred in connection with a cash management program established in the ordinary course ofbusiness;
(q) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, orwarranty requirements of the Parent Guarantor or any Restricted Subsidiary, including rights of offset andset-off;
-23-
(r) any extension, renewal or replacement, in whole or in part, of any Permitted Lien; provided that any suchextension, renewal or replacement shall not extend in any material respect to any additional property orassets;
(s) Liens securing Debt incurred to refinance Permitted Refinancing Debt permitted to be incurred under thisIndenture; provided that any such Lien shall not extend to or cover materially any assets not securing theDebt so refinanced plus improvements and accessions to such property and assets and proceeds anddistributions thereof;
(t) purchase money Liens to finance property or assets of the Parent Guarantor or any Restricted Subsidiaryacquired in the ordinary course of business; provided that the related purchase money Debt shall not exceedthe cost of such property or assets and shall not be secured by any property or assets of the Parent Guarantoror any Restricted Subsidiary other than the property and assets so acquired;
(u) Permitted Collateral Liens;
(v) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customsduties in connection with the importation of goods;
(w) Liens over the Capital Stock of an Unrestricted Subsidiary or a Permitted Joint Venture that secures Debt ofsuch Unrestricted Subsidiary or Permitted Joint Venture;
(x) Liens incurred in the ordinary course of business of the Parent Guarantor or any Restricted Subsidiary withrespect to an amount that does not exceed the greater of $225,000,000 and 3.0% of Total Assets at any onetime outstanding and any replacements, extensions, modifications or renewals thereof;
(y) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing suchPerson’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of businessfor the account of such Person to facilitate the purchase, shipment or storage of such inventory or othergoods;
(z) leases, licenses, subleases and sublicenses of assets in the ordinary course of business;
(aa) Liens on property or assets under construction (and related rights) in favor of a contractor or developer orarising from progress or partial payments by a third-party relating to such property or assets;
(bb) Liens on equipment of the Issuer or any Restricted Subsidiary granted in the ordinary course of business;
(cc) customary Liens on and in respect of deposits required in connection with the purchase of property,equipment and inventory, in each case incurred in the ordinary course of business;
(dd) (i) Liens on escrowed proceeds for the benefit of the related holders of debt securities or other Debt (or theunderwriters or arrangers thereof) or (ii) Liens on cash set aside at the time of the incurrence of any Debt orgovernment securities purchased with such cash, in either case, to the extent such cash or governmentsecurities prefund the payment of interest on such Debt and are held in escrow accounts or similararrangements to be applied for such purpose; and
-24-
(ee) Liens on assets or property of a Restricted Subsidiary that is not a Subsidiary Guarantor securing Debt andother Obligations of any Restricted Subsidiary that is not a Subsidiary Guarantor.
“Permitted Receivables Financing” means any financing pursuant to which the Parent Guarantor or any RestrictedSubsidiary may sell, convey or otherwise transfer to any other Person or grant a security interest in, any accounts receivable(and related assets) in an aggregate principal amount equivalent to the Fair Market Value of such accounts receivable (andrelated assets) of the Parent Guarantor or any Restricted Subsidiary; provided that (a) the covenants, events of default andother provisions applicable to such financing shall be customary for such transactions and shall be on market terms (asdetermined in good faith by the Parent Guarantor’s Board of Directors) at the time such financing is entered into, (b) theinterest rate applicable to such financing shall be a market interest rate (as determined in good faith by the ParentGuarantor’s Board of Directors) at the time such financing is entered into, and (c) such financing shall be non-recourse tothe Parent Guarantor or any Restricted Subsidiary except to a limited extent customary for such transactions.
“Permitted Refinancing Debt” means any renewals, extensions, substitutions, refinancings or replacements (each,for purposes of this definition and Section 4.06(b)(xiv), a “refinancing”) of any Debt of the Parent Guarantor or a RestrictedSubsidiary or pursuant to this definition, including any successive refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if incurred with original issue discount, an aggregate issueprice) not in excess of the sum of (i) the aggregate principal amount (or if incurred with original issuediscount, the aggregate accreted value) then outstanding of the Debt being refinanced and (ii) an amountnecessary to pay any fees and expenses, including premiums and defeasance costs, related to suchrefinancing;
(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being refinanced;
(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being refinanced;
(d) the new Debt is not senior in right of payment to the Debt that is being refinanced; and
(e) such Debt is unsecured or is secured by a Silent Second Lien, if the Debt being refinanced is unsecured.
“Permitted Reorganization” means any amalgamation, demerger, merger, voluntary liquidation, consolidation,reorganization, winding up or corporate reconstruction, directly or indirectly, in one or a series of related transactionsinvolving the Parent Guarantor or any of its Restricted Subsidiaries (a “Reorganization”) that is made on a solvent basis;provided that any payments or assets distributed in connection with such Reorganization remain within the applicable Issuerand its Restricted Subsidiaries. For the avoidance of doubt, the term “Permitted Reorganization” shall include the closure ofbank accounts and the conversion of debt instruments into Capital Stock or other equity instruments.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, jointstock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
-25-
“Preferred Stock” means, with respect to any Person, Capital Stock of any class or classes (however designated) ofsuch Person which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon anyvoluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class of such Personwhether now outstanding, or issued after the Issue Date, and including, without limitation, all classes and series of preferredor preference stock of such Person.
“pro forma” means, with respect to any calculation made or required to be made pursuant to the terms of thisIndenture, a calculation made in good faith by a responsible financial or accounting officer of the Parent Guarantor;provided that any such calculation shall (x) give effect to any realized or expected synergies, cost efficiencies and costsavings relating to, or directly or indirectly resulting from, or associated with, any Asset Sale, Investment, acquisition,reorganization, restructuring or operational improvement initiative that has occurred during the period included in thecalculation or any prior period or would reasonably be expected to occur in connection with an acquisition or othertransaction in relation to which “pro forma” effect is given, as if such synergies, cost efficiencies or cost savings had beeneffective throughout the period included in the calculation and (y) eliminate any extraordinary, exceptional, unusual ornonrecurring loss, expense or charge (including severance, relocation, plant closure, operational improvement orrestructuring costs or reserves therefor) relating to, or directly or indirectly resulting from, or incurred in connection with,any Asset Sale, Investment, acquisition, reorganization, restructuring or operational improvement initiative, or offering ofdebt or equity securities.
“Property” means, with respect to any Person, any interest of such Person in any kind of property or asset, whetherreal, personal or mixed, or tangible or intangible, including Capital Stock, and other securities of, any other Person. Forpurposes of any calculation required pursuant to this Indenture, the value of any Property shall be its Fair Market Value.
“Public Equity Offering” means an offer and sale of Qualified Capital Stock that are listed on an internationalsecurities exchange or publicly offered (which shall include an offering pursuant to Rule 144A and/or Regulation S underthe Securities Act to professional market investors or similar persons).
“QIB” means a “Qualified Institutional Buyer” as defined in Rule 144A.
“Qualified Capital Stock” of any Person means any and all Capital Stock of such Person other than RedeemableCapital Stock.
“Record Date” for the interest payable on any Interest Payment Date means the Business Day immediatelypreceding such Interest Payment Date.
“Redeemable Capital Stock” means any class or series of Capital Stock that, either by its terms, by the terms of anysecurity into which it is convertible or exchangeable, or by contract or otherwise, is, or upon the happening of an event orpassage of time would be, required to be redeemed prior to the final Stated Maturity of the Notes or is redeemable at theoption of the holder thereof at any time prior to such final Stated Maturity (other than upon a Change of Control of theParent Guarantor in circumstances in which the Holders would have similar rights), or is convertible into or exchangeablefor debt securities at any time prior to such final Stated Maturity; provided that any Capital Stock that would constituteQualified Capital Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase orredeem such Capital Stock upon the occurrence of any “asset sale” or “change of control” occurring prior to the StatedMaturity of the Notes will not constitute Redeemable Capital Stock if the “asset sale” or “change of control” provisionsapplicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained inSection 4.09 and Section 4.11 and such Capital Stock specifically provides that such Person will not repurchase or redeemany such stock pursuant to such
-26-
provision prior to the Parent Guarantor’s or the Issuers’ repurchase of such Notes as are required to be repurchased pursuantto Section 4.09 and Section 4.11.
“Redemption Date” means, when used with respect to any Note to be redeemed, in whole or in part, the date fixedfor such redemption by or pursuant to this Indenture.
“Redemption Price” means, when used with respect to any Note to be redeemed, the price at which it is to beredeemed pursuant to this Indenture.
“Refinance” means, with respect to any Debt, to amend, modify, extend, substitute, renew, replace, refund, prepay,repay, repurchase, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. “Refinanced”and “Refinancing” shall have correlative meanings.
“Regulation S” means Regulation S under the Securities Act (including any successor regulation thereto), as it maybe amended from time to time.
“Replacement Assets” means properties and assets that replace the properties and assets that were the subject of anAsset Sale or properties and assets that are, or will be, used in the Parent Guarantor’s business or in that of the RestrictedSubsidiaries or in a Similar Business or any and all businesses that in the good faith judgment of the Board of Directors ofthe Parent Guarantor are reasonably related, and, in each case, any capital expenditure relating thereto.
“Restricted Investment” means any Investment other than a Permitted Investment.
“Restricted Subsidiary” means any Subsidiary of the Parent Guarantor other than an Unrestricted Subsidiary.
“Reversion Date” means, after the Notes have achieved Investment Grade Status, the date, if any, that such Notesshall cease to have such Investment Grade Status.
“Rule 144” means Rule 144 under the Securities Act (including any successor regulation thereto), as it may beamended from time to time.
“Rule 144A” means Rule 144A under the Securities Act (including any successor regulation thereto), as it may beamended from time to time.
“S&P” means Standard and Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. and itssuccessors.
“Securities Act” means the U.S. Securities Act of 1933, as amended, or any successor statute, and the rules andregulations promulgated by the Commission thereunder.
“Security Agent” means Citibank, N.A., London Branch, and its successors, as security agent under the IntercreditorAgreement, and any additional security agent or sub-agent.
“Security Documents” means, collectively, all security agreements, mortgages, standard securities, deeds of trust,pledges, collateral assignments and other agreements or instruments evidencing or creating any security entered into by theParent Guarantor or any of its Subsidiaries pursuant to Section 4.14 of this Indenture in favor of the Security Agent or anyHolders in any or all of the Collateral, the Intercreditor Agreement and any Additional Intercreditor Agreement, in each caseas amended from time to time in accordance with their terms and the terms of this Indenture.
-27-
“Security Interests” means security interests in the Collateral securing the Notes and the Guarantees.
“Senior Holdco Notes” means the existing $1,130,000,000 aggregate principal amount of 6.500%/7.250% SeniorSecured Toggle Notes due 2027 and €1,000,000,000 aggregate principal amount of 5.000%/5.750% Senior Secured ToggleNotes due 2027 issued by ARD Finance S.A. on November 20, 2019 and any replacements or refinancings thereof, directlyor indirectly.
“Silent Second Liens” means Liens granted in favor of Debt (the “second priority Debt”) on property or assets of theParent Guarantor or any of its Restricted Subsidiaries that:
(a) are by law or under the terms of an intercreditor agreement reasonably acceptable to the Trustee second inpriority to first priority Liens on such property or assets; and
(b) are subject to arrangements in form and substance reasonably satisfactory to the Trustee which provide(x) that any payments on enforcement of the Liens in such property or assets (other than payments to thesecurity agent, trustee, administrative agent or other representative of the holders of the second priorityDebt) to the holders of the second priority Debt (or their representatives) will only be made once the Debtsecured by the first priority Liens on such property or assets have been satisfied in full and (y) that theholders of the second priority Debt (and their representatives) will have no ability to cause the enforcementof, or direct the relevant security agent in the enforcement of, the Liens in such property or assets until theDebt secured by the first priority Liens on such property or assets have been satisfied in full.
“Similar Business” means any business, service or other activity engaged in by the Parent Guarantor or anyRestricted Subsidiaries of the Parent Guarantor on the Issue Date and any business, service or other activities that arereasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of, thebusinesses in which the Parent Guarantor and the Restricted Subsidiaries are engaged on the Issue Date or any business that,in the good faith business judgment of the Parent Guarantor, constitutes a reasonable diversification of business conductedby the Parent Guarantor and its Subsidiaries.
“Stated Maturity” means, when used with respect to any note or any installment of interest thereon, the datespecified in such note as the fixed date on which the principal of such note or such installment of interest, respectively, isdue and payable, and, when used with respect to any other indebtedness, means the date specified in the instrumentgoverning such indebtedness as the fixed date on which the principal of such indebtedness, or any installment of interestthereon, is due and payable.
“Subordinated Debt” means Debt of either Issuer or any of the Guarantors (other than the Existing Ardagh Bonds,the Notes and any Permitted Refinancing Debt in respect of the foregoing) that is subordinated in right of payment to theNotes or the Guarantees of such Guarantors, as the case may be; provided that no Debt shall be deemed to be subordinatedin right of payment to any other Debt solely by virtue of being unsecured or by virtue of being secured on a junior Lienbasis.
“Subsidiary” means, with respect to any Person:
(a) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person,by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof; and
-28-
(b) any other Person (other than a corporation), including, without limitation, a partnership, limited liabilitycompany, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or suchPerson and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, hasat least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof(or other Person performing similar functions).
“Subsidiary Guarantee” means any Guarantee given by a Subsidiary Guarantor.
“Subsidiary Guarantors” means any Restricted Subsidiary that provides a Guarantee, in each case until it is releasedfrom its obligations under its Guarantee and this Indenture in accordance with the terms of this Indenture.
“Total Assets” means the consolidated total assets of the Parent Guarantor and its Restricted Subsidiaries as shownon the most recent consolidated balance sheet of the Parent Guarantor.
“Total Inventories” means, as of any date, the amount of raw materials, packaging materials, work-in-progress andfinished goods of the Parent Guarantor and the Restricted Subsidiaries, net of any provisions in respect of the foregoingitems, in each case as of the date of the most recent consolidated balance sheet of the Parent Guarantor which has beendelivered in accordance with Section 4.19.
“Total Receivables” means, as of any date, (a) the amount of accounts receivable of the Parent Guarantor and theRestricted Subsidiaries plus (b) the amount of accounts receivable of the Parent Guarantor and the Restricted Subsidiariesthat has been sold, conveyed or otherwise transferred in Permitted Receivables Financings and is outstanding, in each case,as of the date of the most recent consolidated balance sheet of the Parent Guarantor which has been delivered in accordancewith Section 4.19.
“Transaction Agreement” means the transaction agreement dated July 14, 2019, among Ardagh Group S.A.,Element Holdings II L.P. and Trivium Packaging B.V.
“Treasury Rate” means, as of any Redemption Date, the weekly average rounded to the nearest 1/l00th of apercentage point (for the most recently completed week for which such information is available as of the date that is twoBusiness Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constantmaturity (as compiled and published in Federal Reserve Statistical Release H.15 with respect to each applicable day duringsuch week or, if such Statistical Release is no longer published, any publicly available source of similar market data) mostnearly equal to the period from the Redemption Date to April 30, 2022; provided, however, that if the period from theRedemption Date to April 30, 2022 is not equal to the constant maturity of a United States Treasury security for which sucha yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year)from the weekly average yields of United States Treasury securities for which such yields are given, except that if the periodfrom the Redemption Date to April 30, 2022 is less than one year, the weekly average yield on actually traded United StatesTreasury securities (or other comparable benchmark) adjusted to a constant maturity of one year shall be used.
“Trivium Transactions” means (i) the disposition of the Parent Guarantor’s and its subsidiaries’ metal food andspecialty business to Trivium Packaging B.V. completed on October 31, 2019, (ii) the receipt by the Parent Guarantor andits subsidiaries of the relevant cash consideration in connection to the disposition and (iii) the use of proceeds therefrom.
“Trust Officer” means any officer within the agency and corporate trust group, division or section of the Trustee(however named, or any successor group of the Trustee) and also means, with respect to any
-29-
particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of andfamiliarity with the particular subject.
“Unrestricted Subsidiary” means:
(a) any Subsidiary of the Parent Guarantor that at the time of determination is an Unrestricted Subsidiary (asdesignated by the Parent Guarantor’s Board of Directors pursuant to Section 4.17);
(b) any Subsidiary of an Unrestricted Subsidiary; and
(c) Enville Limited, Ardagh Containers Holdings Limited, UniMould S.A., Ardagh Packaging Finance UKLimited, Recan GmbH and Recan UK Limited.
“U.S. dollars” or “$” means the lawful currency of the United States of America.
“U.S. Government Securities” means direct obligations of, or obligations guaranteed by, the United States ofAmerica, and the payment for which the United States of America pledges its full faith and credit.
“Voting Stock” means any class or classes of Capital Stock pursuant to which the holders thereof have the generalvoting power under ordinary circumstances to elect at least a majority of the Board of Directors, managers or trustees (orPersons performing similar functions) of any Person (irrespective of whether or not, at the time, stock of any other class orclasses shall have, or might have, voting power by reason of the happening of any contingency).
“Wholly Owned Restricted Subsidiary” means any Restricted Subsidiary, all of the outstanding Capital Stock (otherthan directors’ qualifying shares or shares of Restricted Subsidiaries required to be owned by third parties pursuant toapplicable law) of which are owned by the Parent Guarantor or by one or more other Wholly Owned Restricted Subsidiariesor by the Parent Guarantor and one or more other Wholly Owned Restricted Subsidiaries.
-30-
SECTION 1.02. Other Definitions.
Term Defined in Section
4.12(a)Recitals4.13(a)Recitals2.0312.084.11(a)4.11(a)4.11(a)8.032.12Definition of IFRS6.01(a)4.09(b)4.09(c)2.01(c)12.01(a)4.06(a)4.06(a)12.15PreamblePreamble8.02Recitals10.01(a)RecitalsPreamble2.01(c)2.034.06(b)4.08(c)Preamble2.032.01(b)4.08(c)(xi)4.12(a)12.142.01(b)4.08(a)4.132.035.01(b)(i)4.224.12(a)2.03PreamblePreamble
“Additional Amounts”“Additional Notes”“Additional Intercreditor Agreement”“Additional Notes”“Agents”“Authorized Agent”“Change of Control Offer”“Change of Control Purchase Date”“Change of Control Purchase Price”“covenant defeasance”“Defaulted Interest”“Election Option”“Event of Default”“Excess Proceeds”“Excess Proceeds Offer”“Global Notes”“Holdings USA Disposition”“incur”“incurrence”“Interest Amount”“Irish Issuer”“Issuers”“legal defeasance”“Notes”“Obligations”“Original Notes”“Parent Guarantor”“Participants”“Paying Agent”“Permitted Debt”“Permitted Payments”“Principal Paying Agent”“Registrar”“Regulation S Global Note”“Relevant Fiscal Year”“Relevant Taxing Jurisdiction”“Required Currency”“Restricted Global Note”“Restricted Payment”“Security Confirmations”“Security Register”“Surviving Entity”“Suspension Event”“Taxes”“Transfer Agent”“Trustee”“U.S. Issuer”
-31-
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with IFRS;
(iii) “or” is not exclusive;
(iv) “including” or “include” means including or include without limitation;
(v) words in the singular include the plural and words in the plural include the singular;
(vi) unsecured or unguaranteed Debt shall not be deemed to be subordinate or junior to secured orguaranteed Debt merely by virtue of its nature as unsecured or unguaranteed Debt; and
(vii) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indentureas a whole and not to any particular Article, Section, clause or other subdivision.
SECTION 1.04. Financial Calculations. In the event that the Parent Guarantor or any of its RestrictedSubsidiaries (w) incurs Debt to finance an acquisition (including an acquisition of assets) or other transaction or (x) assumesDebt of Persons that are, or secured by assets that are, acquired by the Parent Guarantor or any of its Restricted Subsidiariesor merged into, amalgamated or consolidated with, the Parent Guarantor or any of its Restricted Subsidiaries in accordancewith the terms of this Indenture or (y) commits to an acquisition or transaction pursuant to which it may incur AcquiredDebt or (z) is subject to a Change of Control, the date of determination of Consolidated Adjusted Net Income, theConsolidated Fixed Charge Coverage Ratio, the Consolidated Secured Debt Leverage Ratio or the Consolidated LeverageRatio, as applicable, shall, at the option of the Parent Guarantor, be (a) the date that a definitive agreement, put option orsimilar arrangement for such acquisition, transaction, merger, amalgamation, consolidation or Change of Control is enteredinto and the Consolidated Adjusted Net Income, the Consolidated Fixed Charge Coverage Ratio, the Consolidated SecuredDebt Leverage Ratio or the Consolidated Leverage Ratio, as applicable, shall be calculated giving pro forma effect to suchacquisition, Change of Control and the other transactions to be entered into in connection therewith (including anyincurrence of Debt and the use of proceeds thereof) consistent with the definitions of “Consolidated Adjusted Net Income”,“Consolidated Fixed Charge Coverage Ratio” and “pro forma”, as applicable, and, for the avoidance of doubt, (A) if anysuch ratios are exceeded as a result of fluctuations in such ratio (including due to fluctuations in the Consolidated AdjustedNet Income of the Parent Guarantor or the target company) at or prior to the consummation of the relevant acquisition orChange of Control, such ratios will not be deemed to have been exceeded as a result of such fluctuations solely for purposesof determining whether such acquisition and any related transactions are permitted hereunder and (B) such ratios shall not betested at the time of consummation of such acquisition, transaction, merger, amalgamation or consolidation; provided that ifthe Parent Guarantor elects to have such determinations occur at the time of entry into such definitive agreement, put optionor similar arrangement, (i) any such transaction shall be deemed to have occurred on the date the definitive agreement, putoption or similar arrangement is entered into and to be outstanding thereafter for purposes of calculating any ratios underthis Indenture after the date of such agreement and before the earlier of the date of consummation of such acquisition or thedate such agreement is terminated or expires without consummation of such acquisition and (ii) to the extent any covenantbaskets were utilized in satisfying any covenants, such baskets shall be deemed utilized until the earlier of the date ofconsummation of such acquisition or the date such agreement is terminated or expires without consummation of suchacquisition, but any calculation of Consolidated Adjusted Net Income for purposes
-32-
of other incurrences of Debt or Liens or making of Restricted Payments (not related to such acquisition) shall not reflectsuch acquisition until it has been consummated unless such other incurrence of Debt or Liens is conditional or contingent onthe occurrence of such acquisition or Change of Control or (b) the date such Debt is borrowed or assumed or such Change ofControl occurs.
SECTION 1.05. Agency of Irish Issuer. The U.S. Issuer irrevocably appoints the Irish Issuer as its agent for allpurposes relevant to this Indenture, including the giving and receipt of notices and execution and delivery of all documents,instruments, and certificates contemplated herein (including, without limitation, execution and delivery to the Trustee of anIssuers Order) and all modifications hereto. Any acknowledgment, consent, direction, certification, or other action whichmight otherwise be valid or effective only if given or taken by all Issuers or either Issuer or acting singly, shall be valid andeffective if given or taken only by the Irish Issuer, whether or not the U.S. Issuer joins therein, and the Trustee, other Agentsand the Holders shall have no duty or obligation to make further inquiry with respect to the authority of the Irish Issuerunder this Section 1.05; provided that nothing in this Section 1.05 shall limit the effectiveness of, or the right of the Trustee,other Agents and the Holders to rely upon, any notice (including, without limitation, an Issuers Order), document,instrument, certificate, acknowledgment, consent, direction, certification or other action delivered by either Issuer pursuantto this Indenture.
ARTICLE 2 THE NOTES
SECTION 2.01. The Notes.
(a) Form and Dating. The Notes and the Trustee’s (or the authenticating agent’s) certificate of authenticationshall be substantially in the form of Exhibit A hereto with such appropriate insertions, omissions, substitutions and othervariations as are required or permitted by this Indenture. The Notes may have notations, legends or endorsements requiredby law, the rules of any securities exchange agreements to which the Issuers are subject, if any, or usage; provided that anysuch notation, legend or endorsement is in form reasonably acceptable to the Issuers. The Issuers shall approve the form ofthe Notes. Each Note shall be dated the date of its authentication. The terms and provisions contained in the form of theNotes shall constitute and are hereby expressly made a part of this Indenture. The Notes shall be issued only in registeredform without coupons and only in minimum denominations of $200,000 in principal amount and any integral multiples of$1,000 in excess thereof.
(b) Global Notes. Notes offered and sold to QIBs in reliance on Rule 144A shall be issued initially in the formof one or more Global Notes substantially in the form of Exhibit A hereto, with such applicable legends as are provided inExhibit A hereto, except as otherwise permitted herein (the “Restricted Global Note”), which shall be deposited on behalf ofthe purchasers of the Notes represented thereby with a custodian for DTC, and registered in the name of DTC or itsnominee, duly executed by the Issuers and authenticated by the Trustee (or its agent in accordance with Section 2.02) ashereinafter provided. The aggregate principal amount of the Restricted Global Note may from time to time be increased ordecreased by adjustments made by the Registrar on Schedule A to the Restricted Global Note and recorded in the SecurityRegister, as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued initially in the form of one or more Global Notessubstantially in the form of Exhibit A hereto, with such applicable legends as are provided in Exhibit A hereto, except asotherwise permitted herein (the “Regulation S Global Note”), which shall be deposited on behalf of the purchasers of theNotes represented thereby with a custodian for DTC, and registered in the name of DTC or its nominee, duly executed bythe Issuers and authenticated by the Trustee (or its agent in accordance with Section 2.02) as hereinafter provided. Theaggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased byadjustments
-33-
made by the Registrar on Schedule A to the Regulation S Global Note and recorded in the Security Register, as hereinafterprovided.
(c) Book-Entry Provisions. This Section 2.01(c) shall apply to the Regulation S Global Notes and the RestrictedGlobal Notes (together, the “Global Notes”) deposited with or on behalf of DTC.
Members of, or participants and account holders in, DTC (“Participants”) shall have no rights under this Indenturewith respect to any Global Note held on their behalf by DTC or by the Trustee or any custodian of DTC or under suchGlobal Note, and DTC or its nominees may be treated by the Issuers, a Guarantor, the Trustee and any agent of the Issuers, aGuarantor or the Trustee as the sole owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing,nothing herein shall prevent the Issuers, a Guarantor, the Trustee or any agent of the Issuers, a Guarantor or the Trustee fromgiving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC, on theone hand, and the Participants, on the other, the operation of customary practices of such persons governing the exercise ofthe rights of a Holder of a beneficial interest in any Global Note.
Subject to the provisions of Section 2.10(b), the registered Holder of a Global Note may grant proxies and otherwiseauthorize any Person, including Participants and Persons that may hold interests through Participants, to take any action thata Holder is entitled to take under this Indenture or the Notes.
Except as provided in Section 2.10, owners of a beneficial interest in Global Notes will not be entitled to receivephysical delivery of certificated Notes.
SECTION 2.02. Execution and Authentication. An authorized member of the Issuers’ boards of directors or anexecutive officer of the Issuers shall sign the Notes on behalf of the Issuers by manual or facsimile signature.
If an authorized member of the Issuers’ boards of directors or an executive officer whose signature is on a Note nolonger holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.
A Note shall not be valid or obligatory for any purpose until an authorized signatory of the Trustee manually signsthe certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticatedunder this Indenture.
The Issuers shall execute and, upon receipt of an Issuers Order, the Trustee shall authenticate (whether itself or viathe authenticating agent) (a) Original Notes, on the date hereof, for original issue up to an aggregate principal amount of$500,000,000 and (b) Additional Notes, from time to time, subject to compliance at the time of issuance of such AdditionalNotes with the provisions of Section 4.06. The Issuers are permitted to issue Additional Notes as part of a further issueunder this Indenture, from time to time; provided that, if any Additional Notes are not fungible with the Original Notes, suchAdditional Notes will have a separate CUSIP number and/or ISIN, if applicable.
The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate the Notes.Unless limited by the terms of such appointment, any such authenticating agent may authenticate Notes whenever theTrustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by any suchagent. An authenticating agent has the same rights as any Registrar, co-Registrar, Transfer Agent or Paying Agent to dealwith the Issuers or an Affiliate of the Issuers.
-34-
The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section 2.02 if theTrustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shalldetermine that such action would expose the Trustee to personal liability to existing Holders.
SECTION 2.03. Registrar, Transfer Agent and Paying Agent. The Issuers shall maintain an office or agency forthe registration of the Notes and of their transfer or exchange (the “Registrar”), an office or agency where Notes may betransferred or exchanged (the “Transfer Agent”), an office or agency where the Notes may be presented for payment (the“Paying Agent” and references to the Paying Agent shall include the Principal Paying Agent) and an office or agency wherenotices or demands to or upon the Issuers in respect of the Notes may be served. The Issuers may appoint one or moreTransfer Agents, one or more co-Registrars and one or more additional Paying Agents.
The Issuers shall maintain a Principal Paying Agent in London, United Kingdom. Either Issuer or any of theirrespective Affiliates may act as Transfer Agent, Registrar, co-Registrar, Paying Agent and agent for service of notices anddemands in connection with the Notes; provided that neither Issuer nor any of their respective Affiliates shall act as PayingAgent for the purposes of Articles Three and Eight and Sections 4.09 and 4.11.
The Issuers hereby appoint Citibank, N.A., London Branch located at 25 Canada Square, London E14 5LB, UnitedKingdom as Transfer Agent, as Principal Paying Agent (the “Principal Paying Agent”) in London, United Kingdom, and asagent for service of notices and demands in connection with the Notes and Citigroup Global Markets Europe AG, at 5thFloor Reuterweg 16, 60323 Frankfurt, Germany, as Registrar. Each hereby accepts such appointments. The Transfer Agent,the Principal Paying Agent and the Registrar and any authenticating agent are collectively referred to in this Indenture as the“Agents”. The roles, duties and functions of the Agents are of a mechanical nature and each Agent shall only perform thoseacts and duties as specifically set out in this Indenture and no other acts, covenants, obligations or duties shall be implied orread into this Indenture against any of the Agents. For the avoidance of doubt, a Paying Agent’s obligation to disburse anyfunds shall be subject to prior receipt by it of those funds to be disbursed.
Subject to any applicable laws and regulations, the Issuers shall cause the Registrar to keep a register (the “SecurityRegister”) at its corporate trust office in which, subject to such reasonable regulations it may prescribe, the Issuers shallprovide for the registration of ownership, exchange, and transfer of the Notes. Such registration in the Security Registershall be conclusive evidence of the ownership of Notes. Included in the books and records for the Notes shall be notations asto whether such Notes have been paid, exchanged or transferred, canceled, lost, stolen, mutilated or destroyed and whethersuch Notes have been replaced. In the case of the replacement of any of the Notes, the Registrar shall keep a record of theNote so replaced and the Note issued in replacement thereof. In the case of the cancellation of any of the Notes, theRegistrar shall keep a record of the Note so canceled and the date on which such Note was canceled.
The Issuers shall enter into an appropriate agency agreement with any Paying Agent or co-Registrar not a party tothis Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuers shallnotify the Trustee of the name and address of any such agent. If the Issuers fail to maintain a Registrar or Paying Agent, theTrustee may appoint a suitably qualified and reputable party to act as such and shall be entitled to appropriate compensationtherefor pursuant to Section 7.05.
SECTION 2.04. Paying Agent to Hold Money . Not later than 12:00 p.m. London, United Kingdom time, oneBusiness Day prior to each due date of the principal, premium, if any, and interest on any Notes, the Issuers shall depositwith the Principal Paying Agent money in immediately available funds in U.S. dollars sufficient to pay such principal,premium, if any, and interest so becoming due on the due
-35-
date for payment under the Notes. The Principal Paying Agent (and, if applicable, each other Paying Agent) shall remit suchpayment in a timely manner to the Holders on the relevant due date for payment, it being acknowledged by each Holder thatif the Issuers deposit such money with the Principal Paying Agent after the time specified in the immediately precedingsentence, the Principal Paying Agent shall remit such money to the Holders on the relevant due date for payment, unlesssuch remittance is impracticable having regard to applicable banking procedures and timing constraints, in which case thePrincipal Paying Agent shall remit such money to the Holders on the next Business Day, but without liability for any interestresulting from such late payment. For the avoidance of doubt, the Principal Paying Agent shall only be obliged to remitmoney to Holders if it has actually received such money from the Issuers. The Issuers shall require each Paying Agent otherthan the Trustee (including where acting as the Principal Paying Agent) to agree in writing that such Paying Agent shall holdfor the benefit of the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, andinterest on the Notes (whether such money has been paid to it by the Issuers or any other obligor on the Notes), and suchPaying Agent shall promptly notify the Trustee of any default by the Issuers (or any other obligor on the Notes) in makingany such payment. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee andaccount for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, uponwritten request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account forany funds disbursed. Upon doing so, the Paying Agent shall have no further liability for the money so paid over to theTrustee. If the Issuers or any Affiliate of the Issuers acts as Paying Agent, it shall, on or before each due date of anyprincipal, premium, if any, or interest on the Notes, segregate and hold in a separate trust fund for the benefit of the Holdersa sum of money sufficient to pay such principal, premium, if any, or interest so becoming due until such sum of money shallbe paid to such Holders or otherwise disposed of as provided in this Indenture, and shall promptly notify the Trustee of itsaction or failure to act.
The Trustee may, if the Issuers have notified it in writing that the Issuers intend to effect a defeasance or to satisfyand discharge this Indenture in accordance with the provisions of Article Eight, notify the Paying Agent in writing of thisfact and require the Paying Agent (until notified by the Trustee to the contrary), to act thereafter as Paying Agent of theTrustee and not the Issuers in relation to any amounts deposited with it in accordance with the provisions of Article Eight.
SECTION 2.05. Holder Lists. The Registrar shall preserve in as current a form as is reasonably practicable themost recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuers shallfurnish to the Trustee, in writing no later than the Record Date for each Interest Payment Date and at such other times as theTrustee may request in writing, a list in such form and as of such Record Date as the Trustee may reasonably require of thenames and addresses of Holders, including the aggregate principal amount of Notes held by each Holder.
SECTION 2.06. Transfer and Exchange.
(a) Where Notes are presented to the Registrar or a co-Registrar with a request to register a transfer or toexchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer ormake the exchange in accordance with the requirements of this Section 2.06. To permit registration of transfers andexchanges, the Issuers shall execute and the Trustee (or the authenticating agent) shall, upon receipt of an Issuers Order,authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes, of any authorizeddenominations and of a like aggregate principal amount, at the Registrar’s request; provided that no Note of less than$200,000 may be transferred or exchanged. No service charge shall be made for any registration of transfer or exchange ofNotes (except as otherwise expressly permitted herein), but the Issuers may require payment of a sum sufficient to cover anyagency fee or similar charge payable in connection with any such registration of transfer or exchange of Notes (other thanany agency fee or similar charge payable in connection with any
-36-
redemption of the Notes or upon exchanges pursuant to Sections 2.10, 3.08 or 9.05) or in accordance with an ExcessProceeds Offer pursuant to Section 4.09 or Change of Control Offer pursuant to Section 4.11, not involving a transfer.
Upon presentation for exchange or transfer of any Note as permitted by the terms of this Indenture and by anylegend appearing on such Note, such Note shall be exchanged or transferred upon the Security Register and one or morenew Notes shall be authenticated and issued in the name of the Holder (in the case of exchanges only) or the transferee, asthe case may be. No exchange or transfer of a Note shall be effective under this Indenture unless and until such Note hasbeen registered in the name of such Person in the Security Register. Furthermore, the exchange or transfer of any Note shallnot be effective under this Indenture unless the request for such exchange or transfer is made by the Holder or by a dulyauthorized attorney-in-fact at the office of the Registrar.
Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Issuers orthe Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Issuersand the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.
All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuersevidencing the same indebtedness, and entitled to the same benefits under this Indenture, as the Notes surrendered upon suchregistration of transfer or exchange.
Neither the Issuers nor the Trustee, Registrar or any Paying Agent shall be required (i) to issue, register the transferof, or exchange any Note during a period beginning at the opening of 15 Business Days before the day of the mailing of anotice of redemption of Notes selected for redemption under Section 3.02 and ending at the close of business on the day ofsuch mailing, or (ii) to register the transfer of or exchange any Note so selected for redemption in whole or in part, exceptthe unredeemed portion of any Note being redeemed in part.
(b) Notwithstanding any provision to the contrary herein, so long as a Global Note remains outstanding and isheld by or on behalf of DTC, transfers of a Global Note, in whole or in part, or of any beneficial interest therein, shall onlybe made in accordance with Section 2.01(c), Section 2.06(a) and this Section 2.06(b); provided, that a beneficial interest in aGlobal Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same GlobalNote in accordance with the transfer restrictions set forth in the restricted Note legend on the Note, if any.
(i) Except for transfers or exchanges made in accordance with any of clauses (ii) through (v) of thisSection 2.06(b), transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, tonominees of DTC or to a successor of DTC or such successor’s nominee.
(ii) Restricted Global Note to Regulation S Global Note. If the holder of a beneficial interest in theRestricted Global Note at any time wishes to exchange its interest in such Restricted Global Note for an interest in theRegulation S Global Note, or to transfer its interest in such Restricted Global Note to a Person who wishes to take deliverythereof in the form of a beneficial interest in the Regulation S Global Note, such transfer or exchange may be effected, onlyin accordance with this clause (ii) and the rules and procedures of DTC, to the extent applicable (the “ApplicableProcedures”). Upon receipt by the Registrar from the Transfer Agent of (A) written instructions directing the Registrar tocredit or cause to be credited an interest in the Regulation S Global Note in a specified principal amount and to cause to bedebited an interest in the Restricted Global Note in such specified principal amount, and (B) a certificate in the form ofExhibit B
-37-
attached hereto given by the holder of such beneficial interest stating that the transfer of such interest has been madein compliance with the transfer restrictions applicable to the Global Notes and (x) pursuant to and in accordance withRegulation S or (y) that the interest in the Restricted Global Note being transferred is being transferred in a transactionpermitted by Rule 144, then the Registrar shall reduce or cause to be reduced the principal amount of the Restricted GlobalNote and shall increase or cause to be increased the principal amount of the Regulation S Global Note by the aggregateprincipal amount of the interest in the Restricted Dollar Global Note to be exchanged or transferred.
(iii) Regulation S Global Note to Restricted Dollar Global Note. If the holder of a beneficial interest in theRegulation S Global Note at any time wishes to transfer such interest to a Person who wishes to take delivery thereof in theform of a beneficial interest in the Restricted Global Note, such transfer may be effected only in accordance with this clause(iii) and the Applicable Procedures. Upon receipt by the Registrar from the Transfer Agent of (A) written instructionsdirecting the Registrar to credit or cause to be credited an interest in the Restricted Global Note in a specified principalamount and to cause to be debited an interest in the Regulation S Global Note in such specified principal amount, and (B) acertificate in the form of Exhibit C attached hereto given by the holder of such beneficial interest stating that the transfer ofsuch interest has been made in compliance with the transfer restrictions applicable to the Global Notes and stating that (x)the Person transferring such interest reasonably believes that the Person acquiring such interest is a QIB and is obtainingsuch interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of theUnited States or (y) that the Person transferring such interest is relying on an exemption other than Rule 144A from theregistration requirements of the Securities Act and, in such circumstances, such Opinion of Counsel as the Issuers or theTrustee may reasonably request to ensure that the requested transfer or exchange is being made pursuant to an exemptionfrom, or in a transaction not subject to, the registration requirements of the Securities Act, then the Registrar shall reduce orcause to be reduced the principal amount of the Regulation S Global Note and to increase or cause to be increased theprincipal amount of the Restricted Global Note by the aggregate principal amount of the interest in such Regulation S GlobalNote to be exchanged or transferred.
(c) If Notes are issued upon the transfer, exchange or replacement of Notes bearing the restricted Notes legendsset forth in Exhibit A, the Notes so issued shall bear the restricted Notes legends, and a request to remove such restrictedNotes legends from Notes shall not be honored unless there is delivered to the Issuers such satisfactory evidence, which mayinclude an Opinion of Counsel licensed to practice law in the State of New York, as may be reasonably required by theIssuers, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereofcomply with the provisions of Rule 144A or Rule 144 under the Securities Act. Upon provision of such satisfactoryevidence, the Trustee, at the direction of the Issuers, shall (or shall direct the authenticating agent to) authenticate anddeliver Notes that do not bear the legend.
(d) The Trustee and the Agents shall have no responsibility for any actions taken or not taken by DTC.
SECTION 2.07. Replacement Notes. If a mutilated certificated Note is surrendered to the Registrar or if theHolder claims that the Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall (orshall direct the authenticating agent to), upon receipt of an Issuers Order, authenticate a replacement Note in such form asthe Note mutilated, lost, destroyed or wrongfully taken if the Holder satisfies any other reasonable requirements of theIssuers and any requirement of the Trustee. If required by the Trustee or the Issuers, such Holder shall furnish an indemnitybond sufficient in the judgment of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying Agent, theTransfer
-38-
Agent, the Registrar and any co-Registrar, and any authenticating agent from any loss that any of them may suffer if a Noteis replaced. The Issuers and the Trustee may charge the Holder for their expenses in replacing a Note.
In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due andpayable, the Issuers in its discretion may pay such Note instead of issuing a new Note in replacement thereof.
Every replacement Note shall be an additional obligation of the Issuers.
The provisions of this Section 2.07 are exclusive and will preclude (to the extent lawful) all other rights andremedies with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Notes.
SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all Notes authenticated by or on behalf ofthe Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 asnot outstanding. Subject to Section 2.09, a Note does not cease to be outstanding because the Issuers or an Affiliate of theIssuers holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Issuers receiveproof satisfactory to them that the Note that has been replaced is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date or maturity date moneysufficient to pay all principal, interest and Additional Amounts, if any, payable on that date with respect to the Notes (orportions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying suchmoney to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portionsthereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Notes Held by Issuers. In determining whether the Holders of the required principal amount ofNotes have concurred in any direction or consent or any amendment, modification or other change to this Indenture, Notesowned by either Issuer or by any of their respective Affiliates shall be disregarded and treated as if they were notoutstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any suchdirection, waiver or consent or any amendment, modification or other change to this Indenture, only Notes which a TrustOfficer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged ingood faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to actwith respect to the Notes and that the pledgee is not either Issuer or any of their respective Affiliates.
SECTION 2.10. Certificated Notes.
(a) A Global Note deposited with a custodian for DTC pursuant to Section 2.01 shall be transferred in whole tothe beneficial owners thereof in the form of certificated Notes only if such transfer complies with Section 2.06 and (i) DTCnotifies the Issuers that it is unwilling or unable to continue to act as depositary and a successor depositary is not appointedby the Issuers within 120 days of such notice, or (ii) the owner of a Book-Entry Interest requests such an exchange inwriting delivered through DTC following an Event of Default under this Indenture. Notice of any such transfer shall begiven by the Issuers in accordance with the provisions of Section 12.02(a).
-39-
(b) Any Global Note that is transferable to the beneficial owners thereof in the form of certificated Notespursuant to this Section 2.10 shall be surrendered by a custodian for DTC to the Transfer Agent, to be so transferred, inwhole or from time to time in part, without charge, and the Trustee shall itself or via the authenticating agent authenticateand deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount at maturity ofNotes of authorized denominations in the form of certificated Notes. Any portion of a Global Note transferred or exchangedpursuant to this Section 2.10 shall be executed, authenticated and delivered only in registered form in minimumdenominations of $200,000 and any integral multiples of $1,000 in excess thereof and registered in such names as DTC maydirect. Subject to the foregoing, a Global Note is not exchangeable except for a Global Note of like denomination to beregistered in the name of DTC or its nominee or its nominee. In the event that a Global Note becomes exchangeable forcertificated Notes, payment of principal, premium, if any, and interest on the certificated Notes will be payable, and thetransfer of the certificated Notes will be registrable, at the office or agency of the Issuers maintained for such purposes inaccordance with Section 2.03. Such certificated Notes shall bear the applicable legends set forth in Exhibit A hereto.
(c) In the event of the occurrence of any of the events specified in Section 2.10(a), the Issuers shall promptlymake available to the Trustee and the authenticating agent a reasonable supply of certificated Notes in definitive, fullyregistered form without interest coupons.
SECTION 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. TheRegistrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer,exchange or payment. The Trustee, in accordance with its customary procedures, and no one else shall cancel (subject to therecord retention requirements of the Exchange Act and the Trustee’s retention policy) all Notes surrendered for registrationof transfer, exchange, payment or cancellation and dispose of such cancelled Notes in its customary manner. Except asotherwise provided in this Indenture, the Issuers may not issue new Notes to replace Notes it has redeemed, paid ordelivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest. Any interest on any Note that is payable, but is not punctually paid or dulyprovided for, on the dates and in the manner provided in the Notes and this Indenture (all such interest herein called“Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Record Date by virtue of having beensuch Holder, and such Defaulted Interest may be paid by the Issuers, at its election in each case, as provided in clause (a) or(b) of this Section 2.12:
(a) The Issuers may elect to make payment of any Defaulted Interest to the Persons in whose names theNotes are registered at the close of business on a special record date for the payment of such Defaulted Interest,which shall be fixed in the following manner. The Issuers shall notify the Trustee in writing of the amount ofDefaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time theIssuers may deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid inrespect of such Defaulted Interest; or shall make arrangements satisfactory to the Trustee for such deposit prior tothe date of the proposed payment, such money when deposited to be held in trust for the benefit of the Personsentitled to such Defaulted Interest as provided in this clause. In addition, the Issuers shall fix a special record datefor the payment of such Defaulted Interest, such date to be not more than 15 days and not less than 10 days prior tothe proposed payment date and not less than 15 days after the receipt by the Trustee of the notice of the proposedpayment date. The Issuers shall promptly but, in any event, not less than 15 days prior to the special record date,notify the Trustee of such special record date and, in the name and at the expense of the Issuers, the Trustee shallcause notice of the proposed payment date of such Defaulted Interest and the special record date therefor to bemailed first-class, postage prepaid to each Holder as such Holder’s address appears in the Security Register, not lessthan 10 days prior to such special record date. Notice of the proposed payment
-40-
date of such Defaulted Interest and the special record date therefor having been so mailed, such Defaulted Interestshall be paid to the Persons in whose names the Notes are registered at the close of business on such special recorddate and shall no longer be payable pursuant to Section 2.12(b).
(b) The Issuers may make payment of any Defaulted Interest on the Notes in any other lawful mannernot inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon suchnotice as may be required by such exchange, if, after notice given by the Issuers to the Trustee of the proposedpayment date pursuant to this clause, such manner of payment shall be deemed reasonably practicable.
Subject to the foregoing provisions of this Section 2.12, each Note delivered under this Indenture upon registrationof transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and toaccrue, which were carried by such other Note.
SECTION 2.13. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day yearof twelve 30-day months.
SECTION 2.14. ISIN and CUSIP Numbers. The Issuers in issuing the Notes may use ISIN and CUSIP numbers(if then generally in use), and, if so, the Trustee shall use ISIN and CUSIP numbers, as appropriate, in notices of redemptionas a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness ofsuch numbers or codes either as printed on the Notes or as contained in any notice of a redemption and that reliance may beplaced only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by anydefect in or omission of such numbers. The Issuers shall promptly notify the Trustee of any change in the ISIN or CUSIPnumbers.
SECTION 2.15. Issuance of Additional Notes. The Issuers may, subject to Section 4.06 of this Indenture, issueAdditional Notes under this Indenture in accordance with the procedures of Section 2.02. The Original Notes issued on theIssue Date and any Additional Notes subsequently issued shall be treated as a single class for all purposes under thisIndenture.
ARTICLE 3 REDEMPTION; OFFERS TO PURCHASE
SECTION 3.01. Right of Redemption. The Issuers may redeem all or any portion of the Notes upon the termsand at the Redemption Prices set forth in the Notes. Any redemption pursuant to this Section 3.01 shall be made pursuant tothe provisions of this Article Three.
SECTION 3.02. Notices to Trustee. If the Issuers elect to redeem Notes pursuant to Section 3.01, they shallnotify the Trustee in writing of the Redemption Date and the record date, the principal amount of Notes to be redeemed, theRedemption Price and the paragraph of the Notes pursuant to which the redemption will occur. If and so long as the Notesare listed on Euronext Dublin and the rules and regulations of Euronext Dublin so require, the Issuers shall publish thenotice of redemption in a newspaper having general circulation in Ireland (which is expected to be The Irish Times or, to theextent and in the manner permitted by the rules of Euronext Dublin, posted on the official website of Euronext Dublin).
The Issuers shall give each notice to the Trustee provided for in this Section 3.02 in writing at least 10 days beforethe date notice is mailed to the Holders pursuant to Section 3.04 unless the Trustee consents to a shorter period. Such noticeshall be accompanied by an Officer’s Certificate from the Issuers to the effect that such redemption will comply with theconditions herein. If fewer than all the Notes are to be
-41-
redeemed, the record date relating to such redemption shall be selected by the Issuers and given to the Trustee.
SECTION 3.03. Selection of Notes to Be Redeemed. If fewer than all of the Notes are to be redeemed at anytime, the Notes will be selected by a method that complies with the requirements, as certified to it by the Issuers, of theprincipal securities exchange, if any, on which the Notes are listed at such time, and in compliance with the requirements ofthe relevant clearing system or, if the Notes are not listed on a securities exchange, or such securities exchange prescribes nomethod of selection and the Notes are not held through clearing system or the clearing system prescribes no method ofselection, by lot; provided, however, that no such partial redemption shall reduce the portion of the principal amount of aNote not redeemed to less than $200,000.
The Trustee or the Registrar shall make the selection from the Notes outstanding and not previously called forredemption. The Trustee or the Registrar may select for redemption portions equal to $1,000 in principal amount and anyintegral multiple thereof; provided that no Notes of $200,000 in principal amount or less may be redeemed in part.Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.The Trustee or the Registrar, as applicable, shall notify the Issuers promptly in writing of the Notes or portions of Notes tobe called for redemption.
Neither the Trustee nor the Registrar shall be liable for selections made in accordance with the provisions of thisSection 3.03.
Any redemption and notice may, in the Issuers’ discretion, be subject to the satisfaction of one or more conditionsprecedent. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, suchredemption or notice shall state that in the Issuers’ discretion, the Redemption Date may be delayed until such time as any orall such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event thatany or all such conditions shall not have been satisfied by the Redemption Date or by the Redemption Date so delayed.
SECTION 3.04. Notice of Redemption.
(a) At least 10 days but not more than 60 days before a date for redemption of the Notes, the Issuers shall mail anotice of redemption by first-class mail to each Holder to be redeemed and shall comply with the provisions ofSection 12.02(b).
(b) The notice shall identify the Notes to be redeemed (including ISIN and CUSIP numbers) and shall state:
(i) the Redemption Date and the record date;
(ii) the appropriate calculation of the Redemption Price and the amount of accrued interest, if any, andAdditional Amounts, if any, to be paid;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the Paying Agent to collect the RedemptionPrice plus accrued interest, if any, and Additional Amounts, if any;
(v) that, if any Note is being redeemed in part, the portion of the principal amount (equal to $1,000 inprincipal amount or any integral multiple thereof) of such Note to be redeemed
-42-
and that, on and after the Redemption Date, upon surrender of such Note, a new Note or Notes in principal amountequal to the unredeemed portion thereof will be reissued;
(vi) that, if any Note contains an ISIN or CUSIP number, no representation is being made as to thecorrectness of such ISIN or CUSIP number either as printed on the Notes or as contained in the notice of redemption andthat reliance may be placed only on the other identification numbers printed on the Notes;
(vii) that, unless the Issuers and the Guarantors default in making such redemption payment, interest on theNotes (or portion thereof) called for redemption shall cease to accrue on and after the Redemption Date;
(viii) the paragraph of the Notes pursuant to which the Notes called for redemption are beingredeemed; and
(ix) whether the redemption is conditioned on any events and, if so, the notice shall specify such events.
At the Issuers’ written request, the Trustee shall give a notice of redemption in the Issuers’ name and at the Issuers’expense. In such event, the Issuers shall provide the Trustee with the notice and the other information required by thisSection 3.04.
SECTION 3.05. Deposit of Redemption Price. At least one Business Day prior to any Redemption Date, by nolater than 12:00 p.m. (London time) on that date, the Issuers shall deposit or cause to be deposited with the Paying Agent(or, if either Issuer or any of their respective Affiliates is the Paying Agent, shall segregate and hold in trust) a sum in sameday funds sufficient to pay the Redemption Price of and accrued interest and Additional Amounts, if any, on all Notes to beredeemed on that date other than Notes or portions of Notes called for redemption that have previously been delivered by theIssuers to the Trustee for cancellation. The Paying Agent shall return to the Issuers following a written request by the Issuersany money so deposited that is not required for that purpose.
SECTION 3.06. [Reserved].
SECTION 3.07. Payment of Notes Called for Redemption. If notice of redemption has been given in the mannerprovided in Section 3.04, the Notes or portion of Notes specified in such notice to be redeemed shall become due andpayable on the Redemption Date at the Redemption Price stated therein, together with accrued interest to such RedemptionDate, and on and after such date (unless the Issuers shall default in the payment of such Notes at the Redemption Price andaccrued interest to the Redemption Date, in which case the principal, until paid, shall bear interest from the RedemptionDate at the rate prescribed in the Notes) such Notes shall cease to accrue interest. Upon surrender of any Note forredemption in accordance with a notice of redemption, such Note shall be paid and redeemed by the Issuers at theRedemption Price, together with accrued interest, if any, to the Redemption Date; provided that installments of interestwhose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders registered as such at the closeof business on the relevant Record Date.
Notice of redemption shall be deemed to be given when mailed, whether or not the Holder receives the notice. Inany event, failure to give such notice, or any defect therein, shall not affect the validity of the proceedings for theredemption of Notes held by Holders to whom such notice was properly given.
-43-
SECTION 3.08. Notes Redeemed in Part.
(a) Upon surrender of a Global Note that is redeemed in part, the Paying Agent shall forward such Global Noteto the Trustee who shall make a notation on the Security Register to reduce the principal amount of such Global Note to anamount equal to the unredeemed portion of the Global Note surrendered; provided that each such Global Note shall be in aprincipal amount at final Stated Maturity of $200,000 or an integral multiple of $1,000 in excess thereof.
(b) Upon surrender and cancellation of a certificated Note that is redeemed in part, the Issuers shall execute andthe Trustee shall authenticate for the Holder (at the Issuers’ expense) a new Note equal in principal amount to theunredeemed portion of the Note surrendered and canceled; provided that each such certificated Note shall be in a principalamount at final Stated Maturity of $200,000 or an integral multiple of $1,000 in excess thereof.
ARTICLE 4 COVENANTS
SECTION 4.01. Payment of Notes. The Issuers, jointly and severally, and the Guarantors covenant and agree forthe benefit of the Holders that they shall duly and punctually pay the principal of, premium, if any, interest and AdditionalAmounts, if any, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Subject to Section2.04, principal, premium, if any, interest and Additional Amounts, if any, shall be considered paid on the date due if on suchdate the Trustee or the Paying Agent (other than either Issuer or any of their respective Affiliates) holds, as of 10:00 a.m.,London, United Kingdom time on the due date, in accordance with this Indenture, money sufficient to pay all principal,premium, if any, interest and Additional Amounts, if any, then due. If either Issuer or any of their respective Affiliates actsas Paying Agent, principal, premium, if any, interest and Additional Amounts, if any, shall be considered paid on the duedate if the entity acting as Paying Agent complies with Section 2.04.
The Issuers or the Guarantors shall pay interest on overdue principal at the rate specified therefor in the Notes. TheIssuers or the Guarantors shall pay interest on overdue installments of interest at the same rate to the extent lawful.
SECTION 4.02. Corporate Existence. Subject to Article Five, the Issuers, the Parent Guarantor and eachRestricted Subsidiary shall do or cause to be done all things necessary to preserve and keep in full force and effect theircorporate, partnership, limited liability company or other existence and the rights (charter and statutory), licenses andfranchises of the Issuers, the Parent Guarantor and each Restricted Subsidiary; provided that none of the Issuers and theParent Guarantor shall be required to preserve or keep in full force and effect any such existence or such right, license orfranchise if the Board of Directors of the applicable Issuer and the Parent Guarantor shall determine that the preservationthereof is no longer desirable in the conduct of the business of the Issuers, the Parent Guarantor and the RestrictedSubsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.03. Maintenance of Properties. The Parent Guarantor shall cause all properties owned by it or anyRestricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to bemaintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall causeto be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment ofthe Parent Guarantor may be necessary so that the business carried on in connection therewith may be properly andadvantageously conducted at all times; provided that nothing in this Section 4.03 shall prevent the Parent Guarantor fromdiscontinuing the maintenance of any such properties if such discontinuance is, in the judgment of the
-44-
Parent Guarantor, desirable in the conduct of the business of the Issuers, the Parent Guarantor and the RestrictedSubsidiaries as a whole and not disadvantageous in any material respect to the Holders.
SECTION 4.04. Insurance. The Parent Guarantor shall maintain, and shall cause the Restricted Subsidiaries tomaintain, insurance with carriers believed by the Parent Guarantor to be responsible, against such risks and in such amounts,and with such deductibles, retentions, self-insured amounts and coinsurance provisions, as the Parent Guarantor believes arecustomarily carried by businesses similarly situated and owning like properties, including as appropriate general liability,property and casualty loss and interruption of business insurance.
SECTION 4.05. Statement as to Compliance.
(a) The Parent Guarantor shall deliver to the Trustee, within 120 days after the end of each fiscal year or within14 days of written request by the Trustee, an Officer’s Certificate stating that in the course of the performance by the signerof its duties as an officer of the Parent Guarantor he would normally have knowledge of any Default and whether or not thesigner knows of any Default that occurred during such period and if any specifying such Default, its status and what actionthe Parent Guarantor is taking or proposed to take with respect thereto. For purposes of this Section 4.05(a), suchcompliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
(b) If the Parent Guarantor or the Issuers shall become aware that (i) any Default or Event of Default hasoccurred and is continuing or (ii) any Holder seeks to exercise any remedy hereunder with respect to a claimed Defaultunder this Indenture or the Notes, the Parent Guarantor or the Issuers, as the case may be, shall immediately deliver to theTrustee an Officer’s Certificate specifying such event, notice or other action (including any action the Parent Guarantor orthe Issuers are taking or propose to take in respect thereof).
SECTION 4.06. Limitation on Debt.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, create, issue, incur,assume, guarantee or in any manner become directly or indirectly liable with respect to or otherwise become responsible for,contingently or otherwise, the payment of (individually and collectively, to “incur” or, as appropriate, an “incurrence”), anyDebt (including any Acquired Debt); provided that the Parent Guarantor, each Issuer and any Restricted Subsidiary shall bepermitted to incur Debt (including Acquired Debt) if in each case (i) after giving effect to the incurrence of such Debt andthe application of the proceeds thereof, on a pro forma basis, no Default or Event of Default would occur or be continuingand (ii) at the time of such incurrence and after giving effect to the incurrence of such Debt and the application of theproceeds thereof, on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters forwhich financial statements are available immediately preceding the incurrence of such Debt, taken as one period, would begreater than 2.0 to 1.0.
(b) Section 4.06(a) shall not, however, prohibit the following (collectively, “Permitted Debt”):
(i) the Notes issued on the Issue Date;
(ii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under Credit Facilities inan aggregate principal amount not to exceed the greater of (i) $700,000,000 and (ii) an amount equal to (I) 85.0% of TotalReceivables plus 70.0% of Total Inventories less (II) $275,000,000;
-45-
(iii) any Existing Debt of the Parent Guarantor or any Restricted Subsidiary (other than Debt described inclauses (i) and (ii) of this Section 4.06(b));
(iv) the incurrence by the Parent Guarantor or any Restricted Subsidiary of intercompany Debt between theParent Guarantor and any Restricted Subsidiary or between or among Restricted Subsidiaries; provided that:
(A) if an Issuer or a Guarantor is the obligor on any such Debt, unless required by a CreditFacility and only to the extent legally permitted, such Debt must be unsecured (except in respect of theintercompany current liabilities incurred in the ordinary course of business in connection with cashmanagement, cash pooling, tax and accounting operations of the Parent Guarantor and its RestrictedSubsidiaries); and
(B) (x) any disposition, pledge or transfer of any such Debt to a Person (other than a disposition,pledge or transfer to the Parent Guarantor or a Restricted Subsidiary) and (y) any transaction pursuant towhich any Restricted Subsidiary that has Debt owing by the Parent Guarantor or another RestrictedSubsidiary ceases to be a Restricted Subsidiary, will, in each case, be deemed to be an incurrence of suchDebt not permitted by this clause (iv);
(v) guarantees of the Parent Guarantor or any Restricted Subsidiary of Debt of the Parent Guarantor or anyRestricted Subsidiary to the extent that the guaranteed Debt was permitted to be incurred by another provision of thisSection 4.06;
(vi) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt represented by CapitalizedLease Obligations, mortgage financings, purchase money obligations or other Debt incurred or assumed in connection withthe acquisition or development of real or personal, movable or immovable, property or assets, in each case, incurred for thepurpose of financing or refinancing all or any part of the purchase price, lease expense or cost of construction orimprovement of property, plant, equipment or other assets used in the Parent Guarantor’s or any Restricted Subsidiary’sbusiness (including any reasonable related fees or expenses incurred in connection with such acquisition or development);provided that the principal amount of such Debt so incurred when aggregated with other Debt previously incurred in relianceon this clause (vi) and still outstanding shall not in the aggregate exceed the greater of $510,000,000 and 6.0% of TotalAssets; and provided, further , that the total principal amount of any Debt incurred in connection with an acquisition ordevelopment permitted under this clause (vi) did not in each case at the time of incurrence exceed (A) the Fair Market Valueof the acquired or constructed asset or improvement so financed or (B) in the case of an uncompleted constructed asset, theamount of the asset to be constructed, as determined on the date the contract for construction of such asset was entered intoby the Parent Guarantor or the relevant Restricted Subsidiary (including, in each case, any reasonable related fees andexpenses incurred in connection with such acquisition, construction or development);
(vii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt arising from agreementsproviding for guarantees, indemnities or obligations in respect of purchase price adjustments in connection with theacquisition or disposition of assets, including, without limitation, shares of Capital Stock (other than guarantees or similarcredit support given by the Parent Guarantor or any Restricted Subsidiary of Debt incurred by any Person acquiring all orany portion of such assets for the purpose of financing such acquisition); provided that the maximum aggregate liability inrespect of all such Debt permitted pursuant to this clause (vii) shall at no time exceed the net proceeds, including non-cashproceeds (the Fair Market Value of such non-cash
-46-
proceeds being measured at the time received and without giving effect to any subsequent changes in value) actuallyreceived from the sale of such assets;
(viii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under CommodityHedging Agreements not for speculative purposes;
(ix) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under CurrencyAgreements not for speculative purposes;
(x) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under Interest RateAgreements not for speculative purposes;
(xi) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary of Debt in respect ofworkers’ compensation and claims arising under similar legislation, or pursuant to self-insurance obligations and not inconnection with the borrowing of money or the obtaining of advances or credit;
(xii) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary arising from (A) thehonoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case ofdaylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided that such Debt isextinguished within five Business Days of incurrence, (B) bankers’ acceptances, performance, surety, judgment, completion,payment, appeal or similar bonds, instruments or obligations, (C) completion guarantees, advance payment, customs, VATor other tax guarantees or similar instruments provided or letters of credit obtained by the Parent Guarantor or any RestrictedSubsidiary in the ordinary course of business, and (D) the financing of insurance premiums in the ordinary course ofbusiness;
(xiii) any Debt of the Parent Guarantor or any Restricted Subsidiary incurred pursuant to anyPermitted Receivables Financing;
(xiv) the incurrence by a Person of Permitted Refinancing Debt in exchange for or the net proceeds of whichare used to refund, replace or refinance Debt incurred by it pursuant to, or described in, Section 4.06(a), sub clauses (i) and(iii), this sub-clause (xiv) and sub-clauses (xviii), (xix) and (xx) of this Section 4.06(b), as the case may be;
(xv) guarantees by the Parent Guarantor or a Restricted Subsidiary of Debt incurred by Permitted JointVentures in an aggregate principal amount at any one time outstanding not to exceed an amount equal to the greater of$150,000,000 and 2.0% of Total Assets;
(xvi) cash management obligations and Debt in respect of netting services, pooling arrangements or similararrangements in connection with cash management in the ordinary course of business consistent with past practice;
(xvii) (i) take-or-pay obligations in the ordinary course of business, (ii) customer deposits andadvance payments in the ordinary course of business received from customers for goods or services purchased in theordinary course of business and (iii) manufacturer, vendor financing, customer and supply arrangements in the ordinarycourse of business;
(xviii) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary (other than and inaddition to Debt permitted under clauses (i) through (xvii) above and clauses (xix) and (xx) below) in an aggregate principalamount at any one time outstanding not to
-47-
exceed, together with any Permitted Refinancing Debt in respect thereof, the greater of $350,000,000 and 5.0% ofTotal Assets;
(xix) Debt of any Person (x) incurred and outstanding on the date on which such Person becomes a RestrictedSubsidiary of the Parent Guarantor or another Restricted Subsidiary of the Parent Guarantor or is merged, consolidated,amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of relatedliabilities) the Parent Guarantor or any Restricted Subsidiary or (y) incurred to provide all or any portion of the fundsutilized to consummate the transaction or series of related transactions pursuant to which such Person became a RestrictedSubsidiary or was otherwise acquired by the Parent Guarantor or a Restricted Subsidiary; provided, however, with respect toeach of sub-clause (x) and (y) of this Section 4.06(b)(xix), that at the time of such acquisition or other transaction (1) theParent Guarantor would have been able to incur $1.00 of additional Debt pursuant to Section 4.06(a) after giving effect tothe incurrence of such Debt pursuant to this Section 4.06(b)(xix) or (2) the Fixed Charge Coverage Ratio of the ParentGuarantor and its Restricted Subsidiaries would not be less than it was immediately prior to giving pro forma effect to suchacquisition or other transaction;
(xx) Contribution Debt; and
(xxi) Debt consisting of local lines of credit, overdraft facilities or local working capital facilities in anaggregate outstanding principal amount at any one time not to exceed the greater of $75,000,000 and 1.0% of Total Assets.
(c) Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of originalissue discount and the payment of interest or dividends in the form of additional Debt of the same class will not be deemedto be an incurrence of Debt for purposes of this Section 4.06.
(d) For purposes of determining compliance with any restriction on the incurrence of Debt in U.S. dollars whereDebt is denominated in a different currency, the amount of such Debt will be the Dollar Equivalent determined on the dateof such determination; provided that if any such Debt denominated in a different currency is subject to a CurrencyAgreement (with respect to U.S. dollars) covering principal amounts payable on such Debt, the amount of such Debtexpressed in U.S. dollars shall be adjusted to take into account the effect of such agreement. The principal amount of anyPermitted Refinancing Debt incurred in the same currency as the Debt being refinanced shall be the Dollar Equivalent of theDebt refinanced determined on the date such Debt being refinanced was initially incurred. Notwithstanding any otherprovision of this Section 4.06, for purposes of determining compliance with this Section 4.06, increases in Debt solely dueto fluctuations in the exchange rates of currencies will not be deemed to exceed the maximum amount that an Issuer, theParent Guarantor or a Subsidiary Guarantor may incur under this Section 4.06.
(e) For purposes of determining any particular amount of Debt under this Section 4.06:
(i) obligations with respect to letters of credit, guarantees or Liens, in each case supporting Debt otherwiseincluded in the determination of such particular amount shall not be included;
(ii) any Liens granted pursuant to the equal and ratable provisions referred to in Section 4.07 shall not betreated as Debt;
-48-
(iii) accrual of interest, accrual of dividends, the accretion of accreted value, the obligation to paycommitment fees and the payment of interest in the form of additional preferred stock or Debt shall not be treated as Debt;and
(iv) the reclassification of preferred stock as Debt due to a change in accounting principles shall not betreated as Debt.
(f) In the event that an item of Debt meets the criteria of more than one of the types of Debt described in thisSection 4.06, the Parent Guarantor, in its sole discretion, shall classify items of Debt and shall only be required to includethe amount and type of such Debt in one of such clauses and the Parent Guarantor shall be entitled to divide and classify anitem of Debt in more than one of the types of Debt described in this Section 4.06, and may change the classification of anitem of Debt (or any portion thereof) to any other type of Debt described in this Section 4.06 at any time.
(g) The amount of any Debt outstanding as of any date will be:
(i) in the case of any Debt issued with original issue discount, the amount of the liability in respect thereofdetermined in accordance with IFRS;
(ii) the principal amount of the Debt, in the case of any other Debt; and
(iii) in respect of Debt of another Person secured by a Lien on the assets of the specified Person, the lesserof:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Debt of the other Person.
SECTION 4.07. Limitation on Liens. The Parent Guarantor shall not, and shall not permit any RestrictedSubsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind securing any Debt or assignor otherwise convey any right to receive any income, profits or proceeds on or with respect to any of the Parent Guarantor’sor any Restricted Subsidiary’s property or assets, constituting Collateral, whether owned at or acquired after the Issue Date,or any income, profits or proceeds therefrom other than Permitted Collateral Liens.
The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur,assume or suffer to exist any Lien of any kind securing any Debt (except for Permitted Liens) or assign or otherwise conveyany right to receive any income, profits or proceeds on or with respect to any of the Parent Guarantor’s or any RestrictedSubsidiary’s property or assets, including any shares of stock or any Debt of any Restricted Subsidiary but excluding anyCapital Stock, Debt or other securities of any Unrestricted Subsidiary, whether owned at or acquired after the Issue Date, orany income, profits or proceeds therefrom unless:
(a) in the case of any Lien securing Subordinated Debt, the Issuers’ obligations in respect of the Notes(or a Guarantee in the case of Liens securing Subordinated Debt of a Guarantor) are directly secured by a Lien onsuch property, assets or proceeds that is senior in priority to the Lien securing the Subordinated Debt until such timeas the Subordinated Debt is no longer secured by a Lien; and
-49-
(b) in the case of any other Lien, the Issuers’ obligations in respect of the Notes (or a Guarantee in thecase of Liens securing Debt of a Guarantor), and all other amounts due under this Indenture are equally and ratablysecured with the obligation or liability secured by such Lien.
SECTION 4.08. Limitation on Restricted Payments.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, takeany of the following actions (each of which is a “Restricted Payment” and which are collectively referred to as “RestrictedPayments”):
(i) declare or pay any dividend on or make any distribution (whether made in cash, securities or otherproperty) with respect to any of the Parent Guarantor’s or any Restricted Subsidiary’s Capital Stock (including, withoutlimitation, any payment in connection with any merger or consolidation involving the Parent Guarantor or any RestrictedSubsidiary) (other than (A) to the Parent Guarantor or any Restricted Subsidiary or (B) to all holders of Capital Stock ofsuch Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Parent Guarantor or a RestrictedSubsidiary of dividends or distributions of greater value than the Parent Guarantor or such Restricted Subsidiary wouldreceive on a pro rata basis; provided that any amount so paid or distributed to holders of Capital Stock of a RestrictedSubsidiary other than the Parent Guarantor or a Restricted Subsidiary shall be included in the calculation of the aggregateamount of all Restricted Payments declared or made after July 1, 2014 for the purposes of Section 4.08(b)), except fordividends or distributions payable solely in shares of the Parent Guarantor’s Qualified Capital Stock or in options, warrantsor other rights to acquire such shares of Qualified Capital Stock, or make any payment of cash interest on DeeplySubordinated Funding;
(ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connectionwith any merger or consolidation), directly or indirectly, any shares of the Parent Guarantor’s Capital Stock held by personsother than the Parent Guarantor or a Restricted Subsidiary (other than Capital Stock of any Restricted Subsidiary or anyentity that becomes a Restricted Subsidiary as a result thereof) or any options, warrants or other rights to acquire such sharesof Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease or otherwise acquire or retire for value,prior to any scheduled principal payment, sinking fund payment or maturity, any Subordinated Debt or any DeeplySubordinated Funding; or
(iv) make any Investment (other than any Permitted Investment) in any Person.
If any Restricted Payment described in this Section 4.08(a) is not made in cash, the amount of the proposedRestricted Payment shall be the Fair Market Value of the asset to be transferred as of the date of transfer.
(b) Notwithstanding Section 4.08(a), the Parent Guarantor or any Restricted Subsidiary may make a RestrictedPayment if, at the time of and after giving pro forma effect to such proposed Restricted Payment:
(i) no Default or Event of Default has occurred and is continuing;
(ii) the Parent Guarantor could incur at least $1.00 of additional Debt (other than Permitted Debt) pursuantto Section 4.06; and
-50-
(iii) the aggregate amount of all Restricted Payments declared or made after July 1, 2014 does not exceedthe sum of:
(A) 50% of aggregate Consolidated Adjusted Net Income on a cumulative basis during theperiod beginning on July 1, 2014 and ending on the last day of the Parent Guarantor’s last fiscal quarterending prior to the date of such proposed Restricted Payment (or, if such aggregate cumulative ConsolidatedAdjusted Net Income shall be a negative number, minus 100% of such negative amount),; plus
(B) the aggregate Net Cash Proceeds, and the Fair Market Value of property or assets ormarketable securities, received by the Parent Guarantor as a contribution to its common equity capital afterthe Issue Date or from the issuance or sale (other than to any Subsidiary) of shares of the Parent Guarantor’sQualified Capital Stock or Deeply Subordinated Funding (including upon the exercise of options, warrantsor rights) or warrants, options or rights to purchase shares of the Parent Guarantor’s Qualified Capital Stockor Deeply Subordinated Funding (except, in each case to the extent such proceeds are used to purchase,redeem or otherwise retire Capital Stock or Subordinated Debt or Deeply Subordinated Funding as set forthin sub-clause (ii) or (iii) of Section 4.08(c) or constitute an Excluded Contribution or the proceeds of anyContribution Debt) (excluding the Net Cash Proceeds from the issuance of the Parent Guarantor’s QualifiedCapital Stock or Deeply Subordinated Funding financed, directly or indirectly, using funds borrowed fromthe Parent Guarantor or any Subsidiary until and to the extent such borrowing is repaid and ExcludedContributions); plus
(C) (x) the amount by which the Parent Guarantor’s Debt or Debt of any Restricted Subsidiary isreduced after the Issue Date upon the conversion or exchange (other than by the Parent Guarantor or itsSubsidiary) of such Debt into the Parent Guarantor’s Qualified Capital Stock or Deeply SubordinatedFunding, and (y) the aggregate Net Cash Proceeds, and the Fair Market Value of property or assets ormarketable securities, received after the Issue Date by the Parent Guarantor from the issuance or sale (otherthan to any Subsidiary) of Redeemable Capital Stock that has been converted into or exchanged for theParent Guarantor’s Qualified Capital Stock or Deeply Subordinated Funding, to the extent such RedeemableCapital Stock was originally sold for cash or Cash Equivalents, together with, in the case of both sub-clauses(x) and (y) of this Section 4.08(b)(iii)(C), the aggregate Net Cash Proceeds received by the Parent Guarantorat the time of such conversion or exchange (excluding the Net Cash Proceeds from the issuance of the ParentGuarantor’s Qualified Capital Stock or Deeply Subordinated Funding financed, directly or indirectly, usingfunds borrowed from the Parent Guarantor or any Subsidiary until and to the extent such borrowing isrepaid); plus
(D) (x) in the case of the disposition or repayment of any Investment constituting a RestrictedPayment made after the Issue Date, an amount (to the extent not included in Consolidated Adjusted NetIncome) equal to the cash proceeds of such disposition or repayment or the Fair Market Value of propertyreceived by the Parent Guarantor or a Restricted Subsidiary thereof, in either case, less the cost of thedisposition of such Investment and net of taxes, and (y) in the case of the designation of an UnrestrictedSubsidiary as a Restricted Subsidiary (as long as the designation of such Subsidiary as an UnrestrictedSubsidiary was deemed a Restricted Payment), the Fair Market Value of the Parent Guarantor’s interest insuch Subsidiary; provided that such amount shall not in any case exceed the amount of the RestrictedPayment deemed made at the time that the Subsidiary was designated as an Unrestricted Subsidiary, plus
-51-
(E) $80,000,000.
(c) Notwithstanding clauses (a) and (b) of this Section 4.08, the Parent Guarantor and any Restricted Subsidiarymay take the following actions (“Permitted Payments”) so long as (with respect to sub-clauses (viii), (xi), (xii) and (xvii) ofthis clause (c)) no Default or Event of Default has occurred and is continuing:
(i) the payment of any dividend within 180 days after the date of its declaration if at such date of itsdeclaration such payment would have been permitted by this Section 4.08;
(ii) the repurchase, redemption or other acquisition or retirement for value of any shares of the ParentGuarantor’s Capital Stock or options, warrants or other rights to acquire such Capital Stock in exchange for (including anysuch exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of theissuance of fractional shares or scrip), or out of the Net Cash Proceeds of a substantially concurrent issuance and sale (otherthan to a Subsidiary of the Parent Guarantor) of, shares of the Parent Guarantor’s Qualified Capital Stock, options, warrantsor other rights to acquire such Qualified Capital Stock or Deeply Subordinated Funding (other than any ExcludedContribution or the proceeds of any Contribution Debt);
(iii) the repurchase, redemption, defeasance or other acquisition or retirement for value or payment ofprincipal of any Subordinated Debt or Deeply Subordinated Funding in exchange for, or out of the Net Cash Proceeds of asubstantially concurrent issuance and sale (other than to a Subsidiary of the Parent Guarantor) of, shares of the ParentGuarantor’s Qualified Capital Stock or Deeply Subordinated Funding (other than any Excluded Contribution or the proceedsof any Contribution Debt);
(iv) the purchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Debt(other than Redeemable Capital Stock) in exchange for, or out of the Net Cash Proceeds of a substantially concurrentincurrence (other than to a Subsidiary) of, Permitted Refinancing Debt;
(v) the repurchase of Capital Stock deemed to occur upon the exercise of stock options with respect towhich payment of the cash exercise price has been forgiven if the cumulative aggregate value of such deemed repurchasesdoes not exceed the cumulative aggregate amount of the exercise price of such options received;
(vi) payments or distributions to dissenting shareholders pursuant to applicable law in connection with or incontemplation of a merger, consolidation or transfer of assets that complies with the provisions of Article Five;
(vii) cash payments in lieu of issuing fractional shares pursuant to the exchange or conversion of anyexchangeable or convertible securities;
(viii) cash payments, advances, loans or expense reimbursements made to any parent company of theParent Guarantor to permit any such company to pay (i) general operating expenses, customary directors’ fees, accounting,legal, corporate reporting and administrative expenses incurred in the ordinary course of business in an amount not to exceed$25,000,000 in the aggregate in any fiscal year, and (ii) any taxes, duties or similar governmental fees of any such parentcompany to the extent such tax obligations are directly attributable to its ownership of the Parent Guarantor and itsRestricted Subsidiaries;
-52-
(ix) any payments (including pursuant to a tax sharing agreement or similar arrangement) between theParent Guarantor and any other Person or a Restricted Subsidiary and any other Person with which the Parent Guarantor orany of its Restricted Subsidiaries files a consolidated tax return or with which the Parent Guarantor or any of its RestrictedSubsidiaries is part of a group for tax purposes (including a fiscal unity) or any tax advantageous group contribution madepursuant to applicable legislation; provided, however, that any such payments do not exceed the amounts of such tax thatwould have been payable by the Parent Guarantor and its Restricted Subsidiaries on a stand-alone basis and the related taxliabilities of the Parent Guarantor and its Restricted Subsidiaries are relieved thereby;
(x) the repurchase, redemption or other acquisition or retirement, and any loans, advances, dividends ordistributions by the Parent Guarantor to any direct or indirect parent company to repurchase, redeem or otherwise acquire orretire, for value of any Capital Stock of the Parent Guarantor or any Restricted Subsidiary or any direct or indirect parentcompany held by any current or former officer, director, employee or consultant of the Parent Guarantor or any of itsRestricted Subsidiaries; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retiredCapital Stock may not exceed $10,000,000 plus an amount equal to $10,000,000 multiplied by the number of years that haveelapsed since the Issue Date; provided, further, that such amount in any calendar year may be increased by an amount not toexceed (A) the cash proceeds from the sale of Capital Stock of the Parent Guarantor or a Restricted Subsidiary during suchcalendar year, in each case to members of management, directors or consultants of the Parent Guarantor, any of itsRestricted Subsidiaries or any of its direct or indirect parent companies and (B) the cash proceeds of key man life insurancepolicies of the Parent Guarantor or a Restricted Subsidiary received by the Parent Guarantor or a Restricted Subsidiary afterthe Issue Date less any amount previously applied to the making of Restricted Payments pursuant to this clause (x), in eachcase, to the extent the cash proceeds have not otherwise been applied to the making of Restricted Payments pursuant toSection 4.08(b)(iii)(B) or Section 4.08(c)(iii);
(xi) the declaration and payment by the Parent Guarantor of, or loans, advances, dividends or distributionsto any parent company of the Parent Guarantor to pay, dividends on the common stock or common equity interests of theParent Guarantor or in respect of any parent company that has had a Public Equity Offering, in an amount not to exceed inany fiscal year, 50% of aggregate Consolidated Adjusted Net Income on a cumulative basis during such fiscal year (the“Relevant Fiscal Year”); provided that such dividends shall be declared and paid no later than 180 days after the end of theRelevant Fiscal Year;
(xii) any other Restricted Payment; provided that the Consolidated Leverage Ratio of the Parent Guarantoron a pro forma basis after giving effect to any such Restricted Payment made pursuant to this clause (xii) but not includingany Restricted Payment made in reliance on Section 4.08(b) or another clause of Section 4.08(c) (other than this sub-clause(xii)) does not exceed 5.25 to 1.0.
(xiii) Restricted Payments in an amount equal to the amount of Excluded Contributions made;
(xiv) the payment, purchase, redemption, defeasance or other acquisition or retirement for value of anySubordinated Debt of the Parent Guarantor and its Restricted Subsidiaries pursuant to Section 4.09 and Section 4.11;provided that, prior to such payment, purchase, redemption, defeasance or other acquisition or retirement for value, theIssuers or the Parent Guarantor has made a Change of Control Offer or Asset Sale Offer, as the case may be, with respect toNotes as a result of such Change of Control or Asset Sale, as the case may be, and has repurchased all such Notes
-53-
validly tendered and not withdrawn in connection with such Change of Control Offer or Asset Sale Offer, as thecase may be;
(xv) the declaration and payment of dividends to holders of any class or series of Redeemable Capital Stockincurred in accordance with Section 4.06;
(xvi) dividends or other distributions of Capital Stock of Unrestricted Subsidiaries; and
(xvii) any other Restricted Payment; provided that the total aggregate amount of Restricted Paymentsmade under this clause (xvii) does not exceed the greater of $150,000,000 and 2.0% of Total Assets; and
(xviii) any Restricted Payment made in connection with the Trivium Transactions (including, for theavoidance of doubt, any payments contemplated by the Transaction Agreement), and any costs and expenses (including alllegal, accounting and other professional fees and expenses) related thereto or used to fund amounts owed to Affiliates inconnection with the Trivium Transactions (including dividends to any parent entity to permit payment by such parent entityof such amounts).
The actions described in sub-clauses (i), (vi), (xi) and (xvii) of Section 4.08(c) are Restricted Payments that will bepermitted to be made in accordance with this Section 4.08(c) but that reduce the amount that would otherwise be availablefor Restricted Payments under Section 4.08(b)(iii).
For purposes of determining compliance with this Section 4.08, in the event that a Restricted Payment meets thecriteria of more than one of the categories described in sub-clauses (i) through (xviii) of Section 4.08(c), or is permittedpursuant to Section 4.08(a), the Parent Guarantor and its Restricted Subsidiaries will be entitled to classify such RestrictedPayment (or portion thereof) on the date of its payment or later reclassify such Restricted Payment (or portion thereof) inany manner that complies with this Section 4.08. The amount of all Restricted Payments (other than cash) will be the FairMarket Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by theParent Guarantor or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
SECTION 4.09. Limitation on Sale of Certain Assets.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, consummate any AssetSale unless:
(i) the consideration the Parent Guarantor or such Restricted Subsidiary receives for such Asset Sale is notless than the Fair Market Value of the assets sold (as determined in good faith by the Parent Guarantor’s Board ofDirectors);
(ii) at least 75% of the consideration the Parent Guarantor or such Restricted Subsidiary receives in respectof such Asset Sale consists of (A) cash (including any Net Cash Proceeds received from the conversion within 90 days ofsuch Asset Sale of securities, notes or other obligations received in consideration of such Asset Sale); (B) Cash Equivalents;(C) the assumption by the purchaser of (x) the Parent Guarantor’s Debt or Debt of any Restricted Subsidiary (other thanSubordinated Debt) as a result of which neither the Parent Guarantor nor any of the Restricted Subsidiaries remainsobligated in respect of such Debt or (y) Debt of a Restricted Subsidiary that is no longer a Restricted Subsidiary as a resultof such Asset Sale, if the Parent Guarantor and each other Restricted Subsidiary is released from any guarantee of such Debtas a result of such Asset Sale; (D) Replacement Assets; (E) any Designated Non-cash Consideration
-54-
received by the Parent Guarantor or such Restricted Subsidiary in such Asset Sale having an aggregate Fair MarketValue, taken together with all other Designated Non-cash Consideration received pursuant to this clause (ii), not to exceedthe greater of $225,000,000 and 3.00% of Total Assets at the time of the receipt of such Designated Non-cashConsideration, with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the timereceived and without giving effect to subsequent changes in value; or (F) a combination of the consideration specified insub-clauses (A) to (E) of this Section 4.09(a)(ii); and
(iii) the Parent Guarantor delivers an Officer’s Certificate to the Trustee certifying that such Asset Salecomplies with the provisions described in sub-clauses (i) and (ii) of this Section 4.09(a).
(b) If the Parent Guarantor or any Restricted Subsidiary consummates an Asset Sale, the Net Cash Proceedsfrom such Asset Sale, within 360 days after the consummation of such Asset Sale, may be used by the Parent Guarantor orsuch Restricted Subsidiary to (A) permanently repay, purchase or prepay any then outstanding (i) Debt of the ParentGuarantor or any Restricted Subsidiary (and to effect a corresponding commitment reduction if such Debt is revolving creditborrowings) owing to a Person other than the Parent Guarantor or a Restricted Subsidiary to the extent secured by a Lien (ii)Debt of a Restricted Subsidiary that is not a Guarantor owing to a Person other than the Parent Guarantor or a RestrictedSubsidiary or (iii) any other Pari Passu Debt other than the Existing Unsecured Notes or any other unsecured Debt that isguaranteed on a subordinated basis (B) invest in any Replacement Assets, (C) acquire all or substantially all of the assets of,or any Capital Stock of, another Similar Business, if, after giving effect to any such acquisition of Capital Stock, the SimilarBusiness is or becomes a Restricted Subsidiary, or (D) any combination of the foregoing; provided that in the case of sub-clause (B) of this Section 4.09(b), if the Parent Guarantor or such Restricted Subsidiary, as the case may be, has entered intoa binding commitment in definitive form within such 360-day period to so apply such Net Cash Proceeds with the good faithexpectation that such Net Cash Proceeds will be applied to satisfy such commitment within 180 days of such commitment(an “Acceptable Commitment”), such binding commitment shall be treated as a permitted application of such Net CashProceeds; provided, further, that if any Acceptable Commitment is later cancelled or terminated for any reason before suchNet Cash Proceeds are applied and after such initial 360-day period, then such Net Cash Proceeds shall constitute ExcessProceeds. The amount of such Net Cash Proceeds not so used as set forth in this Section 4.09(b) constitutes “ExcessProceeds”. The Parent Guarantor may reduce revolving credit borrowings or otherwise invest such Net Cash Proceeds in anymanner that is not prohibited by the terms of this Indenture.
(c) The Parent Guarantor or the Issuers may also at any time, and the Parent Guarantor or the Issuers shallwithin 20 Business Days after the aggregate amount of Excess Proceeds exceeds the greater of $100,000,000 and 1.5% ofTotal Assets, make an offer to purchase (an “Excess Proceeds Offer”) from all Holders and from the holders of any PariPassu Debt (which, in the case of Excess Proceeds which constitute proceeds from the sale or other disposition of Collateral,were secured by a Lien on such Collateral), to the extent required by the terms thereof, on a pro rata basis, in accordancewith the procedures set forth in this Indenture or the agreements governing any such Pari Passu Debt, the maximumprincipal amount (expressed as an integral multiple of $1,000) of the Notes and any such Pari Passu Debt that may bepurchased with the amount of the Excess Proceeds. The offer price as to each Note and any such Pari Passu Debt will bepayable in cash in an amount equal to (solely in the case of the Notes) 100% of the principal amount of such Note and(solely in the case of Pari Passu Debt) no greater than 100% of the principal amount (or accreted value, as applicable) ofsuch Pari Passu Debt, plus in each case accrued and unpaid interest, if any, to the date of purchase.
(d) To the extent that the aggregate principal amount of Notes and any such Pari Passu Debt tendered pursuantto an Excess Proceeds Offer is less than the aggregate amount of Excess Proceeds, the
-55-
Parent Guarantor may use the amount of such Excess Proceeds not used to purchase the Notes and Pari Passu Debt forgeneral corporate purposes that are not otherwise prohibited by this Indenture. If the aggregate principal amount of the Notesand any such Pari Passu Debt validly tendered and not withdrawn by holders thereof exceeds the aggregate amount ofExcess Proceeds, the Notes and any such Pari Passu Debt to be purchased shall be selected by the Trustee on a pro ratabasis (based upon the principal amount of Notes and the principal amount or accreted value of such Pari Passu Debttendered by each Holder). Upon completion of each such Excess Proceeds Offer, the amount of Excess Proceeds will bereset to zero.
(e) If the Parent Guarantor or the Issuers are obligated to make an Excess Proceeds Offer, the Parent Guarantoror the Issuers shall purchase the Notes and Pari Passu Debt, at the option of the holders thereof, in whole or in part (as anintegral multiple of $1,000), on a date that is not earlier than 30 days and not later than 60 days from the date the notice ofthe Excess Proceeds Offer is given to such holders, or such later date as may be required under the Exchange Act; providedthat Notes of $200,000 will be purchased in full.
If the Parent Guarantor or the Issuers are required to make an Excess Proceeds Offer, the Parent Guarantor and theIssuers shall comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any otherapplicable securities laws and regulations, including any securities laws of Ireland and the requirements of any applicablesecurities exchange on which Notes or the Existing Ardagh Bonds are then listed. To the extent that the provisions of anysecurities laws or regulations conflict with the provisions of this Section 4.09, the Issuers shall comply with such securitieslaws and regulations and shall not be deemed to have breached their obligations described in this Section 4.09 by virtuethereof.
SECTION 4.10. Limitation on Transactions with Affiliates.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, enterinto or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase,exchange or lease of assets or property or the rendering of any service) with, or for the benefit of, any Affiliate of the ParentGuarantor or any Restricted Subsidiary’s Affiliate involving aggregate consideration in excess of the greater of $75,000,000and 2.0% of Total Assets unless:
(i) such transaction or series of transactions is on terms that, taken as a whole, are not materially lessfavorable to the Parent Guarantor or such Restricted Subsidiary, as the case may be, than those that could have beenobtained in a comparable arm’s-length transaction with third parties that are not Affiliates; and
(ii) with respect to any transaction or series of related transactions involving aggregate payments or thetransfer of assets or provision of services, in each case having a value greater than the greater of $150,000,000 and 2.0% ofTotal Assets, the Parent Guarantor shall deliver a resolution of its Board of Directors (set out in an Officer’s Certificate tothe Trustee) resolving that such transaction complies with Section 4.10(a)(i) and that the fairness of such transaction hasbeen approved by a majority of the Disinterested Directors (or in the event there is only one Disinterested Director, by suchDisinterested Director) of the Parent Guarantor’s Board of Directors.
(b) Notwithstanding the foregoing, the restrictions set forth in Section 4.10(a) will not apply to:
(i) customary directors’ fees, indemnification and similar arrangements (including the payment ofdirectors’ and officers’ insurance premiums), consulting fees, employee salaries, bonuses, employment agreements andarrangements, compensation or employee benefit arrangements, including stock options or legal fees;
-56-
(ii) any Restricted Payment not prohibited by Section 4.08 or the making of an Investment that is aPermitted Investment;
(iii) the agreements and arrangements existing on the Issue Date and any amendment, modification orsupplement thereto; provided that any such amendment, modification or supplement to the terms thereof is not moredisadvantageous to the Holders and to the Parent Guarantor and the Restricted Subsidiaries, as applicable, in any materialrespect than the original agreement or arrangement as in effect on the Issue Date;
(iv) any payments or other transactions pursuant to a tax sharing agreement between the Parent Guarantorand any other Person or a Restricted Subsidiary and any other Person with which the Parent Guarantor or any of itsRestricted Subsidiaries file a consolidated tax return or with which the Issuers are part of a consolidated group for taxpurposes or any tax advantageous group contribution made pursuant to applicable legislation; provided, however, that anysuch payments do not exceed the amounts of such tax that would have been payable by the Parent Guarantor and itsRestricted Subsidiaries on a stand-alone basis and the related tax liabilities of the Parent Guarantor and its RestrictedSubsidiaries are relieved thereby;
(v) transactions in the ordinary course of business with a Person (other than an Unrestricted Subsidiary)that is an Affiliate of the Parent Guarantor solely because the Parent Guarantor owns, directly or through a RestrictedSubsidiary, Capital Stock in, or controls, such Person;
(vi) the issuance of securities pursuant to, or for the purpose of the funding of, employment arrangements,stock options, and stock ownership plans, as long as the terms thereof are or have been previously approved by the ParentGuarantor’s Board of Directors;
(vii) the granting and performance of registration rights for the Parent Guarantor’s securities;
(viii) (A) issuances or sales of Qualified Capital Stock of the Parent Guarantor or DeeplySubordinated Funding and (B) any amendment, waiver or other transaction with respect to any Deeply SubordinatedFunding in compliance with the other provisions of this Indenture;
(ix) pledges by the Parent Guarantor or any Restricted Subsidiary of the Capital Stock of an UnrestrictedSubsidiary or a Permitted Joint Venture securing Debt owing by such Unrestricted Subsidiary or a Permitted Joint Venture;
(x) transactions with a joint venture made in the ordinary course of business;
(xi) transactions between or among the Parent Guarantor and the Restricted Subsidiaries or between oramong Restricted Subsidiaries;
(xii) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services or providersof employees or other labor, in each case in the ordinary course of business and otherwise in compliance with the terms ofthis Indenture that are fair to the Parent Guarantor or the Restricted Subsidiaries, in the reasonable determination of themembers of the Board of Directors of the Parent Guarantor or the senior management thereof, or are on terms at least asfavorable as might reasonably have been obtained at such time from an unaffiliated Person;
(xiii) any transaction effected as part of a Permitted Receivables Financing;
-57-
(xiv) pledges of equity interests of Unrestricted Subsidiaries;
(xv) any employment agreement, consultancy agreement or employee benefit arrangement with anyemployee, consultant, officer or director of the Parent Guarantor or any Restricted Subsidiary, including under any stockoption, stock appreciation rights, stock incentive or similar plans, entered into in the ordinary course of business; and
(xvi) (x) the Trivium Transactions and the payment of all costs and expenses (including all legal, accountingand other professional fees and expenses) related to the Trivium Transactions or any payment as contemplated by theTransaction Agreement; (y) any transactions or services pursuant to the Mutual Services Agreement and any services ortransactions that are similar or incidental to the services or transactions contemplated therein provided on an arm’s lengthbasis; and (z) any transactions or services pursuant to the IP Cross-License Agreement and any services or transactions thatare similar or incidental to the services or transactions contemplated therein provided on an arm’s length basis.
SECTION 4.11. Purchase of Notes upon a Change of Control.
(a) If a Change of Control occurs at any time, then the Issuers or the Parent Guarantor shall make an offer (a“Change of Control Offer”) to each Holder to purchase such Holder’s Notes, at a purchase price (the “Change of ControlPurchase Price”) in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, ifany, to the date of purchase (the “Change of Control Purchase Date”) (subject to the rights of holders of record on relevantregular Record Dates that are prior to the Change of Control Purchase Date to receive interest due on an Interest PaymentDate).
(b) Within 30 days following any Change of Control, the Issuers or the Parent Guarantor shall:
(i) cause a notice of the Change of Control Offer to be:
(A) delivered to holders of the Notes electronically or mailed by first-class mail, postageprepaid; and
(B) if at the time of such notice the Notes are listed on Euronext Dublin and the rules ofEuronext Dublin so require, published in The Irish Times (or another leading newspaper of generalcirculation in Ireland or, to the extent and in the manner permitted by the rules of Euronext Dublin, postedon the official website of Euronext Dublin); and
(ii) send notice of the Change of Control Offer by first-class mail, with a copy to the Trustee, to eachHolder to the address of such Holder appearing in the Security Register, which notice shall state:
(A) that a Change of Control has occurred, and the date it occurred;
(B) the circumstances and relevant facts regarding such Change of Control (including, but notlimited to, applicable information with respect to pro forma historical income, cash flow and capitalizationafter giving effect to the Change of Control);
(C) the Change of Control Purchase Price and the Change of Control Purchase Date, which shallbe a Business Day no earlier than 10 days nor later than 60 days from the date such notice is mailed, or suchlater date as is necessary to comply with requirements under the Exchange Act and any applicable securitieslaws or regulations;
-58-
(D) that any Note accepted for payment pursuant to the Change of Control Offer shall cease toaccrue interest after the Change of Control Purchase Date unless the Change of Control Purchase Price is notpaid;
(E) that any Note (or part thereof) not tendered shall continue to accrue interest; and
(F) any other procedures that a Holder must follow to accept a Change of Control Offer or towithdraw such acceptance (which procedures may also be performed at the office of the paying agent inIreland as long as the Notes are listed on Euronext Dublin).
(c) On the Change of Control Purchase Date, the Issuers shall, to the extent lawful:
(i) accept for payment all Notes or portions thereof (equal to $200,000 or an integral multiple of $1,000 inexcess thereof) properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of Control Purchase Price in respect ofall Notes or portions thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officer’sCertificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Issuers.
The Issuers or the Parent Guarantor will publicly announce the results of the Change of Control Offer on, oras soon as practical after, the Change of Control Purchase Date.
(d) The Paying Agent shall promptly mail to each Holder that has properly tendered its Notes pursuant to theChange of Control Offer an amount equal to the Change of Control Purchase Price for such Notes and the Trustee shall itselfor via the authenticating agent promptly authenticate and mail (or cause to be transferred by book-entry) to each such Holdera new Note or Notes equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided thateach such new Note shall be in a principal amount of $200,000 and in integral multiples of $1,000 in excess thereof.
(e) If the Change of Control Purchase Date is on or after an interest Record Date and on or before the relatedInterest Payment Date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Note isregistered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tenderpursuant to the Change of Control Offer.
(f) Neither the Issuers nor the Parent Guarantor shall be required to make a Change of Control Offer upon aChange of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise incompliance with the requirements set forth herein applicable to a Change of Control Offer made by the Issuers or the ParentGuarantor and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
(g) The Issuers and the Parent Guarantor shall comply with the applicable tender offer rules, includingRule 14e-l under the Exchange Act, and any other applicable securities laws and regulations in connection with a Change ofControl Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of thisIndenture, the Issuers and the Parent Guarantor shall comply with the applicable securities laws and regulations and shall notbe deemed to have breached their obligations under this Indenture by virtue of such conflict.
-59-
(h) Notwithstanding anything to the contrary contained in this Section 4.11, a Change of Control Offer may bemade in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitiveagreement is in place for the Change of Control at the time the Change of Control Offer is made.
SECTION 4.12. Additional Amounts.
(a) All payments that the Issuers make under or with respect to the Notes or that the Guarantors make under orwith respect to the Guarantees shall be made free and clear of and without withholding or deduction for or on account of anypresent or future tax, duty, levy, impost, assessment or other governmental charge (including, without limitation, penalties,interest and other similar liabilities related thereto) of whatever nature (collectively, “Taxes”) imposed or levied on suchpayments by or on behalf of any jurisdiction (other than the United States, any state thereof or the District of Columbia) inwhich any Issuer or Guarantor is organized, resident or doing business for tax purposes or from or through which any of theforegoing (or its agents, including the Paying Agent) makes any payment on the Notes or by or within any department,political subdivision or governmental authority of or in any of the foregoing having power to tax (each, a “Relevant TaxingJurisdiction”), unless such Issuer or Guarantor or other applicable withholding agent, as the case may be, is required towithhold or deduct Taxes by law or by the interpretation or administration of law. If either Issuer, a Guarantor or otherapplicable withholding agent is required to withhold or deduct any amount for or on account of Taxes imposed or levied onbehalf of a Relevant Taxing Jurisdiction from any payment made under or with respect to the Notes or any Guarantee, suchIssuer or Guarantor, as the case may be, shall pay additional amounts (“Additional Amounts”) as may be necessary to ensurethat the net amount received by each beneficial owner of the Notes after such withholding or deduction (including anywithholding or deduction in respect of any Additional Amounts) will not be less than the amount the beneficial owner wouldhave received if such Taxes had not been withheld or deducted.
(b) None of the Issuers or Guarantors shall, however, pay Additional Amounts in respect or on account of:
(i) any Taxes, to the extent such Taxes are imposed or levied by a Relevant Taxing Jurisdiction by reasonof the Holder’s or beneficial owner’s present or former connection with such Relevant Taxing Jurisdiction (other than themere receipt, ownership, holding or disposition of the Notes, or by reason of the receipt of any payments in respect of anyNotes or any Guarantee, or the exercise or enforcement of rights under any Notes or any Guarantee);
(ii) any Taxes to the extent such Taxes are imposed or withheld by reason of the failure of the Holder orbeneficial owner of the Notes, following the Issuers’ written request addressed to the Holder or beneficial owner, to complywith any certification, identification, information or other reporting requirements (to the extent such holder or beneficialowner is legally eligible to do so), whether required by statute, treaty, regulation or administrative practice of a RelevantTaxing Jurisdiction, as a precondition to exemption from, or reduction in the rate of deduction or withholding of, such Taxesimposed by the Relevant Taxing Jurisdiction (including, without limitation, a certification that the Holder or beneficialowner is not resident in the Relevant Taxing Jurisdiction);
(iii) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;
(iv) any Tax which is payable otherwise than by deduction or withholding from payments made under orwith respect to the Notes or any Guarantee;
-60-
(v) any Tax imposed on or with respect to any payment by any of the Issuers or Guarantors to the Holder ifsuch Holder is a fiduciary or partnership or Person other than the sole beneficial owner of such payment to the extent thatsuch Taxes would not have been imposed on such payment had such beneficial owner been the holder of such Note;
(vi) any Tax that is imposed on or with respect to a payment made to a Holder or beneficial owner whowould have been able to avoid such withholding or deduction by presenting the relevant Notes to another paying agent in amember state of the European Union or the United Kingdom;
(vii) any Taxes, to the extent such Taxes were imposed as a result of the presentation of a Note for payment(where presentation is required) more than 30 days after the relevant payment is first made available to the Holder (except tothe extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day ofsuch 30-day period);
(viii) any U.S. federal withholding Taxes or equivalent thereof imposed pursuant to Sections 1471through 1474 of the Internal Revenue Code of 1986 as of the Issue Date (or any amended or successor version that issubstantively comparable and not materially more onerous to comply with), any current or future regulations promulgatedthereunder or other official administrative interpretations thereof and any agreements entered into pursuant to currentSection 1471(b)(1) of the Internal Revenue Code of 1986 as of the Issue Date (or any amended or successor versiondescribed above), and including (for the avoidance of doubt) any intergovernmental agreements (and any law, regulation,rule or practice implementing any such intergovernmental agreement) in respect of the foregoing; or
(ix) any combination of the foregoing.
(c) The Issuers and the Guarantors, if the applicable withholding agents, shall (i) make such withholding ordeduction as is required by applicable law and (ii) remit the full amount deducted or withheld to the relevant authority inaccordance with applicable law.
(d) At least 30 calendar days prior to each date on which any payment under or with respect to the Notes or anyGuarantee is due and payable, if the Issuers or any Guarantor shall be obligated to pay Additional Amounts with respect tosuch payment (unless such obligation to pay Additional Amounts arises after the 30th day prior to the date on whichpayment under or with respect to the Notes or any Guarantee is due and payable, in which case it will be promptlythereafter), the Issuers shall deliver to the Trustee, with a copy to the Paying Agent, an Officer’s Certificate stating that suchAdditional Amounts will be payable and the amounts so payable and setting forth such other information as is necessary toenable the Paying Agent to pay such Additional Amounts to the Holders on the payment date. The Trustee and the PayingAgent shall be entitled to rely solely on such Officer’s Certificate as conclusive proof that such payments are necessary. TheIssuers shall promptly publish a notice in accordance with Section 12.02 stating that such Additional Amounts will bepayable and describing the obligation to pay such amounts.
In addition, the Issuers or any Guarantor, as the case may be, shall pay any present or future stamp, issuance,registration, court, documentary, excise or property taxes or other similar taxes, charges and duties, including, withoutlimitation, interest, penalties and other similar liabilities with respect thereto, imposed by any Relevant Taxing Jurisdictionin respect of (i) the execution, issue, delivery or registration of the Notes or any Guarantee or any other document orinstrument referred to thereunder, or (ii) the receipt of any payments under or with respect to, or enforcement of, the Notesor any Guarantee.
-61-
Upon written request, any of the Issuers or a Guarantor will furnish to the Trustee or a Holder within a reasonabletime certified copies of tax receipts evidencing any payment by such Issuer or Guarantor (as the case may be) of any Taxesimposed or levied by a Relevant Taxing Jurisdiction, in accordance with the procedures described in Section 12.02, in suchform as provided in the normal course by the taxing authority imposing such Taxes. If, notwithstanding the efforts of suchIssuer or Guarantor to obtain such receipts, the same are not obtainable, such Issuer or Guarantor will provide the Trustee orsuch Holder with other evidence reasonably satisfactory to the Trustee or holder of such payments by such Issuer orGuarantor. If requested by the Trustee, the Issuers and (to the extent necessary) any Guarantors will provide to the Trusteesuch information as may be reasonably available to such Issuer and the Guarantors (and not otherwise in the possession ofthe Trustee) to enable determination of the amount of any withholding Taxes attributable to any particular Holder(s).
(e) Whenever this Indenture or the Notes refers to, in any context, the payment of principal, premium, if any,interest or any other amount payable under or with respect to any Note (including payments thereof made pursuant to aGuarantee), such reference includes the payment of Additional Amounts, if applicable.
(f) This Section 4.12 will survive any termination, defeasance or discharge of this Indenture and shall applymutatis mutandis to any jurisdiction (other than the United States, any state thereof or the District of Columbia) in whichany successor Person to any of the Issuers or Guarantors is organized, resident or doing business for tax purposes or anyjurisdiction from or through which any such person (or its agents, including the Paying Agent) makes any payment on theNotes (or any Guarantee) and any department, political subdivision or governmental authority of or in any of the foregoinghaving the power to tax.
SECTION 4.13. Additional Intercreditor Agreements.
(a) At the request and direction of the Parent Guarantor and without the consent of the Holders, in connectionwith the incurrence by the Parent Guarantor or its Restricted Subsidiaries of any Permitted Debt, the Parent Guarantor, therelevant Restricted Subsidiaries, the Trustee and the Security Agent shall enter into with the Holders (or their dulyauthorized representatives) an intercreditor agreement (an “Additional Intercreditor Agreement”) or a restatement,amendment or other modification of the existing Intercreditor Agreement, in each case on substantially the same terms as theIntercreditor Agreement or terms not violating the terms of this Indenture (for such matters covered by this Indenture) orterms not affecting adversely the rights of the Holders of the Notes in material respects (for such matters not covered by thisIndenture), including containing substantially the same terms with respect to release of Guarantees and priority and releaseof the Security Interests; provided that such Additional Intercreditor Agreement will not impose any personal obligations onthe Trustee or Security Agent or, in the opinion of the Trustee or Security Agent, as applicable, adversely affect the rights,duties, liabilities or immunities of the Trustee or Security Agent under this Indenture or the Intercreditor Agreement.
(b) At the request and direction of the Parent Guarantor and without the consent of the Holders, the Trustee andthe Security Agent shall from time to time enter into one or more amendments to any Intercreditor Agreement to: (i) cureany ambiguity, omission, defect or inconsistency of any such agreement, (ii) increase the amount or types of Debt coveredby any such agreement that may be incurred by an Issuer or a Guarantor that is subject to any such agreement (includingwith respect to any Intercreditor Agreement or Additional Intercreditor Agreement, the addition of provisions relating tonew Debt ranking junior in right of payment to the Notes), (iii) add Restricted Subsidiaries to the Intercreditor Agreement oran Additional Intercreditor Agreement, (iv) further secure the Notes (including Additional Notes), (v) make provision forequal and ratable pledges of the Collateral to secure Additional Notes, (vi) implement any Permitted Collateral Liens, (vii)amend the Intercreditor Agreement or any Additional Intercreditor
-62-
Agreement in accordance with the terms thereof or (viii) make any other change to any such agreement that does not violatethe terms of this Indenture. The Parent Guarantor shall not otherwise direct the Trustee or the Security Agent to enter intoany amendment to any Intercreditor Agreement without the consent of the Holders of the majority in aggregate principalamount of the Notes then outstanding, except as otherwise permitted below under Article Nine, and the Parent Guarantormay only direct the Trustee and the Security Agent to enter into any amendment to the extent such amendment does notimpose any personal obligations on the Trustee or Security Agent or, in the opinion of the Trustee or Security Agent,adversely affect their respective rights, duties, liabilities or immunities under this Indenture or the Intercreditor Agreementor any Additional Intercreditor Agreement.
(c) In relation to any Intercreditor Agreement or Additional Intercreditor Agreement, the Trustee (and SecurityAgent, if applicable) shall consent on behalf of the Holders to the payment, repayment, purchase, repurchase, defeasance,acquisition, retirement or redemption of any obligations subordinated to the Notes thereby; provided, however, that suchtransaction would comply with Section 4.08.
(d) Each Holder, by accepting a Note, shall be deemed to have agreed to and accepted the terms and conditionsof the Intercreditor Agreement or any Additional Intercreditor Agreement (whether then entered into or entered into in thefuture pursuant to the provisions described in this Section 4.13) and to have directed the Trustee or Security Agent, asapplicable, to enter into any such Additional Intercreditor Agreement. The Issuers shall make a copy of the IntercreditorAgreement or any Additional Intercreditor Agreement available for inspection by Holders during normal business hours onany Business Day upon prior written request at the offices of the Listing Agent.
SECTION 4.14. Additional Subsidiary Guarantees and Security Interests.
(a) On or prior to the 90th day following the Issue Date, or, upon delivery of an Officer’s Certificate to theTrustee stating that in the good faith determination of the Issuers the outbreak of COVID-19 and measures to prevent itsspread has made it impracticable to incur and perfect such security interests, 120th day following the Issue Date, and subjectto the Agreed Security Principles, the Parent Guarantor shall ensure that each of the Subsidiaries of the Parent Guarantor(other than the Issuers) that is a guarantor of the Existing Ardagh Bonds becomes a Subsidiary Guarantor and, in connectiontherewith, cause such Subsidiary and entities to deliver such agreements, instruments, certificates and opinions of counselthat may be reasonably requested by the Trustee.
(b) On or prior to the 90th day following the Issue Date, or, upon delivery of an Officer’s Certificate to theTrustee stating that in the good faith determination of the Issuers the outbreak of COVID-19 and measures to prevent itsspread has made it impracticable to incur and perfect such security interests, 120th day following the Issue Date, and subjectto the Agreed Security Principles, the Parent Guarantor shall ensure that Security Interests for the benefit of the Trustee andthe Holders in any assets that secure the Existing Secured Notes are in place and perfected, subject to Section 11.04.
Notwithstanding the foregoing, following the replacement and/or refinancing of the Existing Secured Notes otherthan the August 2019 Secured Notes, all mortgages or similar Security Interests in real property in any jurisdiction otherthan the England and Wales or any state of the United States shall be released, and such real property shall no longercomprise Collateral.
SECTION 4.15. Limitation on Guarantees of Debt by Restricted Subsidiaries.
(a) The Parent Guarantor shall not permit any Restricted Subsidiary that is not an Issuer or a Guarantor, directlyor indirectly, to guarantee, assume or in any other manner become liable for the payment
-63-
of any Pari Passu Debt or Subordinated Debt of either Issuer (other than the Notes), the Parent Guarantor or any SubsidiaryGuarantor, unless:
(i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to thisIndenture providing for a Guarantee of payment of the Notes by such Restricted Subsidiary on the same terms as theguarantee of such Debt; and
(ii) with respect to any guarantee of Subordinated Debt by such Restricted Subsidiary, any such guaranteeshall be subordinated to such Restricted Subsidiary’s Guarantee with respect to the Notes at least to the same extent as suchSubordinated Debt is subordinated to the Notes.
This clause (a) shall not be applicable to any guarantees of any Restricted Subsidiary:
(A) existing on the Issue Date, guaranteeing Debt under Credit Facilities permitted to be incurredpursuant to Section 4.06(b)(ii) and Section 4.06(b)(xiii) or guaranteeing Debt in an aggregate principal amount thatis less than the greater of $100,000,000 and 1.5% of Total Assets;
(B) that existed at the time such Person became a Restricted Subsidiary if the guarantee was not incurredin connection with, or in contemplation of, such Person becoming a Restricted Subsidiary; or
(C) given to a bank or trust company having combined capital and surplus and undivided profits of notless than €500,000,000, whose debt has a rating, at the time such guarantee was given, of at least BBB+ or theequivalent thereof by S&P and at least Baa1 or the equivalent thereof by Moody’s, in connection with the operationof cash management programs established for the Parent Guarantor’s benefit or that of any Restricted Subsidiary.
(b) Notwithstanding the foregoing, any Guarantee of the Notes created pursuant to the provisions described inSection 4.15(a) above may provide by its terms that it will be automatically and unconditionally released and dischargedupon:
(i) any sale, exchange or transfer, to any Person who is not the Parent Guarantor or a Restricted Subsidiaryof all of the Capital Stock owned by the Parent Guarantor and its other Restricted Subsidiaries in, or all or substantially allthe assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture); or
(ii) (with respect to any Guarantee created after the Issue Date) the release by the Holders of the applicableIssuer’s, the Parent Guarantor’s or the Subsidiary Guarantor’s Debt described in Section 4.15(a) above, of their Guaranteeby such Restricted Subsidiary (including any deemed release upon payment in full of all Obligations under such Debt otherthan as a result of payment under such Guarantee), at a time when:
(A) no other Debt of either Issuer, the Parent Guarantor or any Subsidiary Guarantor has beenguaranteed by such Restricted Subsidiary; or
(B) the holders of all such other Debt that is guaranteed by such Restricted Subsidiary alsorelease their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full ofall Obligations under such Debt other than as a result of payment under such Guarantee); or
-64-
(iii) the release of the Guarantees on the terms and conditions and in the circumstances described in Section10.03.
(c) Notwithstanding the foregoing, the Parent Guarantor shall not be obligated to cause any such RestrictedSubsidiary to guarantee the Notes to the extent that such Guarantee would reasonably be expected to give rise to or result in(A) any violation of applicable law, rule, regulation or order that cannot be avoided or otherwise prevented throughmeasures reasonably available to the Parent Guarantor or such Restricted Subsidiary, (B) personal liability for the officers,directors or shareholders of such Restricted Subsidiary or (C) any significant cost, expense, liability or obligation (includingwith respect to any Taxes but excluding any reasonable guarantee or similar fee payable to the Parent Guarantor or aRestricted Subsidiary) other than any governmental or regulatory filings required as a result of, or any measures pursuant tosub-clause (A) of this Section 4.15(c) undertaken in connection with, such Guarantee, which cannot be avoided throughmeasures reasonably available to the Parent Guarantor or the Restricted Subsidiary; provided, however, that any RestrictedSubsidiary who directly or indirectly, guarantees, assumes or in any other manner become liable for the payment of anyobligations under the Existing Ardagh Bonds shall also be required to Guarantee payment of the Notes on the same terms asthe guarantee of such obligations.
(d) Each such additional Guarantee will be limited as necessary to recognize certain defenses generallyavailable to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference, financialassistance, corporate purpose and corporate benefit, thin capitalization, distributable reserves, capital maintenance or similarlaws, regulations or defenses affecting the rights of creditors generally) or other considerations under applicable law.
SECTION 4.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly,create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on theability of any Restricted Subsidiary to:
(i) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stockor any other interest or participation in, or measured by, its profits;
(ii) pay any Debt owed to the Parent Guarantor or any other Restricted Subsidiary;
(iii) make loans or advances to the Parent Guarantor or any other Restricted Subsidiary; or
(iv) transfer any of its properties or assets to the Parent Guarantor or any other Restricted Subsidiary.
(b) The provisions of Section 4.16(a) shall not apply to:
(i) encumbrances and restrictions imposed by the Notes, the Existing Ardagh Bonds, this Indenture, anyCredit Facility, the indentures governing the Existing Ardagh Bonds, the Intercreditor Agreement (or any AdditionalIntercreditor Agreement), the Senior Holdco Notes and the security documents related thereto or by other indentures oragreements governing other Debt incurred ranking equally with the Notes;
-65-
(ii) any customary encumbrances or restrictions created under any agreements with respect to Debt of theParent Guarantor or any Restricted Subsidiary permitted to be incurred subsequent to the Issue Date pursuant to theprovisions of Section 4.06, including encumbrances or restrictions imposed by Debt permitted to be incurred under CreditFacilities or any guarantees thereof in accordance with Section 4.06; provided that such agreements do not prohibit thepayment of interest with respect to the Notes or the Guarantees absent a default or event of default under such agreement;
(iii) encumbrances or restrictions contained in any agreement in effect on the Issue Date (other than anagreement described in another sub-clause of this Section 4.16(b));
(iv) with respect to restrictions or encumbrances referred to in Section 4.16(a)(iv), encumbrances andrestrictions that restrict in a customary manner the subletting, assignment or transfer of any properties or assets that aresubject to a lease, license, conveyance or other similar agreement to which the Parent Guarantor or any RestrictedSubsidiary is a party;
(v) encumbrances or restrictions contained in any agreement or other instrument of a Person (including itsSubsidiaries), acquired by the Parent Guarantor or any Restricted Subsidiary in effect at the time of such acquisition (but notcreated in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties orassets of any Person, other than the Person, or the property or assets of the Person, so acquired (including its Subsidiaries);
(vi) encumbrances or restrictions contained in contracts for sales of Capital Stock or assets permitted by theprovisions of Section 4.09 with respect to the assets or Capital Stock to be sold pursuant to such contract or in customarymerger or acquisition agreements (or any option to enter into such contract) for the purchase or acquisition of Capital Stockor assets or any of the Parent Guarantor’s Subsidiaries by another Person;
(vii) with respect to restrictions or encumbrances referred to in Section 4.16(a)(iv), any customaryencumbrances or restrictions pertaining to any asset or property subject to a Lien to the extent set forth in the securitydocument or any related document governing such Lien;
(viii) encumbrances or restrictions imposed by applicable law or regulation or by governmentallicenses, concessions, franchises or permits;
(ix) encumbrances or restrictions on cash or other deposits or net worth imposed by customers undercontracts entered into the ordinary course of business;
(x) customary limitations on the distribution or disposition of assets or property in joint venture agreementsentered into the ordinary course of business and in good faith by any Restricted Subsidiary; provided that such encumbranceor restriction is applicable only to such Restricted Subsidiary and its Subsidiaries;
(xi) in the case of Section 4.16(a)(iv), customary encumbrances or restrictions in connection with purchasemoney obligations, mortgage financings and Capitalized Lease Obligations for property acquired in the ordinary course ofbusiness;
(xii) any encumbrance or restriction arising by reason of customary non-assignment provisions inagreements;
-66-
(xiii) encumbrances or restrictions with respect to any Permitted Receivables Financing; providedthat such encumbrances or restrictions are customarily required by the institutional sponsor or arranger of such PermittedReceivables Financing in similar types of documents relating to the purchase of similar receivables in connection with thefinancing thereof;
(xiv) encumbrances or restrictions with respect to a Restricted Subsidiary imposed pursuant to a PermittedJoint Venture;
(xv) encumbrances or restrictions incurred in accordance with Section 4.07; or
(xvi) any encumbrances or restrictions existing under any agreement that extends, renews, amends, modifies,restates, supplements, refunds, refinances or replaces the agreements containing the encumbrances or restrictions in theforegoing sub-clauses (i) through (xv); provided that the terms and conditions of any such encumbrances or restrictions arenot materially less favorable, taken as a whole, to the Holders of the Notes than those under or pursuant to the agreement soextended, renewed, amended, modified, restated, supplemented, refunded, refinanced or replaced.
SECTION 4.17. Designation of Unrestricted and Restricted Subsidiaries.
(a) The Parent Guarantor’s Board of Directors may designate any Subsidiary (including newly acquired ornewly established Subsidiaries) to be an “Unrestricted Subsidiary” only if no Default has occurred and is continuing at thetime of or after giving effect to such designation.
(b) In the event of any designation of a Subsidiary as an Unrestricted Subsidiary in accordance with this Section4.17, the Parent Guarantor shall be deemed to have made an Investment constituting a Restricted Payment pursuant toSection 4.08 for all purposes of this Indenture in an amount equal to the greater of (i) the net book value of the ParentGuarantor’s interest in such Subsidiary calculated in accordance with IFRS or (ii) the Fair Market Value of the ParentGuarantor’s interest in such Subsidiary.
(c) The Parent Guarantor’s Board of Directors may designate any Unrestricted Subsidiary as a RestrictedSubsidiary if:
(i) no Default or Event of Default has occurred and is continuing at the time of or will occur and becontinuing after giving effect to such designation; and
(ii) (x) the Parent Guarantor could incur at least $1.00 of additional Debt (pursuant to Section 4.06(a)) or(y) the Fixed Charge Coverage Ratio would not be less than it was immediately prior to giving effect to such designation, ineach case, on a pro forma basis taking into account such designation.
(d) Any designation of a Subsidiary as an Unrestricted Subsidiary or Restricted Subsidiary by the ParentGuarantor’s Board of Directors in accordance with this Section 4.17 shall be evidenced to the Trustee by filing a resolutionof the Parent Guarantor’s Board of Directors with the Trustee giving effect to such designation and an Officer’s Certificatecertifying that such designation complies with the foregoing conditions, and giving the effective date of such designation.Any such filing with the Trustee must occur within 45 days after the end of the Parent Guarantor’s fiscal quarter in whichsuch designation is made (or, in the case of a designation made during the last fiscal quarter of the Parent Guarantor’s fiscalyear, within 90 days after the end of such fiscal year).
-67-
SECTION 4.18. Payment of Taxes and Other Claims. The Parent Guarantor shall pay or discharge and shallcause each of its Subsidiaries to pay or discharge, or cause to be paid or discharged, before the same shall becomedelinquent (a) all material taxes, assessments and governmental charges levied or imposed upon (i) the Parent Guarantor orany such Subsidiary, (ii) the income or profits of any such Subsidiary which is a corporation or (iii) the property of theParent Guarantor or any such Subsidiary and (b) all material lawful claims for labor, materials and supplies that, if unpaid,might by law become a lien upon the property of the Parent Guarantor or any such Subsidiary; provided that the ParentGuarantor shall not be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge orclaim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings or for whichadequate reserves have been established.
SECTION 4.19. Reports to Holders. So long as any Notes are outstanding, the Issuers or the Parent Guarantorshall furnish to the Trustee:
(a) within 120 days (or, if the SEC has granted a longer period for the reporting of equivalentinformation for companies required to make such public filings, such longer period as notified in writing to theTrustee by the Parent Guarantor or the Issuers) after the end of the Parent Guarantor’s fiscal year’s annual reportscontaining the following information: (a) audited consolidated balance sheets of the Parent Guarantor as of the endof the two most recent fiscal years and audited consolidated income statements and statements of cash flow of theParent Guarantor for the two most recent fiscal years, including footnotes to such financial statements and the reportof the Parent Guarantor’s independent auditors on the financial statements; (b) an operating and financial review ofthe audited financial statements, including a discussion of the results of operations, financial condition and liquidityand capital resources, and a discussion of material commitments and contingencies and critical accounting policies;(c) a description of the business and management of the Parent Guarantor; and (d) material recent developments tothe extent not previously reported;
(b) within 60 days (or, if the SEC has granted a longer period for the reporting of equivalent informationfor companies required to make such public filings, such longer period as notified in writing to the Trustee by theParent Guarantor or the Issuers) following the end of each of the first three fiscal quarters in each fiscal year of theParent Guarantor’s quarterly reports containing the following information: (a) an unaudited condensed consolidatedbalance sheet as of the end of such quarter and unaudited condensed statements of income and cash flow for thequarterly and year-to-date periods ending on the unaudited condensed balance sheet date, and the comparable prioryear periods for the Parent Guarantor, together with condensed footnote disclosure; (b) operating and financialreview of the unaudited financial statements, including a discussion of the consolidated financial condition andresults of operations of the Parent Guarantor and any material change between the current quarterly period and thecorresponding period of the prior year; and (c) material recent developments to the extent not previously reported;and
(c) promptly after the occurrence of any material acquisition, disposition or restructuring of the ParentGuarantor and the Restricted Subsidiaries, taken as a whole, or any change of the entire Board of Directors,chairman of the Board of Directors, chief executive officer or chief financial officer at the Parent Guarantor orchange in auditors of the Parent Guarantor, a press release containing a description of such event.
In addition, the Issuers or the Parent Guarantor shall furnish to the Holders and to prospective investors, upon therequests of such Holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act solong as the Notes are not freely transferable under the Exchange Act by Persons who are not “affiliates” under the SecuritiesAct.
-68-
The Issuers or the Parent Guarantor shall also make available copies of all reports furnished to the Trustee (a) on thewebsite of the Ardagh group of companies and (b) through the newswire service of Bloomberg, or, if Bloomberg does notthen operate, any similar agency.
SECTION 4.20. Further Instruments and Acts. Upon request of the Trustee or the Security Agent (but withoutimposing any duty or obligation of any kind on the Trustee or the Security Agent to make any such request), the Issuers andthe Guarantors shall execute and deliver such further instruments and do such further acts as may be reasonably necessary orproper to carry out more effectively the purpose of this Indenture.
SECTION 4.21. Security Confirmations. In connection with the issuance of any Additional Notes, the Issuersand the Parent Guarantor shall, and the Parent Guarantor shall cause its Subsidiaries to, take those steps in certainjurisdictions (the “Security Confirmations”) that are taken as a matter of market practice to provide that the Notes thenoutstanding continue to benefit from the Collateral and the Security Documents and that the Additional Notes will benefit tothe extent legally possible from the Collateral and the Security Documents. To the extent any Security Confirmations havenot been effected on the date of issuance of the Additional Notes, subject to the Agreed Security Principles, the Issuers andthe Parent Guarantor shall, and the Parent Guarantor shall cause its Subsidiaries to, use commercially reasonable efforts toeffect such Security Confirmations as soon as practicable.
SECTION 4.22. Suspension of Covenants. If on any date following the Issue Date, the Notes have achievedInvestment Grade Status and no Default or Event of Default has occurred and is continuing (a “Suspension Event”), then,beginning on that day and continuing until the Reversion Date, the provisions of Sections 4.06, 4.08, 4.09, 4.10, 4.15 and4.16 and the provisions of Section 5.01(b)(iii) and, in each case, any related default provision of this Indenture will cease tobe effective and will not be applicable to the Parent Guarantor and its Restricted Subsidiaries. Such Sections and any relateddefault provisions shall apply according to their terms from the first day on which a Suspension Event ceases to be in effect.Such Sections shall not, however, be of any effect with regard to actions of the Parent Guarantor properly taken during thecontinuance of the Suspension Event, and Section 4.08 shall be interpreted as if it has been in effect since the date of thisIndenture except that no default will be deemed to have occurred solely by reason of a Restricted Payment made whileSection 4.08 was suspended. On the Reversion Date, all Debt incurred during the continuance of the Suspension Event shallbe classified, at the Parent Guarantor’s option, as having been incurred pursuant to Section 4.06(a) or one of the sub-clausesset forth in Section 4.06(b) (to the extent such Debt would be permitted to be incurred thereunder as of the Reversion Dateand after giving effect to Debt incurred prior to the Suspension Event and outstanding on the Reversion Date). To the extentsuch Debt shall not be so permitted to be incurred under Section 4.06(a) or Section 4.06(b), such Debt shall be deemed tohave been outstanding on the Issue Date, so that it is classified as permitted under Section 4.06(b)(iii).
ARTICLE 5 CONSOLIDATION, MERGER AND SALE OF ASSETS
SECTION 5.01. Consolidation, Merger and Sale of Assets.
(a) The Parent Guarantor shall not, in a single transaction or through a series of transactions, consolidate with ormerge with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of, or take any actionpursuant to any resolution passed by the Parent Guarantor’s Board of Directors or shareholders with respect to a demerger ordivision pursuant to which the Parent Guarantor would dispose of, all or substantially all of the Parent Guarantor’sproperties and assets (other than Capital Stock, Debt or other securities of any Unrestricted Subsidiary) to any other Personor Persons and the Parent Guarantor shall not permit any Restricted Subsidiary to enter into any such transaction or series oftransactions if such
-69-
transaction or series of transactions, in the aggregate, would result in the sale, assignment, conveyance, transfer, lease orother disposition of all or substantially all of the properties and assets (other than Capital Stock, Debt or other securities ofany Unrestricted Subsidiary) of the Parent Guarantor and its Restricted Subsidiaries on a consolidated basis to any otherPerson or Persons.
(b) Section 5.01(a) shall not apply if:
(i) at the time of, and immediately after giving effect to, any such transaction or series of transactions,either the Parent Guarantor will be the continuing corporation or the Person (if other than the Parent Guarantor) formed byor surviving any such consolidation or merger or to which such sale, assignment, conveyance, transfer, lease or dispositionof all or substantially all the properties and assets of the Parent Guarantor and the Restricted Subsidiaries on a consolidatedbasis has been made (the “Surviving Entity”):
(A) will be a corporation duly incorporated and validly existing under the laws of any memberstate of the European Union or the European Economic Area, the United Kingdom, the United States ofAmerica, any state thereof, the District of Columbia, Canada, Switzerland, Australia or Bermuda; and
(B) expressly assumes, by a supplemental indenture in form satisfactory to the Trustee, theParent Guarantor’s obligations under the Notes and this Indenture and will assume the Parent Guarantor’sobligations under the Security Documents, and the Notes, this Indenture and the Security Documents shallremain in full force and effect as so supplemented;
(ii) immediately after giving effect to such transaction or series of transactions on a pro forma basis (andtreating any Obligation of the Parent Guarantor or any Restricted Subsidiary incurred in connection with or as a result ofsuch transaction or series of transactions as having been incurred by the Parent Guarantor or such Restricted Subsidiary atthe time of such transaction), no Default or Event of Default will have occurred and be continuing;
(iii) immediately before and immediately after giving effect to such transaction or series of transactions on apro forma basis (on the assumption that the transaction or series of transactions occurred on the first day of the four-quarterfiscal period immediately prior to the consummation of such transaction or series of transactions with the appropriateadjustments with respect to the transaction or series of transactions being included in such pro forma calculation), the ParentGuarantor (or the Surviving Entity if the Parent Guarantor is not the continuing obligor under this Indenture) could incur atleast $1.00 of additional Debt under the provisions of Section 4.06;
(iv) any Subsidiary Guarantor, unless it is the other party to the transactions described in this Section 5.01,shall have by supplemental indenture confirmed that its Guarantee will apply to such Person’s obligations under thisIndenture and the Notes;
(v) the Liens on Collateral shall remain in full force and effect securing the Notes and the Guarantees, asapplicable; and
(vi) the Parent Guarantor or the Surviving Entity shall have delivered to the Trustee, in form and substancesatisfactory to the Trustee, an Officer’s Certificate (attaching the computations to demonstrate compliance with Section5.01(b)(iii)) and an opinion of independent counsel, each stating that such consolidation, merger, sale, assignment,conveyance, transfer, lease or other
-70-
disposition, and if a supplemental indenture is required in connection with such transaction, such supplementalindenture, comply with the requirements of this Indenture and that this Indenture and the Notes constitute legal, valid andbinding obligations of the continuing person, enforceable in accordance with their terms.
(c) Notwithstanding anything to the contrary set forth above, the Parent Guarantor may designate any Person asa successor parent guarantor (the “Successor Parent Guarantor”); provided that the Parent Guarantor could have merged oramalgamated into such Person in accordance with the provisions hereof, at the time of, and immediately after giving effectto such designation; provided, further, that such Successor Parent Guarantor expressly assumes, by a supplemental indenturein form satisfactory to the Trustee, the Parent Guarantor’s obligations under the Notes and this Indenture.
(d) The Surviving Entity or Successor Parent Guarantor, as applicable, shall succeed to, and be substituted for,and may exercise every right and power of, the Parent Guarantor under this Indenture, but, in the case of a lease of all orsubstantially all of the Parent Guarantor’s assets or in the case of the designation of a Successor Parent Guarantor inaccordance with Section 5.01(c), the Parent Guarantor shall not be released from the obligation to pay the principal of,premium, if any, and interest, on the Notes.
(e) Nothing in this Indenture shall prevent (i) any Restricted Subsidiary from consolidating with, merging intoor transferring all or substantially all of its properties and assets to the Parent Guarantor or any other Restricted Subsidiary,(ii) any Subsidiary Guarantor from consolidating with, merging into or transferring all or substantially all of its propertiesand assets to the Parent Guarantor, either Issuer or another Subsidiary Guarantor (and upon any such transfer, the Guaranteeof the transferring Subsidiary Guarantor shall automatically be released); provided that if such Restricted Subsidiary is aparty to any of the Security Documents, arrangements satisfactory to the Trustee are made to maintain the Lien on Collateralgranted under such Security Documents) or (iii) the Parent Guarantor from appointing any Person as Successor ParentGuarantor; provided that such appointment is made in accordance with Section 5.01(c) above.
The Parent Guarantor shall publish a notice of any consolidation, merger or sale of assets described in Section5.01(a) in accordance with Section 12.02 and, so long as the rules of Euronext Dublin so require, notify such exchange ofany such consolidation, merger or sale.
SECTION 5.02. Successor Substituted. Upon any consolidation or merger, or any sale, conveyance, transfer,lease or other disposition of all or substantially all of the property and assets of the Parent Guarantor in accordance withSection 5.01 of this Indenture, any Surviving Entity formed by such consolidation or into which the Parent Guarantor ismerged or to which such sale, conveyance, transfer, lease or other disposition is made, shall succeed to, and be substitutedfor, and may exercise every right and power of, the Parent Guarantor under this Indenture with the same effect as if suchSurviving Entity had been named as the Parent Guarantor herein; provided that the Parent Guarantor shall not be releasedfrom its obligation to pay the principal of, premium, if any, or interest and Additional Amounts, if any, on the Notes in thecase of a lease of all or substantially all of its property and assets.
-71-
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
(a) “Event of Default”, wherever used herein, means any of the following events:
(i) a default for 30 days in the payment when due of any interest or any Additional Amounts on any Note;or
(ii) default in the payment of the principal of or premium, if any, on any Note at its Maturity (uponacceleration, optional or mandatory redemption, if any, required repurchase or otherwise); or
(iii) failure to comply with the provisions of Article Five; or
(iv) failure to comply with any covenant or agreement of the Parent Guarantor or of any RestrictedSubsidiary that is contained herein or any Guarantees (other than specified in sub-clause (i), (ii) or (iii) of this Section6.01(a)) and such failure continues for a period of 60 days or more, in each case after the written notice specified in Section6.02(a); or
(v) default under the terms of any instrument evidencing or securing the Debt of the Parent Guarantor orany Restricted Subsidiary having an outstanding principal amount in excess of the greater of (i) for so long as any ExistingArdagh Bonds other than the August 2019 Notes remain outstanding, €75,000,000 and (ii) thereafter, the greater of$200,000,000 and 2.75% of Total Assets, in each case, individually or in the aggregate, if that default: (x) results in theacceleration of the payment of such Debt or (y) is caused by the failure to pay such Debt at final maturity thereof aftergiving effect to the expiration of any applicable grace periods and other than by regularly scheduled required prepayment,and such failure to make any payment has not been waived or the maturity of such Debt has not been extended, and in eithercase the total amount of such Debt unpaid or accelerated exceeds (i) for so long as any Existing Ardagh Bonds other than theAugust 2019 Notes remain outstanding, €75,000,000 and (ii) thereafter, the greater of $200,000,000 and 2.75% of TotalAssets or its equivalent at the time; or
(vi) any Guarantee ceases to be, or shall be asserted in writing by any Guarantor, or any Person acting onbehalf of any Guarantor, not to be in full force and effect or enforceable in accordance with its terms (other than as providedfor in this Indenture, any Guarantee, the Intercreditor Agreement or any Additional Intercreditor Agreement); or
(vii) the Security Interests purported to be created under any Security Document will, at any time, cease tobe in full force and effect and constitute a valid and perfected Lien with the priority required by the applicable SecurityDocument, the Intercreditor Agreement and/or any Additional Intercreditor Agreement with respect to Collateral having aFair Market Value in excess of (i) for so long as any Existing Secured Notes other than the August 2019 Secured Notesremain outstanding, €75,000,000 and (ii) thereafter, the greater of $150,000,000 and 2.0% of Total Assets for any reasonother than the satisfaction in full of all obligations under this Indenture and discharge of this Indenture or in accordance withthe terms of the Intercreditor Agreement and/or any Additional Intercreditor Agreement, or any Security Interest purportedto be created thereunder is declared invalid or unenforceable or the Parent Guarantor or any Subsidiary Guarantor grantingCollateral the subject of any such Security Interest asserts, in any pleading in any court of competent jurisdiction, that anysuch Security Interest is invalid or unenforceable and (but only in
-72-
the event that such failure to be in full force and effect or such assertion is capable of being cured without imposingany new hardening period, in equity or at law, that such Security Interest was not otherwise subject immediately prior tosuch failure or assertion) such failure to be in full force and effect or such assertion has continued uncured for a period of 15days; or
(viii) one or more final judgments, orders or decrees (not subject to appeal and not covered byinsurance or indemnities) shall be rendered against the Parent Guarantor or any Material Subsidiary, either individually or inan aggregate amount, in excess of (i) for so long as any Existing Ardagh Bonds other than the August 2019 Notes remainoutstanding, €75,000,000 and (ii) thereafter, the greater of $200,000,000 and 2.75% of Total Assets or its equivalent at thetime, and either a creditor shall have commenced an enforcement proceeding upon such judgment, order or decree or thereshall have been a period of 60 consecutive days or more during which a stay of enforcement of such judgment, order ordecree was not (by reason of pending appeal or otherwise) in effect; or
(ix) the entry by a court of competent jurisdiction of (A) a decree or order for relief in respect of the ParentGuarantor or any Material Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or (B) adecree or order adjudging the Parent Guarantor or any Material Subsidiary bankrupt or insolvent, or seeking reorganization,arrangement, adjustment or composition of or in respect of the Parent Guarantor or any Material Subsidiary under anyapplicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of theParent Guarantor or any Material Subsidiary or of any substantial part of their respective properties or ordering the windingup or liquidation of their affairs, and any such decree, order or appointment pursuant to any Bankruptcy Law for relief shallcontinue to be in effect, or any such other decree, appointment or order shall be unstayed and in effect, for a period of 100consecutive days; or
(x) (A) the Parent Guarantor or any Material Subsidiary (x) commences a voluntary case or proceedingunder any applicable Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or insolvent or (y)consents to the filing of a petition, application, answer or consent seeking reorganization or relief under any applicableBankruptcy Law, (B) the Parent Guarantor or any Material Subsidiary consents to the entry of a decree or order for relief inrespect of the Parent Guarantor or such Material Subsidiary in an involuntary case or proceeding under any applicableBankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it or, (C) the ParentGuarantor or any Material Subsidiary (x) consents to the appointment of, or taking possession by, a custodian, receiver,liquidator, administrator, supervisor, assignee, trustee, sequestrator or similar official of the Parent Guarantor or suchMaterial Subsidiary or of any substantial part of their respective properties, (y) makes an assignment for the benefit ofcreditors or (z) admits in writing its inability to pay its debts generally as they become due.
(b) If a Default or an Event of Default occurs and is continuing and is known to a responsible officer of theTrustee, the Trustee shall mail to each Holder notice of the Default or Event of Default within 15 Business Days after itsoccurrence by registered or certified mail or facsimile transmission of an Officer’s Certificate specifying such event, noticeor other action, its status and what action the Issuers are taking or proposes to take with respect thereto. Except in the case ofa Default or an Event of Default in payment of principal of, premium, if any, and Additional Amounts or interest on anyNotes, the Trustee may withhold the notice to the Holders of such Notes if its Trust Officers in good faith determines thatwithholding the notice is in the interests of the Holders. The Trustee shall not be deemed to have knowledge of a Defaultunless a Trust Officer has actual knowledge of such Default. The Issuers and the Parent
-73-
Guarantor shall also notify the Trustee within 15 Business Days of the occurrence of any Default stating what action, if any,they are taking with respect to that Default.
SECTION 6.02. Acceleration.
(a) If an Event of Default with respect to the Notes (other than an Event of Default specified in clauses (ix) or(x) of Section 6.01(a)) occurs and is continuing, the Trustee or the Holders of not less than 30% in aggregate principalamount of the Notes then outstanding by written notice to the Issuers and the Parent Guarantor (and to the Trustee if suchnotice is given by the Holders) may, and the Trustee, upon the written request of such Holders shall, declare the principalamount of, premium, if any, and any Additional Amounts and accrued interest on all of the outstanding Notes immediatelydue and payable, and upon any such declaration all such amounts payable in respect of the Notes shall become immediatelydue and payable.
(b) If an Event of Default specified in clauses (ix) or (x) of Section 6.01(a) occurs and is continuing, then theprincipal amount of, premium, if any, and Additional Amounts and accrued and unpaid interest on all of the outstandingNotes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee orany Holder.
(c) At any time after a declaration of acceleration under this Indenture, but before a judgment or decree forpayment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of theoutstanding Notes, by written notice to the Issuers, the Parent Guarantor and the Trustee, may rescind and annul suchdeclaration of acceleration and its consequences if:
(i) the Parent Guarantor or either Issuer has paid or deposited with the Trustee a sum sufficient to pay:
(A) all overdue interest and Additional Amounts, if any, on all Notes then outstanding;
(B) all unpaid principal of and premium, if any, on any outstanding Notes that have become dueotherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes;
(C) to the extent that payment of such interest is lawful, interest upon overdue interest andoverdue principal at the rate borne by the Notes; and
(D) all sums paid or advanced by the Trustee under this Indenture and the reasonablecompensation, expenses, disbursements and advances of the Trustee, its agents and counsel;
(ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and
(iii) all Events of Default, other than the non-payment of amounts of principal of, premium, if any, and anyAdditional Amounts and interest on the Notes that have become due solely by such declaration of acceleration, have beencured or waived as provided in Section 6.04.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
-74-
(d) In the event of a declaration of acceleration of the Notes because an Event of Default as described in Section6.01(a)(v) has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if theevent of default or payment default triggering such Event of Default pursuant to Section 6.01(a)(v) shall be remedied orcured, or waived by the holders of the Debt that gave rise to such Event of Default, or such Debt shall have been dischargedin full, within 20 days after the Event of Default arose and if (1) the annulment of the acceleration (if applicable) of theNotes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events ofDefault, except nonpayment of principal, premium or interest, including Additional Amounts, if any, on the Notes thatbecame due solely because of the acceleration of the Notes, have been cured or waived.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may in itsdiscretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings asthe Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of anycovenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other properremedy. Subject to the Intercreditor Agreement or any Additional Intercreditor Agreement, the Trustee may direct theSecurity Agent to take enforcement action with respect to the Collateral if any amount is declared or becomes due andpayable pursuant to Section 6.02 (but not otherwise).
All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee, andall rights of action and claims under the Security Documents may be prosecuted or enforced under the Security Documentsby the Security Agent (in consultation with the Trustee, where appropriate), without the possession of any of the Notes orthe production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee or the SecurityAgent shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provisionfor the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee or the SecurityAgent, their agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has beenrecovered.
SECTION 6.04. Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amountof the outstanding Notes may, by written notice to the Trustee, on behalf of the Holders of all the Notes, waive any pastDefault hereunder and its consequences, except a Default:
(a) in the payment of the principal of, premium, if any, Additional Amounts, if any, or interest on anyNote; or
(b) in respect of a covenant or provision hereof which under Article Nine cannot be modified oramended without the consent of the holders of 90% of the outstanding Notes.
Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemedto have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Defaultor Event of Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority. The Holders of a majority in aggregate principal amount of the Notes maydirect the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising anytrust or power conferred on the Trustee under this Indenture; provided that:
(a) the Trustee may refuse to follow any direction that conflicts with law, this Indenture or that theTrustee determines, without obligation, in good faith may be unduly prejudicial to the rights of Holders not joiningin the giving of such direction;
-75-
(b) the Trustee may refuse to follow any direction that the Trustee determines is unduly prejudicial tothe rights of other Holders or would involve the Trustee in personal liability; and
(c) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent withsuch direction.
SECTION 6.06. Limitation on Suits. A Holder may not institute any proceedings or pursue any remedy withrespect to this Indenture or the Notes unless:
(a) the Holders of at least 30% in aggregate principal amount of outstanding Notes shall have made awritten request to the Trustee to pursue such remedy;
(b) such Holder or Holders offer the Trustee indemnity and/or security (including by way of pre-funding) reasonably satisfactory to the Trustee against any costs, liability or expense;
(c) the Trustee does not comply with the request within 30 days after receipt of the request and the offerof indemnity and/or security (including by way of pre-funding); and
(d) during such 30-day period, the Holders of a majority in aggregate principal amount of theoutstanding Notes do not give the Trustee a direction that is inconsistent with the request.
The limitations in the foregoing provisions of this Section 6.06, however, do not apply to a suit instituted by aHolder for the enforcement of the payment of the principal of, premium, if any, Additional Amounts, if any, or interest, ifany, on such Note on or after the respective due dates expressed in such Note.
A Holder may not use this Indenture to prejudice the rights of any other Holder or to obtain a preference or priorityover another Holder.
SECTION 6.07. Unconditional Right of Holders to Bring Suit for Payment. Notwithstanding any other provisionof this Indenture, the right of any Holder to bring suit for the enforcement of payment of principal, premium, if any,Additional Amounts, if any, and interest, if any, on the Notes held by such Holder, on or after the respective due datesexpressed in the Notes shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. The Issuers covenant that if default is made in the payment of:
(a) any installment of interest on any Note when such interest becomes due and payable and suchdefault continues for a period of 30 days, or
(b) the principal of (or premium, if any, on) any Note at the Maturity thereof,
the Issuers shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Notes, the wholeamount then due and payable on such Notes for principal (and premium, if any), Additional Amounts, if any and interest,and interest on any overdue principal (and premium, if any) and Additional Amounts, if any and, to the extent that paymentof such interest shall be legally enforceable, upon any overdue installment of interest, at the rate borne by the Notes, and, inaddition thereto, such further amount as shall be sufficient to cover the amounts provided for in Section 7.05 and suchfurther amount as
-76-
shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses,disbursements and advances of the Trustee, its agents and counsel.
If the Issuers fail to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of anexpress trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute suchproceeding to judgment or final decree and may enforce the same against the Issuers or any other obligor upon the Notesand collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Issuersor any other obligor upon the Notes, wherever situated.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papersor documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for theproperly incurred compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any otheramounts due the Trustee under Section 7.05) and the Holders allowed in any judicial proceedings relative to any of theIssuers or Guarantors, their creditors or their property and, unless prohibited by law or applicable regulations, may vote onbehalf of the Holders at their direction in any election of a trustee in bankruptcy or other Person performing similarfunctions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to theTrustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to theTrustee any amount due it for the properly incurred compensation, expenses, disbursements and advances of the Trustee, itsagents and its counsel, and any other amounts due the Trustee under Section 7.05. To the extent that the payment of anysuch compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts dueto the Trustee under Section 7.05 out of the estate in any such proceeding, shall be denied for any reason, payment of thesame shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money securities and otherproperties which the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan ofreorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt onbehalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights ofany Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Application of Money Collected. If the Trustee collects any money or property pursuant to thisArticle Six, it shall pay out the money or property in the following order:
FIRST: to the Trustee, any Agent, and the Security Agent for amounts due under Section 7.05;
SECOND: to Holders for amounts due and unpaid on the Notes for principal of, premium, if any, interest, ifany, and Additional Amounts, if any, ratably, without preference or priority of any kind, accordingto the amounts due and payable on the Notes for principal, premium, if any, interest, if any, andAdditional Amounts, if any, respectively; and
THIRD: to the Issuers, any Guarantor or any other obligors of the Notes, as their interests may appear, or as acourt of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. Atleast 30 days before such record date, the Issuers shall mail to each Holder and the Trustee
-77-
a notice that states the record date, the payment date and amount to be paid. This Section 6.10 is subject at all times to theprovisions set forth in Section 11.02.
Notwithstanding the foregoing, the Security Agent shall apply the proceeds of the Collateral as directed by theIntercreditor Agreement or any Additional Intercreditor Agreement.
SECTION 6.11. Undertaking for Costs. A court may in its discretion require, in any suit for the enforcement ofany right or remedy under this Indenture or in any suit against the Trustee or the Security Agent for any action taken oromitted by it as Trustee or as the Security Agent, the filing by any party litigant in the suit of an undertaking to pay the costsof such suit, and such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against anyparty litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.This Section 6.11 does not apply to a suit by the Trustee or the Security Agent, a suit by Holders of more than 10% inaggregate principal amount of the outstanding Notes or to any suit by any Holder pursuant to Section 6.07.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or the Security Agent or any Holder hasinstituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued orabandoned for any reason, or has been determined adversely to the Trustee or the Security Agent or to such Holder, then andin every such case, subject to any determination in such proceeding, the Issuers, any Guarantor, the Trustee, the SecurityAgent and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter allrights and remedies of the Trustee, the Security Agent and the Holders shall continue as though no such proceeding hadbeen instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacementor payment of mutilated, destroyed, lost or stolen Notes in Section 2.07, no right or remedy herein conferred upon orreserved to the Trustee, or the Security Agent or to the Holders is intended to be exclusive of any other right or remedy, andevery right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedygiven hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedyhereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the Trustee, or the Security Agent orof any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right orremedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by thisArticle Six or by law to the Trustee, or the Security Agent or to the Holders may be exercised from time to time, and as oftenas may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.15. Record Date. The Issuers may set a record date for purposes of determining the identity ofHolders entitled to vote or to consent to any action by vote or consent authorized or permitted by Sections 6.04 and 6.05.Unless this Indenture provides otherwise, such record date shall be the later of 30 days prior to the first solicitation of suchconsent or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 2.05 prior to suchsolicitation.
SECTION 6.16. Waiver of Stay or Extension Laws. Each Issuer covenants (to the extent that it may lawfully doso) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of,any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or theperformance of this Indenture; and the Issuers (to the extent that it may lawfully do so) hereby expressly waives all benefitor advantage of any such law and covenants that it shall not hinder, delay or impede the execution of any power hereingranted to the Trustee or to the
-78-
Security Agent, but shall suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE 7 TRUSTEE AND SECURITY AGENT
SECTION 7.01. Duties of Trustee and the Security Agent.
(a) If an Event of Default has occurred and is continuing of which a Trust Officer of the Trustee or the SecurityAgent has actual knowledge, the Trustee or the Security Agent shall exercise such of the rights and powers vested in it bythis Indenture, the Intercreditor Agreement, and any Additional Intercreditor Agreement and the Security Documents anduse the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances inthe conduct of such person’s own affairs;
(b) Subject to the provisions of Section 7.01(a), (i) the Trustee and the Security Agent undertakes to performsuch duties and only such duties as are specifically set forth in this Indenture, the Intercreditor Agreement, any AdditionalIntercreditor Agreement and the Security Documents and no others and no implied covenants or obligations shall be readinto this Indenture against the Trustee and the Security Agent; and (ii) in the absence of bad faith on its part, the Trustee andthe Security Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressedtherein, upon certificates or opinions furnished to the Trustee and the Security Agent and conforming to the requirements ofthis Indenture, the Intercreditor Agreement, any Additional Intercreditor Agreement and the Security Documents. In the caseof any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee orthe Security Agent, the Trustee and the Security Agent, as applicable, shall examine same to determine whether theyconform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculationsor other facts stated therein);
(c) The Security Agent shall execute and deliver, if necessary, and act as beneficiary under, the SecurityDocuments on behalf of the Holders under this Indenture and shall take such other actions as may be necessary or advisablein accordance with the Security Documents. The Security Agent shall remit any proceeds recovered from enforcement of theSecurity Documents; provided that all necessary approvals are obtained from each relevant jurisdiction in which theCollateral is located.
(d) Neither the Trustee nor the Security Agent shall be relieved from liability for its own negligent action, itsown negligent failure to act or its own willful misconduct, except that:
(i) this clause (d) does not limit the effect of Section 7.01(b);
(ii) the Trustee and the Security Agent shall not be liable for any error of judgment made in good faith by aTrust Officer of the Trustee or the Security Agent unless it is proved that the Trustee or the Security Agent was negligent inascertaining 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 inaccordance with a direction received by it pursuant to Section 6.02 or 6.05;
(e) The Trustee, any Paying Agent and the Security Agent shall not be liable for interest on any money receivedby it except as the Trustee, any Paying Agent and the Security Agent may agree in writing with the Issuers or the SubsidiaryGuarantors. Money held in trust by the Trustee, the Principal Paying Agent or the Security Agent need not be segregatedfrom other funds except to the extent required by law and, for the avoidance of doubt, shall not be held in accordance withthe UK Client Money Rules;
-79-
(f) No provision of this Indenture, the Intercreditor Agreement, any Additional Intercreditor Agreement or theSecurity Documents shall require the Trustee, each Agent, the Principal Paying Agent or the Security Agent to expend orrisk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise ofany of its rights or powers, if it shall have grounds to believe that repayment of such funds or adequate indemnity againstsuch risk or liability is not assured to it; and
(g) Any provisions hereof or of the Intercreditor Agreement, any Additional Intercreditor Agreement or of theSecurity Documents relating to the conduct or affecting the liability of or affording protection to the Trustee, each Agent, orthe Security Agent, as the case may be, shall be subject to the provisions of this Section 7.01.
SECTION 7.02. Certain Rights of Trustee and the Security Agent.
(a) Subject to Section 7.01:
(i) following the occurrence of a Default or an Event of Default, the Trustee is entitled to require allAgents to act under its direction;
(ii) the Trustee and the Security Agent may rely conclusively, and shall be protected in acting or refrainingfrom acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to havebeen signed or presented by the proper person;
(iii) before the Trustee or the Security Agent act or refrain from acting, they may require an Officer’sCertificate or an Opinion of Counsel or both, which shall conform to Section 12.04. Neither the Trustee nor the SecurityAgent shall be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion and suchcertificate or opinion will be equal to complete authorization;
(iv) the Trustee and the Security Agent may act through its attorneys and agents and shall not be responsiblefor the misconduct or negligence of any attorney or agent appointed with due care by it hereunder;
(v) neither the Trustee nor the Security Agent shall be under any obligation to exercise any of the rights orpowers vested in it by this Indenture at the request or direction of any of the Holders, unless such Holders shall have offeredto the Trustee and the Security Agent security and/or indemnity (including by way of pre-funding) satisfactory to themagainst the costs, expenses and liabilities that might be incurred by them in compliance with such request or direction;
(vi) unless otherwise specifically provided in this Indenture, any demand, request, direction or notice fromeither Issuer will be sufficient if signed by an officer of such Issuer;
(vii) neither the Trustee nor the Security Agent shall be liable for any action it takes or omits to take in goodfaith that it believes to be authorized or within its rights or powers;
(viii) whenever, in the administration of this Indenture, the Intercreditor Agreement, any AdditionalIntercreditor Agreement and the Security Documents, the Trustee and the Security Agent shall deem it desirable that amatter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee and the SecurityAgent (unless other
-80-
evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’sCertificate;
(ix) neither the Trustee nor the Security Agent shall be bound to make any investigation into the facts ormatters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee and the Security Agent, intheir discretion, individually, may make such further inquiry or investigation into such facts or matters as it may see fit, and,if the Trustee or the Security Agent shall determine to make such further inquiry or investigation, it shall be entitled toexamine the books, records and premises of the Issuers personally or by agent or attorney;
(x) neither the Trustee nor the Security Agent shall be required to give any bond or surety with respect tothe performance of its duties or the exercise of its powers under this Indenture;
(xi) in the event the Trustee or the Security Agent receives inconsistent or conflicting requests andindemnity from two or more groups of Holders, each representing less than a majority in aggregate principal amount of theNotes then outstanding, pursuant to the provisions of this Indenture, the Trustee and the Security Agent, in their discretion,may determine what action, if any, will be taken;
(xii) the permissive rights of the Trustee and the Security Agent to take the actions permitted by thisIndenture will not be construed as an obligation or duty to do so;
(xiii) delivery of reports, information and documents to the Trustee under Section 4.19 is forinformational purposes only and the Trustee’s receipt of the foregoing will not constitute actual or constructive notice of anyinformation contained therein or determinable from information contained therein, including the Parent Guarantor’s or anyof its Restricted Subsidiary’s compliance with any of their covenants hereunder (as to which the Trustee is entitled to relyexclusively on Officer’s Certificates);
(xiv) the rights, privileges, protections, immunities and benefits given to each of the Trustee and the SecurityAgent in this Indenture, including, without limitation, its rights to be indemnified and compensated, are extended to, and willbe enforceable by, the Trustee and the Security Agent in each of their capacities hereunder, by the Registrar, the Agents, andeach agent, custodian and other Person employed to act hereunder;
(xv) the Trustee and the Security Agent may consult with counsel and the advice of such counsel or anyOpinion of Counsel will, subject to Section 7.01(c), be full and complete authorization and protection from liability inrespect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(xvi) the Trustee and the Security Agent shall have no duty to inquire as to the performance of the covenantsof the Parent Guarantor and/or its Restricted Subsidiaries in Article Four hereof;
(xvii) the Trustee and the Security Agent shall not have any obligation or duty to monitor, determineor inquire as to compliance, and shall not be responsible or liable for compliance with restrictions on transfer, exchange,redemption, purchase or repurchase, as applicable, of minimum denominations imposed under this Indenture or underapplicable law or
-81-
regulation with respect to any transfer, exchange, redemption, purchase or repurchase, as applicable, of any interestin any Notes, but may at its sole discretion, choose to do so;
(xviii) in no event shall the Trustee or the Security Agent be responsible or liable for any failure ordelay in the performance of its obligations hereunder arising out of, or caused by, directly or indirectly, forces beyond itscontrol, including, without limitation, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophesor acts of God; it being understood that the Trustee shall use reasonable efforts that are consistent with accepted practices inthe banking industry to resume performance as soon as practicable under the circumstances; and
(xix) neither the Trustee nor the Security Agent shall under any circumstance be liable for any consequentialloss or punitive damages (including loss of business, goodwill, opportunity or profit of any kind) of the Issuers, anyGuarantor or any Restricted Subsidiary.
(b) The Trustee and the Security Agent may request that the Issuers deliver an Officer’s Certificate setting forththe names of the individuals and/or titles of officers authorized at such time to take specified actions pursuant to thisIndenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including anyperson specified as so authorized in any such certificate previously delivered and not superseded.
(c) The Security Agent shall accept without investigation, requisition or objection such right and title as theIssuers and any Guarantor may have to any of the Collateral and shall not be bound or concerned to examine or enquire intoor be liable for any defect or failure in the right or title of the Issuers or any Guarantor to the Collateral or any part thereofwhether such defect or failure was known to the Security Agent or might have been discovered upon examination or enquiryand whether capable of remedy or not and shall have no responsibility for the validity, value or sufficiency of the Collateral.
(d) Without prejudice to the provisions hereof, the Security Agent shall not be under any obligation to insureany of the Collateral or any certificate, note, bond or other evidence in respect thereof, or to require any other person tomaintain any such insurance and shall not be responsible for any loss, expense or liability which may be suffered as a resultof any assets comprised in the Collateral being uninsured or inadequately insured.
(e) The Security Agent shall not be responsible for any loss, expense or liability occasioned to the Collateral,howsoever caused, by the Security Agent or by any act or omission on the part of any other person (including any bank,broker, depositary, warehouseman or other intermediary or by any clearing system or other operator thereof), or otherwise,unless such loss is occasioned by the willful misconduct or fraud of the Security Agent.
(f) Beyond the exercise of reasonable care in the custody thereof, the Security Agent shall have no duty orliability as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any incomethereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Security Agent shallnot be responsible for filing any financing or continuation statements or recording any documents or instruments in anypublic office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in theCollateral. The Security Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in itspossession if the Collateral is accorded treatment substantially equal to that which it accords its own property and shall notbe liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission ofany carrier, forwarding agency or other agent or bailee selected by the Security Agent in good faith.
-82-
(g) Neither the Trustee nor the Security Agent is required to give any bond or surety with respect to theperformance of its duties or the exercise of its powers under this Indenture or the Notes.
(h) Neither the Trustee nor the Security Agent will be liable to any person if prevented or delayed in performingany of its obligations or discretionary functions under this Indenture by reason of any present or future law applicable to it,by any governmental or regulatory authority or by any circumstances beyond its control.
(i) Notwithstanding anything else herein contained, the Trustee and Agents may refrain without liability fromdoing anything that would or might in its opinion be contrary to any law of any state or jurisdiction (including but notlimited to include the European Union, the United Kingdom and the United States of America or any jurisdiction forming apart of it) or any directive or regulation of any agency of any such state or jurisdiction and may without liability do anythingwhich is, in its opinion, necessary to comply with any such law, directive or regulation.
(j) The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in thatjurisdiction would, in its opinion, based upon legal advice in the relevant jurisdiction, be contrary to any law of thatjurisdiction or, to the extent applicable, the State of New York.
(k) Both the Trustee and the Security Agent may assume without inquiry in the absence of actual knowledgethat the Issuers are duly complying with their obligations contained in this Indenture required to be performed and observedby it, and that no Default or Event of Default or other event which would require repayment of the Notes has occurred.
(l) At any time that the security granted pursuant to the Security Documents has become enforceable and theHolders have given a direction to the Trustee to enforce such security, the Trustee is not required to give any direction to theSecurity Agent with respect thereto unless it has been indemnified and/or secured to its satisfaction in accordance with thisIndenture. In any event, in connection with any enforcement of such security, the Trustee is not responsible for:
(i) any failure of the Security Agent to enforce such security within a reasonable time or at all;
(ii) any failure of the Security Agent to pay over the proceeds of enforcement of the security;
(iii) any failure of the Security Agent to realize such security for the best price obtainable;
(iv) monitoring the activities of the Security Agent in relation to such enforcement;
(v) taking any enforcement action itself in relation to such security;
(vi) agreeing to any proposed course of action by the Security Agent which could result in the Trusteeincurring any liability for its own account; or
(vii) paying any fees, costs or expenses of the Security Agent.
SECTION 7.03. Individual Rights of Trustee and the Security Agent . The Trustee, the Security Agent, anyTransfer Agent, any Paying Agent, any Registrar or any other agent of the Issuers or of the Trustee or Security Agent, in itsindividual or any other capacity, may become the owner or pledgee of
-83-
Notes and, may otherwise deal with the Issuers with the same rights it would have if it were not Trustee, the Security Agent,Paying Agent, Transfer Agent, Registrar or such other agent. The Trustee and the Security Agent may accept deposits from,lend money to, and generally engage in any kind of banking, trust or other business with either Issuer or any of theirrespective Affiliates or Subsidiaries as if it were not performing the duties specified herein, in the Intercreditor Agreement,any Additional Intercreditor Agreement and in the Security Documents, and may accept fees and other consideration fromthe Issuers for services in connection with this Indenture and otherwise without having to account for the same to theTrustee, the Security Agent or to the Holders from time to time.
SECTION 7.04. Disclaimer of Trustee and Security Agent . The recitals contained herein and in the Notes,except for the Trustee’s certificates of authentication, shall be taken as the statements of the Issuers, and the Trustee assumesno responsibility for their correctness. The Trustee and the Security Agent make no representations as to the validity orsufficiency of this Indenture, the Notes or the Security Documents, except that the Trustee represents that it is dulyauthorized to execute and deliver this Indenture and to authenticate the Notes and the Security Agent represents that it isduly authorized to execute and deliver this Indenture and the Security Documents. The Trustee and the Security Agent shallnot be accountable for the Issuers’ use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers’direction under any provision of this Indenture nor shall it be responsible for the use or application of any money receivedby any Paying Agent other than the Trustee and the Security Agent. The Security Agent shall not nor shall any receiverappointed by or any agent of the Security Agent, by reason of taking possession of any Collateral or any part thereof or anyother reason or on any basis whatsoever, be liable to account for anything expect actual receipts or be liable for any loss ordamage arising from a realization of the Collateral or any part thereof or from any act, default or omission in relation to theCollateral or any part thereof or from any exercise or non-exercise by it of any power, authority or discretion conferred uponit in relation to the Collateral or any part thereof unless such loss or damage shall be caused by its own fraud or negligence.The Security Agent shall not have any responsibility or liability arising from the fact that the Collateral may be held in safecustody by a custodian. The Security Agent assumes no responsibility for the validity, sufficiency or enforceability (whichthe Security Agent has not investigated) of the Collateral purported to be created by any supplemental indenture or otherdocument. In addition, the Security Agent has no duty to monitor the performance by the Issuers and the Guarantors of theirobligations to the Security Agent nor is it obliged (unless indemnified and/or secured (including by way of prefunding to itssatisfaction) to take any other action which may involve the Security Agent in any personal liability or expense.
SECTION 7.05. Compensation and Indemnity. The Issuers, failing which the Guarantors, shall pay to theTrustee and the Security Agent such compensation as shall be agreed in writing for their services hereunder. The Trustee’sand the Security Agent’s compensation shall not be limited by any law on compensation of a trustee of an express trust. TheIssuers, failing which the Guarantors, shall reimburse the Trustee and the Security Agent promptly upon request for allproperly incurred disbursements, advances or expenses incurred or made by them, including costs of collection, in additionto the compensation for their services. Such expenses shall include the properly incurred compensation, disbursements,advances and expenses of the Trustee’s and the Security Agent’s agents and counsel.
The Issuers, failing which the Guarantors, shall indemnify the Trustee and the Security Agent against any and allloss, liability or expense (including attorneys’ fees and expenses) incurred by either of them without willful misconduct ornegligence on their part arising out of or in connection with the administration of this trust and the performance of theirduties hereunder (including the costs and expenses of enforcing this Indenture, the Intercreditor Agreement, any AdditionalIntercreditor Agreement and the Security Documents against the Issuers and the Guarantors (including this Section 7.05)and defending themselves against any claim, whether asserted by the Issuers, the Guarantors, any Holder or any otherPerson, or liability in connection with the execution and performance of any of their powers and duties
-84-
hereunder). The Trustee and the Security Agent shall notify the Issuers promptly of any claim for which they may seekindemnity. Failure by the Trustee or the Security Agent to so notify the Issuers shall not relieve the Issuers or any Guarantorof its obligations hereunder. The Issuers shall, at the sole discretion of the Trustee or Security Agent, as applicable, defendthe claim and the Trustee and the Security Agent may cooperate and may participate at the Issuers’ expense in such defense.Alternatively, the Trustee and the Security Agent may at their option have separate counsel of their own choosing and theIssuers shall pay the properly incurred fees and expenses of such counsel. The Issuers need not pay for any settlement madewithout its consent, which consent may not be unreasonably withheld. The Issuers shall not reimburse any expense orindemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct,negligence or bad faith.
To secure the Issuers’ payment obligations in this Section 7.05, the Trustee and the Security Agent shall have a Lienprior to the Notes on all money or property held or collected by the Trustee, in their capacity as Trustee and the SecurityAgent, except money or property, including any proceeds from the sale of Collateral, held in trust to pay principal of,premium, if any, additional amounts, if any, and interest on particular Notes. Such Lien shall survive the satisfaction anddischarge of all Notes under this Indenture.
When either the Trustee or the Security Agent incur expenses after the occurrence of a Default specified inSection 6.01(a)(ix) or (x) with respect to the Issuers, the Guarantors, or any Restricted Subsidiary, the expenses are intendedto constitute expenses of administration under Bankruptcy Law.
The Issuers’ obligations under this Section 7.05 and any claim or Lien arising hereunder shall survive theresignation or removal of any Trustee and the Security Agent, the satisfaction and discharge of the Issuers’ obligationspursuant to Article Eight and any rejection or termination under any Bankruptcy Law, and the termination of this Indenture.
SECTION 7.06. Replacement of Trustee or Security Agent. A resignation or removal of the Trustee and theSecurity Agent and appointment of a successor Trustee and successor Security Agent shall become effective only upon thesuccessor Trustee’s and the successor Security Agent’s acceptance of appointment as provided in this Section 7.06.
The Trustee and, subject to the appointment and acceptance of a successor Security Agent as provided in thisSection and the last paragraph of this Section 7.06, the Security Agent may resign at any time without giving any reason byso notifying the Issuers. The Holders of a majority in outstanding principal amount of the outstanding Notes may remove theTrustee and the Security Agent by so notifying the Trustee, the Security Agent and the Issuers. The Issuers shall remove theTrustee if:
(a) the Trustee or the Security Agent fails to comply with Section 7.09;
(b) the Trustee or the Security Agent is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee or the Security Agent or their property;or
(d) the Trustee or the Security Agent otherwise becomes incapable of acting.
If the Trustee or the Security Agent resigns or is removed, or if a vacancy exists in the office of Trustee or theSecurity Agent for any reason, the Issuers shall promptly appoint a successor Trustee or a successor Security Agent, as thecase may be. Within one year after the successor Trustee or Security Agent takes office, the Holders of a majority inprincipal amount of the outstanding Notes may appoint a successor Trustee or Security Agent to replace the successorTrustee or Security Agent appointed by the Issuers. If
-85-
the successor Trustee or Security Agent does not deliver its written acceptance required by the next succeeding paragraph ofthis Section 7.06 within 30 days after the retiring Trustee or Security Agent resigns or is removed, the retiring Trustee orSecurity Agent, the Issuers or the Holders of a majority in principal amount of the outstanding Notes may, at the expense ofthe Issuers, petition any court of competent jurisdiction for the appointment of a successor Trustee or Security Agent.
A successor Trustee or Security Agent shall deliver a written acceptance of its appointment to the retiring Trustee orSecurity Agent, as the case may be, and to the Issuers. Thereupon the resignation or removal of the retiring Trustee orSecurity Agent shall become effective, and the successor Trustee or Security Agent shall have all the rights, powers andduties of the Trustee or the Security Agent under this Indenture. The successor Trustee or Security Agent shall mail a noticeof its succession to Holders. The retiring Trustee or Security Agent shall promptly transfer all property held by it as Trusteeor Security Agent to the successor Trustee or Security Agent; provided that all sums owing to the Trustee or Security Agenthereunder have been paid and subject to the Lien provided for in Section 7.05.
If a successor Trustee or Security Agent does not take office within 60 days after the retiring Trustee or SecurityAgent resigns or is removed, the retiring Trustee or Security Agent, the Issuers or the Holders of at least 30% in outstandingprincipal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee orSecurity Agent at the expense of the Issuers. Without prejudice to the right of the Issuers to appoint a successor Trustee or asuccessor Security Agent in accordance with the provisions of this Indenture, the retiring Trustee or Security Agent mayappoint a successor Trustee or Security Agent at any time prior to the date on which a successor Trustee or Security Agenttakes office.
If the Trustee or the Security Agent fails to comply with Section 7.09, any Holder who has been a bona fide Holderof a Note for at least six months may petition any court of competent jurisdiction for the removal of the Trustee or theSecurity Agent and the appointment of a successor Trustee or Security Agent.
In addition to the foregoing and notwithstanding any provision to the contrary, any resignation, removal orreplacement of the Security Agent pursuant to this Section 7.06 shall not be effective until (a) a successor to the SecurityAgent has agreed to act under the terms of this Indenture and (b) all of the Security Interests in the Collateral has beentransferred to such successor. Any replacement or successor Security Agent shall be a bank with an office in New York,New York or London, United Kingdom, or an Affiliate of any such bank. Upon acceptance of its appointment as SecurityAgent hereunder by a replacement or successor, such replacement or successor shall succeed to and become vested with allthe rights, powers, privileges and duties of the retiring Security Agent hereunder, and the retiring Security Agent shall bedischarged from its duties and obligations hereunder.
Notwithstanding the replacement of the Trustee or the Security Agent pursuant to this Section 7.06, the Issuers’ andthe Guarantors’ obligations under Section 7.05 shall continue for the benefit of the retiring Trustee or Security Agent.
SECTION 7.07. Successor Trustee or Security Agent by Merger. Any corporation into which the Trustee or theSecurity Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from anymerger, conversion or consolidation to which the Trustee or the Security Agent shall be a party, or any corporationsucceeding to all or substantially all of the corporate trust business of the Trustee or the Security Agent, shall be thesuccessor of the Trustee or the Security Agent hereunder; provided such corporation shall be otherwise qualified and eligibleunder this Article Seven, without the execution or filing of any paper or any further act on the part of any of the partieshereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor bymerger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the
-86-
Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. In case at thattime any of the Notes shall not have been authenticated, any successor Trustee may authenticate such Notes either in thename of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have thefull force and effect which this Indenture provides for the certificate of authentication of the Trustee shall have; providedthat the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of anypredecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
SECTION 7.08. Appointment of Security Agent and Supplemental Security Agents. The parties heretoacknowledge and agree, and each Holder by accepting the Notes acknowledges and agrees that the Issuers hereby appointsCitibank, N.A., London Branch to act as Security Agent hereunder, and Citibank, N.A., London Branch accepts suchappointment. Each Holder by accepting the Notes, authorizes and expressly directs the Trustee and the Security Agent onsuch Holder’s behalf to enter into the Intercreditor Agreement and any Additional Intercreditor Agreement and the Trusteeand the Holders acknowledge that the Security Agent will be acting in respect to the Security Documents and the securitygranted thereunder on the terms outlined therein (which terms in respect of the rights and protections of the Security Agentin the event of an inconsistency with the terms of this Indenture, will prevail), including, without limitation, Schedule 6 ofthe Intercreditor Agreement.
(a) The Security Agent may perform any of its duties and exercise any of its rights and powers through one ormore sub-agents or co-trustees appointed by it. The Security Agent and any such sub-agent or co-trustee may perform any ofits duties and exercise any of its rights and powers through its affiliates. All of the provisions of this Indenture applicable tothe Security Agent (other than covenants and obligations relating to the Parallel Debt) including, without limitation, itsrights to be indemnified, shall apply to and be enforceable by any such sub-agent and affiliates of a Security Agent and anysuch sub-agent or co-trustee. All references herein to a “Security Agent” (other than covenants and obligations relating tothe Parallel Debt) shall include any such sub-agent or co-trustee and affiliates of a Security Agent or any such sub-agent orco-trustee.
(b) It is the purpose of this Indenture, the Intercreditor Agreement, any Additional Intercreditor Agreement andthe Security Documents that there shall be no violation of any Law of any jurisdiction denying or restricting the right ofbanking corporations or associations to transact business as agent or trustee in such jurisdiction. Without limiting Section7.08(a), it is recognized that in case of litigation under, or enforcement of, this Indenture, the Intercreditor Agreement, anyAdditional Intercreditor Agreement or any of the Security Documents, or in case the Security Agent deems that by reason ofany present or future law of any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or inany of the Security Documents or take any other action which may be desirable or necessary in connection therewith, theSecurity Agent is hereby authorized to appoint an additional individual or institution selected by the Security Agent in itssole discretion as a separate trustee, co-trustee, administrative agent, Security Agent, administrative sub-agent oradministrative so-agent (any such additional individual or institution being referred to herein individually as a“Supplemental Security Agent” and collectively as “Supplemental Security Agents”).
(c) In the event that the Security Agent appoints a Supplemental Security Agent with respect to any Collateral,(i) each and every right, power, privilege or duty expressed or intended by this Indenture or any of the other SecurityDocuments (other than the rights arising in respect of the Parallel Debts under Section 11.05) to be exercised by or vested inor conveyed to such Security Agent with respect to such Collateral shall be exercisable by and vest in such SupplementalSecurity Agent to the extent, and only to the extent, necessary to enable such Supplemental Security Agent to exercise suchrights, powers and privileges with respect to such Collateral and to perform such duties with respect to such Collateral, andevery covenant and obligation contained in the Security Documents and necessary to the exercise or
-87-
performance thereof by such Supplemental Security Agent (other than covenants and obligations relating to the ParallelDebt) shall run to and be enforceable by either such Security Agent or such Supplemental Security Agent, and (ii) theprovisions of this Indenture (and, in particular, this Article Seven) that refer to the Security Agent shall inure to the benefitof such Supplemental Security Agent and all references therein to the Security Agent shall be deemed to be references to aSecurity Agent and/or such Supplemental Security Agent, as the context may require.
(d) Should any instrument in writing from the Issuers or any other obligor be required by any SupplementalSecurity Agent so appointed by the Security Agent for more fully and certainly vesting in and confirming to him or it suchrights, powers, privileges and duties, the Parent Guarantor shall, or shall cause the Issuers and relevant Guarantor to,execute, acknowledge and deliver any and all such instruments promptly upon request by the Security Agent. In case anySupplemental Security Agent, or a successor thereto, shall die, become incapable of acting, resign or be removed, all therights, powers, privileges and duties of such Supplemental Security Agent, to the extent permitted by Law, shall vest in andbe exercised by the Security Agent until the appointment of a new Supplemental Security Agent.
SECTION 7.09. Eligibility; Disqualification. There will at all times be a Trustee hereunder that is a corporationorganized and doing business under the laws of England and Wales or the United States of America or of any state thereofthat is authorized under such laws to exercise corporate trustee power and which is generally recognized as a corporationwhich customarily performs such corporate trustee roles and provides such corporate trustee services in transactions similarin nature to the offering of the Notes as described in the Offering Memorandum.
SECTION 7.10. Appointment of Co-Trustee.
(a) It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction denying orrestricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It isrecognized that in case of litigation under this Indenture, and in particular in case of the enforcement thereof on Default, orin the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of thepowers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted or take anyaction which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint anindividual or institution as a separate or co-trustee.
(b) In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, eachand every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and Lien expressed orintended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisableby and vest in such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to exercisesuch powers, rights and remedies, and only to the extent that the Trustee by the laws of any jurisdiction is incapable ofexercising such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by suchseparate or co-trustee shall run to and be enforceable by either of them.
(c) Should any instrument in writing from the Issuers be required by the separate or co-trustee so appointed bythe Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, dutiesand obligations, any and all such instruments in writing shall to the extent permitted by the laws of the State of New Yorkand the jurisdictions of organization of the Issuers, on request, be executed, acknowledged and delivered by the Issuers;provided that if an Event of Default shall have occurred and be continuing, if the Issuers do not execute any such instrumentwithin 15 days after request therefor, the Trustee shall be empowered as an attorney-in-fact for the Issuers to execute anysuch instrument in the Issuers’ name and stead. In case any separate or co-trustee or a successor to either
-88-
shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties andobligations of such separate or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until theappointment of a new trustee or successor to such separate or co-trustee.
(d) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to thefollowing provisions and conditions:
(i) all rights and powers, conferred or imposed upon the Trustee shall be conferred or imposed upon andmay be exercised or performed by such separate trustee or co-trustee; and
(ii) no trustee hereunder shall be liable by reason of any act or omission of any other trustee hereunder.
(e) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of thethen separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separatetrustee or co-trustee shall refer to this Indenture and the conditions of this Article Seven.
(f) Any separate trustee or co-trustee may at any time appoint the Trustee as its agent or attorney-in-fact withfull power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on itsbehalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, allof its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted bylaw, without the appointment of a new or successors trustee.
SECTION 7.11. Resignation of Agents.
(a) Any Agent may resign its appointment hereunder at any time without the need to give any reason andwithout being responsible for any costs associated therewith by giving to the Issuers and the Trustee and (except in the caseof resignation of the Principal Paying Agent) the Principal Paying Agent 30 days’ written notice to that effect (waivable bythe Issuers and the Trustee); provided that in the case of resignation of the Principal Paying Agent no such resignation shalltake effect until a new Principal Paying Agent (approved in advance in writing by the Trustee) shall have been appointed bythe Issuers to exercise the powers and undertake the duties hereby conferred and imposed upon the Principal Paying Agent.Following receipt of a notice of resignation from any Agent, the Issuers shall promptly give notice thereof to the Holders inaccordance with Section 12.02. Such notice shall expire at least 30 days before or after any due date for payment in respectof the Notes.
(b) If any Agent gives notice of its resignation in accordance with this Section 7.11 and a replacement Agent isrequired and by the tenth day before the expiration of such notice such replacement has not been duly appointed, such Agentmay itself appoint as its replacement any reputable and experienced financial institution. Immediately following suchappointment, the Issuers shall give notice of such appointment to the Trustee, the remaining Agents and the Holderswhereupon the Issuers, the Trustee, the remaining Agents and the replacement Agent shall acquire and become subject to thesame rights and obligations between themselves as if they had entered into an agreement in the form mutatis mutandis ofthis Indenture.
(c) Upon its resignation becoming effective the Principal Paying Agent shall forthwith transfer all moneys heldby it hereunder hereof to the successor Principal Paying Agent or, if none, the Trustee or to the Trustee’s order, but shallhave no other duties or responsibilities hereunder, and shall be entitled to
-89-
the payment by the Issuers of its remuneration for the services previously rendered hereunder and to the reimbursement ofall reasonable expenses (including legal fees) incurred in connection therewith.
SECTION 7.12. Agents General Provisions.
(a) Actions of Agents. The rights, powers, duties and obligations and actions of each Agent under this Indentureare several and not joint or joint and several.
(b) Agents of Trustee. The Issuers and the Agents acknowledge and agree that in the event of a Default or Eventof Default, the Trustee may, by notice in writing to the Issuers and the Agents, require that the Agents act as agents of, andtake instructions exclusively from, the Trustee. Prior to receiving such written notification from the Trustee, the Agents shallbe the agents of the Issuers and need have no concern for the interests of the Holders.
(c) Funds held by Agents. The Agents will hold all funds as banker subject to the terms of this Indenture and asa result, such money will not be held in accordance with the rules established by the Financial Conduct Authority in theFinancial Conduct Authority’s Handbook of rules and guidance from time to time in relation to client money.
(d) Publication of Notices. Any obligation the Agents may have to publish a notice to Holders of Global Noteson behalf of the Issuers will be met upon delivery of the notice to DTC.
(e) Instructions. In the event that instructions given to any Agent are not reasonably clear, then such Agent shallbe entitled to seek clarification from the Issuers or other party entitled to give the Agents instructions under this Indenture bywritten request promptly, and in any event within one Business Day of receipt by such Agent of such instructions. If anAgent has sought clarification in accordance with this Section 7.12, then such Agent shall be entitled to take no action untilsuch clarification is provided, and shall not incur any liability for not taking any action pending receipt of such clarification.
(f) No Fiduciary Duty. No Agent shall be under any fiduciary duty or other obligation towards, or have anyrelationship of agency or trust, for or with any person other than the Issuers.
(g) Mutual Undertaking. Each Party shall, within ten Business Days of a written request by another Party,supply to that other Party such forms, documentation and other information relating to it, its operations, or the Notes as thatother Party reasonably requests for the purposes of that other Party's compliance with Applicable Law and shall notify therelevant other Party reasonably promptly in the event that it becomes aware that any of the forms, documentation or otherinformation provided by such Party is (or becomes) inaccurate in any material respect; provided, however, that no Partyshall be required to provide any forms, documentation or other information pursuant to this Section 7.12(g) to the extentthat: (i) any such form, documentation or other information (or the information required to be provided on such form ordocumentation) is not reasonably available to such Party and cannot be obtained by such Party using reasonable efforts; or(ii) doing so would or might in the reasonable opinion of such Party constitute a breach of any: (a) Applicable Law; (b)fiduciary duty; or (c) duty of confidentiality. For purposes of this Section 7.12(g), “Applicable Law” shall be deemed toinclude (i) any rule or practice of any Authority by which any Party is bound or with which it is accustomed to comply; (ii)any agreement between any Authorities; and (iii) any agreement between any Authority and any Party that is customarilyentered into by institutions of a similar nature.
-90-
(h) Tax Withholding.
(i) The Issuers shall notify each Agent in the event that they determine that any payment to be made by anAgent under the Notes is a payment which could be subject to FATCA Withholding if such payment were made to arecipient that is generally unable to receive payments free from FATCA Withholding, and the extent to which the relevantpayment is so treated; provided, however, that the Issuers’ obligations under this Section 7.12(h) shall apply only to theextent that such payments are so treated by virtue of characteristics of either Issuer, the Notes, or both.
(ii) Notwithstanding any other provision of this Indenture, each Agent shall be entitled to make a deduction orwithholding from any payment which it makes under the Notes for or on account of any Tax, if and only to the extent sorequired by Applicable Law, in which event the Agent shall make such payment after such deduction or withholding hasbeen made and shall account to the relevant Authority within the time allowed for the amount so deducted or withheld or, atits option, shall reasonably promptly after making such payment return to the Issuers the amount so deducted or withheld, inwhich case, the Issuers shall so account to the relevant Authority for such amount. For the avoidance of doubt, FATCAWithholding is a deduction or withholding which is deemed to be required by Applicable Law for the purposes of thisSection 7.12(h)(ii).
ARTICLE 8 DEFEASANCE; SATISFACTION AND DISCHARGE
SECTION 8.01. Issuers’ Option to Effect Defeasance or Covenant Defeasance. The Issuers and the ParentGuarantor may, at their option and at any time prior to the Stated Maturity of the Notes, by a resolution of their Board ofDirectors, at any time, with respect to the Notes, elect to have either Section 8.02 or Section 8.03 be applied to alloutstanding Notes upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. Defeasance and Discharge. Upon the Issuers’ or the Parent Guarantor’s exercise underSection 8.01 of the option applicable to this Section 8.02, the Issuers, the Parent Guarantor and the Subsidiary Guarantorsshall be deemed to have been discharged from their obligations with respect to the Notes on the date the conditions set forthin Section 8.04 are satisfied (hereinafter, “legal defeasance”). For this purpose, such legal defeasance means that the Issuersshall be deemed to have paid and discharged the entire Debt represented by the outstanding Notes and to have satisfied alltheir other obligations under the Notes and this Indenture (and the Trustee, at the expense of the Issuers, shall execute properinstruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated ordischarged hereunder: (a) the rights of Holders of outstanding Notes to receive, solely from the trust fund described inSection 8.08 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on)and interest on such Notes when such payments are due, (b) the provisions set forth in Section 8.06, (c) the rights, powers,trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Guarantors’ obligations in connectiontherewith and (d) this Section 8.02. Subject to compliance with this Article Eight, the Issuers and the Parent Guarantor mayexercise their option under this Section 8.02 notwithstanding the prior exercise of their option under Section 8.03 withrespect to the Notes. If the Issuers or the Parent Guarantor exercises their legal defeasance option, payment of the Notes maynot be accelerated because of an Event of Default.
If the Issuers exercise their legal defeasance option, each Guarantor, if any, shall be released from all its obligationsunder its Guarantee, and the Trustee shall execute a release of such Guarantee.
SECTION 8.03. Covenant Defeasance. Upon the Issuers’ or the Parent Guarantor’s exercise under Section 8.01of the option applicable to this Section 8.03, the Issuers, the Parent Guarantor and the
-91-
Subsidiary Guarantors shall be released from their obligations under any covenant contained in Sections 4.04 through 4.11(inclusive), Sections 4.13 through 4.17 (inclusive), Sections 4.19 through 4.21 (inclusive) and Section 5.01 with respect tothe Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “covenant defeasance”). Forthis purpose, such covenant defeasance means that, the Issuers and the Parent Guarantor may omit to comply with and shallhave no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly,by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to anyother provision herein or in any other document and such omission to comply shall not constitute a Default or an Event ofDefault, but, except as specified in this Section 8.03, the remainder of this Indenture and such Notes shall be unaffectedthereby.
SECTION 8.04. Conditions to Defeasance. In order to exercise either legal defeasance or covenant defeasance:
(a) the Issuers or the Parent Guarantor must irrevocably deposit or cause to be deposited as trust fundsin trust with the Trustee (or such other party as directed by the Trustee), for the benefit of the Holders, cash in U.S.dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient, inthe opinion of an internationally recognized law firm of independent public accountants, to pay and discharge theprincipal of, premium, if any, and accrued and unpaid interest and any Additional Amounts, if any, on theoutstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Issuersor the Parent Guarantor must (i) specify whether the Notes are being defeased to maturity or to a particularRedemption Date; and (ii) if applicable, have delivered to the Trustee an irrevocable notice to redeem all of theoutstanding Notes of such principal, premium, if any, or interest;
(b) in the case of an election under Section 8.02, the Issuers or the Parent Guarantor shall have deliveredto the Trustee an Opinion of Counsel reasonably acceptable to the Trustee stating that (A) the U.S. Internal RevenueService has either published a revenue ruling or issued to the Issuers a private letter ruling, or (B) since the IssueDate, there has been a change in applicable U.S. federal income tax law, in either case to the effect that, and basedthereon such opinion shall confirm that, the beneficial owners of the outstanding Notes will not recognize income,gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will 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 ifsuch legal defeasance had not occurred;
(c) in the case of an election under Section 8.03, the Issuers or the Parent Guarantor shall have deliveredto the Trustee an Opinion of Counsel reasonably acceptable to the Trustee to the effect that the beneficial owners ofthe outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result ofsuch covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same mannerand at the same times as would have been the case if such covenant defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit(other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or,insofar as bankruptcy or insolvency events described in clauses (ix) and (x) of Section 6.01(a) are concerned, at anytime during the period ending on the 123rd day after the date of such deposit;
(e) such legal defeasance or covenant defeasance shall not cause the Trustee to have a conflictinginterest as defined in this Indenture with respect to any of the Issuers’ securities;
-92-
(f) such legal defeasance or covenant defeasance shall not result in a breach or violation of, orconstitute a default (other than a Default or Event of Default resulting from the borrowing of funds to be applied tosuch deposit) under, this Indenture or any material agreement or instrument to which the Parent Guarantor or anyRestricted Subsidiary is a party or by which the Parent Guarantor or any Restricted Subsidiary is bound;
(g) such legal defeasance or covenant defeasance shall not result in the trust arising from such depositconstituting an investment company within the meaning of the U.S. Investment Company Act of 1940, as amended,unless such trust shall be registered under such Act or exempt from registration thereunder;
(h) the Issuers or the Parent Guarantor shall have delivered to the Trustee an Opinion of Counsel in thecountry of each Issuer’s or the Parent Guarantor’s incorporation to the effect that after the 123rd day following thedeposit, the trust funds shall not be subject to the effect of any applicable bankruptcy, insolvency, reorganization orsimilar laws affecting creditors’ rights generally and an Opinion of Counsel reasonably acceptable to the Trusteethat the Trustee shall have a perfected security interest in such trust funds for the ratable benefit of the Holders;
(i) the Issuers or the Parent Guarantor shall have delivered to the Trustee an Officer’s Certificate statingthat the deposit was not made by the Issuers or the Parent Guarantor with the intent of preferring the Holders overthe other creditors of the Issuers or the Parent Guarantor with the intent of defeating, hindering, delaying ordefrauding creditors of the Issuers or the Parent Guarantor or others, or removing assets beyond the reach of therelevant creditors or increasing debts of the Issuers or the Parent Guarantor to the detriment of the relevant creditors;
(j) no event or condition shall exist that would prevent the Issuers from making payments of theprincipal of, premium, if any, and interest on the Notes on the date of such deposit or at any time ending on the123rd day after the date of such deposit; and
(k) the Issuers or the Parent Guarantor shall have delivered to the Trustee an Officer’s Certificate and anOpinion of Counsel, each stating that all conditions precedent provided for relating to either the legal defeasance orthe covenant defeasance, as the case may be, have been complied with.
If the funds deposited with the Trustee to effect covenant defeasance are insufficient to pay the principal of,premium, if any, and interest on the Notes when due because of any acceleration occurring after an Event of Default, thenthe Issuers and the Guarantors shall remain liable for such payments.
SECTION 8.05. Satisfaction and Discharge of Indenture. This Indenture (and all Liens on Collateral createdpursuant to the Security Documents) shall be discharged and shall cease to be of further effect as to all Notes issuedhereunder (except, in each case, as to surviving rights under Section 2.06) when:
(a) the Issuers or the Parent Guarantor has irrevocably deposited or caused to be deposited with theTrustee (or such other party as directed by the Trustee) as funds in trust for such purpose an amount in cash in U.S.dollars, U.S. Government Securities or a combination of cash in U.S. dollars and U.S. Government Securities, or acombination thereof, sufficient to pay and discharge the entire Debt on such Notes not theretofore delivered to theTrustee for cancellation, for principal, premium, if any, and accrued and unpaid interest, Additional Amounts, if any,to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity orRedemption Date, as the case may be and the Issuers or the Parent Guarantor shall have
-93-
delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of such Notes atMaturity or on the Redemption Date, as the case may be, and either:
(i) all Notes previously authenticated and delivered (other than lost, stolen or destroyed Notesthat have been replaced or paid and Notes for whose payment money has theretofore been deposited in trustor segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from suchtrust, as provided in Section 8.07) have been delivered to the Trustee for cancellation; or
(ii) all Notes not theretofore delivered to the Trustee for cancellation (A) have become due andpayable (by reason of the mailing of a notice of redemption or otherwise) or (B) will become due andpayable at Stated Maturity within one year or (C) are to be called for redemption within one year underarrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the Issuers’name, and at the Issuers’ expense;
(b) the Issuers or the Parent Guarantor has paid or caused to be paid all other amounts payable by theIssuers under this Indenture; and
(c) the Issuers or the Parent Guarantor has delivered an Officer’s Certificate and an Opinion of Counselto the Trustee each stating that: (x) all conditions precedent to satisfaction and discharge have been satisfied, and (y)such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, thisIndenture, the Security Documents or any other agreement or instrument governed by the laws of the State of NewYork to which either Issuer or any Subsidiary is a party or by which either Issuer or any Subsidiary is bound.
SECTION 8.06. Survival of Certain Obligations. Notwithstanding Sections 8.01 and 8.03, any obligations of theIssuers, the Parent Guarantor and the Subsidiary Guarantors in Sections 2.02 through 2.14 (inclusive), Section 6.07, Section7.05 and Section 7.06 shall survive until the Notes have been paid in full. Thereafter, any obligations of the Issuers or theParent Guarantor and the Subsidiary Guarantors in Section 7.05 shall survive such satisfaction and discharge. Nothingcontained in this Article Eight shall abrogate any of the obligations or duties of the Trustee under this Indenture.
SECTION 8.07. Acknowledgment of Discharge by Trustee. Subject to Section 8.09, after the conditions ofSection 8.02 or 8.03 have been satisfied, the Trustee upon written request shall acknowledge in writing the discharge of allof the Issuers’, Parent Guarantor’s and Subsidiary Guarantor’s obligations under this Indenture except for those survivingobligations specified in this Article Eight.
SECTION 8.08. Application of Trust Money. Subject to Section 8.09, the Trustee shall hold in trust cash in U.S.dollars or U.S. Government Securities deposited with it pursuant to this Article Eight. It shall apply the deposited cash orU.S. Government Securities through the Paying Agent and in accordance with this Indenture to the payment of principal of,premium, if any, interest, and Additional Amounts, if any, on the Notes; but such money need not be segregated from otherfunds except to the extent required by law.
SECTION 8.09. Repayment to Issuers. Subject to Section 7.05 and Sections 8.01 through 8.04 (inclusive), theTrustee and the Paying Agent shall promptly pay to the Issuers upon request set forth in an Officer’s Certificate any excessmoney held by them at any time and thereupon shall be relieved from all liability with respect to such money. The Trusteeand the Paying Agent shall pay to the Issuers upon request any money held by them for the payment of principal, premium,if any, interest or Additional Amounts, if any, that remains unclaimed for two years; provided that the Trustee or PayingAgent before being required
-94-
to make any payment may cause to be published (a) through the newswire service of Bloomberg or, if Bloomberg does notthen operate, any similar agency and, (b) if and so long as the Notes are listed on Euronext Dublin and the rules andregulations of such exchange so require, a newspaper having a general circulation in Ireland (which is expected to be TheIrish Times) or, to the extent and in the manner permitted by the rules of Euronext Dublin, posted on the official website ofEuronext Dublin or mail to each Holder entitled to such money at such Holder’s address (as set forth in the SecurityRegister) notice that such money remains unclaimed and that after a date specified therein (which shall be at least 30 daysfrom the date of such publication or mailing) any unclaimed balance of such money then remaining will be repaid to theIssuers. After payment to the Issuers, Holders entitled to such money must look to the Issuers for payment as generalcreditors unless an applicable law designates another Person, and all liability of the Trustee and such Paying Agent withrespect to such money shall cease.
SECTION 8.10. Indemnity for Government Securities. The Issuers or the Parent Guarantor shall pay and shallindemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. GovernmentSecurities or the principal, premium, if any, interest, if any, and Additional Amounts, if any, received on such U.S.Government Securities.
SECTION 8.11. Reinstatement. If the Trustee or Paying Agent is unable to apply cash in U.S. dollars or U.S.Government Securities, in accordance with this Article Eight by reason of any legal proceeding or by reason of any order orjudgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, theIssuers’ and the Guarantors’ obligations under this Indenture and the Notes shall be revived and reinstated as though nodeposit had occurred pursuant to this Article Eight until such time as the Trustee or any such Paying Agent is permitted toapply all such cash U.S. Government Securities in accordance with this Article Eight; provided that, if the Issuers have madeany payment of principal of, premium, if any, interest, if any, and Additional Amounts, if any, on any Notes because of thereinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive suchpayment from the cash in U.S. dollars or U.S. Government Securities, held by the Trustee or Paying Agent.
ARTICLE 9 AMENDMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
(a) The Issuers, each when authorized by a resolution of its respective Board of Directors (as evidenced by thedelivery of such resolutions to the Trustee), the Guarantors and the Trustee may modify, amend or supplement thisIndenture, any Guarantee or the Notes and the Issuers, each when authorized by a resolution of its Board of Directors (asevidenced by the delivery of such resolution to the Security Agent and copied to the Trustee), the Guarantors and theSecurity Agent may modify, amend or supplement any Security Document, in each case without notice to or consent of anyHolder:
(i) to evidence the succession of another Person to the Parent Guarantor and the assumption by any suchsuccessor of the covenants herein and in the Notes; provided that such successor Person would have been permitted to sosucceed in a transaction that would have complied with Article Five; provided, further, that such transaction need not be of aspecific type identified in Article Five (it being understood that in the case of any other transaction, the requirements ofArticle Five shall apply mutatis mutandis);
(ii) to add to the covenants of the Issuers, any Guarantor or any other obligor upon the Notes for the benefitof the Holders or to surrender any right or power conferred upon the Issuers,
-95-
any Guarantor, or any other obligor upon the Notes, as applicable, herein, in the Notes or in any Guarantees;
(iii) to cure any ambiguity, or to correct or supplement any provision herein, in the Notes or any Guaranteesthat may be defective or inconsistent with any other provision herein or in the Notes or any Guarantee or to make any otherprovisions with respect to matters or questions arising under this Indenture, the Notes or any Guarantee; provided that, ineach case, such provisions shall not adversely affect the rights of the Holders in any material respect;
(iv) to conform the text of this Indenture, the Guarantees, the Security Documents, or the Notes to anyprovision of the “Description of the Secured Notes” in the Offering Memorandum to the extent that such provision in such“Description of the Secured Notes” was intended to be a verbatim recitation of a provision of this Indenture, the Guarantees,the Security Documents or the Notes;
(v) to release any Guarantor in accordance with and if permitted by the terms of and limitations set forth inthis Indenture and to add a Subsidiary Guarantor or other guarantor under this Indenture (which shall require execution ofthe relevant supplemental indenture only by the Issuers, the Parent Guarantor and such additional Subsidiary Guarantor(s) orother guarantor(s));
(vi) to evidence and provide the acceptance of the appointment of a successor Trustee or Security Agenthereunder or any Security Document;
(vii) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of theHolders as additional security for the payment and performance of the Issuers’ and any Guarantor’s obligations hereunder,in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which asecurity interest is required to be granted to the Trustee pursuant to this Indenture or otherwise to release Collateral from theLiens pursuant to this Indenture and the Security Documents when permitted or required by this Indenture, the SecurityDocuments and/or the Intercreditor Agreement or to modify the Security Documents and/or the Intercreditor Agreement tosecure additional extensions of credit and add additional secured creditors holding obligations that are permitted to besecured by Liens pari passu with the Notes under the Security Documents pursuant to the terms of this Indenture; or
(viii) to provide for the issuance of Additional Notes in accordance with and if permitted by the termsand limitations set forth in this Indenture.
(b) The Issuers, each when authorized by a resolution of its respective Board of Directors (as evidenced by thedelivery of such resolutions to the Trustee), the Parent Guarantor, the Trustee and the Restricted Subsidiary being added as aSubsidiary Guarantor or other entity becoming a Guarantor under this Indenture may supplement this Indenture to add aSubsidiary Guarantor or other Guarantor under this Indenture (which shall require execution of the relevant supplementalindenture only by the Issuers, the Parent Guarantor and such additional Subsidiary Guarantor(s) or other Guarantor(s)) ineach case without notice to or consent of any Holder.
(c) In formulating its opinion on such matters, the Trustee shall be entitled to require and rely conclusively onsuch evidence as it deems appropriate, including an Opinion of Counsel and an Officer’s Certificate.
-96-
SECTION 9.02. With Consent of Holders.
(a) Except as provided in Section 9.02(b) and Section 6.04 and without prejudice to Section 9.01, the Issuers,the Guarantors and the Trustee may:
(i) modify, amend or supplement this Indenture, the Security Documents or the Notes; or
(ii) waive compliance by the Issuers with any provision of this Indenture, the Security Documents or theNotes,
with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes thenoutstanding (including consents obtained in connection with a tender offer or in exchange for the Notes); provided that ifany amendment, waiver or other modification will only affect one series of the Notes, only the consent of the Holders of notless than a majority in principal amount of the then outstanding Notes of such series shall be required.
(b) Without the consent of the Holders of 90% of the outstanding Notes (provided, however, that if anyamendment, waiver or other modification will only affect one series of the Notes, only the consent of the Holders of at least90% of the aggregate principal amount of such series shall be required (and not the consent of at least 90% of the aggregateprincipal amount of all Notes then outstanding)), with respect to any such Notes held by a non-consenting Holder, noamendment, modification, supplement or waiver, including a waiver pursuant to Section 6.04 and an amendment,modification or supplement pursuant to Section 9.01, may:
(i) change the Stated Maturity of the principal of, or any installment of any Additional Amounts or intereston, any Note;
(ii) reduce the principal amount of any Note (or Additional Amounts or premium, if any) or the rate of orchange the time for payment of interest on any Note;
(iii) change the coin or currency in which the principal of any Note or any premium or any AdditionalAmounts or the interest thereon is payable;
(iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturitythereof (or, in the case of redemption, on or after the Redemption Date);
(v) reduce the principal amount of the outstanding Notes, the consent of whose Holders is required for anyamendment or supplement to, or waiver of certain provisions of this Indenture;
(vi) modify any of the provisions of this Article Nine or any provisions herein relating to the waiver of pastdefaults or relating to the waiver of certain covenants, except to increase the percentage of outstanding Notes required forsuch actions or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent ofthe Holder of each Note affected thereby;
(vii) make any change to the Intercreditor Agreement (and/or any Additional Intercreditor Agreement) orany provisions of this Indenture affecting the ranking of the Notes or the Guarantees, in each case in a manner that adverselyaffects the rights of the Holders or directly or indirectly release the Liens on the Collateral except as permitted by thisIndenture, the
-97-
Intercreditor Agreement (or any Additional Intercreditor Agreement) and the Security Documents; or
(viii) make any change in Section 4.12 that adversely affects the rights of any Holder or amend theterms of the Notes or this Indenture in a way that would result in a loss of an exemption from any of the Taxes describedthereunder or an exemption from any obligation to withhold or deduct Taxes so described thereunder unless the Issuers orthe Guarantors agree to pay Additional Amounts (if any) in respect thereof in the supplemental indenture.
(c) The consent of the Holders will not be necessary under this Indenture to approve the particular form of anyproposed amendment, modification, supplement, waiver or consent. It is sufficient if such consent approves the substance ofthe proposed amendment, modification, supplement, waiver or consent. A consent to any amendment or waiver under thisIndenture by any Holder given in connection with a tender of such Holder’s Notes will not be rendered invalid by suchtender.
SECTION 9.03. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture underthis Article Nine, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form apart of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and deliveredhereunder shall be bound thereby.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment, modification or supplement changes theterms of a Note, the Issuers or the Trustee may require the Holder to deliver it to the Trustee. The Trustee may place anappropriate notation on the Note and on any Note subsequently authenticated regarding the changed terms and return it tothe Holder. Alternatively, if the Issuers so determine, the Issuers in exchange for the Note shall issue and the Trustee shallauthenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shallnot affect the validity of such amendment, modification or supplement.
SECTION 9.05. [Reserved].
SECTION 9.06. Notice of Amendment or Waiver. Promptly after the execution by the Issuers and the Trustee ofany supplemental indenture or waiver pursuant to the provisions of Section 9.02, the Issuers shall give notice thereof to theHolders of each outstanding Note affected, in the manner provided for in Section 12.02(b), setting forth in general terms thesubstance of such supplemental indenture or waiver.
SECTION 9.07. Trustee to Sign Amendments, Etc. The Trustee or the Security Agent, as the case may be, shallexecute any amendment, supplement or waiver authorized pursuant and adopted in accordance with this Article Nine;provided that the Trustee or the Security Agent, as the case may be, may, but shall not be obligated to, execute any suchamendment, supplement or waiver which affects the Trustee’s or Security Agent’s, as the case may be, own rights, duties orimmunities under this Indenture. The Trustee and the Security Agent shall be entitled to receive, if requested, an indemnityand/or security (including by way of pre-funding) satisfactory to it and to receive, and shall be fully protected in relyingupon, an Opinion of Counsel and an Officer’s Certificate each stating that the execution of any amendment, supplement orwaiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture and that such amendment hasbeen duly authorized, executed and delivered and is the legally valid and binding obligation of the Issuers and theGuarantors (if any) enforceable against them in accordance with its terms, subject to customary exceptions. Such Opinion ofCounsel shall be an expense of the Issuers.
-98-
SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount.
(a) All Notes issued under this Indenture shall vote and consent together on all matters (as to which any of suchNotes may vote) as one class and no series of Notes will have the right to vote or consent as a separate series on any matter;provided, however, that if any amendment, waiver or other modification will only affect one series of Notes, only theconsent of the Holders of not less than a majority in principal amount of the affected series of Notes then outstanding (andnot the consent of the Holders of at least a majority of all Notes), shall be required. Determinations as to whether Holders ofthe requisite aggregate principal amount of Notes have concurred in any direction, waiver or consent shall be made inaccordance with this Article Nine and Section 9.08(b).
(b) The aggregate principal amount of the Notes, at any date of determination, shall be the principal amount ofthe Notes at such date of determination. With respect to any matter requiring consent, waiver, approval or other action of theHolders of a specified percentage of the principal amount of all the Notes, such percentage shall be calculated, on therelevant date of determination, by dividing (i) the principal amount, as of such date of determination, of Notes, the Holdersof which have so consented by (b) the aggregate principal amount, as of such date of determination, of the Notes thenoutstanding, in each case, as determined in accordance with the preceding sentence, Section 2.08 and Section 2.09 of thisIndenture. Any such calculation made pursuant to this Section 9.08(b) shall be made by the Issuers and delivered to theTrustee pursuant to an Officer’s Certificate.
ARTICLE 10 GUARANTEE
SECTION 10.01. Notes Guarantees.
(a) (i) The Parent Guarantor hereby fully and, subject to the limitations on the effectiveness and enforceabilityset forth in Section 10.04, unconditionally guarantees, on a first priority (subject to Permitted Collateral Liens), seniorsecured, joint and several basis, and (ii) each Subsidiary Guarantor by execution of a supplemental indenture hereto, fullyand, subject to the limitations on the effectiveness and enforceability set forth in such supplemental indenture,unconditionally guarantees, on a first priority (subject to Permitted Collateral Liens), senior secured, joint and several basis,in each case to each Holder and to the Trustee and its successors and assigns on behalf of each Holder, the full payment ofprincipal of, premium, if any, interest, if any, and Additional Amounts, if any on, and all other monetary obligations of theIssuers under this Indenture and the Notes (including obligations to the Trustee and the obligations to pay AdditionalAmounts, if any) with respect to each Note authenticated and delivered by the Trustee or its agent pursuant to and inaccordance with this Indenture, in accordance with the terms of this Indenture (all the foregoing being hereinaftercollectively called the “Obligations”). The Guarantors further agree that the Obligations may be extended or renewed, inwhole or in part, without notice or further assent from the Guarantors and that the Guarantors shall remain bound under thisArticle Ten notwithstanding any extension or renewal of any Obligation. All payments under each Guarantee will be madein U.S. dollars.
(b) The Guarantors hereby agree that their obligations hereunder shall be as if they were each principal debtorand not merely surety, unaffected by, and irrespective of, any invalidity, irregularity or unenforceability of any Note or thisIndenture, any failure to enforce the provisions of any Note or this Indenture, any waiver, modification or indulgencegranted to the Issuers with respect thereto by the Holders or the Trustee, or any other circumstance which may otherwiseconstitute a legal or equitable discharge of a surety or guarantor (except payment in full); provided that notwithstanding theforegoing, no such waiver, modification, indulgence or circumstance shall without the written consent of the Guarantorsincrease the principal amount of a Note or the interest rate thereon or change the currency of payment with respect to anyNote, or alter the Stated Maturity thereof. The Guarantors hereby waive diligence, presentment, demand
-99-
of payment, filing of claims with a court in the event of merger or bankruptcy of either Issuer, any right to require that theTrustee pursue or exhaust its legal or equitable remedies against either Issuer prior to exercising its rights under a Guarantee(including, for the avoidance of doubt, any right which a Guarantor may have to require the seizure and sale of the assets ofsuch Issuer to satisfy the outstanding principal of, interest on or any other amount payable under each Note prior to recourseagainst such Guarantor or its assets), protest or notice with respect to any Note or the Debt evidenced thereby and alldemands whatsoever, and each covenant that their Guarantee will not be discharged with respect to any Note except bypayment in full of the principal thereof and interest thereon or as otherwise provided in this Indenture, including Section10.04. If at any time any payment of principal of, premium, if any, interest, if any, or Additional Amounts, if any, on suchNote is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of eitherIssuer, the Guarantors’ obligations hereunder with respect to such payment shall be reinstated as of the date of suchrescission, restoration or returns as though such payment had become due but had not been made at such times.
(c) The Guarantors also agree to pay any and all costs and expenses (including reasonable attorneys’ fees)incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
SECTION 10.02. Subrogation.
(a) Each Guarantor shall be subrogated to all rights of the Holders against the Issuers in respect of any amountspaid to such Holders by such Guarantor pursuant to the provisions of its Guarantee.
(b) The Guarantors agree that they shall not be entitled to any right of subrogation in relation to the Holders inrespect of any Obligations guaranteed hereby until payment in full of all Obligations. The Guarantors further agree that, asbetween them, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligationsguaranteed hereby may be accelerated as provided in Section 6.02 for the purposes of the Guarantees herein,notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligationsguaranteed hereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Section 6.02,such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for thepurposes of this Section 10.02.
SECTION 10.03. Release of Subsidiary Guarantees. A Subsidiary Guarantee (and any Subsidiary Guaranteeprovided pursuant to Section 4.15) shall be automatically and unconditionally released and the Subsidiary Guarantor thatgranted such Subsidiary Guarantee shall be automatically and unconditionally released from its obligations and liabilitiesthereunder and hereunder:
(a) upon any sale or disposition of (i) Capital Stock of a Subsidiary Guarantor following which suchSubsidiary Guarantor is no longer a Restricted Subsidiary or, (ii) all or substantially all of the properties and assetsof a Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the ParentGuarantor or a Restricted Subsidiary that does not violate Section 4.09;
(b) in the event that all of the Capital Stock of such Subsidiary Guarantor is sold or otherwise disposedof pursuant to an enforcement of the security over the Capital Stock of such Subsidiary Guarantor under theapplicable Security Document(s) in accordance with the terms of the Intercreditor Agreement and any AdditionalIntercreditor Agreement;
(c) upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary;
-100-
(d) upon legal defeasance under Section 8.02, covenant defeasance under Section 8.03 or uponsatisfaction and discharge under Section 8.05;
(e) in the circumstances set forth in Section 5.01(d); and
(f) as described in Article Nine.
SECTION 10.04. Limitation and Effectiveness of Guarantees.
(a) Each Guarantee is limited to (i) an amount not to exceed the maximum amount that can be guaranteed by theGuarantor that gave such Guarantee without rendering such Guarantee, as it relates to such Guarantor, voidable underapplicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditorsgenerally or (ii) the maximum amount otherwise permitted by law.
(b) Ireland. The Guarantee by a Guarantor organized under the laws of Ireland shall not be lawful if itconstitutes financial assistance to any person for the purpose of an acquisition by subscription, purchase, exchange orotherwise of any shares in such Guarantor or a holding company of such Guarantor contrary to Section 82 of the CompaniesAct 2014.
SECTION 10.05. Notation Not Required. Neither the Issuers nor any Guarantor shall be required to make anotation on the Notes to reflect any Guarantee or any release, termination or discharge thereof.
SECTION 10.06. Successors and Assigns. This Article Ten shall be binding upon the Guarantors and each oftheir successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and,in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred uponthat party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assigns, allsubject to the terms and conditions of this Indenture.
SECTION 10.07. No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders inexercising any right, power or privilege under this Article Ten shall operate as a waiver thereof, nor shall a single or partialexercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits ofthe Trustee and the Holders herein expressly specified are cumulative and are not exclusive of any other rights, remedies orbenefits which either may have under this Article Ten at law, in equity, by statute or otherwise.
SECTION 10.08. Modification. No modification, amendment or waiver of any provision of this Article Ten, northe consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writingand signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for thepurpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other orfurther notice or demand in the same, similar or other circumstance.
SECTION 10.09. Trustee and Security Agent to Effectuate Subordination of Heye International GmbHSubsidiary Guarantee . Each Holder of a Note, by its acceptance thereof, acknowledges the fact that it is a condition of thegranting by Heye International GmbH (“Heye”) of a Guarantee, that any claims by the Security Agent and/or the Trusteeagainst Heye under its Guarantee be subordinated to the claims by Unicredit Bank AG (formerly Bayerische Hypo- undVereinsbank A.G.) and its affiliates (“HVB”) against Heye under the two bilateral credit facilities granted to Heye by HVB(the “Heye Guarantee
-101-
Subordination”). Accordingly, each Holder of a Note, by its acceptance thereof, consents and agrees to the abovementionedHeye Guarantee Subordination and (i) will be deemed to have authorized and directed the Trustee and the Security Agent tosign such documents, agreements or deeds as may be expedient, necessary or otherwise required to give effect to the HeyeGuarantee Subordination and (ii) ratifies and confirms the actions of the Trustee and the Security Agent under sub-clause (i)of this Section 10.09.
ARTICLE 11 SECURITY
SECTION 11.01. Security; Security Documents.
(a) The due and punctual payment of the principal of, interest on and Additional Amounts, if any, on the Notesand the Guarantees when and as the same shall be due and payable, whether on an Interest Payment Date, at maturity, byacceleration, repurchase, redemption or otherwise, interest on the overdue principal of and interest (to the extent permittedby law), if any, on the Notes and Guarantees and performance of all other obligations under this Indenture, shall be securedas provided in the Security Documents. The Trustee, the Security Agent, the Issuers and the Guarantors hereby agree that,subject to Permitted Collateral Liens, the Security Agent shall hold the Collateral in trust for the benefit of the Trustee andall of the Holders pursuant to the terms of the Security Documents, and shall act as mortgagee or security holder under allmortgages or standard securities, beneficiary under all deeds of trust and as secured party under the applicable securityagreements.
(b) Each Holder of the Notes, by its acceptance thereof, consents and agrees to the terms of the SecurityDocuments (including, without limitation, the provisions providing for foreclosure and release of Collateral) as the samemay be in effect or may be amended from time to time in accordance with their terms and authorizes and directs the SecurityAgent to perform its respective obligations and exercise its rights thereunder in accordance therewith.
(c) The Trustee, the Security Agent and each Holder, by accepting the Notes and the Guarantees, acknowledgesthat, as more fully set forth in the Security Documents, the Collateral as now or hereafter constituted shall be held for thebenefit of all the Holders under the Security Documents, and that the Lien of this Indenture and the Security Documents inrespect of the Security Agent and the Holders is subject to and qualified and limited in all respects by the SecurityDocuments and actions that may be taken thereunder.
(d) For the purposes of the Security Documents governed by Italian law, each Holder of the Notes and theTrustee appoints the Security Agent:
(i) to act as his/its agent in connection with this Indenture;
(ii) to act as its trustee in relation to any Security Documents; and
(iii) in addition to the foregoing, and to the extent necessary - with the express consent pursuant to article1395 of the Italian Civil Code - to be its mandatario con rappresentanza and common representative to act on its/theirbehalf in connection with any actions to be taken in respect of any Security Document which is expressed to be governed byItalian law, and to take any action in relation to the creation, perfection, maintenance, enforcement and release of thesecurity created thereunder.
(e) Notwithstanding (i) anything to the contrary contained in this Indenture, the Security Documents, Notes,Guarantees or any other instrument governing, evidencing or relating to any Debt, (ii)
-102-
the time, order or method of attachment of any Liens, (iii) the time or order of filing or recording of financing statements orother documents filed or recorded to perfect any Lien upon any Collateral, (iv) the time of taking possession or control overany Collateral or (v) the rules for determining priority under any law of any relevant jurisdiction governing relative prioritiesof secured creditors:
(1) the Liens will rank equally and ratably with all valid, enforceable and perfected Liens, whenevergranted upon any present or future Collateral, but only to the extent such Liens are permitted under this Indenture toexist and to rank equally and ratably with the Notes and Guarantees; and
(2) all proceeds of the Collateral applied under the Security Documents shall be allocated anddistributed as set forth in the Security Documents, subject to the Intercreditor Agreement and any AdditionalIntercreditor Agreement.
SECTION 11.02. Authorization of Actions to Be Taken by the Security Agent Under the Security Documents.The Security Agent shall be the representative on behalf of the Holders and, subject to the Intercreditor Agreement and anyAdditional Intercreditor Agreement, shall act upon the written direction of the Trustee (in turn, acting on written direction ofthe Holders) with regard to all voting, consent and other rights granted to the Trustee and the Holders under the SecurityDocuments. Subject to the provisions of the Security Documents (including the Intercreditor Agreement and any AdditionalIntercreditor Agreement), the Security Agent may, in its sole discretion and without the consent of the Holders, on behalf ofthe Holders, take all actions it deems necessary or appropriate in order to (a) enforce any of its rights or any of the rights ofthe Holders under the Security Documents and (b) receive any and all amounts payable from the Collateral in respect of theobligations of the Issuers and the Guarantors hereunder. Subject to the provisions of the Security Documents, the SecurityAgent shall have the power to institute and to maintain such suits and proceedings as it may deem expedient to prevent anyimpairment of the Collateral by any acts of impairment that may be unlawful or in violation of the Security Documents orthis Indenture, and such suits and proceedings as the Security Agent (after consultation with the Trustee, where appropriate)may deem reasonably expedient to preserve or protect its interest and the interests of the Holders in the Collateral (includingpower to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative orother governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, orcompliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interestsof the Holders or the Security Agent). The Security Agent is hereby irrevocably authorized by each Holder of the Notes toeffect any release of Liens or Collateral contemplated by Section 11.04 hereof or by the terms of the Security Documents.
Each Holder, by accepting a Note, shall be deemed (i) to have authorized the Trustee and the Security Agent to enterinto the Security Documents and the Intercreditor Agreement and any Additional Intercreditor Agreement, in each case incompliance with this Indenture and (ii) to be bound thereby. Each Holder, by accepting a Note, appoints the Trustee or theSecurity Agent, as the case may be, as its agent under the Security Documents, the Intercreditor Agreement and anyAdditional Intercreditor Agreement and authorizes it to act as such.
SECTION 11.03. Authorization of Receipt of Funds by the Security Agent Under the Security Documents. TheSecurity Agent is authorized to receive and distribute any funds for the benefit of the Holders under the Security Documents,and to make further distributions of such funds to the Holders according to the provisions of this Indenture and the SecurityDocuments.
-103-
SECTION 11.04. Release of the Collateral.
(a) Upon (i) confirmation in writing from the Trustee of the full and final payment and performance of allobligations under this Indenture and the Notes; (ii) confirmation in writing from the Trustee of the surrender of alloutstanding Notes issued under this Indenture to the Trustee for cancellation; (iii) the release of the Collateral in accordancewith the terms of this Section 11.04 and the Security Documents; or (iv) any other release of the Collateral as security forobligations of the Issuers or a Guarantor under this Indenture, the Security Agent shall disclaim and give up any and allrights it has in or to the Collateral, and any rights it has under the Security Documents and shall no longer be deemed to holdthe Lien in the Collateral for the benefit of the Holders.
(b) Liens granted by a Subsidiary Guarantor (and the Liens, if any, over the Capital Stock of such SubsidiaryGuarantor) will be automatically and unconditionally released (and, upon request of the Issuers or any Guarantor, theSecurity Agent shall (without notice to, or vote or consent of, any Holder but with notice to the Trustee) take such actions asshall be required to release such Liens):
(i) upon any sale or disposition of (A) Capital Stock of a Subsidiary Guarantor following which suchSubsidiary Guarantor is no longer a Restricted Subsidiary or, (B) all or substantially all of the properties and assets of aSubsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the Parent Guarantor ora Restricted Subsidiary that does not violate Section 4.09;
(ii) in the event that all of the Capital Stock of such Subsidiary Guarantor is sold or otherwise disposed ofpursuant to an enforcement of the security over the Capital Stock of such Subsidiary Guarantor under the applicable SecurityDocument(s) in accordance with the terms of the Intercreditor Agreement or any Additional Intercreditor Agreement;
(iii) upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary;
(iv) in the circumstances set forth in Section 5.01(c);
(v) as described in Article Nine; and
(vi) with respect to mortgages or similar security interests in real property (other than in England and Walesor in any state of the United States) upon the replacement and/or refinancing of the Existing Secured Notes.
(c) Upon request of the Issuers or any Guarantor, in connection with any sale, lease, sale and leaseback,assignment, conveyance, transfer or other disposition of assets or property permitted by this Indenture (including, withoutlimitation, Sections 4.09, 4.13 and 4.14 hereof), the Security Agent shall (without notice to, or vote or consent of, anyHolder but with notice to the Trustee) take such actions as shall be required (as more particularly described in this Section11.04(f)) to release its Security Interest in any Collateral being disposed in such disposition, to the extent necessary oradvisable to permit consummation of such disposition in accordance with this Indenture and the Security Documents and theTrustee shall receive full payment therefor from the Issuers for any costs incurred thereby. Upon the request of the Issuers,the Security Agent shall (without notice to, or vote or consent of, any Holder but with notice to the Trustee) take suchactions as shall be required (as more particularly described in Section 11.04(f)) to release its Security Interest in any realproperty (other than any real property in England and Wales or any state of the United States, in connection with thereplacement or refinancing of the Existing Secured Notes in accordance with Section 11.04(b)(vi).
-104-
(d) Upon the request of the Issuers, the Security Agent shall (without notice to, or vote or consent of, anyHolder but with notice to the Trustee) take such actions as shall be required (as more particularly described in Section11.04(f)) to release its Security Interest in any assets constituting inventories and accounts receivable (and other assetscustomarily relating to inventories and accounts receivable such as insurance proceeds, books and records and other assets)in connection with the granting of a security interest in such Collateral to secure new Debt (where such Debt and securityinterest are permitted by Section 4.06(b)(2), as certified to the Trustee in an Officer’s Certificate and an Opinion of Counselwhich certification and opinion shall be conclusive); provided that if the Parent Guarantor or any of its RestrictedSubsidiaries owning such assets grants a Silent Second Lien over such assets in favor of any other Debt, they shall also granta Silent Second Lien in such released Collateral in favor of the Security Agent (on its own behalf and on behalf of theHolders); provided, further, that upon the release of such Silent Second Liens securing such other Debt, the Liens in favor ofthe Security Agent (on its own behalf and on behalf of the Trustee for the holders of the Notes) shall be automaticallyreleased. The Issuers shall provide the Security Agent and the Trustee with an Opinion of Counsel regarding the validity andenforceability of any Silent Second Lien granted pursuant to the foregoing, which opinion may be subject to exceptions,limitations and exclusions reasonably determined by such counsel to be necessary or appropriate, in light of applicable lawin the relevant jurisdiction.
(e) Any release of Collateral made in compliance with this Section 11.04 shall not be deemed to impair the Lienunder the Security Documents or the Collateral thereunder in contravention of the provisions of this Indenture or theSecurity Documents.
(f) In the event that the Issuers or any Guarantor seeks to release Collateral, the Issuers or such Guarantor shalldeliver an Officer’s Certificate (which the Trustee and Security Agent shall rely upon in connection with such release) to theTrustee and the Security Agent setting forth that the specified release complies with the terms of this Indenture. Uponreceipt of the Officer’s Certificate and if so requested by the Issuers or such Guarantor, the Security Agent shall execute,deliver or acknowledge any necessary or proper instruments of termination, satisfaction or release to evidence the release ofany Collateral permitted to be released pursuant to this Indenture.
SECTION 11.05. Parallel Debt.
(a) Without prejudice to the provisions of this Indenture and the Security Documents and for the purpose ofpreserving the initial and continuing validity of the security rights granted and to be granted by the Issuers and eachGuarantor to the Security Agent, an amount equal to and in the same currency of the obligations under the Notes and theGuarantees from time to time due by the Issuers or such Guarantor in accordance with the terms and conditions of the Notesand Guarantees, including for the avoidance of doubt, the limitations set out under Section 10.04, shall be owing as aseparate and independent obligation of the Issuers and each Guarantor to the Security Agent (such payment undertaking andthe obligations and liabilities which are the result thereof the “Parallel Debt”).
(b) The Issuers, each Guarantor and the Security Agent acknowledge that (i) for this purpose the Parallel Debtconstitutes undertakings, obligations and liabilities of the Issuers and each Guarantor to the Security Agent under thisIndenture and the Security Documents which are separate and independent from, and without prejudice to, thecorresponding obligations under the Notes and Guarantees which the Issuers or such Guarantor has to the Holders and(ii) that the Parallel Debt represents the Security Agent’s own claims to receive payment of the Parallel Debt; provided thatthe total amount which may become due under the Parallel Debt shall never exceed the total amount which may become dueunder the Notes and Guarantees; provided, further, that the Security Agent shall exercise its rights with respect to theParallel Debt solely in accordance with this Indenture and the Security Documents (including the Intercreditor Agreementand any Additional Intercreditor Agreement).
-105-
(c) Every payment of monies made by the Issuers or a Guarantor to the Security Agent shall (conditionally uponsuch payment not subsequently being avoided or reduced by virtue of any provisions or enactments relating to bankruptcy,insolvency, liquidation or similar laws of general application) be in satisfaction pro tanto of the covenant by the Issuers orsuch Guarantor contained in Section 11.05(a); provided that if any such payment as is mentioned above is subsequentlyavoided or reduced by virtue of any provisions or enactments relating to bankruptcy, liquidation or similar laws of generalapplication the Security Agent shall be entitled to receive the amount of such payment from the Issuers or such Guarantorand the Issuers or such Guarantor shall remain liable to perform the relevant obligation and the relevant liability shall bedeemed not to have been discharged.
(d) Subject to the provision in Section 11.05(c), but notwithstanding any of the other provisions of this clause(d):
(i) the total amount due and payable as Parallel Debt under this Section 11.05 shall be decreased to theextent that the Issuers or a Guarantor shall have paid any amounts to the Security Agent or to the Trustee on behalf of theHolders or any of them to reduce the outstanding principal amount of the Notes or the Security Agent or the Trustee onbehalf of the Holders otherwise receives any amount in payment of the Notes and the Guarantees; and
(ii) to the extent that the Issuers or a Guarantor shall have paid any amounts to the Trustee or to theSecurity Agent under the Parallel Debt or the Trustee or the Security Agent shall have otherwise received monies inpayment of the Parallel Debt, the total amount due and payable under the Notes and the Guarantees shall be decreased as ifsaid amounts were received directly in payment of the Notes and Guarantees.
ARTICLE 12 MISCELLANEOUS
SECTION 12.01. Release of U.S. Issuer’s Obligations.
(a) Notwithstanding anything to the contrary in this Indenture, upon the sale or disposition directly or indirectlyof the Capital Stock of the U.S. Issuer pursuant to an enforcement by the Security Agent in accordance with the IntercreditorAgreement (or any Additional Intercreditor Agreement) and this Indenture (a “Holdings USA Disposition”), the obligationsof the U.S. Issuer under the Notes and this Indenture will be automatically and unconditionally released (and thereupon shallterminate and be discharged and be of no further effect); provided that each other guarantee by the U.S. Issuer in respect ofany Credit Facility and any other capital markets debt of the Parent Guarantor or any of its subsidiaries has been released (oris released simultaneously upon such Holdings USA Disposition). Upon a Holdings USA Disposition, the Irish Issuer shallbe the sole Issuer under the Notes and this Indenture, and the Notes and this Indenture shall remain in full force and effectand any reference in this indenture, the Notes and the Intercreditor Agreement (or any Additional Intercreditor Agreement)to the “Issuers” or the U.S. Issuer shall be deemed to be references only to the “Issuer” or the Irish Issuer, mutatis mutandis.
(b) The Parent Guarantor shall publish a notice of a Holdings USA Disposition described in Section 12.01(a) inaccordance with Section 12.02 and, so long as the rules of Euronext Dublin so require, notify such exchange of a HoldingsUSA Disposition.
(c) The U.S. Issuer agrees, and each Holder by accepting a Note agrees, that the provisions of this Section 12.01are for the benefit of and enforceable by the Security Agent.
-106-
SECTION 12.02. Notices.
(a) Any notice or communication shall be in writing and delivered in person or mailed by first class mail or sentby facsimile transmission addressed as follows:
if to the Irish Issuer:
Ardagh House South County Business Park
Leopardstown Dublin 18 D18 PX68
Ireland
Attention: Finance Director Facsimile: +353 1 668 3416
if to the U.S. Issuer:
The Corporation Trust Company 1209 Orange Street
Wilmington, Delaware 19801 United States
if to the Guarantors:
Ardagh Group S.A. 56, rue Charles MartelL 2134 Luxembourg
Grand Duchy of Luxembourg
With copies to:
Shearman & Sterling 9 Appold Street
London, EC2A 2AP United Kingdom
Telephone: +44 (0)20 7655 5000 Facsimile: +44 (0)20 7655 5500
Attention: Mr. Trevor Ingram
if to the Trustee, Principal Paying Agent or Transfer Agent:
Citibank, N.A., London Branch 25 Canada Square
Canary Wharf London E14 5LB United Kingdom
-107-
(i) for the Trustee and Security Agent:
Email: [email protected] Attention: The Directors, Agency & Trust
(ii) for the Principal Paying Agent:
Email: [email protected] Attention: PPA desk
(iii) for the Transfer Agent:
Email: [email protected] Attention: Transfer Agent
The Issuers, the Guarantors or the Trustee by notice to the other may designate additional or different addresses forsubsequent notices or communications.
(b) Notices regarding the Notes shall be:
(i) delivered to Holders electronically or mailed by first-class mail, postage paid, and, if and so long as theNotes are listed on Euronext Dublin and the rules and regulations of such exchange so require, published in a newspaperhaving a general circulation in Ireland (which is expected to be The Irish Times or, to the extent and in the manner permittedby the rules of Euronext Dublin, posted on the official website of Euronext Dublin); and
(ii) in the case of certificated Notes, mailed to each Holder by first-class mail at such Holder’s respectiveaddress as it appears on the registration books of the Registrar.
Notices given by first-class mail shall be deemed given five calendar days after mailing and notices given bypublication shall be deemed given on the first date on which publication is made. Failure to mail a notice or communicationto a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication ismailed in the manner provided above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticableto give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute asufficient notification for every purpose hereunder.
(c) If and so long as the Notes are listed on any securities exchange instead of or in addition to Euronext Dublin,notices shall also be given in accordance with any applicable requirements of such alternative or additional securitiesexchange.
(d) If and so long as the Notes are represented by Global Notes, notices may be given by delivery of the relevantnotices to DTC for communication to entitled account holders in substitution for the mailing required under Section 12.02(b)(i).
SECTION 12.03. Certificate and Opinion as to Conditions Precedent. Upon any request or application by theIssuers or any Guarantor to the Trustee to take or refrain from taking any action under
-108-
this Indenture (except in connection with the original issuance of the Original Notes on the date hereof), the Issuers or anyGuarantor, as the case may be, shall furnish upon request to the Trustee:
(a) an Officer’s Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion ofthe signer, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have beencomplied with; and
(b) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion ofsuch counsel, all such conditions precedent have been complied with.
Any Officer’s Certificate may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless theofficer signing such certificate knows, or in the exercise of reasonable care should know, that such Opinion of Counsel withrespect to the matters upon which such Officer’s Certificate is based are erroneous. Any Opinion of Counsel may be basedand may state that it is so based, insofar as it relates to factual matters, upon certificates of public officials or an Officer’sCertificate stating that the information with respect to such factual matters is in the possession of the Issuers, unless thecounsel signing such Opinion of Counsel knows, or in the exercise of reasonable care should know, that the Officer’sCertificate with respect to the matters upon which such Opinion of Counsel is based are erroneous.
SECTION 12.04. Statements Required in Certificate or Opinion. Every certificate or opinion with respect tocompliance with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or opinion has read such covenant orcondition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which thestatements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has made such examination orinvestigation as is necessary to enable him to express an informed opinion as to whether or not such covenant orcondition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual, such condition or covenant hasbeen complied with.
SECTION 12.05. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules foraction by or at a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 12.06. Legal Holidays. If an Interest Payment Date or other 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 interveningperiod. If a Record Date is not a Business Day, the Record Date shall not be affected.
SECTION 12.07. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OFLAW RULES THEREOF.
SECTION 12.08. Jurisdiction. The Issuers and each Guarantor agree that any suit, action or proceeding againstthe Issuers or any Guarantor brought by any Holder or the Trustee arising out of or based upon this Indenture, the Guaranteeor the Notes may be instituted in any state or Federal court in the
-109-
Borough of Manhattan, New York, New York, and any appellate court from any thereof, and each of them irrevocablysubmits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding. Each of the Issuers and theGuarantors irrevocably waives, to the fullest extent permitted by law, any objection to any suit, action, or proceeding thatmay be brought in connection with this Indenture, the Guarantees or the Notes, including such actions, suits or proceedingsrelating to securities laws of the United States of America or any state thereof, in such courts whether on the grounds ofvenue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenientforum. The Issuers and the Guarantors agree that final judgment in any such suit, action or proceeding brought in such courtshall be conclusive and binding upon the Issuers or any Guarantor, as the case may be, and may be enforced in any court tothe jurisdiction of which the Issuers or any Guarantor, as the case may be, are subject by a suit upon such judgment;provided that service of process is effected upon the Issuers or any Guarantor, as the case may be, in the manner provided bythis Indenture. Each of the Irish Issuer and the Guarantors not resident in the United States has appointed the U.S. Issuer,with offices on the date hereof at Ardagh Holdings USA Inc., c/o The Corporation Trust Company, 1209 Orange Street,Wilmington, Delaware 19801, or any successor so long as such successor is resident in the United States and can act for thispurpose, as its authorized agent (the “Authorized Agent”), upon whom process may be served in any suit, action orproceeding arising out of or based upon this Indenture, the Guarantee or the Notes or the transactions contemplated hereinwhich may be instituted in any state or Federal court in the Borough of Manhattan, New York, New York, by any Holder orthe Trustee, and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit, action orproceeding. The U.S. Issuer has hereby accepted such appointment and has agreed to act as said agent for service of process,and the Issuers and the Parent Guarantor agree to take any and all action, including the filing of any and all documents thatmay be necessary to continue such respective appointment in full force and effect as aforesaid. Service of process upon theAuthorized Agent shall be deemed, in every respect, effective service of process upon the Issuers and the Parent Guarantor.Notwithstanding the foregoing, any action involving the Issuers or the Parent Guarantor arising out of or based upon thisIndenture, the Guarantees or the Notes may be instituted by any Holder or the Trustee in any other court of competentjurisdiction. Each Issuer expressly consents to the jurisdiction of any such court in respect of any such action and waives anyother requirements of or objections to personal jurisdiction with respect thereto and waives any right to trial by jury.
SECTION 12.09. No Recourse Against Others. A director, officer, employee, incorporator, member orshareholder, as such, of the Issuers or any Guarantor shall not have any liability for any obligations of the Issuers or anyGuarantor under the Notes, this Indenture or any Guarantee or for any claim based on, in respect of or by reason of suchobligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver andrelease shall be part of the consideration for the issue of the Notes. Such waiver and release may not be effective to waiveliabilities under the U.S. federal securities laws.
SECTION 12.10. Successors. All agreements of the Issuers and any Guarantor in this Indenture and the Notesshall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.11. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signedcopy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove thisIndenture.
SECTION 12.12. Table of Contents, Cross-Reference Sheet and Headings. The table of contents, cross-referencesheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, arenot intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
-110-
SECTION 12.13. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal orunenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected orimpaired thereby.
SECTION 12.14. Currency Indemnity. U.S. dollars is the required currency (the “Required Currency”) of accountand payment for all sums payable under the Notes, the Guarantees and this Indenture. Any amount received or recovered inrespect of the Notes, any Guarantee or otherwise under this Indenture in a currency other than the Required Currency(whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding up ordissolution of each Issuer, any Subsidiary or otherwise) by the Trustee or a Holder in respect of any sum expressed to be dueto such Holder from the Issuers or the Guarantors shall constitute a discharge of the Issuers’ or the Guarantors’ obligationsonly to the extent of the amount of the Required Currency which the recipient is able to purchase with the amount soreceived or recovered in such other currency on the date of that receipt or recovery (or, if it is not possible to purchase theRequired Currency on that date, on the first date on which it is possible to do so). If the amount of the Required Currency tobe recovered is less than the amount of the Required Currency expressed to be due to the recipient under any Note, theIssuers or the Guarantors shall indemnify the recipient against the cost of making any further purchase of the RequiredCurrency in an amount equal to such difference. For the purposes of this Section 12.14, it will be sufficient for the holder tocertify that it would have suffered a loss had the actual purchase of the Required Currency been made with the amount soreceived in that other currency on the date of receipt or recovery (or, if a purchase of the Required Currency on that date hadnot been possible, on the first date on which it would have been possible). The foregoing indemnities, to the extent permittedby law: (a) constitute a separate and independent obligation from the other obligations of the Issuers and the Guarantors’; (b)shall give rise to a separate and independent cause of action; (c) shall apply irrespective of any waiver granted by anyHolder; and (d) shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidatedamount in respect of any sum due under any Note or other judgment or order.
SECTION 12.15. Contractual Recognition of Bail-In
The Issuers acknowledge and accept that, notwithstanding any other provision of this Indenture or any otheragreement, arrangement or understanding between the parties:
(a) any Liability may be subject to the exercise of Write-down and Conversion Powers by the Resolution Authority;
(b) the Issuers will be bound by the effect of any application of any Write-down and Conversion Powers inrelation to any Liability and in particular (but without limitation) by:
(1) any reduction in the principal amount, in full or in part, or outstanding amount due (including anyaccrued but unpaid interest) in respect of any Liability; and
(2) any conversion of all or part of any Liability into ordinary shares or other instruments of ownershipof Citigroup Global Markets Europe AG or any other Person; that may result from any exercise of any Write-downand Conversion Powers in relation to any Liability;
(c) the terms of this Indenture and the rights of the Issuers hereunder may be varied, to the extent necessary, togive effect to any exercise of any Write-down and Conversion Powers in relation to any Liability and the Issuers will bebound by any such variation;
-111-
(d) ordinary shares or other instruments of ownership of Citigroup Global Markets Europe AG or any otherPerson may be issued to or conferred on an Issuer as a result of any exercise of any Write-down and Conversion Powers inrelation to any Liability.
For purposes of this Section 12.15:
"Liability" means any liability of Citigroup Global Markets Europe AG to the Issuers arising under or in connectionwith this Indenture;
“Resolution Authority” means the German Federal Agency for Financial Markets Stabilisation (Bundesanstalt fürFinanzmarktstabilisierung), or any other body which has authority to exercise any Write-down and Conversion Powers; and
“Write-down and Conversion Powers” means any write-down, conversion, transfer, modification or suspensionpower existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements ineffect in Germany, relating to the transposition of Directive 2014/59/EU establishing a framework for the recovery andresolution of credit institutions and investment firms as amended from time to time, including but not limited to the GermanRecovery and Resolution Act (Sanerungs-und Abwicklungsgesetz) as amended from time to time, and the instruments, rulesand standards created thereunder, pursuant to which:
(a) any obligation of Citigroup Global Markets Europe AG (or other affiliate of such entity) can be reduced,cancelled, modified or converted into shares, other securities or other obligations of such entity or any other person (orsuspended for a temporary period); and
(b) any right in a contract governing an obligation of Citigroup Global Markets Europe AG may be deemed tohave been exercised.
[Remainder of Page Intentionally Left Blank]
[Indenture]
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first writtenabove.
ARDAGH PACKAGING FINANCE PLC, as Issuer
By: Name: Title:
ARDAGH HOLDINGS USA INC., as Issuer
By: Name: Title:
ARDAGH GROUP S.A., as Parent Guarantor
By: Name: Title:
[Indenture]
CITIBANK, N.A., LONDON BRANCH, as Trustee, Security Agent, Principal Paying Agent and Transfer Agent
By: Name: Title:
CITIGROUP GLOBAL MARKETS EUROPE AG, as Registrar
By: Name: Title:
By: Name: Title:
Schedule I-1
Schedule I
AGREED SECURITY PRINCIPLES
1. AGREED SECURITY PRINCIPLES
The guarantees and security to be provided under and in connection with this Indenture will be given in accordancewith the security and guarantee principles set out in this Schedule I (the “Agreed Security Principles”).Notwithstanding anything contained in the Agreed Security Principles, so long as the Existing Secured Notes remainoutstanding, the security and guarantees provided in respect of the Notes shall be the same as those provided inrespect of the Existing Secured Notes.
2. GENERAL PRINCIPLES
2.1 The Agreed Security Principles embody a recognition by all parties that there may be certain legal andpractical difficulties in obtaining effective guarantees and security from the Parent Guarantor and itsSubsidiaries (collectively, the “Group”) in certain jurisdictions. In particular:
(a) mandatory law provisions, general legal, statutory and constitutional documents’ limitations, capitalmaintenance, the prohibition of an intervention threatening the existence of a German member of the Group(Verstoß gegen das Verbot des existenzvernichtenden Eingriffs), financial assistance, corporate benefit,fraudulent preference, “thin capitalization” rules, “transfer pricing”, retention of title claims, exchangecontrol restrictions, employee consultation or approval requirements, regulatory restrictions and similarprinciples may limit the ability of a member of the Group to provide a guarantee or security or may requirethat the guarantee and/or security be limited by an amount or otherwise. If any such limit applies, theguarantees and security provided will be limited to the maximum amount which the relevant member of theGroup may provide having regard to applicable law;
(b) a factor in determining whether or not security shall be taken is the applicable cost which shall not bedisproportionate to the benefit to the Holders (or any other beneficiary of the security) of obtaining suchsecurity. For these purposes “cost” includes, but is not limited to, income or corporate tax cost, registrationtaxes payable on the creation or enforcement or for the continuance of any security, notary costs, stampduties, out-of-pocket expenses, and other fees and expenses directly incurred by the relevant grantor ofsecurity or any of its direct or indirect owners, subsidiaries or affiliates;
(c) unless each consent required by law, statute, the terms of any applicable contract, instrument orconstitutional document or otherwise from the minority shareholders in, or any relevant corporate body of,any member of the Group which is not wholly owned (directly or indirectly) by another member of theGroup is obtained, such Group member shall not be required to grant guarantees and security provided thatthe relevant company and the Parent Guarantor have used reasonable efforts to obtain such consent;
(d) guarantees should not be granted and security shall not be created or perfected to the extent that it wouldresult in a risk to the directors or officers of the relevant grantor of such
[Schedule I-2]
guarantee and security of contravention of any statutory duty in such capacity or their fiduciary duties and/orwhich could reasonably be expected to result in personal, civil or criminal liability on the part of any suchdirector or officer;
(e) any assets subject to third party arrangements (including shareholder agreements or joint ventureagreements) which would prevent or prohibit those assets from being subject to legal, valid, binding andenforceable security will be excluded from the security created by any relevant security document; providedthat the relevant member of the Group has used reasonable efforts to obtain any necessary consent or waiverif the asset is material, it being acknowledged that reasonable efforts will not require the payment by theParent Guarantor or the relevant company of any monetary consideration (other than nominal amounts orexpenses) to obtain any such consent or waiver;
(f) the maximum guaranteed or secured amount may be limited to minimize stamp duty, notarization,registration or other applicable fees, taxes and duties where the benefit of increasing the guaranteed orsecured amount is disproportionate to the level of such fee, taxes and duties;
(g) where a class of assets to be secured includes material and immaterial assets, if the cost of granting securityover the immaterial assets is disproportionate to the benefit of such security, security will be granted overthe material assets only;
(h) the giving of a guarantee, the granting of security or the perfection of the security granted will not berequired if:
(i) it would have a material adverse effect on the ability of the relevant member of the Group to conductits operations and business in the ordinary course as otherwise permitted by the Indenture; or
(ii) it would have a material adverse effect on the tax arrangements of the Group or any member of theGroup;
provided that, in each case, the relevant member of the Group shall use reasonable efforts to overcome suchobstacle. The secured and guaranteed obligations will be limited where necessary to prevent any materialadditional tax liability of any member of the Group;
(i) other than as provided for in Section 11.04(b)(vi) of this Indenture, and save for security granted by aGuarantor organized under the laws of England & Wales, Ireland, The Netherlands, or any state of theUnited States of America, security shall only be granted over the Capital Stock of each Guarantor;
(j) no fixed security shall be required to be given over bank accounts, inventory, receivables orintellectual property rights where satisfactory floating security (or equivalent in the relevant jurisdiction) canbe taken over such assets; and
(k) no perfection action will be required in jurisdictions in which a Guarantor is not located.
[Schedule I-3]
3. GUARANTEES AND SECURITY
3.1 It is agreed between the parties to this Indenture that subject to the other provisions of this Schedule I, no individualitem of security shall be granted unless on or about the same time, security of an equivalent nature is granted to orfor the benefit of Law Debenture Trust Company, in its capacity as trustee for certain of the Existing Secured Notes.
3.2 In the case of guarantees and security to be granted by a Guarantor incorporated in The Netherlands or France, if therelevant Guarantor has at least 50 employees, and/or over any Dutch or French assets, if the relevant entity grantingsuch pledge has at least 50 employees, or any other jurisdictions or assets requiring receipt of advice from a workscouncil, such guarantees and security shall not be granted until neutral or positive advice is received from anyrelevant works council and such work council shall be allowed to assist to the relevant board meeting of suchGuarantor or relevant entity granting such pledge.
3.3 In the case of guarantees and security to be granted by a Guarantor incorporated in The Netherlands or France and/orover any Dutch or French assets, or any other jurisdictions or assets requiring receipt of advice from a workscouncil, such guarantees and security shall not be granted until neutral or positive advice is received from anyrelevant works council.
3.4 Each guarantee will be an upstream, cross-stream and downstream guarantee and each guarantee and security will befor all liabilities of the relevant members of the Group under the Indenture in accordance with, and subject to, therequirements of the Agreed Security Principles in each relevant jurisdiction.
3.5 No subsidiary of the Parent Guarantor that is a Controlled Foreign Corporation (as defined in the United StatesInternal Revenue Code of 1986, as amended) (or that is a disregarded entity for U.S. federal income tax purposesowned by any such Controlled Foreign Corporation) shall be required to give a guarantee or pledge any of its assets(including shares in a subsidiary) as security for an obligation of a United States Person (as defined in the UnitedStates Internal Revenue Code of 1986, as amended). Furthermore, not more than 65% of the total combined votingpower of all classes of shares entitled to vote of any such subsidiary may be pledged directly or indirectly as securityfor an obligation of a United States Person. These principles also apply with respect to any entity that becomes aUnited States Person and/or a Controlled Foreign Corporation following any guarantee or pledge of assets or shares.
4. TERMS OF SECURITY DOCUMENTS
4.1 Security shall (to the extent legally possible, subject to the general principles above) be created in favor of theSecurity Agent, the Trustee and the Holders or the Security Agent on behalf of or as trustee for the Trustee and theHolders (as considered appropriate by counsel to the Security Agent), to secure all of the obligations of the partygiving the relevant security as well as all liabilities under the Indenture and the Notes (to the extent permitted bylocal law).
4.2 The security documents should only operate to create security rather than to impose new commercial obligations.Accordingly, representations shall not be included and undertakings (such as in respect of insurance, maintenance ofassets, information or the payment of costs) shall be strictly limited to those necessary for the creation or perfectionof the security, will not unreasonably interfere with the normal running of the business and shall not be included tothe extent the subject matter thereof is the same as a corresponding undertaking in the Indenture and
[Schedule I-4]
shall not operate so as to prevent transactions which are otherwise permitted under the Indenture or to requireadditional consents or authorizations or to impose commercial obligations.
4.3 The following principles will be reflected in the terms of any security taken as part of this transaction:
(a) security will not be enforceable in respect of the Notes until an Event of Default has occurred in respect ofwhich the Notes are being accelerated (a “Declared Default”);
(b) information, such as lists of assets, will be provided if, in the opinion of counsel to the Security Agent, theseare required by local law to be provided to perfect or register the security or to ensure the security can beenforced and, unless in the opinion of counsel to the Security Agent required to be provided by local lawmore frequently, be provided annually or, following an Event of Default which is continuing, on theSecurity Agent’s reasonable request; and
(c) each of the Trustee, the Security Agent and the Holders should only be able to exercise any power ofattorney granted to it under the security documents following a Declared Default.
5. BANK ACCOUNTS
5.1 If a member of the Group grants security over its bank accounts it shall be free to deal with those accounts in theordinary course of its business until a Declared Default has occurred. No control agreements will be required inrespect of any account located in the United States of America.
5.2 If required by local law to perfect the security, notice of the security will be served on the account bank within 10Business Days of the security being granted and the relevant member of the Group shall use its reasonable efforts toobtain an acknowledgement of that notice within 20 business days of service. If the relevant member of the Grouphas used its reasonable efforts but has not been able to obtain acknowledgement its obligation to obtainacknowledgement shall cease on the expiry of that 20 Business Day period. Irrespective of whether notice of thesecurity is required for perfection, if the service of notice would prevent the relevant member of the Group fromusing a bank account in the ordinary course of its business no notice of security shall be served until a DeclaredDefault has occurred. There will be no restriction on the closure of any bank accounts which are no longer requiredby the Group.
5.3 Any security over bank accounts shall be subject to any prior security interests in favor of the account bank whichare created either by law or in the standard terms and conditions of the account bank. The notice of security mayrequest these are waived or subordinated by the account bank but the Guarantor shall not be required to change itsbanking arrangements if these security interests are not waived or subordinated or only partially waived orsubordinated.
5.4 If required under local law, security over bank accounts will be registered subject to the general principles set out inthese Agreed Security Principles.
6. REAL ESTATE
6.1 No security will be given over real property unless it has a value in excess of €20,000,000 (twenty million euro) andthe secured parties under any Credit Facility have been granted a lien on such real property.
[Schedule I-5]
6.2 No security will be given over leasehold interests unless there is an option to acquire the freehold and where thefreehold will have a value in excess of the amount referred to in paragraph 6.1 above in which case security will begiven at the time of the exercise of that option.
6.3 There will be no obligation to investigate title, provide surveys or other insurance or environmental due diligence.
6.4 A Guarantor will be under no obligation to obtain any landlord consent required to grant security over its real estate,but only to investigate the possibility thereof.
6.5 Until the release provided for in Section 11.04(b)(vi) of this Indenture, with respect to any real estate located inGermany, a submission to immediate foreclosure relating to any real estate security only in relation to 5% of theamount secured under the relevant land charge is to be provided. A Guarantor will be under no obligation to notifyany insurer of its real estate relating to any real estate security.
7. FIXED ASSETS
7.1 If a member of the Group grants security over its fixed assets it shall be free to deal with those assets in the ordinarycourse of its business until a Declared Default has occurred.
7.2 If required under local law, security over fixed assets will be registered subject to the general principles set out inthese Agreed Security Principles.
8. INSURANCE POLICIES
8.1 If required by local law to perfect the security or to exclude the possibility that the debtor pays to the relevantmember of the Group with discharging effect, notice of the security will be served on the insurance provider within10 Business Days of the security being granted and the relevant member of the Group shall use its reasonable effortsto obtain an acknowledgement of that notice within 20 Business Days of service. If the relevant member of theGroup has used its reasonable efforts but has not been able to obtain acknowledgement its obligation to obtainacknowledgement shall cease on the expiry of that 20 Business Day period.
8.2 No loss payee or other endorsement shall be made on the insurance policy.
9. INTELLECTUAL PROPERTY
9.1 If a member of the Group grants security over its intellectual property it shall be free to deal with those assets in theordinary course of its business (including, without limitation, allowing its intellectual property to lapse if no longermaterial to its business and if permitted by the Indenture) until a Declared Default has occurred.
9.2 No security shall be granted over any intellectual property which cannot be secured under the terms of the relevantlicensing agreement. No notice shall be prepared or given to any third party from whom intellectual property islicensed until a Declared Default has occurred.
9.3 The security documents may provide for the applications of registration as may be required under local law for theapplicable registration of the security over intellectual property to be provided by the relevant member of the Groupin its jurisdiction of incorporation and any central registry only
[Schedule I-6]
and subject to the general principles set out in these Agreed Security Principles; provided that no registration of thetransfer of the relevant intellectual property to the Holders, the Trustee or the Security Agent shall be required underthe relevant security documents.
10. INTERCOMPANY RECEIVABLES
10.1 If a member of the Group grants security over its intercompany receivables it shall be free to deal with thosereceivables in the ordinary course of its business until a Declared Default has occurred.
10.2 If required by local law to perfect the security or to exclude the possibility that the debtor pays to the relevantmember of the Group with discharging effect, notice of the security will be served on the relevant lender within 10Business Days of the security being granted.
10.3 If required under local law security over intercompany receivables will be registered subject to the general principlesset out in these Agreed Security Principles.
11. TRADE RECEIVABLES AND INVENTORY
11.1 If a member of the Group grants security over its trade receivables and/or its inventory it shall be free to deal withthose receivables and/or inventory in the ordinary course of its business until a Declared Default has occurred.
11.2 No notice of security may be prepared or served until the occurrence of a Declared Default.
11.3 No security will be granted over any trade receivables which cannot be secured under the terms of the relevantcontract.
11.4 If required under local law, security over trade receivables and inventory will be registered subject to the generalprinciples set out in these Agreed Security Principles.
11.5 Any list of trade receivables required shall not include details of the underlying contracts to the extent not requiredto perfect the security transfer and make the receivables identifiable (bestimmbar) or to ensure the security can beenforced.
12. SHARES / PARTNERSHIP INTEREST
12.1 The security document will be governed by the laws of the person whose shares or partnership interests are beingsecured and not by the law of the country of the person granting the security.
12.2 Until a Declared Default has occurred, the securing person will be permitted to retain and to exercise voting rights toany shares or partnership interests pledged by it in a manner which does not adversely affect the validity orenforceability of the security or cause an Event of Default to occur and the company whose shares or partnershipinterests have been pledged will, subject to the terms of the Indenture, be permitted to pay dividends.
12.3 Where customary, as soon as reasonably practicable following execution of the share pledge, the share certificateand (where available and customary) a stock transfer form executed in blank will be provided to the Security Agentand where required by law the share certificate or shareholders register will be endorsed or written up and theendorsed share certificate or a copy of the written up register provided to the Security Agent.
[Schedule I-7]
13. RELEASE OF SECURITY
Unless required by local law the circumstances in which the security shall be released should not be dealt with inindividual security documents but, if so required, shall, except to the extent required by local law, be the same asthose set out in the Indenture or the Intercreditor Agreement or any Additional Intercreditor Agreement and notrequire any further consent by the Security Agent, the Trustee or any Holder.
14. JURISDICTIONS
14.1 The guarantees and security to be provided under and in connection with the Notes and the Indenture will only begranted by members of the Group organized under the laws of the following jurisdictions:
(i) Austria;
(ii) Denmark;
(iii) Germany;
(iv) Ireland;
(v) Italy (guarantee only);
(vi) Luxembourg (guarantee only);
(vii) Poland;
(viii) Sweden;
(ix) Switzerland;
(x) The Netherlands;
(xi) The United Kingdom; and
(xii) The United States of America.
15. SECURITY DOCUMENTATION
Subject to the Agreed Security Principles, each security agreement referred to will be substantially the same as thatin place immediately prior to the Issue Date (with such modifications as required, but only to the extent necessary, toreflect any change in law since the date of the relevant security agreement).
A-1
Exhibit A
[FORM OF FACE OF NOTE]
ARDAGH PACKAGING FINANCE PLC
ARDAGH HOLDINGS USA INC.
If Regulation S Global Note – CUSIP Number [●]/ISIN [●]1
If Restricted Global Note – CUSIP Number [●]/ISIN [●]2
No. [ ]
[Include if Global Note — UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZEDREPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THEISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANYCERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS ISREQUESTED 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), ANYTRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON ISWRONGFUL 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 INTHE NAME OF DTC OR A NOMINEE OF DTC OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOTEXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITSNOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NOTRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY DTC TO A NOMINEEOF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCHNOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BEREGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACTOF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHERJURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BEOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF INTHE ABSENCE
1 If the original Regulation S Global Note – CUSIP Number G04586 AS5 / ISIN USG04586AS53.
2 If the original Restricted Global Note – CUSIP Number 03969A AQ3/ ISIN US03969AAQ31.
A-2
OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A“QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT) OR(B) IT IS A NON U.S. PERSON ACQUIRING THIS NOTE IN AN “OFFSHORE TRANSACTION” PURSUANT TORULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (2) AGREES ON ITS OWN BEHALF AND ONBEHALF OF ANY INVESTOR FOR WHICH IT HAS PURCHASED SECURITIES TO OFFER, SELL OR OTHERWISETRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”)WHICH IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUEDATE HEREOF AND THE LAST DATE ON WHICH AN ISSUER OR ANY AFFILIATE OF AN ISSUER WAS THEOWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)] [IN THE CASE OF REGULATION SNOTES: 40 DAYS AFTER THE LATER OF THE DATE WHEN THE SECURITIES WERE FIRST OFFERED TOPERSONS OTHER THAN DISTRIBUTORS IN RELIANCE ON REGULATION S AND THE DATE OF THECOMPLETION OF THE DISTRIBUTION] ONLY (A) TO AN ISSUER, (B) PURSUANT TO A REGISTRATIONSTATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SOLONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON ITREASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THATPURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TOWHOM 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 INCOMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT OR (E) PURSUANT TO ANY OTHERAVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT,SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITIONOF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMESWITHIN ITS OR THEIR CONTROL AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWSAND ANY APPLICABLE LOCAL LAWS AND REGULATIONS AND FURTHER SUBJECT TO EACH ISSUER’SAND THE TRUSTEE’S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE(E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHERINFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING CASES, TOREQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THISSECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND (3) AGREESTHAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICESUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ONBEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES THAT IT SHALL NOTTRANSFER THE SECURITIES IN AN AMOUNT LESS THAN $200,000.
BY ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN), THE PURCHASER ORHOLDER WILL BE DEEMED TO HAVE REPRESENTED AND AGREED THAT (A) IT IS NOT AND FOR SO LONGAS IT HOLDS THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT BE (I) AN “EMPLOYEE BENEFIT PLAN” ASDEFINED IN SECTION 3(3) OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, ASAMENDED (“ERISA”), THAT
A-3
IS SUBJECT TO TITLE I OF ERISA, (II) A “PLAN” AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THEU.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) AN ENTITY OR ACCOUNTWHOSE UNDERLYING ASSETS ARE DEEMED TO INCLUDE THE ASSETS OF ANY SUCH EMPLOYEE BENEFITPLAN SUBJECT TO ERISA OR OTHER PLAN SUBJECT TO SECTION 4975 OF THE CODE OR (IV) A NON U.S.,GOVERNMENTAL, CHURCH OR OTHER BENEFIT PLAN WHICH IS SUBJECT TO ANY NON U.S. OR U.S.FEDERAL, STATE, OR LOCAL LAW THAT IS SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OFTITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) (EACH OF (I), (II), (III) AND (IV), A“PLAN”), (B) NO ASSETS OF A PLAN HAVE BEEN USED BY IT TO ACQUIRE THIS NOTE (OR ANY INTERESTHEREIN) OR (C) ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN) WILL NOTRESULT IN A PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE FORWHICH AN EXEMPTION IS NOT AVAILABLE OR VIOLATION OF ANY SIMILAR LAW, AND NONE OF THEISSUER, THE INITIAL PURCHASERS NOR ANY OF THEIR RESPECTIVE AFFILIATES IS ITS FIDUCIARY INCONNECTION WITH THE PURCHASE AND HOLDING OF THIS NOTE.
[IN THE CASE OF ADDITIONAL REGULATION S NOTES: THIS NOTE SHALL BEAR THE TEMPORARYCUSIP AND TEMPORARY ISIN NUMBERS INDICATED ON THIS NOTE UNTIL THE DAY THAT IS 40 DAYSAFTER [●], AFTER WHICH DATE THE PERMANENT CUSIP AND PERMANENT ISIN NUMBERS INDICATEDON THIS NOTE SHALL BE BORNE.]
A-4
5.250% SENIOR SECURED NOTE DUE 2025
Ardagh Packaging Finance plc, a public limited company incorporated under the laws of Ireland, and ArdaghHoldings USA Inc., a Delaware corporation, for value received, jointly and severally promise to pay to [●] or registeredassigns the principal sum of $[●] (as such amount may be increased or decreased as indicated in Schedule A (Schedule ofPrincipal Amount) of this Note) on April 30, 2025.
From [ ] or from the most recent Interest Payment Date to which interest has been paid or provided for, cashinterest on this Note will accrue at 5.250%, payable semi-annually on April 30 and October 30 of each year, beginning on[●], to the Person in whose name this Note (or any predecessor Note) is registered at the close of business on the BusinessDay immediately preceding such Interest Payment Date, as the case may be.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWSOF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof bymanual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid orobligatory for any purpose.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and to the provisionsof the Indenture, which provisions shall for all purposes have the same effect as if set forth at this place.
A-5
IN WITNESS WHEREOF, Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. have caused this Note tobe signed manually or by facsimile by its duly authorized signatory.
Dated: [●]
ARDAGH PACKAGING FINANCE PLC
By:Name: Title: Authorized Signatory
ARDAGH HOLDINGS USA INC.
By:Name: Title: Authorized Signatory
A-6
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the Indenture.
CITIBANK, N.A., LONDON BRANCH,as Trustee
By:Authorized Officer
A-7
[FORM OF REVERSE SIDE OF NOTE]
5.250% Senior Secured Note Due 2025
1. Interest
Ardagh Packaging Finance plc, a public limited company incorporated under the laws of Ireland, and ArdaghHoldings USA Inc. a Delaware corporation (each corporation, and such respective successors and assigns under theIndenture hereinafter referred to, being herein collectively called the “Issuers”), for value received, promises to pay intereston the principal amount of this Note from [●] at the rate per annum of 5.250%. Interest will be computed on the basis of a360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the interest rate borne by theNotes compounded semi-annually, and it shall pay interest on other overdue amounts at the same rate to the extent lawful.Any interest paid on this Note shall be increased to the extent necessary to pay Additional Amounts as set forth in this Note.
2. Additional Amounts
(a) All payments that the Issuers make under or with respect to the Notes or that the Guarantors make under orwith respect to the Guarantees shall be made free and clear of and without withholding or deduction for or on account of anypresent or future tax, duty, levy, impost, assessment or other governmental charge (including, without limitation, penalties,interest and other similar liabilities related thereto) of whatever nature (collectively, “Taxes”) imposed or levied on suchpayments by or on behalf of any jurisdiction (other than the United States, any state thereof or the District of Columbia) inwhich any Issuer or Guarantor is organized, resident or doing business for tax purposes or from or through which any of theforegoing (or its agents, including the Paying Agent) makes any payment on this Note or by or within any department,political subdivision or governmental authority of or in any of the foregoing having power to tax (each, a “Relevant TaxingJurisdiction”), unless such Issuer or Guarantor or other applicable withholding agent, as the case may be, is required towithhold or deduct Taxes by law or by the interpretation or administration of law. If either Issuer, a Guarantor or otherapplicable withholding agent is required to withhold or deduct any amount for or on account of Taxes imposed or levied onbehalf of a Relevant Taxing Jurisdiction from any payment made under or with respect to this Note or any Guarantee, suchIssuer or Guarantor, as the case may be, shall pay additional amounts (“Additional Amounts”) as may be necessary to ensurethat the net amount received by each beneficial owner of the Notes, after such withholding or deduction (including anywithholding or deduction in respect of any Additional Amounts) will not be less than the amount the beneficial owner wouldhave received if such Taxes had not been withheld or deducted.
(b) None of the Issuers or Guarantors will, however, pay Additional Amounts in respect or on account of:
(i) any Taxes, to the extent such Taxes are imposed or levied by a Relevant Taxing Jurisdiction byreason of the Holder’s or beneficial owner’s present or former connection with such Relevant Taxing Jurisdiction(other than the mere receipt, ownership, holding or disposition of this Note, or by reason of the receipt of anypayments in respect of any Notes or any Guarantee, or the exercise or enforcement of rights under any Notes or anyGuarantee);
(ii) any Taxes to the extent such Taxes are imposed or withheld by reason of the failure of the Holder orbeneficial owner of this Note, following the Issuers’ written request addressed to the Holder or beneficial owner, tocomply with any certification, identification, information or other reporting requirements (to the extent such holderor beneficial owner is legally eligible to do so),
A-8
whether required by statute, treaty, regulation or administrative practice of a Relevant Taxing Jurisdiction, as aprecondition to exemption from, or reduction in the rate of deduction or withholding of, such Taxes imposed by theRelevant Taxing Jurisdiction (including, without limitation, a certification that the Holder or beneficial owner is notresident in the Relevant Taxing Jurisdiction);
(iii) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;
(iv) any Tax which is payable otherwise than by deduction or withholding from payments made under orwith respect to this Note or any Guarantee;
(v) any Tax imposed on or with respect to any payment by any of the Issuers or Guarantors to theHolder if such Holder is a fiduciary or partnership or Person other than the sole beneficial owner of such payment tothe extent that such Taxes would not have been imposed on such payment had such beneficial owner been the holderof such Note;
(vi) any Tax that is imposed on or with respect to a payment made to a Holder or beneficial owner whowould have been able to avoid such withholding or deduction by presenting the relevant Notes to another payingagent in a member state of the European Union or the United Kingdom;
(vii) any Taxes, to the extent such Taxes were imposed as a result of the presentation of a Note forpayment (where presentation is required) more than 30 days after the relevant payment is first made available to theHolder (except to the extent that the Holder would have been entitled to Additional Amounts had this Note beenpresented on the last day of such 30-day period);
(viii) any U.S. federal withholding Taxes or equivalent thereof imposed pursuant to Sections 1471 through1474 of the Internal Revenue Code of 1986 as of the Issue Date (or any amended or successor version that issubstantively comparable and not materially more onerous to comply with), any current or future regulationspromulgated thereunder or other official administrative interpretations thereof and any agreements entered intopursuant to current Section 1471(b)(1) of the Internal Revenue Code of 1986 as of the Issue Date (or any amendedor successor version described above), and including (for the avoidance of doubt) any intergovernmental agreements(and any law, regulation, rule or practice implementing any such intergovernmental agreement) in respect of theforegoing; or
(ix) any combination of the foregoing.
(c) The Issuers and the Guarantors, if the applicable withholding agents, shall (i) make such withholding ordeduction as is required by applicable law and (ii) remit the full amount deducted or withheld to the relevant authority inaccordance with applicable law.
(d) At least 30 calendar days prior to each date on which any payment under or with respect to this Note or anyGuarantee is due and payable, if the Issuers or any Guarantor shall be obligated to pay Additional Amounts with respect tosuch payment (unless such obligation to pay Additional Amounts arises after the 30th day prior to the date on whichpayment under or with respect to this Note or any Guarantee is due and payable, in which case it will be promptlythereafter), the Issuers shall deliver to the Trustee, with a copy to the Paying Agent, an Officer’s Certificate stating that suchAdditional Amounts will be payable and the amounts so payable and setting forth such other information as is necessary toenable the Paying Agent to pay such Additional Amounts to the Holders on the payment date. The Trustee and the
A-9
Paying Agent shall be entitled to rely solely on such Officer’s Certificate as conclusive proof that such payments arenecessary. The Issuers shall promptly publish a notice in accordance with Section 12.02 of the Indenture stating that suchAdditional Amounts will be payable and describing the obligation to pay such amounts.
In addition, the Issuers or any Guarantor, as the case may be, shall pay any present or future stamp, issuance,registration, court, documentary, excise or property taxes or other similar taxes, charges and duties, including withoutlimitation, interest, penalties and other similar liabilities with respect thereto, imposed by any Relevant Taxing Jurisdictionin respect of (i) the execution, issue, delivery or registration of this Note or any Guarantee or any other document orinstrument referred to thereunder, or (ii) the receipt of any payments under or with respect to, or enforcement of, this Note orany Guarantee.
Upon written request, any of the Issuers or a Guarantor will furnish to the Trustee or a Holder within a reasonabletime certified copies of tax receipts evidencing any payment by such Issuer or such Guarantor (as the case may be) of anyTaxes imposed or levied by a Relevant Taxing Jurisdiction, in accordance with the procedures described in Section 12.02 ofthe Indenture, in such form as provided in the normal course by the taxing authority imposing such Taxes. If,notwithstanding the efforts of such Issuer or Guarantor to obtain such receipts, the same are not obtainable, such Issuer orsuch Guarantor will provide the Trustee or such Holder with other evidence reasonably satisfactory to the Trustee or holderof such payments by such Issuer or Guarantor. If requested by the Trustee, the Issuers and (to the extent necessary) anyGuarantors will provide to the Trustee such information as may be reasonably available to such Issuers and the Guarantors(and not otherwise in the possession of the Trustee) to enable the determination of the amount of any withholding taxesattributable to any particular Holder(s).
(e) Whenever the Indenture or this Note refers to, in any context, the payment of principal, premium, if any,interest or any other amount payable under or with respect to this or any other Note (including payments thereof madepursuant to a Guarantee), such reference includes the payment of Additional Amounts, if applicable.
(f) This paragraph 2 will survive any termination, defeasance or discharge of the Indenture and shall applymutatis mutandis to any jurisdiction (other than the United States, any state thereof or the District of Columbia) in whichany successor Person to any of the Issuers or Guarantors is organized, resident or doing business for tax purposes or anyjurisdiction from or through which any such person (or its agents, including the Paying Agent) makes any payment on thisor any other Note (or any Guarantee) and any department, political subdivision or governmental authority of or in any of theforegoing having the power to tax.
3. Method of Payment
The Issuers shall pay interest on this Note (except defaulted interest) to the persons who are registered Holders ofthis Note at the close of business on the Record Date for the next Interest Payment Date even if this Note is cancelled afterthe Record Date and on or before the Interest Payment Date. The Issuers shall pay principal and interest in dollars inimmediately available funds that at the time of payment is legal tender for payment of public and private debts; providedthat payment of interest may be made at the option of the Issuers by check mailed to the Holder.
The amount of payments in respect of interest on each Interest Payment Date shall correspond to the aggregateprincipal amount of Notes represented by the Regulation S Global Note and the Restricted Global Note, as established bythe Registrar at the close of business on the relevant Record Date. Payments
A-10
of principal shall be made upon surrender of the Regulation S Global Note and the Restricted Global Note to the PayingAgent.
4. Paying Agent and Registrar
Initially, Citibank, N.A., London Branch or one of its affiliates will act as Principal Paying Agent, and CitigroupGlobal Markets Europe AG will act as Registrar. The Issuers or any of its Affiliates may act as Paying Agent, Registrar orco-Registrar.
5. Indenture
The Issuers issued this Note under an indenture dated as of April 8, 2020 (the “Indenture”), among, inter alios, theIssuers, Ardagh Group S.A., as parent guarantor (the “Parent Guarantor”), Citibank, N.A., London Branch, as trustee (the“Trustee”) and Citibank, N.A., London Branch, as security agent (the “Security Agent”). The terms of this Note includethose stated in the Indenture. Terms defined in the Indenture and not defined herein have the meanings ascribed thereto inthe Indenture. This Note is subject to all such terms, and Holders are referred to the Indenture 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 theIndenture shall govern and be controlling.
The Indenture imposes certain limitations on the Issuers, the Guarantors and their Affiliates, including, withoutlimitation, limitations on the incurrence of indebtedness and issuance of stock, the payment of dividends and other paymentrestrictions affecting the Parent Guarantor and its Restricted Subsidiaries, the sale of assets, transactions with and amongAffiliates of the Parent Guarantor and the Restricted Subsidiaries, Change of Control and Liens.
6. Optional Redemption
(a) At any time prior to April 30, 2022, upon not less than 10 nor more than 60 days’ notice, the Issuers may onany one or more occasions redeem up to 40% of the aggregate principal amount of the Notes at a Redemption Price of105.250% of their principal amount, plus accrued and unpaid interest, if any, to (but excluding) the Redemption Date(subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date),with the net cash proceeds from one or more Public Equity Offerings. The Issuers may only do this, however, if (i) at least60% of the aggregate principal amount of the applicable series of Notes that were initially issued would remain outstandingimmediately after the proposed redemption; and (ii) the redemption occurs within 120 days after the closing of such PublicEquity Offering.
(b) At any time prior to April 30, 2022, upon not less than 10 nor more than 60 days’ notice, the Issuers mayalso redeem all or part of the Notes at a Redemption Price equal to 100% of the principal amount of the Notes beingredeemed plus the Notes Applicable Redemption Premium and accrued and unpaid interest to the Redemption Date.
“Notes Applicable Redemption Premium” means the greater of:
(1) 1.0% of the principal amount of the Notes; and
(2) the excess of:
A-11
(i) the present value at such Redemption Date of (x) the Redemption Price of such Note at April 30,2022 (such Redemption Price being set forth in the table appearing below in clause (c)), plus (y) allrequired interest payments due on such Note through April 30, 2022 (excluding accrued but unpaidinterest), computed using a discount rate equal to the Treasury Rate as of such Redemption Dateplus 50 basis points; over
(ii) the outstanding principal amount of such Note.
“Treasury Rate” means, as of any Redemption Date, the weekly average rounded to the nearest 1/l00th of apercentage point (for the most recently completed week for which such information is available as of the date that is twoBusiness Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constantmaturity (as compiled and published in Federal Reserve Statistical Release H.15 with respect to each applicable day duringsuch week or, if such Statistical Release is no longer published, any publicly available source of similar market data) mostnearly equal to the period from the Redemption Date to April 30, 2022; provided, however, that if the period from theRedemption Date to April 30, 2022 is not equal to the constant maturity of a United States Treasury security for which sucha yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year)from the weekly average yields of United States Treasury securities for which such yields are given, except that if the periodfrom the Redemption Date to April 30, 2022 is less than one year, the weekly average yield on actually traded United StatesTreasury securities (or other comparable benchmark) adjusted to a constant maturity of one year shall be used.
(c) At any time on or after April 30, 2022 and prior to maturity, upon not less than 10 nor more than 60 days’notice, the Issuers may redeem all or part of the Notes. These redemptions will be in amounts of $1,000 or integral multiplesthereof at the following Redemption Prices (expressed as percentages of their principal amount at maturity), plus accruedand unpaid interest, if any, to the Redemption Date, if redeemed during the 12-month period commencing on April 30 of theyears set forth below (subject to the right of holders of record on the relevant regular Record Date that is prior to theRedemption Date to receive interest due on an interest payment date).
YearRedemption Price
Notes102.625%101.313%100.000%
Any redemption and notice may, in the Issuers’ discretion, be subject to the satisfaction of one or more conditionsprecedent.
7. Redemption Upon Changes in Withholding Taxes
This Note and the other Global Notes may also be redeemed together, in whole but not in part, at the election of theIssuers, upon not less than 10 nor more than 60 days’ notice which notice shall be irrevocable and given in accordance withthe procedures described in Section 12.02 of the Indenture, at the Redemption Price equal to 100% of their principal amount,plus accrued and unpaid interest, if any to (but excluding) the Redemption Date if, as a result of (a) any amendment to, orchange in, the laws (or regulations or rulings promulgated thereunder) of any Relevant Taxing Jurisdiction which isannounced and becomes effective after the Issue Date (or, where such Relevant Taxing Jurisdiction became a RelevantTaxing Jurisdiction at a later date, after such later date) or, (b) any change which is announced and becomes
202220232024 and thereafter
A-12
effective after the Issue Date (or, where such Relevant Taxing Jurisdiction became a Relevant Taxing Jurisdiction at a laterdate, after such later date) in the official interpretation or official application of such laws, regulations or rulings (includingby virtue of a holding, judgment or order by a court of competent jurisdiction) of any Relevant Taxing Jurisdiction (each ofthe foregoing sub-clauses (a) and (b), a “Change in Tax Law”), the Issuers would be obligated to pay, on the next date forany payment and as a result of that amendment or change, Additional Amounts (as described above in paragraph 2), withrespect to the Relevant Taxing Jurisdiction, which the Issuers cannot avoid by the use of reasonable measures available tothe Issuers. Prior to the giving of any notice of redemption pursuant to this paragraph 7, the Issuers shall deliver to theTrustee (a) an Officer’s Certificate stating that the obligation to pay Additional Amounts cannot be avoided by the Issuerstaking reasonable measures available to it, and (b) a written opinion of independent tax counsel to the Issuers of recognizedstanding qualified under the laws of the Relevant Taxing Jurisdiction and reasonably satisfactory to the Trustee to the effectthat the Issuers has or will become obligated to pay such 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 theconditions precedent described above, without further inquiry, in which event it will be conclusive and binding on Holdersof the Notes.
Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to theearliest date on which the Issuers would be obliged to make such payment of Additional Amounts if a payment in respect ofthe Notes were then due and (b) unless at the time such notice is given, the obligation to pay Additional Amounts remains ineffect.
Any redemption and notice may, in the Issuer’s discretion, be subject to the satisfaction of one or more conditionsprecedent.
8. Notice of Redemption
Notice of redemption will be mailed first-class postage prepaid at least 10 days but not more than 60 days before theRedemption Date to the Holder of this Note to be redeemed at the addresses contained in the Security Register. If this Noteis in a denomination larger than $200,000 of principal amount at maturity it may be redeemed in part but only in integralmultiples of $1,000 at maturity. In the event of a redemption of less than all of the Notes, the Notes for redemption will bechosen by the Trustee in accordance with the Indenture. If this Note is redeemed subsequent to a Record Date with respectto any Interest Payment Date specified above, then any accrued interest will be paid to the Holder at the close of business onsuch Record Date. If money sufficient to pay the Redemption Price of and accrued interest on all Notes (or portions thereof)to be redeemed on the Redemption Date is deposited with the applicable Paying Agent on or before the Redemption Dateand certain other conditions are satisfied, interest ceases to accrue on such Notes (or such portions thereof) called forredemption on or after such date.
9. Repurchase at the Option of Holders
If a Change of Control occurs at any time, the Issuers or the Parent Guarantor shall offer to purchase on the Changeof Control Purchase Date all or any part (equal to $200,000 or an integral multiple of $1,000 in excess thereof) of this Noteat a purchase price in cash in an amount equal to 101% of the principal amount hereof, plus any accrued and unpaid interest,if any, to the Change of Control Purchase Date (subject to the rights of Holders of record on the relevant Record Dates toreceive interest due on the relevant Interest Payment Date); provided that the Issuers and the Parent Guarantor shall not berequired to make a Change of Control Offer if, when a Change of Control occurs, it has given notice of its intention toredeem all of the Notes pursuant to paragraph 6 or paragraph 7 of this Note. The Issuers shall purchase all Notes properly
A-13
and timely tendered in the Change of Control Offer and not withdrawn in accordance with the procedures set forth in suchnotice. The Change of Control Offer will state, among other things, the procedures that Holders of the Notes must follow toaccept the Change of Control Offer.
When the aggregate amount of Excess Proceeds exceeds the greater of $100,000,000 and 1.5% of Total Assets, theParent Guarantor or the Issuers shall, within 20 Business Days, make an offer to purchase (an “Excess Proceeds Offer”)from all Holders and from the holders of any Pari Passu Debt, to the extent required by the terms thereof, on a pro ratabasis, in accordance with the procedures set forth in the Indenture or the agreements governing any such Pari Passu Debt,the maximum principal amount (expressed as an integral multiple of $1,000 with respect to the Notes) of the Notes and anysuch Pari Passu Debt that may be purchased with the amount of the Excess Proceeds. The offer price as to each Note andany such Pari Passu Debt will be payable in cash in an amount equal to (solely in the case of the Notes) 100% of theprincipal amount of such Note and (solely in the case of Pari Passu Debt) no greater than 100% of the principal amount (oraccreted value, as applicable) of such Pari Passu Debt, plus in each case accrued and unpaid interest, if any, to the date ofpurchase.
To the extent that the aggregate principal amount of Notes and any such Pari Passu Debt tendered pursuant to anExcess Proceeds Offer is less than the aggregate amount of Excess Proceeds, the Parent Guarantor may use the amount ofsuch Excess Proceeds not used to purchase Notes and Pari Passu Debt for general corporate purposes that are not otherwiseprohibited by the Indenture. If the aggregate principal amount of Notes and any such Pari Passu Debt validly tendered andnot withdrawn by holders thereof exceeds the aggregate amount of Excess Proceeds, the Notes and any such Pari Passu Debtto be purchased shall be selected by the Trustee on a pro rata basis (based upon the principal amount of Notes and theprincipal amount or accreted value of such Pari Passu Debt tendered by each holder). Upon completion of each such ExcessProceeds Offer, the amount of Excess Proceeds will be reset to zero.
10. Denominations
The Notes (including this Note) are in denominations of $200,000 and integral multiples of $1,000 in excess thereofof principal amount at maturity. The transfer of Notes (including this Note) may be registered, and Notes (including thisNote) may be exchanged, as provided in the Indenture. The Registrar may require a Holder, among other things, to furnishappropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by theIndenture.
11. Unclaimed Money
All moneys paid by the Issuers or the Guarantors to the Trustee or a Paying Agent for the payment of the principalof, or premium, if any, or interest on, this Note or any other Note that remain unclaimed at the end of two years after suchprincipal, premium or interest has become due and payable may be repaid to the Issuers or the Guarantors, subject toapplicable law, and the Holder of such Note thereafter may look only to the Issuers or the Guarantors for payment thereof.
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may terminate some or all of its obligations and the obligationsof the Guarantors under this Note and each other Note, the Guarantees and the Indenture if the Issuers irrevocably depositwith the Trustee dollars or U.S. Government Securities for the payment of principal and interest on the Notes to redemptionor maturity, as the case may be.
A-14
13. Amendment, Supplement and Waiver
(a) (i) The Issuers, when authorized by a resolution of its Board of Directors (as evidenced by the delivery ofsuch resolution to the Trustee), the Guarantors and the Trustee may modify, amend or supplement the Indenture, anyGuarantee or this Note and each other Note and the Issuers, when authorized by a resolution of its Board of Directors (asevidenced by the delivery of such resolution to the Security Agent), the Guarantors and the Security Agent may modify,amend or supplement any Security Document, in each case without notice to or consent of any Holder:
(A) to evidence the succession of another Person to the Parent Guarantor and the assumption by anysuch successor of the covenants in the Indenture and in this Note and each other Note; provided that such successorPerson would have been permitted to so succeed in a transaction that would have complied with Article Five;provided, further, that such transaction need not be of a specific type identified in Article Five (it being understoodthat in the case of any other transaction, the requirements of Article Five shall apply mutatis mutandis);
(B) to add to the covenants of the Issuers, any Guarantor or any other obligor upon this Note and eachother Note for the benefit of the Holders or to surrender any right or power conferred upon the Issuers, anyGuarantor, or any other obligor upon this Note and each other Note, as applicable, in the Indenture, in this Note andeach other Note or in any Guarantees;
(C) to cure any ambiguity, or to correct or supplement any provision in the Indenture, this Note and eachother Note or any Guarantees that may be defective or inconsistent with any other provision in the Indenture, thisNote and each other Note or any Guarantee or make any other provisions with respect to matters or questions arisingunder the Indenture, the Notes or any Guarantee; provided that, in each case, such provisions shall not adverselyaffect the rights of the Holders in any material respect;
(D) to conform the text of the Indenture, the Guarantees, the Security Documents, or the Notes to anyprovision of the “Description of the Secured Notes” section of the Offering Memorandum to the extent that suchprovision in the “Description of the Secured Notes” was intended to be a verbatim recitation of a provision of theIndenture, the Guarantees, the Security Documents or the Notes;
(E) to release any Guarantor in accordance with and if permitted by the terms of and limitations set forthin the Indenture and to add a Subsidiary Guarantor or other guarantor under the Indenture (which will requireexecution of the relevant supplemental indenture only by the Issuers, the Parent Guarantor and such additionalSubsidiary Guarantor(s) or other guarantor(s));
(F) to evidence and provide the acceptance of the appointment of a successor Trustee or Security Agentunder the Indenture or any Security Document;
(G) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit ofthe Holders as additional security for the payment and performance of the Issuers’ and any Guarantor’s obligationsunder the Indenture, in any property, or assets, including any of which are required to be mortgaged, pledged orhypothecated, or in which a security interest is required to be granted to the Trustee pursuant to the Indenture orotherwise to release Collateral from the Liens pursuant to the Indenture and the Security Documents when permittedor required by the Indenture, the Security Documents and/or the Intercreditor Agreement or to modify the SecurityDocuments and/or the Intercreditor Agreement to secure additional extensions of credit
A-15
and add additional secured creditors holding obligations that are permitted to be secured by Liens pari passu with theNotes under the Security Documents pursuant to the terms of the Indenture; or
(H) to provide for the issuance of Additional Notes in accordance with and if permitted by the terms andlimitations set forth in the Indenture.
(ii) The Issuers, when authorized by a resolution of its Board of Directors (as evidenced by the delivery of suchresolution to the Trustee), the Parent Guarantor, the Trustee and the Restricted Subsidiary being added as a SubsidiaryGuarantor or other entity becoming a Guarantor under the Indenture may supplement the Indenture to add a SubsidiaryGuarantor or other guarantor under the Indenture, in each case without notice to or consent of any Holder.
(iii) In formulating its opinion on such matters, the Trustee shall be entitled to require and rely on such evidenceas it deems appropriate, including an Opinion of Counsel and an Officer’s Certificate.
(b) Except as provided in paragraph 13(c) of this Note and Section 6.04 of the Indenture, respectively, andwithout prejudice to paragraph 13(a) of this Note, the Issuers, the Guarantors and the Trustee may:
(i) modify, amend or supplement the Indenture, the Security Documents or this Note and the otherNotes; or
(ii) waive compliance by the Issuers with any provision of the Indenture, the Security Documents or thisNote and the other Notes,
with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes thenoutstanding (including consents obtained in connection with a tender offer or in exchange for the Notes); provided that, ifany amendment, waiver or other modification will only affect one series of the Notes, only the consent of the holders of notless than a majority in principal amount of the then outstanding Notes of such series shall be required;
(c) Without the consent of the Holders of 90% of the outstanding Notes (provided, however, that if anyamendment, waiver or other modification will only affect one series of the Notes, only the consent of the holders of at least90% of the aggregate principal amount of such series shall be required (and not the consent of at least 90% of the aggregateprincipal amount of all Notes then outstanding)), with respect to any such Notes held by a non-consenting Holder, noamendment, modification, supplement or waiver, including a waiver pursuant to Section 6.04 of the Indenture and anamendment, modification or supplement pursuant to Section 9.01 of the Indenture, may:
(i) change the Stated Maturity of the principal of, or any installment of any Additional Amounts orinterest on, any Note;
(ii) reduce the principal amount of any Note (or Additional Amounts or premium, if any) or the rate ofor change the time for payment of interest on any Note;
(iii) change the coin or currency in which the principal of any Note or any premium or any AdditionalAmounts or the interest thereon is payable;
(iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturitythereof (or, in the case of redemption, on or after the Redemption Date);
A-16
(v) reduce the principal amount of the outstanding Notes, the consent of whose Holders is required forany amendment or supplement to, or waiver or compliance with, certain provisions of the Indenture;
(vi) modify any of the provisions of Article Nine of the Indenture or any provisions in the Indenturerelating to the waiver of past defaults or relating to the waiver of certain covenants, except to increase the percentageof outstanding Notes required for such actions or to provide that certain other provisions of the Indenture cannot bemodified or waived without the consent of the Holder of each Note affected thereby;
(vii) make any change to the Intercreditor Agreement (or any Additional Intercreditor Agreement) or anyprovisions of the Indenture affecting the ranking of the Notes or the Guarantees, in each case in a manner thatadversely affects the rights of the Holders or directly or indirectly release the Liens on the Collateral except aspermitted by the Indenture, the Intercreditor Agreement (or any Additional Intercreditor Agreement) and theSecurity Documents; or
(viii) make any change in Section 4.12 of the Indenture that adversely affects the rights of any Holder oramend the terms of the Notes or the Indenture in a way that would result in a loss of an exemption from any of theTaxes described thereunder or an exemption from any obligation to withhold or deduct Taxes so describedthereunder unless the Issuers or the Guarantors agree to pay Additional Amounts (if any) in respect thereof in thesupplemental indenture.
(d) The consent of the Holders will not be necessary under the Indenture to approve the particular form of anyproposed amendment, modification, supplement, waiver or consent. It is sufficient if such consent approves the substance ofthe proposed amendment, modification, supplement, waiver or consent. A consent to any amendment or waiver under theIndenture by any Holder given in connection with a tender of such Holder’s Notes will not be rendered invalid by suchtender.
14. Defaults and Remedies
This Note and the other Notes have the Events of Default as set forth in Section 6.01 of the Indenture. If an Event ofDefault (other than an Event of Default specified in clauses (ix) and (x) of Section 6.01(a) of the Indenture) occurs and iscontinuing, the Trustee or the registered Holders of not less than 30% in aggregate principal amount of the Notes thenoutstanding by written notice to the Issuers and the Parent Guarantor (and to the Trustee if such notice is given by theHolders), subject to certain limitations, may, and the Trustee, upon the written request of such Holders shall, declare thisNote and the other Notes, and any Additional Amounts and accrued interest, to be due and payable immediately. Certainevents of bankruptcy or insolvency are Events of Default and shall result in this Note and the other Notes being due andpayable immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture, this Note, the other Notes or the Security Documents except as provided inthe Indenture and subject to the Intercreditor Agreement and any Additional Intercreditor Agreement. The Trustee and theSecurity Agent may refuse to enforce the Indenture, this Note or the other Notes unless it receives security and/or indemnity(including by way of pre-funding) reasonably satisfactory to it. Subject to certain limitations and the IntercreditorAgreement (and any Additional Intercreditor Agreement), the Holders of a majority in aggregate principal amount of theNotes may direct the Trustee and the Security Agent in its exercise of any trust or power. The Holders of a majority inaggregate principal amount of the Notes then outstanding by written notice to the Trustee may rescind any acceleration andits consequence if the rescission would not conflict with any judgment or decree and if all existing Events of Default havebeen cured or waived except nonpayment of principal, premium, if any, or interest that has
A-17
become due solely because of such acceleration. The above description of Events of Default and remedies is qualified byreference, and subject in its entirety, to the provisions of the Indenture.
15. Ranking
This Note and the other Notes will be general obligations of each Issuer and will rank senior in right of payment toany and all of each Issuer’s existing and future Debt that is subordinated in right of payment to the Notes, rank equally inright of payment with all of each Issuer’s existing and future Debt that is not subordinated in right of payment to the Notes,and be structurally subordinated to all existing and future indebtedness of the Parent Guarantor’s Subsidiaries that do notprovide Guarantees.
16. Security
This Note and the other Notes will be secured by the Security Interests in the Collateral, subject to PermittedCollateral Liens. Reference is made to the Indenture for terms relating to such security, including the release, terminationand discharge thereof. The Security Documents and the Collateral will be administered by the Security Agent (or in certaincircumstances a sub-agent) pursuant to the Security Documents, including the Intercreditor Agreement or any AdditionalIntercreditor Agreement for the benefit of all Holders and holders of certain Debt permitted to be secured on the Collateral.The Issuers shall not be required to make any notation on this Note to reflect any grant of such security or any such release,termination or discharge. Each Holder, by accepting a Note, shall be deemed to have agreed to and accepted the terms andconditions of the Intercreditor Agreement or any Additional Intercreditor Agreement (whether then entered into or enteredinto in the future pursuant to the provisions described herein).
17. Trustee Dealings with the Issuers
The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notesand may otherwise deal with and collect obligations owed to it by the Issuers, the Guarantors or any of their Affiliates withthe same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-Registrar or co-Paying Agent may dothe same with like rights.
18. No Recourse Against Others
A director, officer, employee, incorporator, member or shareholder, as such, of the Issuers or the Guarantors shallnot have any liability for any obligations of the Issuers or the Guarantors under this Note, the other Notes, the Guarantees orthe Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting aNote, each Holder shall waive and release all such liability. The waiver and release are part of the consideration for issuanceof the Notes.
19. Authentication
This Note shall not be valid until an authorized officer of the Trustee (or an authenticating agent) manually signs thecertificate of authentication on the other side of this Note.
20. Abbreviations
Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants incommon), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants incommon), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
A-18
21. ISIN and CUSIP Numbers
The Issuers may cause ISIN and CUSIP numbers to be printed on the Notes, and if so the Trustee shall use ISIN andCUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of suchnumbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on theother identification numbers placed on the Notes.
22. Governing Law
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWSOF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
A-19
ASSIGNMENT FORM
To assign and transfer this Note, fill in the form below:
(I) or (the Issuers) assign and transfer this Note to
(Insert assignee’s social security or tax I.D. no.)
(Print or type assignee’s name, address and postal code)
and irrevocably appoint ______________________________________ agent to transfer this Note on the books of theIssuers. The agent may substitute another to act for him.
Your Signature: ____________________________________________________________(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: __________________________________________________________(Participant in a recognized signature guarantee medallion program)
Date: _______________________________________________________
Certifying Signature:
In connection with any transfer of any Notes evidenced by this certificate occurring prior to the date that is one yearafter the later of the date of original issuance of such Notes and the last date, if any, on which the Notes were owned by theIssuers or any of their respective Affiliates, the undersigned confirms that such Notes are being transferred in accordancewith the transfer restrictions set forth in such Notes and:
CHECK ONE BOX BELOW
(1) ◻ to the Parent Guarantor or any Subsidiary; or
(2) ◻ pursuant to an effective registration statement under the U.S. Securities Act of 1933; or
(3) ◻ pursuant to and in compliance with Rule 144A under the U.S. Securities Act of 1933; or
(4) ◻ pursuant to and in compliance with Regulation S under the U.S. Securities Act of 1933; or
(5) ◻ pursuant to another available exemption from the registration requirements of the U.S. Securities Actof 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificatein the name of any person other than the registered Holder thereof; provided, however, that if box (3) is checked, byexecuting this form, the Transferor is deemed to have certified that such Notes are being transferred to a person it reasonablybelieves is a “qualified institutional buyer” as defined in Rule
A-20
144A under the U.S. Securities Act of 1933 who has received notice that such transfer is being made in reliance on Rule144A; if box (4) is checked, by executing this form, the Transferor is deemed to have certified that such transfer is madepursuant to an offer and sale that occurred outside the United States in compliance with Regulation S under the U.S.Securities Act; and if box (5) is checked, the Trustee may require, prior to registering any such transfer of the Notes, suchlegal opinions, certifications and other information as the Issuers reasonably request to confirm that such transfer is beingmade pursuant to an exemption from or in a transaction not subject to, the registration requirements of the U.S. SecuritiesAct of 1933.
Signature: _________________________________
Signature Guarantee: __________________________________________________________(Participant in a recognized signature guarantee medallion program)
Certifying Signature: __________________ Date:______________________
Signature Guarantee: __________________________________________________________(Participant in a recognized signature guarantee medallion program)
A-21
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note or a portion thereof repurchased pursuant to Section 4.09 or Section 4.11 of theIndenture, check the box: ◻
If the purchase is in part, indicate the portion (in denominations of $200,000 or any integral multiple of $1,000 inexcess thereof) to be purchased:
Your Signature: ____________________________________________________________(Sign exactly as your name appears on the other side of this Note)
Date:
Certifying Signature: ______________________________________
A-22
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The following decreases/increases in the principal amount of this Security have been made:
Date of
Decrease/ Increase
Decrease in
Principal Amount
Increase in Principal Amount
Principal Amount
Following such Decrease/Increase
Notation Made by or on Behalf
of Paying Agent orRegistrar
__________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _____________
B-1
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM RESTRICTED GLOBAL NOTE TO REGULATION S GLOBAL NOTE.*
Transfers pursuant to Section 2.06(b)(ii) of the Indenture
Citibank, N.A., London Branch 25 Canada Square Canary Wharf London E14 5LB United Kingdom
Attention: Transfer Agent
Re: 5.250% Senior Secured Notes due 2025 (the “Notes”)
Reference is hereby made to the Indenture dated as of April 8, 2020 (the “Indenture”) among, inter alios, ArdaghPackaging Finance plc, a public limited company incorporated under the laws of Ireland and Ardagh Holdings USA Inc., aDelaware corporation, collectively, as Issuers, Ardagh Group S.A., as Parent Guarantor, and Citibank, N.A., LondonBranch, as Trustee, and Citibank, N.A., London Branch, as Security Agent. Capitalized terms used but not defined hereinshall have the meanings given them in the Indenture.
This letter relates to $____________ aggregate principal amount of Notes that are held as a beneficial interest in theform of the Restricted Global Note (CUSIP No. [●]; ISIN No: [●]) with DTC in the name of [name of transferor] (the“Transferor”). The Transferor has requested an exchange or transfer of such beneficial interest for an equivalent beneficialinterest in the Regulation S Global Note (CUSIP No. [●]; ISIN No: [●]).
In connection with such request, the Transferor does hereby certify that such transfer has been effected inaccordance with the transfer restrictions set forth in the Notes and:
(a) with respect to transfers made in reliance on Regulation S (“Regulation S”) under the United StatesSecurities Act of 1933, as amended (the “U.S. Securities Act”), does certify that:
(i) the offer of the Notes was not made to a person in the United States;
(ii) either (i) at the time the buy order is originated the transferee is outside the United States or theTransferor and any person acting on its behalf reasonably believe that the transferee is outside theUnited States or; (ii) the transaction was executed in, on or through the facilities of a designatedoffshore securities market described in paragraph (b) of Rule 902 of Regulation S and neither theTransferor nor any person acting on its behalf knows that the transaction was pre-arranged with abuyer in the United States
B-2
(iii) no directed selling efforts have been made in the United States by the Transferor, an affiliate thereofor any person their behalf in contravention of the requirements of Rule 903 or 904 of Regulation S,as applicable;
(iv) the transaction is not part of a plan or scheme to evade the registration requirements of the U.S.Securities Act; and
(v) the Transferor is not an Issuer, a distributor of the Notes, an affiliate of an Issuer or any suchdistributor (except any officer or director who is an affiliate solely by virtue of holding suchposition) or a person acting on behalf of any of the foregoing.
(b) with respect to transfers made in reliance on Rule 144 the Transferor certifies that the Notes are beingtransferred in a transaction permitted by Rule 144 under the U.S. Securities Act.
You, the Issuers, the Guarantors and the Trustee are entitled to rely upon this letter and are irrevocably authorized toproduce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry withrespect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.
[Name of Transferor]
By: Name: Title:
Date:
cc:Attention:
____________________
* If the Note is a Definitive Note, appropriate changes need to be made to the form of this transfer certificate.
C-1
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM REGULATION S GLOBAL NOTE TO RESTRICTED GLOBAL NOTE
Transfers pursuant to Section 2.06(b)(iii) of the Indenture
Citibank, N.A., London Branch 25 Canada Square Canary Wharf London E14 5LB United Kingdom
Attention: Transfer Agent
Re: 5.250% Senior Secured Notes due 2025 (the “Notes”)
Reference is hereby made to the Indenture dated as of April 8, 2020 (the “Indenture”) among, inter alios, ArdaghPackaging Finance plc, a public limited company incorporated under the laws of Ireland and Ardagh Holdings USA Inc., aDelaware corporation, collectively, as Issuers, Ardagh Group S.A., as Parent Guarantor, and Citibank, N.A., LondonBranch, as Trustee, and Citibank, N.A., London Branch, as Security Agent. Capitalized terms used but not defined hereinshall have the meanings given them in the Indenture.
This letter relates to $__________ aggregate principal amount at maturity of Notes that are held in the form of theRegulation S Global Note with DTC (CUSIP No.: [●]; ISIN No. [●]) in the name of [name of transferor] (the “Transferor”)to effect the transfer of the Notes in exchange for an equivalent beneficial interest in the Restricted Global Note (CUSIPNo.: [●]; ISIN No. [●]).
In connection with such request, and in respect of such Notes the Transferor does hereby certify that such Notes arebeing transferred in accordance with the transfer restrictions set forth in the Notes and that:
CHECK ONE BOX BELOW:
◻ the Transferor is relying on Rule 144A under the Securities Act for exemption from such Act’s registrationrequirements; it is transferring such Notes to a person it reasonably believes is a QIB as defined in Rule144A that purchases for its own account, or for the account of a qualified institutional buyer, and to whomthe Transferor has given notice that the transfer is made in reliance on Rule 144A and the transfer is beingmade in accordance with any applicable securities laws of any state of the United States; or
◻ the Transferor is relying on an exemption other than Rule 144A from the registration requirements of theSecurities Act, subject to the Issuers’ and the Trustee’s right prior to
C-2
any such offer, sale or transfer to require the delivery of an Opinion of Counsel, certification and/or otherinformation satisfactory to each of them.
You, the Issuers, the Guarantors, and the Trustee are entitled to rely upon this letter and are irrevocably authorizedto produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquirywith respect to the matters covered hereby.
[Name of Transferor]
By: Name: Title:
Date:
cc:Attention:
Exhibit 99.8Execution Version
ARDAGH PACKAGING FINANCE PLC
AND
ARDAGH HOLDINGS USA INC. AS ISSUERS,
ARDAGH GROUP S.A., AS PARENT GUARANTOR,
CITIBANK, N.A., LONDON BRANCH, AS TRUSTEE, PRINCIPAL PAYING AGENT AND TRANSFER AGENT
AND
CITIGROUP GLOBAL MARKETS EUROPE AG, AS REGISTRAR
_____________________________
INDENTURE
Dated as of June 2, 2020
_____________________________
5.250% SENIOR NOTES DUE 2027
-i-
TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE 1
SECTION 1.01. Definitions 1SECTION 1.02. Other Definitions 30SECTION 1.03. Rules of Construction 31SECTION 1.04. Financial Calculations 31SECTION 1.05. Agency of Irish Issuer 32
ARTICLE TWO THE NOTES 32
SECTION 2.01. The Notes 32SECTION 2.02. Execution and Authentication 33SECTION 2.03. Registrar, Transfer Agent and Paying Agent 34SECTION 2.04. Paying Agent to Hold Money 35SECTION 2.05. Holder Lists 35SECTION 2.06. Transfer and Exchange 35SECTION 2.07. Replacement Notes 38SECTION 2.08. Outstanding Notes 38SECTION 2.09. Notes Held by Issuers 38SECTION 2.10. Certificated Notes 38SECTION 2.11. Cancellation 39SECTION 2.12. Defaulted Interest 39SECTION 2.13. Computation of Interest 40SECTION 2.14. ISIN and CUSIP Numbers 40SECTION 2.15. Issuance of Additional Notes 40
ARTICLE THREE REDEMPTION; OFFERS TO PURCHASE 40
SECTION 3.01. Right of Redemption 40SECTION 3.02. Notices to Trustee 40SECTION 3.03. Selection of Notes to Be Redeemed 41SECTION 3.04. Notice of Redemption 41SECTION 3.05. Deposit of Redemption Price 42SECTION 3.06. Payment of Notes Called for Redemption 42SECTION 3.07. Notes Redeemed in Part 42
ARTICLE FOUR COVENANTS 43
SECTION 4.01. Payment of Notes 43SECTION 4.02. Corporate Existence 43SECTION 4.03. Maintenance of Properties 43SECTION 4.04. Insurance 44SECTION 4.05. Statement as to Compliance 44SECTION 4.06. Limitation on Debt 44SECTION 4.07. Limitation on Liens 48SECTION 4.08. Limitation on Restricted Payments 48SECTION 4.09. Limitation on Sale of Certain Assets 53
Page
-ii-
SECTION 4.10. Limitation on Transactions with Affiliates 55SECTION 4.11. Purchase of Notes upon a Change of Control 57SECTION 4.12. Additional Amounts 59SECTION 4.13. Additional Intercreditor Agreements 61SECTION 4.14. Additional Subsidiary Guarantees 62SECTION 4.15. Limitation on Guarantees of Debt by Restricted Subsidiaries 62SECTION 4.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries 64SECTION 4.17. Designation of Unrestricted and Restricted Subsidiaries 66SECTION 4.18. Payment of Taxes and Other Claims 66SECTION 4.19. Reports to Holders 66SECTION 4.20. Further Instruments and Acts 67SECTION 4.21. Limitation on Layered Debt 67SECTION 4.22. Suspension of Covenants 67
ARTICLE FIVE CONSOLIDATION, MERGER AND SALE OF ASSETS 68
SECTION 5.01. Consolidation, Merger and Sale of Assets 68SECTION 5.02. Successor Substituted 70
ARTICLE SIX DEFAULTS AND REMEDIES 70
SECTION 6.01. Events of Default 70SECTION 6.02. Acceleration 71SECTION 6.03. Other Remedies 73SECTION 6.04. Waiver of Past Defaults 73SECTION 6.05. Control by Majority 73SECTION 6.06. Limitation on Suits 73SECTION 6.07. Unconditional Right of Holders to Bring Suit for Payment 74SECTION 6.08. Collection Suit by Trustee 74SECTION 6.09. Trustee May File Proofs of Claim 75SECTION 6.10. Application of Money Collected 75SECTION 6.11. Undertaking for Costs 75SECTION 6.12. Restoration of Rights and Remedies 76SECTION 6.13. Rights and Remedies Cumulative 76SECTION 6.14. Delay or Omission Not Waiver 76SECTION 6.15. Record Date 76SECTION 6.16. Waiver of Stay or Extension Laws 76
ARTICLE SEVEN TRUSTEE 76
SECTION 7.01. Duties of Trustee 76SECTION 7.02. Certain Rights of Trustee 77SECTION 7.03. Individual Rights of Trustee 80SECTION 7.04. Disclaimer of Trustee 80SECTION 7.05. Compensation and Indemnity 80SECTION 7.06. Replacement of Trustee 81SECTION 7.07. Successor Trustee by Merger 82SECTION 7.08. [Reserved] 82SECTION 7.09. Eligibility; Disqualification 82
Page
-iii-
SECTION 7.10. Appointment of Co-Trustee 82SECTION 7.11. Resignation of Agents 83SECTION 7.12. Agents General Provisions 84
ARTICLE EIGHT DEFEASANCE; SATISFACTION AND DISCHARGE 85
SECTION 8.01. Issuers’ Option to Effect Defeasance or Covenant Defeasance 85SECTION 8.02. Defeasance and Discharge 85SECTION 8.03. Covenant Defeasance 86SECTION 8.04. Conditions to Defeasance 86SECTION 8.05. Satisfaction and Discharge of Indenture 87SECTION 8.06. Survival of Certain Obligations 88SECTION 8.07. Acknowledgment of Discharge by Trustee 88SECTION 8.08. Application of Trust Money 88SECTION 8.09. Repayment to Issuers 89SECTION 8.10. Indemnity for Government Securities 89SECTION 8.11. Reinstatement 89
ARTICLE NINE AMENDMENTS AND WAIVERS 89
SECTION 9.01. Without Consent of Holders 89SECTION 9.02. With Consent of Holders 90SECTION 9.03. Effect of Supplemental Indentures 92SECTION 9.04. Notation on or Exchange of Notes 92SECTION 9.05. [Reserved] 92SECTION 9.06. Notice of Amendment or Waiver 92SECTION 9.07. Trustee to Sign Amendments, Etc 92SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount 92
ARTICLE TEN GUARANTEE 93
SECTION 10.01. Notes Guarantees 93SECTION 10.02. Subrogation 94SECTION 10.03. Release of Subsidiary Guarantees 95SECTION 10.04. Limitation and Effectiveness of Guarantees 95SECTION 10.05. Notation Not Required 95SECTION 10.06. Successors and Assigns 95SECTION 10.07. No Waiver 96SECTION 10.08. Modification 96
ARTICLE ELEVEN SUBORDINATION 96
SECTION 11.01. Agreement to Subordinate 96SECTION 11.02. Liquidation, Dissolution, Bankruptcy 96SECTION 11.03. Payment Blockage 97SECTION 11.04. Trustee Entitled to Rely 97SECTION 11.05. Trustee to Effectuate Subordination of Each Subsidiary Guarantee; Intercreditor Agreement 98SECTION 11.06. Trustee Not Fiduciary for the Holders of Senior Debt 99SECTION 11.07. Reliance on Subordination Provisions; Amendments 99
Page
-iv-
Schedules
Schedule I - Agreed Security Principles
Exhibits
Exhibit A - Form of NotesExhibit B - Form of Transfer Certificate for Transfer from Restricted Global Note to Regulation S Global NoteExhibit C - Form of Transfer Certificate for Transfer from Regulation S Global Note to Restricted Global Note
SECTION 11.08. Trustee’s Compensation Not Prejudiced 99SECTION 11.09. Subrogation to Rights of Holders of Senior Debt 99SECTION 11.10. Provisions Solely to Define Relative Rights 99SECTION 11.11. Notice to Trustee 100SECTION 11.12. No Suspense of Remedies 100SECTION 11.13. Trust Moneys Not Subordinated 100
ARTICLE TWELVE MISCELLANEOUS 101
SECTION 12.01. Release of U.S. Issuer’s Obligations 101SECTION 12.02. Notices 101SECTION 12.03. Certificate and Opinion as to Conditions Precedent 103SECTION 12.04. Statements Required in Certificate or Opinion 103SECTION 12.05. Rules by Trustee, Paying Agent and Registrar 104SECTION 12.06. Legal Holidays 104SECTION 12.07. Governing Law 104SECTION 12.08. Jurisdiction 104SECTION 12.09. No Recourse Against Others 105SECTION 12.10. Successors 105SECTION 12.11. Multiple Originals 105SECTION 12.12. Table of Contents, Cross-Reference Sheet and Headings 105SECTION 12.13. Severability 105SECTION 12.14. Currency Indemnity 105SECTION 12.15. Contractual Recognition of Bail-In 106
INDENTURE dated as of June 2, 2020 among Ardagh Packaging Finance plc, a public limited companyincorporated under the laws of Ireland (the “Irish Issuer”), Ardagh Holdings USA Inc., a Delaware corporation (the “U.S.Issuer” and, together with the Irish Issuer, the “Issuers”), Ardagh Group S.A. (the “Parent Guarantor”), Citibank, N.A.,London Branch, as trustee (the “Trustee”), as principal paying agent (the “Principal Paying Agent”) and as transfer agent(the “Transfer Agent”) and Citigroup Global Markets Europe AG, as Registrar.
RECITALS OF THE ISSUERS AND THE PARENT GUARANTOR
The Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance of their5.250% Senior Notes due 2027 issued on the date hereof (the “Original Notes”) and any additional notes that may be issuedafter the Issue Date under this Indenture (the “Additional Notes”). The Original Notes and Additional Notes together are the“Notes”. The Issuers and the Parent Guarantor have received good and valuable consideration for the execution and deliveryof this Indenture. The Parent Guarantor will derive substantial direct and indirect benefits from the issuance of the Notes. Allnecessary acts and things have been done to make (i) the Notes, when duly issued and executed by the Issuers andauthenticated and delivered hereunder, the legal, valid and binding obligations of the Issuers and (ii) this Indenture(including the Guarantees included herein) a legal, valid and binding agreement of the Issuers and the Parent Guarantor inaccordance with the terms of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutuallycovenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
“£” means the lawful currency of the United Kingdom of Great Britain and Northern Ireland.
“Acquired Debt” means Debt of a Person:
(a) existing at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with theParent Guarantor or any Restricted Subsidiary; or
(b) assumed in connection with the acquisition of assets from any such Person;
provided, in each case, that such Debt was not incurred in connection with, or in contemplation of, such Person becoming aRestricted Subsidiary or such acquisition, as the case may be.
Acquired Debt will be deemed to be incurred on the date the acquired Person becomes a Restricted Subsidiary or thedate of the related acquisition of assets from any such Person.
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling orcontrolled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, “control,” when used with respect to any specified Person, means the power todirect or cause the direction of the management and policies of such Person, directly or indirectly, whether through theownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meaningscorrelative to the foregoing.
-2-
“Agreed Security Principles” means the Agreed Security Principles as set forth on Schedule I hereto.
“April 2020 Secured Notes” means the existing $500,000,000 aggregate principal amount of 5.250% Senior SecuredNotes and $200,000,000 aggregate principal amount of 5.250% additional Senior Secured Notes due 2025 issued by theIssuers.
“Applicable Law” means any competent regulatory, prosecuting, Tax or governmental authority in any jurisdiction.
“Asset Sale” means any sale, issuance, conveyance, transfer, lease or other disposition (including, withoutlimitation, by way of merger, consolidation or sale and leaseback transaction) (collectively, a “transfer”), directly orindirectly, in one or a series of related transactions, of:
(a) any Capital Stock of any Restricted Subsidiary (other than directors’ qualifying shares or shares required byapplicable law to be held by a Person other than the Parent Guarantor or a Restricted Subsidiary);
(b) all or substantially all of the properties and assets of any division or line of business of the Parent Guarantoror any Restricted Subsidiary; or
(c) any other of the Parent Guarantor’s or any Restricted Subsidiary’s properties or assets.
Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:
(i) any transfer or disposition of assets that is governed by the provisions of Article Five and Section 4.11 orany transfer or disposition of assets consummated in connection with a Permitted Reorganization;
(ii) any transfer or disposition of assets by the Parent Guarantor to the Issuers or any Restricted Subsidiary, orby any Restricted Subsidiary to the Parent Guarantor, the Issuers or any Restricted Subsidiary in accordancewith the terms of this Indenture;
(iii) any transfer or disposition of obsolete or permanently retired equipment or facilities that are no longer usefulin the conduct of the Parent Guarantor’s and any Restricted Subsidiary’s business and that are disposed of inthe ordinary course of business;
(iv) any disposition of accounts receivable and related assets in a Permitted Receivables Financing;
(v) the disposition of receivables in connection with the compromise, settlement or collection thereof in theordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similararrangements;
(vi) the foreclosure, condemnation or any similar action with respect to any property or other assets;
(vii) any unwinding or termination of hedging obligations not for speculative purposes;
-3-
(viii) any single transaction or series of related transactions that involves assets or Capital Stock having a FairMarket Value of less than the greater of $50,000,000 and 0.75% of Total Assets;
(ix) for the purposes of Section 4.09 only, the making of a Permitted Investment or a disposition permitted underSection 4.08; or, solely for the purposes Section 4.09(b), asset sales, the proceeds of which are used within540 days of receipt of such proceeds to make such Restricted Payments, Permitted Payments or PermittedInvestments;
(x) the sale, lease or other disposition of equipment, inventory, property or other assets in the ordinary course ofbusiness;
(xi) the lease, assignment or sublease of any real or personal property in the ordinary course of business;
(xii) an issuance of Capital Stock by a Restricted Subsidiary to the Parent Guarantor or to another RestrictedSubsidiary;
(xiii) a Permitted Investment or a Restricted Payment (or a transaction that would constitute a Restricted Paymentbut for the exclusions from the definition thereof) that is not prohibited by Section 4.08;
(xiv) any disposition of Capital Stock, Debt or other securities of any Unrestricted Subsidiary or a Permitted JointVenture;
(xv) sales of assets received by the Parent Guarantor or any Restricted Subsidiary upon the foreclosure on a Liengranted in favor of the Parent Guarantor or any Restricted Subsidiary;
(xvi) sales or grants of licenses to use the patents, trade secrets, know-how and other intellectual property of theParent Guarantor or any of its Restricted Subsidiaries to the extent that such license does not prohibit theParent Guarantor or any of its Restricted Subsidiaries from using the technologies licensed (other thanpursuant to exclusivity or non-competition arrangements negotiated on an arm’s-length basis) or require theParent Guarantor or any of its Restricted Subsidiaries to pay any fees for any such use;
(xvii) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort orother claims in the ordinary course of business; or
(xviii) sales, issuances, conveyances, transfers, leases or other dispositions to the extent constituting PermittedLiens.
“Authority” means any competent regulatory, prosecuting, Tax or governmental authority in any jurisdiction.
“August 2019 Issue Date” means August 12, 2019, the date of issuance of the August 2019 Notes.
“August 2019 Notes” means the August 2019 Secured Notes and the August 2019 Senior Notes.
“August 2019 Secured Notes” means the existing $500,000,000 aggregate principal amount of 4.125% SeniorSecured Notes due 2026 and the existing €440,000,000 aggregate principal amount of 2.125% Senior Secured Notes due2026 issued by the Issuers on the August 2019 Issue Date.
-4-
“August 2019 Senior Notes” means the existing $800,000,000 aggregate principal amount of 5.250% Senior Notesdue 2027 issued by the Issuers on the August 2019 Issue Date.
“Average Life” means, as of the date of determination with respect to any Debt, the quotient obtained by dividing:
(a) the sum of the products of:
(i) the numbers of years from the date of determination to the date or dates of each successivescheduled principal payment of such Debt; multiplied by
(ii) the amount of each such principal payment;
by
(b) the sum of all such principal payments.
“Bankruptcy Law” means any law relating to bankruptcy, insolvency, receivership, moratorium, winding-up,liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law, including,without limitation, (i) bankruptcy law of Ireland, (ii) bankruptcy law of The Netherlands, (iii) bankruptcy law of England,(iv) bankruptcy law of Germany, (v) bankruptcy law of Sweden, (vi) bankruptcy law of Denmark, (vii) bankruptcy law ofPoland, (viii) bankruptcy law of Italy, (ix) bankruptcy law of Luxembourg or (x) Title 11, United States Bankruptcy Code of1978, as amended.
“Board of Directors” means (i) with respect to any corporation, the board of directors or managers, as applicable, ofthe corporation, or any duly authorized committee thereof; (ii) with respect to any partnership, the board of directors or othergoverning body of the general partner, as applicable, of the partnership or any duly authorized committee thereof; (iii) withrespect to a limited liability company, the managing member or members or any duly authorized controlling committeethereof; and (iv) with respect to any other Person, the board or any duly authorized committee of such Person serving asimilar function. Whenever any provision of this Indenture requires any action or determination to be made by, or anyapproval of, a Board of Directors (including for the avoidance of doubt any committee thereof), such action, determinationor approval shall be deemed to have been taken or made if approved by a majority of the directors (excluding employeerepresentatives, if any) on any such Board of Directors (whether or not such action or approval is taken as part of a formalboard meeting or as a formal board approval), including for the avoidance of doubt any committee thereof. Unless thecontext requires otherwise, Board of Directors means the Board of Directors of the Parent Guarantor.
“Book-Entry Interest” means a beneficial interest in a Global Note held through and shown on, and transferred onlythrough, records maintained in book-entry form by DTC and its nominees and successors.
“Business Day” means a day of the year on which banks are not required or authorized by law to close in Dublin,New York City or London.
“Capital Stock” means, with respect to any Person, any and all shares, interests, partnership interests (whethergeneral or limited), participations, rights in or other equivalents (however designated) of such Person’s equity, any otherinterest or participation that confers the right to receive a share of the profits and losses, or distributions of assets of, suchPerson and any rights (other than debt securities convertible into or exchangeable for Capital Stock), warrants or optionsexchangeable for or convertible into such Capital Stock, whether now outstanding or issued after the Issue Date.
-5-
“Capitalized Lease Obligation” means, with respect to any Person, any obligation of such Person under a lease of (orother agreement conveying the right to use) any property (whether real, personal or mixed), which obligation is required tobe classified and accounted for as a capital lease obligation under IFRS, and, for purposes of this Indenture, the amount ofsuch obligation at any date will be the capitalized amount thereof at such date, determined in accordance with IFRS and theStated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the firstdate such lease may be terminated without penalty.
“Cash Equivalents” means any of the following:
(a) any evidence of Debt with a maturity of 180 days or less from the date of acquisition issued or directly andfully guaranteed or insured by a member state of the European Union or European Economic Area, theUnited Kingdom, the United States of America, any state thereof or the District of Columbia, Canada,Switzerland, Australia or any agency or instrumentality thereof (each, an “Approved Jurisdiction”);
(b) time deposit accounts, certificates of deposit, money market deposits or bankers’ acceptances with amaturity of 180 days or less from the date of acquisition issued by a bank or trust company having combinedcapital and surplus and undivided profits of not less than €500,000,000, whose debt has a rating, at the timeany investment is made therein, of at least BBB+ or the equivalent thereof by S&P and at least Baa1 or theequivalent thereof by Moody’s;
(c) commercial paper with a maturity of 180 days or less from the date of acquisition issued by a corporationthat is not either Issuer’s or any Restricted Subsidiary’s Affiliate and is at the time of acquisition, rated atleast A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s;
(d) repurchase obligations with a term of not more than seven days for underlying securities of the typedescribed in clause (a) or (b) above entered into with a financial institution meeting the qualificationsdescribed in clause (b) above;
(e) investments in money market mutual funds at least 95% of the assets of which constitute Cash Equivalentsof the kind described in clauses (a) through (d) above; or
(f) any investments classified as cash equivalents under IFRS.
“Change of Control” means the occurrence of any of the following events:
(a) the consummation of any transaction (including a merger or consolidation) the result of which is that (i) anyperson or group, other than one or more Permitted Holders, is or as a result of such transaction becomes, thebeneficial owner, directly or indirectly, of more than 50% (or so long as any of the Existing Ardagh Bondsremain outstanding, 35%) of the total voting power of the Voting Stock of the Parent Guarantor and (ii) thePermitted Holders, individually or in the aggregate, do not beneficially own, directly or indirectly, a largerpercentage of the total voting power of such Voting Stock than such other person or group;
(b) the sale, transfer, conveyance or other disposition (other than by way of merger, consolidation or transfer ofthe Parent Guarantor’s Voting Stock or in connection with a Permitted Reorganization) of all orsubstantially all of the assets (other than Capital Stock,
-6-
Debt or other securities of any Unrestricted Subsidiary) of the Parent Guarantor, the Issuers and theRestricted Subsidiaries, on a consolidated basis, to any person or group other than one or more PermittedHolders;
(c) the Parent Guarantor or either Issuer is liquidated or dissolved or adopts a plan of liquidation or dissolutionother than in a transaction which does not violate the provisions described under Article Five or inconnection with a Permitted Reorganization; or
(d) the Parent Guarantor or any Surviving Entity ceases to beneficially own, directly or indirectly, 100% of theVoting Stock of either Issuer, other than director’s qualifying shares and other shares required to be issuedby law.
For the purposes of this definition, (i) “person” and “group” have the meanings they have in Sections 13(d) and14(d) of the Exchange Act; (ii) “beneficial owner” is used as defined in Rules 13d-3 and 13d-5 under the Exchange Act,except that a person shall be deemed to have “beneficial ownership” of all securities that such Person has the right toacquire, whether such right is exercisable immediately or only after the passage of time; and (iii) a Person or group will bedeemed to beneficially own all Voting Stock of an entity held by a parent entity, if such Person or group is or becomes thebeneficial owner, directly or indirectly, of more than 35% of the total voting power of the Voting Stock of such parent entityand the Permitted Holders, individually or in the aggregate, do not beneficially own, directly or indirectly, a largerpercentage of the total voting power of such Voting Stock than such Person or group.
“Code” means the Internal Revenue Code of 1986, as amended.
“Commission” means the U.S. Securities and Exchange Commission.
“Commodity Hedging Agreements” means any type of commodity hedging agreement (including emissionshedging) designed to protect against or manage exposure to fluctuations in commodity prices and entered into in good faithfor such purposes.
“Consolidated Adjusted Net Income” means, for any period, the Parent Guarantor’s and the Restricted Subsidiaries’consolidated net income (or loss) for such period as determined in accordance with IFRS, adjusted by excluding (to theextent included in such consolidated net income or loss), without duplication:
(a) any net after-tax extraordinary gains or losses;
(b) any net after-tax gains or losses attributable to sales of assets of the Parent Guarantor or any RestrictedSubsidiary that are not sold in the ordinary course of business;
(c) the portion of net income or loss of any Person (other than the Parent Guarantor or a Restricted Subsidiary),including Unrestricted Subsidiaries, in which the Parent Guarantor or any Restricted Subsidiary has anequity ownership interest, except that the Parent Guarantor’s or a Restricted Subsidiary’s equity in the netincome of such Person for such period shall be included in such Consolidated Adjusted Net Income to theextent of the aggregate amount of dividends or other distributions actually paid to the Parent Guarantor orany Restricted Subsidiary in cash dividends or other distributions during such period;
(d) the net income or loss of any Restricted Subsidiary to the extent that the declaration or payment of dividendsor similar distributions by such Restricted Subsidiary is not at the date of determination permitted, directlyor indirectly, by operation of the terms of its
-7-
charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulationapplicable to such Restricted Subsidiary or its shareholders (other than restrictions contained in the CreditFacilities and related agreements permitted by Section 4.06(b)(ii));
(e) any extraordinary, exceptional, unusual or nonrecurring loss, expense or charge (including severance,relocation, plant closure, operational improvement or restructuring costs or reserves or provisions therefor)relating to, or directly or indirectly resulting from, or incurred in connection with, any Asset Sale,Investment, acquisition, reorganization, restructuring or operational improvement initiative, or offering orrefinancing of debt or equity securities;
(f) the non-cash accounting effects of any acquisition, purchase, merger, reorganization or other similartransaction, including any increase in amortization or depreciation resulting from adjustments to tangible orintangible assets, the consequence of any revaluation of inventory or other non-cash charges or effects(including losses on derivatives);
(g) the cumulative effect of a change in accounting principles after the August 2019 Issue Date;
(h) any charge or expense recorded for non-cash or capitalized interest on Deeply Subordinated Funding;
(i) net after tax gains or losses attributable to (i) the termination of pension plans, (ii) the acquisition ofsecurities or the extinguishment of debt or (iii) currency exchange transactions that are not in the ordinarycourse of business;
(j) net income or loss attributable to discontinued operations; and
(k) any restoration to net income of any contingency reserve, except to the extent it was provided for in a priorperiod.
“Consolidated Fixed Charge Coverage Ratio” of the Parent Guarantor means, for any period, the ratio of:
(a) the sum of Consolidated Adjusted Net Income, plus in each case to the extent deducted in computingConsolidated Adjusted Net Income for such period:
(i) Consolidated Net Interest Expense;
(ii) Consolidated Tax Expense; and
(iii) Consolidated Non-cash Charges, less all non-cash items increasing Consolidated Adjusted NetIncome for such period and less all cash payments during such period relating to non-cash chargesthat were added back to Consolidated Adjusted Net Income in determining the Consolidated FixedCharge Coverage Ratio in any prior period;
(b) to the sum of:
(i) Consolidated Net Interest Expense; and
-8-
(ii) cash and non-cash dividends due (whether or not declared) on the Parent Guarantor’s and anyRestricted Subsidiary’s Preferred Stock (to any Person other than the Parent Guarantor and anyWholly Owned Restricted Subsidiary), in each case for such period;
provided that in calculating the Consolidated Fixed Charge Coverage Ratio or any element thereof for any period, pro formaeffect will be given to any realized or expected synergies, cost efficiencies and cost savings relating to, or directly orindirectly resulting from, or associated with, any Asset Sale, Investment, acquisition, reorganization, restructuring oroperational improvement initiative that has occurred during the period included in the calculation or any prior period orwould reasonably be expected to occur in connection with an acquisition or other transaction in relation to which “proforma” effect is given as if such synergies, cost efficiencies or cost savings had been effective throughout the periodincluded in the calculation; provided, further, without limiting the application of the previous proviso, that:
(i) if the Parent Guarantor or any Restricted Subsidiary has incurred any Debt since the beginning of suchperiod that remains outstanding or if the transaction giving rise to the need to calculate the ConsolidatedFixed Charge Coverage Ratio is an incurrence of Debt or both, Consolidated Adjusted Net Income andConsolidated Net Interest Expense for such period shall be calculated after giving effect on a pro formabasis to such Debt as if such Debt had been incurred on the first day of such period and the discharge of anyother Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as ifsuch discharge had occurred on the first day of such period;
(ii) if, since the beginning of such period, the Parent Guarantor or any Restricted Subsidiary shall have madeany Asset Sale, Consolidated Adjusted Net Income for such period shall be reduced by an amount equal tothe Consolidated Adjusted Net Income (if positive) directly attributable to the assets which are the subject ofsuch Asset Sale for such period, or increased by an amount equal to the Consolidated Adjusted Net Income(if negative) directly attributable thereto, for such period and the Consolidated Net Interest Expense for suchperiod shall be reduced by an amount equal to the Consolidated Net Interest Expense directly attributable toany Debt of the Parent Guarantor or of any Restricted Subsidiary repaid, repurchased, defeased or otherwisedischarged with respect to the Parent Guarantor and the continuing Restricted Subsidiaries in connectionwith such Asset Sale for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, theConsolidated Net Interest Expense for such period directly attributable to the Debt of such RestrictedSubsidiary to the extent the Parent Guarantor and the continuing Restricted Subsidiaries are no longer liablefor such Debt after such sale);
(iii) if, since the beginning of such period, the Parent Guarantor or any Restricted Subsidiary (by merger orotherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes aRestricted Subsidiary) or an acquisition of assets, including any acquisition of an asset occurring inconnection with a transaction causing a calculation to be made hereunder, which constitutes all orsubstantially all of an operating unit of a business, Consolidated Adjusted Net Income and Consolidated NetInterest Expense for such period shall be calculated after giving pro forma effect thereto (including theincurrence of any Debt) as if such Investment or acquisition occurred on the first day of such period;
(iv) if, since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or wasmerged with or into the Parent Guarantor or any Restricted Subsidiary since the beginning of such period)shall have made any Asset Sale or any Investment or
-9-
acquisition of assets that would have required an adjustment pursuant to clause (x) or (y) above if made bythe Parent Guarantor or a Restricted Subsidiary during such period, Consolidated Adjusted Net Income andConsolidated Net Interest Expense for such period shall be calculated after giving pro forma effect thereto asif such Asset Sale or Investment or acquisition occurred on the first day of such period; and
(v) that the pro forma calculation shall not give effect to: (i) any amounts under clause (b) above attributable toDebt or Preferred Stock incurred on such determination date pursuant to Section 4.06(b) (other than amountsattributable to Debt or Preferred Stock incurred pursuant to Section 4.06(b)(xix)) or (ii) amounts attributableto any Debt or Preferred Stock discharged on such determination date to the extent that such dischargeresults from the proceeds incurred pursuant to Section 4.06(b) (other than amounts attributable to Debt orPreferred Stock discharged on such determination date using proceeds of Debt Preferred Stock incurredpursuant to Section 4.06(b)(xix)).
If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debtshall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period(taking into account any Interest Rate Agreement applicable to such Debt for a period equal to the remaining term of suchInterest Rate Agreement).
“Consolidated Leverage Ratio” of the Parent Guarantor means, as of the date of determination, the ratio of (a) (i) thesum of consolidated Debt of the Parent Guarantor (other than working capital and other than Debt described in clause (f) ofthe definition of “Debt”) less (ii) cash and Cash Equivalents on the most recent consolidated balance sheet of the ParentGuarantor which has been delivered in accordance with Section 4.19 to (b) the aggregate consolidated EBITDA of theParent Guarantor for the period of the most recent four consecutive quarters for which financial statements are availableunder Section 4.19, in each case with such pro forma adjustments to consolidated Debt and consolidated EBITDA as areappropriate and consistent with the pro forma provisions set forth in the definition of “Consolidated Fixed Charge CoverageRatio”.
“Consolidated Net Interest Expense” means, for any period, without duplication and in each case determined on aconsolidated basis in accordance with IFRS, the sum of:
(a) the Parent Guarantor’s and the Restricted Subsidiaries’ total interest expense for such period, including,without limitation:
(i) amortization of debt discount;
(ii) the net costs of Commodity Hedging Agreements, Interest Rate Agreements and CurrencyAgreements (including amortization of fees and discounts);
(iii) commissions, discounts and other fees and charges owed with respect to letters of credit andbankers’ acceptance financing and similar transactions; and
(iv) the interest portion of any deferred payment obligation and amortization of debt issuance costs; plus
(b) the interest component of the Parent Guarantor’s and the Restricted Subsidiaries’ Capitalized LeaseObligations accrued and/or scheduled to be paid or accrued during such period other than the interestcomponent of Capitalized Lease Obligations between or
-10-
among the Parent Guarantor and any Restricted Subsidiary or between or among Restricted Subsidiaries;plus
(c) the Parent Guarantor’s and the Restricted Subsidiaries non-cash interest expenses and interest that wascapitalized during such period; plus
(d) the interest expense on Debt of another Person to the extent such Debt is guaranteed by the Parent Guarantoror any Restricted Subsidiary or secured by a Lien on the Parent Guarantor’s or any Restricted Subsidiary’sassets, but only to the extent that such interest is actually paid by the Parent Guarantor or such RestrictedSubsidiary; minus
(e) the interest income of the Parent Guarantor and the Restricted Subsidiaries during such period.
Notwithstanding any of the foregoing, Consolidated Net Interest Expense shall not include any of the following:
(a) interest accrued, capitalized or paid in respect of Deeply Subordinated Funding;
(b) gains, losses, expenses or charges associated with refinancing of debt;
(c) gains, losses, expenses or charges associated with the total or partial extinguishment of debt;
(d) gains, losses, expenses or charges resulting from “mark to market” provisions or fair value charges appliedto or resulting from derivatives; or
(e) any non-cash pension expense.
“Consolidated Non-cash Charges” means, for any period, the aggregate depreciation, amortization and other non-cash expenses of the Parent Guarantor and the Restricted Subsidiaries for such period, determined on a consolidated basis inaccordance with IFRS (excluding any such non-cash charge that requires an accrual of or reserve for cash charges for anyfuture period).
“Consolidated Tax Expense” means, for any period with respect to any Relevant Taxing Jurisdiction, the provisionfor all national, local and foreign federal, state or other income taxes of the Parent Guarantor and the Restricted Subsidiariesfor such period as determined on a consolidated basis in accordance with IFRS.
“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has notbeen cured or waived.
“Contribution Debt” means Debt of the Parent Guarantor or any Restricted Subsidiary in an aggregate principalamount not greater than the aggregate amount of cash contributions (other than Excluded Contributions and any such cashcontributions that have been used to make a Restricted Payment or a Permitted Investment) made to the equity (other thanthrough the issuance of Redeemable Capital Stock) of the Parent Guarantor or in the form of Deeply Subordinated Funding,in each case, after the August 2019 Issue Date; provided that (without prejudice to the rights of the Parent Guarantor and theRestricted Subsidiaries, including the right to divide and/or classify and/or reclassify as described in Section 4.06) suchContribution Debt is so designated as Contribution Debt pursuant to an Officer’s Certificate on the incurrence date thereof.
-11-
“Credit Facility” or “Credit Facilities” means one or more debt facilities, indentures or other arrangements withbanks, insurance companies, other financial institutions or investors providing for revolving credit loans, term loans, notes,receivables financings, letters of credit or other forms of guarantees and assurances, or other Debt, including overdrafts, ineach case, as amended, restated, modified, renewed, refunded, replaced, restructured, repaid or refinanced (and whether inwhole or in part and whether or not with the original administrative agent or lenders or another administrative agent oragents or other bank or institutions and whether provided under one or more other credit or other agreements, indentures,financing agreements or otherwise) and, for the avoidance of doubt, includes any agreement extending the maturity of,refinancing or restructuring all or any portion of the indebtedness under such agreements or any successor agreements.
“Currency Agreements” means, in respect of a Person, any spot or forward foreign exchange agreements andcurrency swap, currency option or other similar financial agreements or arrangements designed to protect such Personagainst or manage exposure to fluctuations in foreign currency exchange rates.
“Custodian” means any receiver, trustee, assignee, liquidator, custodian, administrator or similar official under anyBankruptcy Law.
“Debt” means, with respect to any Person, without duplication:
(a) all liabilities of such Person for borrowed money (including overdrafts) or for the deferred purchase price ofproperty or services, excluding any trade payables and other accrued current liabilities incurred in theordinary course of business;
(b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments;
(c) all obligations, contingent or otherwise, of such Person in connection with any letters of credit, bankers’acceptances, receivables facilities or other similar facilities;
(d) all indebtedness of such Person created or arising under any conditional sale or other title retentionagreement with respect to property acquired by such Person (even if the rights and remedies of the seller orlender under such agreement in the event of default are limited to repossession or sale of such property), butexcluding trade payables arising in the ordinary course of business;
(e) all Capitalized Lease Obligations of such Person;
(f) all obligations of such Person under or in respect of Commodity Hedging Agreements, Interest RateAgreements and Currency Agreements; and
(g) all Redeemable Capital Stock of such Person valued at the greater of its voluntary maximum fixedrepurchase price and involuntary maximum fixed repurchase price plus accrued and unpaid dividends;
if and to the extent any of the preceding items would appear as debt on a balance sheet (excluding the footnotes thereto) ofthe specified Person prepared in accordance with IFRS, provided that the term “Debt” shall not include (i) non-interestbearing installment obligations and accrued liabilities incurred in the ordinary course of business that are not more than90 days past due; (ii) Debt in respect of the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt inrespect of standby letters of credit,
-12-
performance bonds or surety bonds provided by the Parent Guarantor or any Restricted Subsidiary in the ordinary course ofbusiness to the extent such letters of credit or bonds are not drawn upon or, if and to the extent drawn upon are honored inaccordance with their terms and if, to be reimbursed, are reimbursed no later than the fifth Business Day following receiptby such Person of a demand for reimbursement following payment on the letter of credit or bond; (iii) anything accountedfor as an operating lease in accordance with the Election Option; (iv) any pension obligations of the Parent Guarantor or aRestricted Subsidiary; (v) Debt incurred by the Parent Guarantor or one of the Restricted Subsidiaries in connection with atransaction where (x) such Debt is borrowed from a bank or trust company having a combined capital and surplus andundivided profits of not less than €500,000,000, whose debt has a rating immediately prior to the time such transaction isentered into, of at least A or the equivalent thereof by S&P and A2 or the equivalent thereof by Moody’s and (y) asubstantially concurrent Investment is made by the Parent Guarantor or a Restricted Subsidiary in the form of cash depositedwith the lender of such Debt, or a Subsidiary or Affiliate thereof, in amount equal to such Debt; and (vi) DeeplySubordinated Funding. In addition, “Debt” of the specified Person shall include all Debt of another Person secured by a Lienon any asset of the specified Person (whether or not such Debt is assumed by the specified Person) and, to the extent nototherwise included, the guarantee by the specified Person of Debt of another Person, and Preferred Stock of any RestrictedSubsidiary.
For purposes of this definition, the “maximum fixed repurchase price” of any Redeemable Capital Stock that doesnot have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of suchRedeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Debt will be requiredto be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value of suchRedeemable Capital Stock, such Fair Market Value will be determined in good faith by the Board of Directors of the issuerof such Redeemable Capital Stock; provided, that if such Redeemable Capital Stock is not then permitted to be redeemed,repaid or repurchased, the redemption, repayment or repurchase price shall be the book value of such Redeemable CapitalStock as reflected in the most recent financial statements of such Person.
“Deeply Subordinated Funding” means any funds provided to the Parent Guarantor pursuant to an agreement, note,security or other instrument, other than Capital Stock, that (i) is subordinated in right of payment to all Debt of the ParentGuarantor, (ii)(A) does not mature or require any amortization, redemption or other repayment of principal, (B) does notrequire payment of any cash interest or any similar cash amounts, and (C) contains no change of control or similarprovisions and does not accelerate and has no right to declare a default or event of default or take any enforcement action orotherwise require any cash payment (other than as a result of insolvency proceedings of the Parent Guarantor), in each caseprior to the 90th day following the repayment in full of the Notes and all other amounts due under this Indenture, (iii) doesnot provide for or require any security interest or encumbrance over any asset of the Parent Guarantor or any RestrictedSubsidiary and (iv) does not contain any covenants (financial or otherwise) other than a covenant to pay such DeeplySubordinated Funding.
“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.
“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by theParent Guarantor or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cashConsideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, executed by the principalfinancial officer of the Parent Guarantor, less the amount of Cash Equivalents received in connection with a subsequent sale,redemption, repurchase of, or collection or payment on, such Designated Non-cash Consideration.
-13-
“Designated Senior Debt” means (a) any Debt outstanding under the Senior Credit Facilities and the ExistingSecured Notes and (b) any other Senior Debt permitted under this Indenture the principal amount of which is €30,000,000 ormore as of the date of determination and that has been designated by the Issuers, the Parent Guarantor or the relevantRestricted Subsidiary as “Designated Senior Debt.”
“Disinterested Director” means, with respect to any transaction or series of related transactions, a member of theParent Guarantor’s Board of Directors who does not have any material direct or indirect financial interest in or with respectto such transaction or series of related transactions or is not an Affiliate, or an officer, director or employee of any Person(other than the Parent Guarantor or any Restricted Subsidiary) who has any direct or indirect financial interest in or withrespect to such transaction or series of related transactions; provided that no member of the Parent Guarantor’s Board ofDirectors shall be deemed to have any such direct or indirect financial interest solely as a result of such member’s ownershipof Capital Stock of the Parent Guarantor or any successor or any company holding shares, directly or indirectly, in theParent Guarantor or such member’s serving on the Board of Directors of any company holding shares, directly or indirectly,in the Parent Guarantor.
“Disposition” has the meaning assigned to such term in the Offering Memorandum.
“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any timefor the determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in suchcomputation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency aspublished under “Currency Rates” in the section of the Financial Times entitled “Currencies, Bonds & Interest Rates” on thedate that is two Business Days prior to such determination.
“DTC” means The Depository Trust Company, its nominees and successors.
“Enforcement Action” means, in relation to any Debt of a Subsidiary Guarantor, any action (whether taken by therelevant creditor or creditors or an agent or trustee on its or their behalf) to:
(a) demand payment, declare prematurely due and payable or otherwise seek to accelerate payment of all or anypart of such Debt;
(b) recover all or any part of such Debt (including, by exercising any rights of set-off or combination ofaccounts);
(c) exercise or enforce any rights under or pursuant to any guarantee or other assurance given by suchSubsidiary Guarantor in respect of such Debt;
(d) exercise or enforce any rights under any security interest whatsoever which secures such Debt;
(e) commence legal proceedings against any Person; or
(f) commence, or take any other steps which could lead to the commencement of:
(i) any insolvency, liquidation, dissolution, winding-up, administration, receivership, compulsorymerger or judicial re-organization of any Person;
-14-
(ii) the appointment of a trustee in bankruptcy, or insolvency conciliator, ad hoc official, judicialadministrator, a liquidator or other similar officer in respect of any Person; or
(iii) any other similar process or appointment.
“euro” or “€” means the lawful currency of the member states of the European Union who have agreed to share acommon currency in accordance with the provisions of the Maastricht Treaty dealing with European monetary union.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, or any successor statute, and therules and regulations promulgated by the Commission thereunder.
“Excluded Contribution” means Net Cash Proceeds or property or assets received by the Parent Guarantor as capitalcontributions (other than Contribution Debt and any contributions used to make a Restricted Payment or a PermittedInvestment) to the equity (other than through the issuance of Redeemable Capital Stock) of the Parent Guarantor or in theform of Deeply Subordinated Funding, in each case of such capital contribution or Deeply Subordinated Funding, after theAugust 2019 Issue Date or from the issuance or sale (other than to a Restricted Subsidiary or an employee stock ownershipplan or trust established by the Parent Guarantor or any Subsidiary of the Parent Guarantor for the benefit of its employeesto the extent funded by the Parent Guarantor or any Restricted Subsidiary) of Capital Stock (other than Redeemable CapitalStock) of the Parent Guarantor, in each case, to the extent designated as an Excluded Contribution pursuant to an Officer’sCertificate of the Parent Guarantor.
“Existing Ardagh Bonds” means (i) the Existing Secured Notes and (ii) the Existing Unsecured Notes and any otherinternational debt securities of the Parent Guarantor or any of its Restricted Subsidiaries outstanding on the August 2019Issue Date.
“Existing Debt” means all Debt of the Parent Guarantor and its Restricted Subsidiaries outstanding on the August2019 Issue Date after giving effect to the issue of the August 2019 Notes and the use of proceeds therefrom.
“Existing Secured Notes” means the May 2016 Secured Notes and the March 2017 Secured Notes.
“Existing Unsecured Notes” means the May 2016 Senior Notes, the January 2017 Senior Notes and the June 2017Senior Notes.
“Fair Market Value” means, with respect to any asset or property, the sale value that would be obtained in an arm’s-length free market transaction between an informed and willing seller under no compulsion to sell and an informed andwilling buyer under no compulsion to buy, as determined in good faith by the Parent Guarantor’s Board of Directors.
“FATCA Withholding” means any withholding or deduction required pursuant to an agreement described in section1471(b) of the Code, or otherwise imposed pursuant to sections 1471 through 1474 of the Code, any regulations oragreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
“Guarantee” means any guarantee of the Issuers’ obligations under this Indenture and the Notes by the ParentGuarantor, any Restricted Subsidiary or any other Person in accordance with the provisions of this Indenture, including theGuarantees by the Guarantors dated as of the Issue Date. When used as a verb, “Guarantee” shall have a correspondingmeaning.
-15-
“guarantees” means, as applied to any obligation,
(a) a guarantee (other than by endorsement of negotiable instruments for collection or deposit in the ordinarycourse of business), direct or indirect, in any manner, of any part or all of such obligation; and
(b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any waythe payment or performance (or payment of damages in the event of non-performance) of all or any part ofsuch obligation, including, without limiting the foregoing, by the pledge of assets and the payment ofamounts drawn down under letters of credit.
“Guarantor” means the Parent Guarantor and the Subsidiary Guarantors, together, and any other Person that is aguarantor of the Notes, including any Person that is required after the Issue Date to execute a guarantee of the Notespursuant to Section 4.14 or Section 4.15 until a successor replaces such party pursuant to the applicable provisions of thisIndenture and, thereafter, shall mean such successor.
“Holder” means the Person in whose name a Note is registered on the Registrar’s books.
“IFRS” means International Financial Reporting Standards (formerly International Accounting Standards) endorsedfrom time to time by the European Union or any variation thereof with which the Parent Guarantor or its RestrictedSubsidiaries are, or may be, required to comply, as in effect on the August 2019 Issue Date or, with respect to Section 4.19as in effect from time to time. Except as otherwise set forth in this Indenture, all ratios and calculations based on IFRS (or,as applicable, GAAP) contained in this Indenture shall be computed in accordance with IFRS as in effect on the August2019 Issue Date (or, as applicable, GAAP as in effect at the date specified by the Parent Guarantor in its election to adoptGAAP in accordance with the fourth sentence of this definition). At any time after the August 2019 Issue Date, the ParentGuarantor may elect to implement any new measures or other changes to IFRS (or, as applicable, GAAP) in effect on orprior to the date of such election; provided that any such election, once made, shall be irrevocable. At any time after theAugust 2019 Issue Date, the Parent Guarantor may elect to apply GAAP accounting principles in lieu of IFRS and, upon anysuch election, references herein to IFRS shall thereafter be construed to mean GAAP (except as otherwise provided in thisIndenture), including as to the ability of the Parent Guarantor to make an election pursuant to the previous sentence;provided that any such election, once made, shall be irrevocable; provided, further, that any calculation or determination inthis Indenture that requires the application of IFRS for periods that include fiscal quarters ended prior to the ParentGuarantor’s election to apply GAAP shall remain as previously calculated or determined in accordance with IFRS;provided, further again, that the Parent Guarantor may only make such election if it also elects to report any subsequentfinancial reports required to be made by the Parent Guarantor. The Parent Guarantor shall give notice of any such electionmade in accordance with this definition to the Trustee and the Holders. Notwithstanding any of the foregoing, (i) in relationto the making of any determination or calculation under this Indenture, the Parent Guarantor shall be required to elect (the“Election Option”), from time to time and each time, either (A) to apply IFRS 16 (Leases) or (B) to apply IAS 17 (Leases)(or, in each case, the equivalent measure under GAAP) to the making of such determination or calculation, provided that, ifsuch determination or calculation involves more than one element (including for the calculation of a financial ratio), suchselected accounting standard shall be consistently applied to each element of such determination or calculation (other than,for the avoidance of doubt, in relation to Section 4.19); and (ii) any adverse impact directly or indirectly relating to orresulting from the implementation of IFRS 15 (Revenue from Contracts with Customers) and any successor standard thereto(or any equivalent measure under GAAP) shall be disregarded with respect to all ratios, calculations and determinationsbased upon IFRS to be calculated or made, as the case may be, pursuant to this Indenture (other than, for the avoidance ofdoubt, in relation to Section 4.19).
-16-
“Indenture” means this instrument as originally executed or as it may from time to time be supplemented oramended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
“Intercreditor Agreement” means the Intercreditor Agreement entered into on December 7, 2010, as amended andrestated most recently on March 21, 2017 and from time to time among, inter alios, Ardagh Group S.A. and certain of itssubsidiaries and Citibank, N.A., London Branch, in its capacity as security agent thereunder and trustee for the ExistingSecured Notes, and to which the Trustee will accede as soon as reasonably practicable.
“Interest Payment Date” means the Stated Maturity of an installment of interest on the Notes.
“Interest Rate Agreements” means, in respect of a Person, any interest rate protection agreements and other types ofinterest rate hedging agreements (including, without limitation, interest rate swaps, caps, floors, collars and similaragreements) designed to protect such Person against or manage exposure to fluctuations in interest rates.
“Investment” means, with respect to any Person, any direct or indirect advance, loan or other extension of credit(including guarantees) or capital contribution to (by means of any transfer of cash or other property to others or any paymentfor property or services for the account or use of others), or any purchase, acquisition or ownership by such Person of anyCapital Stock, bonds, notes, debentures or other securities or evidences of Debt issued or owned by, any other Person and allother items that would be classified as investments on a balance sheet prepared in accordance with IFRS. In addition, theportion (proportionate to the Parent Guarantor’s equity interest in such Restricted Subsidiary) of the Fair Market Value ofthe net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an UnrestrictedSubsidiary will be deemed to be an “Investment” that the Parent Guarantor made in such Unrestricted Subsidiary at suchtime. The portion (proportionate to the Parent Guarantor’s equity interest in such Restricted Subsidiary) of the Fair MarketValue of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a RestrictedSubsidiary will be considered a reduction in outstanding Investments. “Investments” excludes extensions of trade credit oncommercially reasonable terms in accordance with normal trade practices.
“Investment Grade Status” shall occur when the Notes receive both of the following:
(1) a rating of “BBB-” or higher from S&P; and
(2) a rating of “Baa3” or higher from Moody’s;
or the equivalent of such rating by either such rating organization or, if no rating of Moody’s or S&P then exists, theequivalent of such rating by any other Nationally Recognized Statistical Rating Organization.
“IP Cross License Agreement” means an intellectual property cross license agreement entered into between theParent Guarantor and Trivium Packaging B.V. and any modification, amendment, replacement or extension or any similaragreement.
“Issue Date” means June 2, 2020.
“Issuers Order” means a written order signed in the name of the Issuers by any Person authorized by a resolution ofthe Board of Directors of each Issuer.
-17-
“January 2017 Senior Notes” means the existing $1,000,000,000 aggregate principal amount of 6.000% SeniorNotes and $700,000,000 aggregate principal amount of 6.000% additional Senior Notes due 2025 issued by the Issuers.
“June 2017 Senior Notes” means the existing £400,000,000 aggregate principal amount of 4.750% Senior Notes due2027 issued by the Issuers on June 12, 2017.
“Lien” means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest,hypothecation, assignment for security, standard security, assignation in security claim, or preference or priority or otherencumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned orhereafter acquired. A Person shall be deemed to own subject to a Lien any property which such Person has acquired or holdssubject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retentionagreement.
“March 2017 Secured Notes” means the existing $715,000,000 aggregate principal amount of 4.250% SeniorSecured Notes due 2022 and the existing €750,000,000 aggregate principal amount of 2.750% Senior Secured Notes due2024 issued by the Issuers on March 8, 2017.
“Material Subsidiary” means any Restricted Subsidiary or group of Restricted Subsidiaries (taken together) thatwould be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to theSecurities Act, as such regulation is in effect on the August 2019 Issue Date, measured, as of the last day of the most recentfiscal quarter for which financial statements are available or for the four fiscal quarters ended most recently for whichfinancial statements are available, as the case may be.
“Maturity” means, with respect to any indebtedness, the date on which any principal of such indebtedness becomesdue and payable as therein or herein provided, whether at the Stated Maturity with respect to such principal or by declarationof acceleration, call for redemption or purchase or otherwise.
“May 2016 Secured Notes” means the existing $500,000,000 aggregate principal amount of Floating Rate Notes due2021, the existing €440,000,000 aggregate principal amount of 4.125% Senior Secured Notes due 2023 and the existing$1,000,000,000 aggregate principal amount of 4.625% Senior Secured Notes due 2023 issued by the Issuers on May 16,2016.
“May 2016 Senior Notes” means the existing €750,000,000 aggregate principal amount of 6.750% Senior Notes due2024 and the existing $1,650,000,000 aggregate principal amount of 7.250% Senior Notes due 2024 issued by the Issuers onMay 16, 2016.
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
“Mutual Services Agreement” means the mutual services agreement dated October 31, 2019 entered into among theParent Guarantor and Trivium Packaging B.V., and any modification, amendment, replacement or extension or any similaragreement.
“Nationally Recognized Statistical Rating Organization” means a nationally recognized statistical ratingorganization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.
“Net Cash Proceeds” means:
(a) with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including(x) payments in respect of deferred payment obligations when received in the
-18-
form of, or stock or other assets when disposed for, cash or Cash Equivalents (except to the extent that suchobligations are financed or sold with recourse to the Parent Guarantor or any Restricted Subsidiary) and(y) any cash or Cash Equivalents received upon the sale or other disposition of any Designated Non-cashConsideration received in any Asset Sale, net of:
(i) brokerage commissions and other fees and expenses (including, without limitation, fees andexpenses of legal counsel, accountants, investment banks and other consultants) related to suchAsset Sale;
(ii) provisions for all taxes paid or payable, or required to be accrued as a liability under IFRS as a resultof such Asset Sale;
(iii) all distributions and other payments required to be made to any Person (other than the ParentGuarantor or any Restricted Subsidiary) owning a beneficial interest in the assets subject to theAsset Sale; and
(iv) appropriate amounts required to be provided by the Parent Guarantor or any Restricted Subsidiary,as the case may be, as a reserve in accordance with IFRS against any liabilities associated with suchAsset Sale and retained by the Parent Guarantor or any Restricted Subsidiary, as the case may be,after such Asset Sale, including, without limitation, pension and other post-employment benefitliabilities, liabilities related to environmental matters and liabilities under any indemnificationobligations associated with such Asset Sale, all as reflected in an Officer’s Certificate delivered tothe Trustee; and
(b) with respect to any capital contributions, issuance or sale of Capital Stock or options, warrants or rights topurchase Capital Stock, or debt securities or Capital Stock that have been converted into or exchanged forCapital Stock as referred to in Section 4.08, the proceeds of such issuance or sale in the form of cash or CashEquivalents, payments in respect of deferred payment obligations when received in the form of, or stock orother assets when disposed of for, cash or Cash Equivalents (except to the extent that such obligations arefinanced or sold with recourse to the Parent Guarantor or any Restricted Subsidiary), net of attorney’s fees,accountant’s fees and brokerage, consultation, underwriting and other fees and expenses actually incurred inconnection with such issuance or sale and net of taxes paid or payable as a result thereof.
“Offering Memorandum” means the final offering memorandum of the Issuers, dated July 30, 2019 relating to theAugust 2019 Notes.
“Officer’s Certificate” means a certificate signed by an officer of the Parent Guarantor, either Issuer, a Guarantor ora Surviving Entity, as the case may be, and delivered to the Trustee.
“Opinion of Counsel” means a written opinion from legal counsel. The counsel may be an employee of or counsel tothe Issuers.
“Pari Passu Debt” means (a) any Debt of the applicable Issuer that ranks equally in right of payment with the Notesor (b) with respect to any Guarantee, any Debt that ranks equally in right of payment to such Guarantee.
-19-
“Parties” means the Issuers, the Parent Guarantor, the Trustee, the Principal Paying Agent and any other party fromtime to time hereto (each, a “Party”).
“Permitted Debt” has the meaning given to such term under Section 4.06(b).
“Permitted Holders” means (a) Yeoman Capital S.A., (b) any of Paul Coulson, Brendan Dowling, Houghton Fry,Edward Kilty, John Riordan or Niall Wall, and any trust created for the benefit of one or more of the foregoing or theirrespective natural person Affiliates, or the estate, executor, administrator, committee or beneficiaries of any thereof, and(c) any of their respective Affiliates.
“Permitted Investments” means any of the following:
(a) Investments in cash or Cash Equivalents;
(b) intercompany Debt to the extent permitted under clause (iv) of the definition of “Permitted Debt”;
(c) Investments in (i) the form of loans borrowed by or advances to, or debt securities issued by, the ParentGuarantor, (ii) a Restricted Subsidiary or (iii) another Person if as a result of such Investment such otherPerson becomes a Restricted Subsidiary or such other Person is merged or consolidated with or into, ortransfers or conveys all or substantially all of its assets to, the Parent Guarantor or a Restricted Subsidiary;
(d) Investments made by the Parent Guarantor or any Restricted Subsidiary as a result of or retained inconnection with an Asset Sale that does not violate Section 4.09;
(e) expenses or advances to cover payroll, travel, entertainment, moving, other relocation and similar matters;
(f) Investments in the August 2019 Notes and the Existing Ardagh Bonds;
(g) Investments existing at the Issue Date and any Investment consisting of an extension, modification orrenewal of any Investment existing on, or made pursuant to a binding commitment existing on, the August2019 Issue Date; provided that the amount of any such Investment may be increased as required by the termsof such Investment existing on the August 2019 Issue Date;
(h) Investments in Commodity Hedging Agreements, Interest Rate Agreements and Currency Agreementspermitted under Section 4.06(b)(viii), Section 4.06(b)(ix) and Section 4.06(b)(x) ;
(i) Investments made in the ordinary course of business, the Fair Market Value of which in the aggregate doesnot exceed $15,000,000 in any fiscal year in any transaction or series of related transactions;
(j) loans and advances (or guarantees to third-party loans) to directors, officers or employees of the ParentGuarantor or any Restricted Subsidiary made in the ordinary course of business and consistent with theParent Guarantor’s past practices or past practices of the Restricted Subsidiaries, as the case may be, in anamount outstanding not to exceed at any one time the greater of $30,000,000 and 0.5% of Total Assets;
-20-
(k) Investments in a Person to the extent that the consideration therefor consists of the issue and sale (other thanto any Subsidiary) of shares of the Parent Guarantor’s Qualified Capital Stock or Deeply SubordinatedFunding or the net proceeds thereof (other than any Excluded Contribution or the proceeds of anyContribution Debt); provided that the net proceeds of such sale have been excluded from, and shall not havebeen included in, the calculation of the amount determined under clause (b)(iii)(B) of Section 4.08;
(l) pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course ofbusiness;
(m) Investments of the Parent Guarantor or the Restricted Subsidiaries described under item (v) to the proviso tothe definition of “Debt”;
(n) Investments, the amount of which, measured by reference to the Fair Market Value of each such Investmenton the date it was made, not to exceed the sum of (x) the greater of $300,000,000 and 4.0% of Total Assetsin the aggregate outstanding at any one time and (y) the sum of (i) the aggregate net after-tax amountreturned in cash or through interest payments, principal payments, dividends or other distributions orpayments on account of such Investment and (ii) the net after-tax cash proceeds received by the ParentGuarantor or any Restricted Subsidiary from the disposition of all or any portion of such Investments (otherthan to a Subsidiary); provided, however, that such net after-tax amounts have not been included inConsolidated Adjusted Net Income for the purpose of calculating clause (b)(iii)(A) of Section 4.08;
(o) Investments resulting from the acquisition of a Person that at the time of such acquisition held instrumentsconstituting Investments that were not acquired in contemplation of the acquisition of such Person;
(p) Investments by the Parent Guarantor or any Restricted Subsidiary in connection with a PermittedReceivables Financing;
(q) loans or advances to (i) directors, officers or employees of the Parent Guarantor or any Restricted Subsidiaryto pay for the purchase of Capital Stock of the Parent Guarantor or any direct or indirect parent companythereof pursuant to management equity plans or similar management or employee benefit arrangement or(ii) stock option plans, trust and similar asset pools to pay for the purchase of Capital Stock of the ParentGuarantor or any direct or indirect parent company thereof not to exceed the greater of $30,000,000 and0.5% of Total Assets in the aggregate outstanding at any one time;
(r) (i) stock, obligations or securities received in satisfaction of judgments, foreclosure of liens, or settlement ofdebts or arbitration awards, and (ii) any Investments received in compromise of obligations of such personsincurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course ofbusiness, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy orinsolvency of any trade creditor or customer;
(s) any Investments received in comprise or resolution of litigation, arbitration or other disputes;
(t) any guarantee of Debt permitted to be incurred by Section 4.06, performance guarantees and contingentobligations incurred in the ordinary course of business and creation of Liens
-21-
on the assets of the Parent Guarantor or any Restricted Subsidiary in compliance with Section 4.07;
(u) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance withSection 4.10(b) (except transactions described in sub-clauses (ii), (v) and (x) thereof);
(v) advances, loans, rebates and extensions of credit (including the creation of receivables) to suppliers,customers and vendors, and advance payment made and deferred consideration and performance guarantees,in each case in the ordinary course of business; and
(w) any Investment in any Subsidiary or any joint venture in connection with intercompany cash managementarrangements or related activities arising in the ordinary course of business.
“Permitted Joint Venture” means any joint venture or similar combinations or other transaction pursuant to whichthe Parent Guarantor or any Restricted Subsidiary enters into, acquires or subscribes for any shares, stock, securities or otherinterest in or transfers any assets to any joint venture; provided, however, that the primary business of such joint venture is aSimilar Business.
“Permitted Junior Securities” means, with respect to a Subsidiary Guarantor: (a) Capital Stock in such SubsidiaryGuarantor or (b) debt securities of the Subsidiary Guarantor that are subordinated to all Senior Debt and any debt securitiesissued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the Notes are subordinatedto Senior Debt pursuant to this Indenture.
“Permitted Liens” means the following types of Liens:
(a) Liens existing as of the August 2019 Issue Date;
(b) Liens (i) securing Debt under Credit Facilities and any other Senior Debt permitted to be incurred pursuantto Section 4.06 and (ii) Liens on any property or assets of the Parent Guarantor or a Restricted Subsidiary tosecure Debt permitted to be incurred pursuant to Section 4.06(b)(ii);
(c) Liens on assets given, disposed of, or otherwise transferred in connection with a Permitted ReceivablesFinancing permitted to be incurred pursuant to Section 4.06(b)(xiii);
(d) Liens on any property or assets of a Restricted Subsidiary granted in favor of the Parent Guarantor or anyRestricted Subsidiary;
(e) Liens on any of the Parent Guarantor’s or any Restricted Subsidiary’s property or assets securing the Notesor any Guarantees;
(f) any interest or title of a lessor under any Capitalized Lease Obligation and Liens to secure Debt (includingCapitalized Lease Obligations) permitted under Section 4.06 covering only the assets acquired with suchDebt;
(g) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale ofgoods entered into by the Parent Guarantor or any Restricted Subsidiary in the ordinary course of business;
-22-
(h) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen,employees, pension plan administrators or other like Liens arising in the ordinary course of business andwith respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings orLiens arising solely by virtue of any statutory or common law provisions relating to attorney’s liens orbankers’ liens, rights of set-off or similar rights and remedies as to deposit accounts or other fundsmaintained with a creditor depositary institution;
(i) Liens for taxes, assessments, government charges or claims that are not yet delinquent or that are beingcontested in good faith by appropriate proceedings for which a reserve or other appropriate provision, if any,as shall be required in conformity with IFRS shall have been made;
(j) Liens incurred or deposits made to secure the performance of tenders, bids or trade or government contracts,or to secure leases, statutory or regulatory obligations, surety or appeal bonds, performance bonds or otherobligations of a like nature incurred in the ordinary course of business (other than obligations for thepayment of money);
(k) zoning restrictions, easements, licenses, reservations, title defects, rights of others for rights-of-way, utilities,sewers, electrical lines, telephone lines, telegraph wires, restrictions, encroachments and other similarcharges, encumbrances or title defects and incurred in the ordinary course of business that do not in theaggregate materially interfere with in any material respect the ordinary conduct of the business of the ParentGuarantor and its Restricted Subsidiaries on the properties subject thereto, taken as a whole;
(l) Liens arising by reason of any judgment, decree or order of any court so long as such Lien is adequatelybonded and any appropriate legal proceedings that may have been duly initiated for the review of suchjudgment, decree or order shall not have been finally terminated or the period within which suchproceedings may be initiated shall not have expired;
(m) Liens on property existing at the time such property is acquired or on property of, or on shares of CapitalStock or Debt of, any Person existing at the time such Person is acquired by, merged with or into orconsolidated with, the Parent Guarantor or any Restricted Subsidiary; provided that such Liens (i) do notextend to or cover any property or assets of the Parent Guarantor or any Restricted Subsidiary other than(A) the property or assets acquired or (B) the property or assets of the Person acquired, merged with or intoor consolidated with the Parent Guarantor or Restricted Subsidiary and (ii) were created prior to, and not inconnection with or in contemplation of such acquisition, merger or consolidation;
(n) Liens securing the Parent Guarantor’s or any Restricted Subsidiary’s obligations under Commodity HedgingAgreements, Interest Rate Agreements or Currency Agreements permitted under Sections 4.06(b)(viii),4.06(b)(ix) and 4.06(b)(x) or any collateral for the Debt to which such Commodity Hedging Agreements,Interest Rate Agreements or Currency Agreements relate;
(o) Liens incurred or deposits made in the ordinary course of business in connection with workers’compensation, unemployment insurance and other types of social security or other insurance (includingunemployment insurance) or deposits to secure public or statutory obligations of such Person or deposits ofcash or government bonds to secure
-23-
performance, bid, surety or appeal bonds and completion bonds and guarantees to which such Person is aparty, or deposits as security for contested taxes or import duties or for the payment of rent, in each caseincurred in the ordinary course of business;
(p) Liens incurred in connection with a cash management program established in the ordinary course ofbusiness;
(q) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, orwarranty requirements of the Parent Guarantor or any Restricted Subsidiary, including rights of offset andset-off;
(r) any extension, renewal or replacement, in whole or in part, of any Permitted Lien; provided that any suchextension, renewal or replacement shall not extend in any material respect to any additional property orassets;
(s) Liens securing Debt incurred to refinance Permitted Refinancing Debt permitted to be incurred under theindenture governing the August 2019 Senior Notes; provided that any such Lien shall not extend to or covermaterially any assets not securing the Debt so refinanced plus improvements and accessions to such propertyand assets and proceeds and distributions thereof;
(t) purchase money Liens to finance property or assets of the Parent Guarantor or any Restricted Subsidiaryacquired in the ordinary course of business; provided that the related purchase money Debt shall not exceedthe cost of such property or assets and shall not be secured by any property or assets of the Parent Guarantoror any Restricted Subsidiary other than the property and assets so acquired;
(u) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customsduties in connection with the importation of goods;
(v) Liens over the Capital Stock of an Unrestricted Subsidiary or a Permitted Joint Venture that secures Debt ofsuch Unrestricted Subsidiary or Permitted Joint Venture;
(w) Liens incurred in the ordinary course of business of the Parent Guarantor or any Restricted Subsidiary withrespect to an amount that does not exceed the greater of $225,000,000 and 3.0% of Total Assets at any onetime outstanding and any replacements, extensions, modifications or renewals thereof;
(x) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing suchPerson’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of businessfor the account of such Person to facilitate the purchase, shipment or storage of such inventory or othergoods;
(y) leases, licenses, subleases and sublicenses of assets in the ordinary course of business;
(z) Liens on property or assets under construction (and related rights) in favor of a contractor or developer orarising from progress or partial payments by a third-party relating to such property or assets;
(aa) Liens on equipment of the Issuer or any Restricted Subsidiary granted in the ordinary course of business;
-24-
(bb) customary Liens on and in respect of deposits required in connection with the purchase of property,equipment and inventory, in each case incurred in the ordinary course of business;
(cc) (i) Liens on escrowed proceeds for the benefit of the related holders of debt securities or other Debt (or theunderwriters or arrangers thereof) or (ii) Liens on cash set aside at the time of the incurrence of any Debt orgovernment securities purchased with such cash, in either case, to the extent such cash or governmentsecurities prefund the payment of interest on such Debt and are held in escrow accounts or similararrangements to be applied for such purpose; and
(dd) Liens on assets or property of a Restricted Subsidiary that is not a Subsidiary Guarantor securing Debt andother Obligations of any Restricted Subsidiary that is not a Subsidiary Guarantor.
“Permitted Receivables Financing” means any financing pursuant to which the Parent Guarantor or any RestrictedSubsidiary may sell, convey or otherwise transfer to any other Person or grant a security interest in, any accounts receivable(and related assets) in an aggregate principal amount equivalent to the Fair Market Value of such accounts receivable (andrelated assets) of the Parent Guarantor or any Restricted Subsidiary; provided that (a) the covenants, events of default andother provisions applicable to such financing shall be customary for such transactions and shall be on market terms (asdetermined in good faith by the Parent Guarantor’s Board of Directors) at the time such financing is entered into, (b) theinterest rate applicable to such financing shall be a market interest rate (as determined in good faith by the ParentGuarantor’s Board of Directors) at the time such financing is entered into, and (c) such financing shall be non-recourse tothe Parent Guarantor or any Restricted Subsidiary except to a limited extent customary for such transactions.
“Permitted Refinancing Debt” means any renewals, extensions, substitutions, refinancings or replacements (each,for purposes of this definition and Section 4.06(b)(xiv), a “refinancing”) of any Debt of the Parent Guarantor or a RestrictedSubsidiary or pursuant to this definition, including any successive refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if incurred with original issue discount, an aggregate issueprice) not in excess of the sum of (i) the aggregate principal amount (or if incurred with original issuediscount, the aggregate accreted value) then outstanding of the Debt being refinanced and (ii) an amountnecessary to pay any fees and expenses, including premiums and defeasance costs, related to suchrefinancing;
(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being refinanced;
(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being refinanced;
(d) the new Debt is not senior in right of payment to the Debt that is being refinanced; and
(e) such Debt is unsecured or is secured by a Silent Second Lien, if the Debt being refinanced is unsecured.
“Permitted Reorganization” means any amalgamation, demerger, merger, voluntary liquidation, consolidation,reorganization, winding up or corporate reconstruction, directly or indirectly, in one or a series of related transactionsinvolving the Parent Guarantor or any of its Restricted Subsidiaries (a
-25-
“Reorganization”) that is made on a solvent basis; provided that any payments or assets distributed in connection with suchReorganization remain within the applicable Issuer and its Restricted Subsidiaries. For the avoidance of doubt, the term“Permitted Reorganization” shall include the closure of bank accounts and the conversion of debt instruments into CapitalStock or other equity instruments.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, jointstock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Preferred Stock” means, with respect to any Person, Capital Stock of any class or classes (however designated) ofsuch Person which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon anyvoluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class of such Personwhether now outstanding, or issued after the Issue Date, and including, without limitation, all classes and series of preferredor preference stock of such Person.
“pro forma” means, with respect to any calculation made or required to be made pursuant to the terms of thisIndenture, a calculation made in good faith by a responsible financial or accounting officer of the Parent Guarantor;provided that any such calculation shall (x) give effect to any realized or expected synergies, cost efficiencies and costsavings relating to, or directly or indirectly resulting from, or associated with, any Asset Sale, Investment, acquisition,reorganization, restructuring or operational improvement initiative that has occurred during the period included in thecalculation or any prior period or would reasonably be expected to occur in connection with an acquisition or othertransaction in relation to which “pro forma” effect is given, as if such synergies, cost efficiencies or cost savings had beeneffective throughout the period included in the calculation and (y) eliminate any extraordinary, exceptional, unusual ornonrecurring loss, expense or charge (including severance, relocation, plant closure, operational improvement orrestructuring costs or reserves therefor) relating to, or directly or indirectly resulting from, or incurred in connection with,any Asset Sale, Investment, acquisition, reorganization, restructuring or operational improvement initiative, or offering ofdebt or equity securities.
“Property” means, with respect to any Person, any interest of such Person in any kind of property or asset, whetherreal, personal or mixed, or tangible or intangible, including Capital Stock, and other securities of, any other Person. Forpurposes of any calculation required pursuant to this Indenture, the value of any Property shall be its Fair Market Value.
“Public Equity Offering” means an offer and sale of Qualified Capital Stock that are listed on an internationalsecurities exchange or publicly offered (which shall include an offering pursuant to Rule 144A and/or Regulation S underthe Securities Act to professional market investors or similar persons).
“QIB” means a “Qualified Institutional Buyer” as defined in Rule 144A.
“Qualified Capital Stock” of any Person means any and all Capital Stock of such Person other than RedeemableCapital Stock.
“Record Date” for the interest payable on any Interest Payment Date means the Business Day immediatelypreceding such Interest Payment Date.
“Redeemable Capital Stock” means any class or series of Capital Stock that, either by its terms, by the terms of anysecurity into which it is convertible or exchangeable, or by contract or otherwise, is, or upon the happening of an event orpassage of time would be, required to be redeemed prior to the final Stated Maturity of the Notes or is redeemable at theoption of the holder thereof at any time prior to such final Stated Maturity (other than upon a Change of Control of theParent Guarantor in circumstances in
-26-
which the Holders would have similar rights), or is convertible into or exchangeable for debt securities at any time prior tosuch final Stated Maturity; provided that any Capital Stock that would constitute Qualified Capital Stock but for provisionsthereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon theoccurrence of any “asset sale” or “change of control” occurring prior to the Stated Maturity of the Notes will not constituteRedeemable Capital Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are no morefavorable to the holders of such Capital Stock than the provisions contained in Section 4.09 and Section 4.11 and suchCapital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provisionprior to the Parent Guarantor’s or the Issuers’ repurchase of such Notes as are required to be repurchased pursuant to Section4.09 and Section 4.11.
“Redemption Date” means, when used with respect to any Note to be redeemed, in whole or in part, the date fixedfor such redemption by or pursuant to this Indenture.
“Redemption Price” means, when used with respect to any Note to be redeemed, the price at which it is to beredeemed pursuant to this Indenture.
“Refinance” means, with respect to any Debt, to amend, modify, extend, substitute, renew, replace, refund, prepay,repay, repurchase, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. “Refinanced”and “Refinancing” shall have correlative meanings.
“Regulation S” means Regulation S under the Securities Act (including any successor regulation thereto), as it maybe amended from time to time.
“Replacement Assets” means properties and assets that replace the properties and assets that were the subject of anAsset Sale or properties and assets that are, or will be, used in the Parent Guarantor’s business or in that of the RestrictedSubsidiaries or in a Similar Business or any and all businesses that in the good faith judgment of the Board of Directors ofthe Parent Guarantor are reasonably related, and, in each case, any capital expenditure relating thereto.
“Restricted Investment” means any Investment other than a Permitted Investment.
“Restricted Subsidiary” means any Subsidiary of the Parent Guarantor other than an Unrestricted Subsidiary.
“Reversion Date” means, after the Notes have achieved Investment Grade Status, the date, if any, that such Notesshall cease to have such Investment Grade Status.
“Rule 144” means Rule 144 under the Securities Act (including any successor regulation thereto), as it may beamended from time to time.
“Rule 144A” means Rule 144A under the Securities Act (including any successor regulation thereto), as it may beamended from time to time.
“S&P” means Standard and Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. and itssuccessors.
“Securities Act” means the U.S. Securities Act of 1933, as amended, or any successor statute, and the rules andregulations promulgated by the Commission thereunder.
“Senior Debt” means:
-27-
(a) all Debt under any Credit Facility permitted to be incurred under Section 4.06 and all Commodity HedgingAgreements, Currency Agreements and Interest Rate Agreements and other obligations with respect thereto;
(b) any other Debt permitted to be incurred by either Issuer, the Parent Guarantor or any Restricted Subsidiarythat provides a Guarantee under the terms of this Indenture unless, with respect to such a RestrictedSubsidiary, the instrument under which such Debt is incurred expressly provides that it is on a parity with orsubordinated in right of payment to its Guarantee, as the case may be; and
(c) all obligations with respect to the items listed in the preceding clauses (a) and (b).
Notwithstanding anything to the contrary in the preceding, Senior Debt will not include:
(i) any liability for taxes owed or owing by the Issuers or the Guarantors;
(ii) any Debt that is incurred in violation of this Indenture or the terms of the Notes, as the case may be;or
(iii) any trade payables.
“Senior Holdco Notes” means (i) the existing €845,000,000 aggregate principal amount of 6.625% / 7.375% SeniorSecured Toggle Notes due 2023, (ii) $770,000,000 aggregate principal amount of 7.125% / 7.875% Senior Secured ToggleNotes due 2023 issued by ARD Finance S.A. on September 16, 2016 and (iii) the existing $350,000,000 aggregate principalamount of 8.750% Senior Secured PIK Notes due 2023 issued by ARD Securities Finance SARL on January 23, 2018 and,in each case, any replacements or refinancings thereof, directly or indirectly.
“Silent Second Liens” means Liens granted in favor of Debt (the “second priority Debt”) on property or assets ofthe Parent Guarantor or any of its Restricted Subsidiaries that:
(a) are by law or under the terms of an intercreditor agreement reasonably acceptable to the Trustee second inpriority to first priority Liens on such property or assets; and
(b) are subject to arrangements in form and substance reasonably satisfactory to the Trustee which provide(x) that any payments on enforcement of the Liens in such property or assets (other than payments to thesecurity agent, trustee, administrative agent or other representative of the holders of the second priorityDebt) to the holders of the second priority Debt (or their representatives) will only be made once the Debtsecured by the first priority Liens on such property or assets have been satisfied in full and (y) that theholders of the second priority Debt (and their representatives) will have no ability to cause the enforcementof, or direct the relevant security agent in the enforcement of, the Liens in such property or assets until theDebt secured by the first priority Liens on such property or assets have been satisfied in full.
“Similar Business” means any business, service or other activity engaged in by the Parent Guarantor or anyRestricted Subsidiaries of the Parent Guarantor on the August 2019 Issue Date and any business, service or other activitiesthat are reasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of,the businesses in which the Parent Guarantor and the Restricted Subsidiaries are engaged on the August 2019 Issue Date orany business that, in the good faith
-28-
business judgment of the Parent Guarantor, constitutes a reasonable diversification of business conducted by the ParentGuarantor and its Subsidiaries.
“Stated Maturity” means, when used with respect to any note or any installment of interest thereon, the datespecified in such note as the fixed date on which the principal of such note or such installment of interest, respectively, isdue and payable, and, when used with respect to any other indebtedness, means the date specified in the instrumentgoverning such indebtedness as the fixed date on which the principal of such indebtedness, or any installment of interestthereon, is due and payable.
“Subordinated Debt” means Debt of either Issuer or any of the Guarantors (other than the Existing Ardagh Bonds,the Notes, the August 2019 Notes and any Permitted Refinancing Debt in respect of the foregoing) that is subordinated inright of payment to the Notes or the Guarantees of such Guarantors, as the case may be; provided that no Debt shall bedeemed to be subordinated in right of payment to any other Debt solely by virtue of being unsecured or by virtue of beingsecured on a junior Lien basis.
“Subsidiary” means, with respect to any Person:
(a) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person,by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof; and
(b) any other Person (other than a corporation), including, without limitation, a partnership, limited liabilitycompany, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or suchPerson and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, hasat least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof(or other Person performing similar functions).
“Subsidiary Guarantee” means any Guarantee given by a Subsidiary Guarantor.
“Subsidiary Guarantors” means any Restricted Subsidiary that provides a Guarantee, in each case until it is releasedfrom its obligations under its Guarantee and this Indenture in accordance with the terms of this Indenture.
“Total Assets” means the consolidated total assets of the Parent Guarantor and its Restricted Subsidiaries as shownon the most recent consolidated balance sheet of the Parent Guarantor.
“Total Inventories” means, as of any date, the amount of raw materials, packaging materials, work-in-progress andfinished goods of the Parent Guarantor and the Restricted Subsidiaries, net of any provisions in respect of the foregoingitems, in each case as of the date of the most recent consolidated balance sheet of the Parent Guarantor which has beendelivered in accordance with Section 4.19.
“Total Receivables” means, as of any date, (a) the amount of accounts receivable of the Parent Guarantor and theRestricted Subsidiaries plus (b) the amount of accounts receivable of the Parent Guarantor and the Restricted Subsidiariesthat has been sold, conveyed or otherwise transferred in Permitted Receivables Financings and is outstanding, in each case,as of the date of the most recent consolidated balance sheet of the Parent Guarantor which has been delivered in accordancewith Section 4.19.
-29-
“Transaction Agreement” means the transaction agreement dated July 14, 2019, among Ardagh Group S.A.,Element Holdings II L.P. and Trivium Packaging B.V. as described in the Offering Memorandum.
“Treasury Rate” means, as of any Redemption Date, the weekly average rounded to the nearest 1/l00th of apercentage point (for the most recently completed week for which such information is available as of the date that is twoBusiness Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constantmaturity (as compiled and published in Federal Reserve Statistical Release H.15 with respect to each applicable day duringsuch week or, if such Statistical Release is no longer published, any publicly available source of similar market data) mostnearly equal to the period from the Redemption Date to August 15, 2022; provided, however, that if the period from theRedemption Date to August 15, 2022 is not equal to the constant maturity of a United States Treasury security for whichsuch a yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of ayear) from the weekly average yields of United States Treasury securities for which such yields are given, except that if theperiod from the Redemption Date to August 15, 2022 is less than one year, the weekly average yield on actually tradedUnited States Treasury securities (or other comparable benchmark) adjusted to a constant maturity of one year shall be used.
“Trivium Transactions” shall have the meaning assigned to the term Transactions in the Offering Memorandum.
“Trust Officer” means any officer within the agency and corporate trust group, division or section of the Trustee(however named, or any successor group of the Trustee) and also means, with respect to any particular corporate trustmatter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particularsubject.
“Unrestricted Subsidiary” means:
(a) any Subsidiary of the Parent Guarantor that at the time of determination is an Unrestricted Subsidiary (asdesignated by the Parent Guarantor’s Board of Directors pursuant to Section 4.17);
(b) any Subsidiary of an Unrestricted Subsidiary; and
(c) Enville Limited, UniMould S.A., Ardagh Containers Holdings Limited, Ardagh Packaging Finance UKLimited, Recan GmbH and Recan UK Limited.
“U.S. dollars” or “$” means the lawful currency of the United States of America.
“U.S. Government Securities” means direct obligations of, or obligations guaranteed by, the United States ofAmerica, and the payment for which the United States of America pledges its full faith and credit.
“Voting Stock” means any class or classes of Capital Stock pursuant to which the holders thereof have the generalvoting power under ordinary circumstances to elect at least a majority of the Board of Directors, managers or trustees (orPersons performing similar functions) of any Person (irrespective of whether or not, at the time, stock of any other class orclasses shall have, or might have, voting power by reason of the happening of any contingency).
-30-
“Wholly Owned Restricted Subsidiary” means any Restricted Subsidiary, all of the outstanding Capital Stock (otherthan directors’ qualifying shares or shares of Restricted Subsidiaries required to be owned by third parties pursuant toapplicable law) of which are owned by the Parent Guarantor or by one or more other Wholly Owned Restricted Subsidiariesor by the Parent Guarantor and one or more other Wholly Owned Restricted Subsidiaries.
SECTION 1.02. Other Definitions.
Term Defined in Section
4.12(a)Recitals4.13(a)Recitals2.0312.084.11(a)4.11(a)4.11(a)8.032.12Definition of IFRS6.01(a)4.09(b)4.09(c)2.01(c)12.01(a)4.06(a)4.06(a)12.15PreamblePreamble8.02Recitals10.01(a)RecitalsPreamble2.01(c)2.034.06(b)4.08(c)Preamble2.032.01(b)4.08(c)(xi)4.12(a)12.142.01(b)4.08(a)2.035.01(b)(i)
“Additional Amounts”“Additional Notes”“Additional Intercreditor Agreement”“Additional Notes”“Agents”“Authorized Agent”“Change of Control Offer”“Change of Control Purchase Date”“Change of Control Purchase Price”“covenant defeasance”“Defaulted Interest”“Election Option”“Event of Default”“Excess Proceeds”“Excess Proceeds Offer”“Global Notes”“Holdings USA Disposition”“incur”“incurrence”“Interest Amount”“Irish Issuer”“Issuers”“legal defeasance”“Notes”“Obligations”“Original Notes”“Parent Guarantor”“Participants”“Paying Agent”“Permitted Debt”“Permitted Payments”“Principal Paying Agent”“Registrar”“Regulation S Global Note”“Relevant Fiscal Year”“Relevant Taxing Jurisdiction”“Required Currency”“Restricted Global Note”“Restricted Payment”“Security Register”“Surviving Entity”
-31-
Term Defined in Section
4.224.12(a)2.03PreamblePreamble
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with IFRS;
(iii) “or” is not exclusive;
(iv) “including” or “include” means including or include without limitation;
(v) words in the singular include the plural and words in the plural include the singular;
(vi) unsecured or unguaranteed Debt shall not be deemed to be subordinate or junior to secured orguaranteed Debt merely by virtue of its nature as unsecured or unguaranteed Debt; and
(vii) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indentureas a whole and not to any particular Article, Section, clause or other subdivision.
SECTION 1.04. Financial Calculations. In the event that the Parent Guarantor or any of its RestrictedSubsidiaries (w) incurs Debt to finance an acquisition (including an acquisition of assets) or other transaction or (x) assumesDebt of Persons that are, or secured by assets that are, acquired by the Parent Guarantor or any of its Restricted Subsidiariesor merged into, amalgamated or consolidated with, the Parent Guarantor or any of its Restricted Subsidiaries in accordancewith the terms of this Indenture or (y) commits to an acquisition or transaction pursuant to which it may incur AcquiredDebt or (z) is subject to a Change of Control, the date of determination of Consolidated Adjusted Net Income, theConsolidated Fixed Charge Coverage Ratio or the Consolidated Leverage Ratio, as applicable, shall, at the option of theParent Guarantor, be (a) the date that a definitive agreement, put option or similar arrangement for such acquisition,transaction, merger, amalgamation, consolidation or Change of Control is entered into and the Consolidated Adjusted NetIncome, the Consolidated Fixed Charge Coverage Ratio or the Consolidated Leverage Ratio, as applicable, shall becalculated giving pro forma effect to such acquisition, Change of Control and the other transactions to be entered into inconnection therewith (including any incurrence of Debt and the use of proceeds thereof) consistent with the definitions of“Consolidated Adjusted Net Income”, “Consolidated Fixed Charge Coverage Ratio” and “pro forma”, as applicable, and, forthe avoidance of doubt, (A) if any such ratios are exceeded as a result of fluctuations in such ratio (including due tofluctuations in the Consolidated Adjusted Net Income of the Parent Guarantor or the target company) at or prior to theconsummation of the relevant acquisition or Change of Control, such ratios will not be deemed to have been exceeded as aresult of such fluctuations solely for purposes of determining whether such acquisition and any related transactions arepermitted hereunder and (B) such ratios shall not be tested at the time of consummation of such acquisition, transaction,merger, amalgamation or consolidation; provided that if the Parent Guarantor elects to have such determinations occur at thetime of entry into such definitive agreement, put option or similar arrangement, (i) any such transaction shall be deemed tohave
“Suspension Event”“Taxes”“Transfer Agent”“Trustee”“U.S. Issuer”
-32-
occurred on the date the definitive agreement, put option or similar arrangement is entered into and to be outstandingthereafter for purposes of calculating any ratios under this Indenture after the date of such agreement and before the earlierof the date of consummation of such acquisition or the date such agreement is terminated or expires without consummationof such acquisition and (ii) to the extent any covenant baskets were utilized in satisfying any covenants, such baskets shallbe deemed utilized until the earlier of the date of consummation of such acquisition or the date such agreement is terminatedor expires without consummation of such acquisition, but any calculation of Consolidated Adjusted Net Income for purposesof other incurrences of Debt or Liens or making of Restricted Payments (not related to such acquisition) shall not reflectsuch acquisition until it has been consummated unless such other incurrence of Debt or Liens is conditional or contingent onthe occurrence of such acquisition or Change of Control or (b) the date such Debt is borrowed or assumed or such Change ofControl occurs.
SECTION 1.05. Agency of Irish Issuer. The U.S. Issuer irrevocably appoints the Irish Issuer as its agent for allpurposes relevant to this Indenture, including the giving and receipt of notices and execution and delivery of all documents,instruments, and certificates contemplated herein (including, without limitation, execution and delivery to the Trustee of anIssuers Order) and all modifications hereto. Any acknowledgment, consent, direction, certification, or other action whichmight otherwise be valid or effective only if given or taken by all Issuers or either Issuer or acting singly, shall be valid andeffective if given or taken only by the Irish Issuer, whether or not the U.S. Issuer joins therein, and the Trustee, other Agentsand the Holders shall have no duty or obligation to make further inquiry with respect to the authority of the Irish Issuerunder this Section 1.05; provided that nothing in this Section 1.05 shall limit the effectiveness of, or the right of the Trustee,other Agents and the Holders to rely upon, any notice (including, without limitation, an Issuers Order), document,instrument, certificate, acknowledgment, consent, direction, certification or other action delivered by either Issuer pursuantto this Indenture.
ARTICLE 2 THE NOTES
SECTION 2.01. The Notes.
(a) Form and Dating. The Notes and the Trustee’s (or the authenticating agent’s) certificate of authenticationshall be substantially in the form of Exhibit A hereto with such appropriate insertions, omissions, substitutions and othervariations as are required or permitted by this Indenture. The Notes may have notations, legends or endorsements requiredby law, the rules of any securities exchange agreements to which the Issuers are subject, if any, or usage; provided that anysuch notation, legend or endorsement is in form reasonably acceptable to the Issuers. The Issuers shall approve the form ofthe Notes. Each Note shall be dated the date of its authentication. The terms and provisions contained in the form of theNotes shall constitute and are hereby expressly made a part of this Indenture. The Notes shall be issued only in registeredform without coupons and only in minimum denominations of $200,000 in principal amount and any integral multiples of$1,000 in excess thereof.
(b) Global Notes. Notes offered and sold to QIBs in reliance on Rule 144A shall be issued initially in the formof one or more Global Notes substantially in the form of Exhibit A hereto, with such applicable legends as are provided inExhibit A hereto, except as otherwise permitted herein (the “Restricted Global Note”), which shall be deposited on behalf ofthe purchasers of the Notes represented thereby with a custodian for DTC, and registered in the name of DTC or itsnominee, duly executed by the Issuers and authenticated by the Trustee (or its agent in accordance with Section 2.02) ashereinafter provided. The aggregate principal amount of the Restricted Global Note may from time to time be increased ordecreased by adjustments made by the Registrar on Schedule A to the Restricted Global Note and recorded in the SecurityRegister, as hereinafter provided.
-33-
Notes offered and sold in reliance on Regulation S shall be issued initially in the form of one or more Global Notessubstantially in the form of Exhibit A hereto, with such applicable legends as are provided in Exhibit A hereto, except asotherwise permitted herein (the “Regulation S Global Note”), which shall be deposited on behalf of the purchasers of theNotes represented thereby with a custodian for DTC, and registered in the name of DTC or its nominee, duly executed bythe Issuers and authenticated by the Trustee (or its agent in accordance with Section 2.02) as hereinafter provided. Theaggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased byadjustments made by the Registrar on Schedule A to the Regulation S Global Note and recorded in the Security Register, ashereinafter provided.
(c) Book-Entry Provisions. This Section 2.01(c) shall apply to the Regulation S Global Notes and the RestrictedGlobal Notes (together, the “Global Notes”) deposited with DTC.
Members of, or participants and account holders in, DTC (“Participants”) shall have no rights under this Indenturewith respect to any Global Note held on their behalf by DTC or by the Trustee or any custodian of DTC or under suchGlobal Note, and DTC or its nominees may be treated by the Issuers, a Guarantor, the Trustee and any agent of the Issuers, aGuarantor or the Trustee as the sole owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing,nothing herein shall prevent the Issuers, a Guarantor, the Trustee or any agent of the Issuers, a Guarantor or the Trustee fromgiving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC, on theone hand, and the Participants, on the other, the operation of customary practices of such persons governing the exercise ofthe rights of a Holder of a beneficial interest in any Global Note.
Subject to the provisions of Section 2.10(b), the registered Holder of a Global Note may grant proxies and otherwiseauthorize any Person, including Participants and Persons that may hold interests through Participants, to take any action thata Holder is entitled to take under this Indenture or the Notes.
Except as provided in Section 2.10, owners of a beneficial interest in Global Notes will not be entitled to receivephysical delivery of certificated Notes.
SECTION 2.02. Execution and Authentication. An authorized member of the Issuers’ boards of directors or anexecutive officer of the Issuers shall sign the Notes on behalf of the Issuers by manual or facsimile signature.
If an authorized member of the Issuers’ boards of directors or an executive officer whose signature is on a Note nolonger holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.
A Note shall not be valid or obligatory for any purpose until an authorized signatory of the Trustee manually signsthe certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticatedunder this Indenture.
The Issuers shall execute and, upon receipt of an Issuers Order, the Trustee shall authenticate (whether itself or viathe authenticating agent) (a) Original Notes, on the date hereof, for original issue up to an aggregate principal amount of$1,000,000,000 and (b) Additional Notes, from time to time, subject to compliance at the time of issuance of suchAdditional Notes with the provisions of Section 4.06. The Issuers are permitted to issue Additional Notes as part of a furtherissue under this Indenture, from time to time; provided that, if any Additional Notes are not fungible with any series ofOriginal Notes, such Additional Notes will have a separate CUSIP number and/or ISIN, if applicable.
-34-
The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate the Notes.Unless limited by the terms of such appointment, any such authenticating agent may authenticate Notes whenever theTrustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by any suchagent. An authenticating agent has the same rights as any Registrar, co-Registrar, Transfer Agent or Paying Agent to dealwith the Issuers or an Affiliate of the Issuers.
The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section 2.02 if theTrustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shalldetermine that such action would expose the Trustee to personal liability to existing Holders.
SECTION 2.03. Registrar, Transfer Agent and Paying Agent. The Issuers shall maintain an office or agency forthe registration of the Notes and of their transfer or exchange (the “Registrar”), an office or agency where Notes may betransferred or exchanged (the “Transfer Agent”), an office or agency where the Notes may be presented for payment (the“Paying Agent” and references to the Paying Agent shall include the Principal Paying Agent) and an office or agency wherenotices or demands to or upon the Issuers in respect of the Notes may be served. The Issuers may appoint one or moreTransfer Agents, one or more co-Registrars and one or more additional Paying Agents.
The Issuers shall maintain a Principal Paying Agent in London, United Kingdom. Either Issuer or any of theirrespective Affiliates may act as Transfer Agent, Registrar, co-Registrar, Paying Agent and agent for service of notices anddemands in connection with the Notes; provided that neither Issuer nor any of their respective Affiliates shall act as PayingAgent for the purposes of Articles Three and Eight and Sections 4.09 and 4.11.
The Issuers hereby appoint Citibank, N.A., London Branch located at 25 Canada Square, London E14 5LB, UnitedKingdom as Transfer Agent, as Principal Paying Agent (the “Principal Paying Agent”) in London, United Kingdom, and asagent for service of notices and demands in connection with the Notes and Citigroup Global Markets Europe AG, at 5thFloor Reuterweg 16, 60323 Frankfurt, Germany, as Registrar. Each hereby accepts such appointments. The Transfer Agent,the Principal Paying Agent and the Registrar and any authenticating agent are collectively referred to in this Indenture as the“Agents”. The roles, duties and functions of the Agents are of a mechanical nature and each Agent shall only perform thoseacts and duties as specifically set out in this Indenture and no other acts, covenants, obligations or duties shall be implied orread into this Indenture against any of the Agents. For the avoidance of doubt, a Paying Agent’s obligation to disburse anyfunds shall be subject to prior receipt by it of those funds to be disbursed.
Subject to any applicable laws and regulations, the Issuers shall cause the Registrar to keep a register (the “SecurityRegister”) at its corporate trust office in which, subject to such reasonable regulations it may prescribe, the Issuers shallprovide for the registration of ownership, exchange, and transfer of the Notes. Such registration in the Security Registershall be conclusive evidence of the ownership of Notes. Included in the books and records for the Notes shall be notations asto whether such Notes have been paid, exchanged or transferred, canceled, lost, stolen, mutilated or destroyed and whethersuch Notes have been replaced. In the case of the replacement of any of the Notes, the Registrar shall keep a record of theNote so replaced and the Note issued in replacement thereof. In the case of the cancellation of any of the Notes, theRegistrar shall keep a record of the Note so canceled and the date on which such Note was canceled.
The Issuers shall enter into an appropriate agency agreement with any Paying Agent or co-Registrar not a party tothis Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuers shallnotify the Trustee of the name and address of any such agent. If the Issuers
-35-
fail to maintain a Registrar or Paying Agent, the Trustee may appoint a suitably qualified and reputable party to act as suchand shall be entitled to appropriate compensation therefor pursuant to Section 7.05.
SECTION 2.04. Paying Agent to Hold Money. Not later than 12:00 p.m. London, United Kingdom time, oneBusiness Day prior to each due date of the principal, premium, if any, and interest on any Notes, the Issuers shall depositwith the Principal Paying Agent money in immediately available funds in U.S. dollars, sufficient to pay such principal,premium, if any, and interest so becoming due on the due date for payment under the Notes. The Principal Paying Agent(and, if applicable, each other Paying Agent) shall remit such payment in a timely manner to the Holders on the relevant duedate for payment, it being acknowledged by each Holder that if the Issuers deposit such money with the Principal PayingAgent after the time specified in the immediately preceding sentence, the Principal Paying Agent shall remit such money tothe Holders on the relevant due date for payment, unless such remittance is impracticable having regard to applicablebanking procedures and timing constraints, in which case the Principal Paying Agent shall remit such money to the Holderson the next Business Day, but without liability for any interest resulting from such late payment. For the avoidance of doubt,the Principal Paying Agent shall only be obliged to remit money to Holders if it has actually received such money from theIssuers. The Issuers shall require each Paying Agent other than the Trustee (including where acting as the Principal PayingAgent) to agree in writing that such Paying Agent shall hold for the benefit of the Trustee all money held by the PayingAgent for the payment of principal of, premium, if any, and interest on the Notes (whether such money has been paid to it bythe Issuers or any other obligor on the Notes), and such Paying Agent shall promptly notify the Trustee of any default by theIssuers (or any other obligor on the Notes) in making any such payment. The Issuers at any time may require a Paying Agentto pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during thecontinuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all moneyheld by it to the Trustee and to account for any funds disbursed. Upon doing so, the Paying Agent shall have no furtherliability for the money so paid over to the Trustee. If the Issuers or any Affiliate of the Issuers acts as Paying Agent, it shall,on or before each due date of any principal, premium, if any, or interest on the Notes, segregate and hold in a separate trustfund for the benefit of the Holders a sum of money sufficient to pay such principal, premium, if any, or interest so becomingdue until such sum of money shall be paid to such Holders or otherwise disposed of as provided in this Indenture, and shallpromptly notify the Trustee of its action or failure to act.
The Trustee may, if the Issuers have notified it in writing that the Issuers intend to effect a defeasance or to satisfyand discharge this Indenture in accordance with the provisions of Article Eight, notify the Paying Agent in writing of thisfact and require the Paying Agent (until notified by the Trustee to the contrary), to act thereafter as Paying Agent of theTrustee and not the Issuers in relation to any amounts deposited with it in accordance with the provisions of Article Eight.
SECTION 2.05. Holder Lists. The Registrar shall preserve in as current a form as is reasonably practicable themost recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuers shallfurnish to the Trustee, in writing no later than the Record Date for each Interest Payment Date and at such other times as theTrustee may request in writing, a list in such form and as of such Record Date as the Trustee may reasonably require of thenames and addresses of Holders, including the aggregate principal amount of Notes held by each Holder.
SECTION 2.06. Transfer and Exchange.
(a) Where Notes are presented to the Registrar or a co-Registrar with a request to register a transfer or toexchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer ormake the exchange in accordance with the requirements of this Section 2.06. To permit registration of transfers andexchanges, the Issuers shall execute and the Trustee (or the
-36-
authenticating agent) shall, upon receipt of an Issuers Order, authenticate and deliver, in the name of the designatedtransferee or transferees, one or more new Notes, of any authorized denominations and of a like aggregate principal amount,at the Registrar’s request, provided that no Note of less than $200,000 may be transferred or exchanged. No service chargeshall be made for any registration of transfer or exchange of Notes (except as otherwise expressly permitted herein), but theIssuers may require payment of a sum sufficient to cover any agency fee or similar charge payable in connection with anysuch registration of transfer or exchange of Notes (other than any agency fee or similar charge payable in connection withany redemption of the Notes or upon exchanges pursuant to Sections 2.10, 3.07 or 9.05) or in accordance with an ExcessProceeds Offer pursuant to Section 4.09 or Change of Control Offer pursuant to Section 4.11, not involving a transfer.
Upon presentation for exchange or transfer of any Note as permitted by the terms of this Indenture and by anylegend appearing on such Note, such Note shall be exchanged or transferred upon the Security Register and one or morenew Notes shall be authenticated and issued in the name of the Holder (in the case of exchanges only) or the transferee, asthe case may be. No exchange or transfer of a Note shall be effective under this Indenture unless and until such Note hasbeen registered in the name of such Person in the Security Register. Furthermore, the exchange or transfer of any Note shallnot be effective under this Indenture unless the request for such exchange or transfer is made by the Holder or by a dulyauthorized attorney-in-fact at the office of the Registrar.
Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Issuers orthe Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Issuersand the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.
All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuersevidencing the same indebtedness, and entitled to the same benefits under this Indenture, as the Notes surrendered upon suchregistration of transfer or exchange.
Neither the Issuers nor the Trustee, Registrar or any Paying Agent shall be required (i) to issue, register the transferof, or exchange any Note during a period beginning at the opening of 15 Business Days before the day of the mailing of anotice of redemption of Notes selected for redemption under Section 3.02 and ending at the close of business on the day ofsuch mailing, or (ii) to register the transfer of or exchange any Note so selected for redemption in whole or in part, exceptthe unredeemed portion of any Note being redeemed in part.
(b) Notwithstanding any provision to the contrary herein, so long as a Global Note remains outstanding and isheld by or on behalf of DTC, transfers of a Global Note, in whole or in part, or of any beneficial interest therein, shall onlybe made in accordance with Section 2.01(c), Section 2.06(a) and this Section 2.06(b); provided, that a beneficial interest in aGlobal Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same GlobalNote in accordance with the transfer restrictions set forth in the restricted Note legend on the Note, if any.
(i) Except for transfers or exchanges made in accordance with any of clauses (ii) through (iii) of thisSection 2.06(b), transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, tonominees of DTC or to a successor of DTC or such successor’s nominee.
(ii) Restricted Global Note to Regulation S Global Note. If the holder of a beneficial interest in theRestricted Global Note at any time wishes to exchange its interest in such Restricted Global Note for an interest in theRegulation S Global Note, or to transfer its interest in such
-37-
Restricted Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in theRegulation S Global Note, such transfer or exchange may be effected, only in accordance with this clause (ii) and the rulesand procedures of DTC (the “Applicable Procedures”). Upon receipt by the Registrar from the Transfer Agent of (A) writteninstructions directing the Registrar to credit or cause to be credited an interest in the Regulation S Global Note in a specifiedprincipal amount and to cause to be debited an interest in the Restricted Global Note in such specified principal amount, and(B) a certificate in the form of Exhibit B attached hereto given by the holder of such beneficial interest stating that thetransfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes and (x)pursuant to and in accordance with Regulation S or (y) that the interest in the Restricted Global Note being transferred isbeing transferred in a transaction permitted by Rule 144, then the Registrar shall reduce or cause to be reduced the principalamount of the Restricted Global Note and shall increase or cause to be increased the principal amount of the Regulation SGlobal Note by the aggregate principal amount of the interest in the Restricted Global Note to be exchanged or transferred.
(iii) Regulation S Global Note to Restricted Global Note. If the holder of a beneficial interest in theRegulation S Global Note at any time wishes to transfer such interest to a Person who wishes to take delivery thereof in theform of a beneficial interest in the Restricted Global Note, such transfer may be effected only in accordance with this clause(iii) and the Applicable Procedures. Upon receipt by the Registrar from the Transfer Agent of (A) written instructionsdirecting the Registrar to credit or cause to be credited an interest in the Restricted Global Note in a specified principalamount and to cause to be debited an interest in the Regulation S Global Note in such specified principal amount, and (B) acertificate in the form of Exhibit C attached hereto given by the holder of such beneficial interest stating that the transfer ofsuch interest has been made in compliance with the transfer restrictions applicable to the Global Notes and stating that (x)the Person transferring such interest reasonably believes that the Person acquiring such interest is a QIB and is obtainingsuch interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of theUnited States or (y) that the Person transferring such interest is relying on an exemption other than Rule 144A from theregistration requirements of the Securities Act and, in such circumstances, such Opinion of Counsel as the Issuers or theTrustee may reasonably request to ensure that the requested transfer or exchange is being made pursuant to an exemptionfrom, or in a transaction not subject to, the registration requirements of the Securities Act, then the Registrar shall reduce orcause to be reduced the principal amount of the Regulation S Global Note and to increase or cause to be increased theprincipal amount of the Restricted Global Note by the aggregate principal amount of the interest in such Regulation S GlobalNote to be exchanged or transferred.
(c) If Notes are issued upon the transfer, exchange or replacement of Notes bearing the restricted Notes legendsset forth in Exhibit A, the Notes so issued shall bear the restricted Notes legends, and a request to remove such restrictedNotes legends from Notes shall not be honored unless there is delivered to the Issuers such satisfactory evidence, which mayinclude an Opinion of Counsel licensed to practice law in the State of New York, as may be reasonably required by theIssuers, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereofcomply with the provisions of Rule 144A or Rule 144 under the Securities Act. Upon provision of such satisfactoryevidence, the Trustee, at the direction of the Issuers, shall (or shall direct the authenticating agent to) authenticate anddeliver Notes that do not bear the legend.
(d) The Trustee and the Agents shall have no responsibility for any actions taken or not taken by DTC.
-38-
SECTION 2.07. Replacement Notes. If a mutilated certificated Note is surrendered to the Registrar or if theHolder claims that the Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall (orshall direct the authenticating agent to), upon receipt of an Issuers Order, authenticate a replacement Note in such form asthe Note mutilated, lost, destroyed or wrongfully taken if the Holder satisfies any other reasonable requirements of theIssuers and any requirement of the Trustee. If required by the Trustee or the Issuers, such Holder shall furnish an indemnitybond sufficient in the judgment of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying Agent, theTransfer Agent, the Registrar and any co-Registrar, and any authenticating agent from any loss that any of them may sufferif a Note is replaced. The Issuers and the Trustee may charge the Holder for their expenses in replacing a Note.
In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due andpayable, the Issuers in its discretion may pay such Note instead of issuing a new Note in replacement thereof.
Every replacement Note shall be an additional obligation of the Issuers.
The provisions of this Section 2.07 are exclusive and will preclude (to the extent lawful) all other rights andremedies with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Notes.
SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all Notes authenticated by or on behalf ofthe Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 asnot outstanding. Subject to Section 2.09, a Note does not cease to be outstanding because the Issuers or an Affiliate of theIssuers holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Issuers receiveproof satisfactory to them that the Note that has been replaced is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date or maturity date moneysufficient to pay all principal, interest and Additional Amounts, if any, payable on that date with respect to the Notes (orportions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying suchmoney to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portionsthereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Notes Held by Issuers. In determining whether the Holders of the required principal amount ofNotes have concurred in any direction or consent or any amendment, modification or other change to this Indenture, Notesowned by either Issuer or by any of their respective Affiliates shall be disregarded and treated as if they were notoutstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any suchdirection, waiver or consent or any amendment, modification or other change to this Indenture, only Notes which a TrustOfficer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged ingood faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to actwith respect to the Notes and that the pledgee is not either Issuer or any of their respective Affiliates.
SECTION 2.10. Certificated Notes.
(a) A Global Note deposited with a custodian for DTC, pursuant to Section 2.01 shall be transferred in whole tothe beneficial owners thereof in the form of certificated Notes only if such transfer
-39-
complies with Section 2.06 and (i) DTC notifies the Issuers that it is unwilling or unable to continue to act as depositary anda successor depositary is not appointed by the Issuers within 120 days of such notice, or (ii) the owner of a Book-EntryInterest requests such an exchange in writing delivered through DTC following an Event of Default under this Indenture.Notice of any such transfer shall be given by the Issuers in accordance with the provisions of Section 12.02(a).
(b) Any Global Note that is transferable to the beneficial owners thereof in the form of certificated Notespursuant to this Section 2.10 shall be surrendered by a custodian for DTC, to the Transfer Agent, to be so transferred, inwhole or from time to time in part, without charge, and the Trustee shall itself or via the authenticating agent authenticateand deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount at maturity ofNotes of authorized denominations in the form of certificated Notes. Any portion of a Global Note transferred or exchangedpursuant to this Section 2.10 shall be executed, authenticated and delivered only in registered form in minimumdenominations of $200,000 and any integral multiples of $1,000 in excess thereof and registered in such names as DTC maydirect. In the event that a Global Note becomes exchangeable for certificated Notes, payment of principal, premium, if any,and interest on the certificated Notes will be payable, and the transfer of the certificated Notes will be registrable, at theoffice or agency of the Issuers maintained for such purposes in accordance with Section 2.03. Such certificated Notes shallbear the applicable legends set forth in Exhibit A hereto.
(c) In the event of the occurrence of any of the events specified in Section 2.10(a), the Issuers shall promptlymake available to the Trustee and the authenticating agent a reasonable supply of certificated Notes in definitive, fullyregistered form without interest coupons.
SECTION 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. TheRegistrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer,exchange or payment. The Trustee, in accordance with its customary procedures, and no one else shall cancel (subject to therecord retention requirements of the Exchange Act and the Trustee’s retention policy) all Notes surrendered for registrationof transfer, exchange, payment or cancellation and dispose of such cancelled Notes in its customary manner. Except asotherwise provided in this Indenture, the Issuers may not issue new Notes to replace Notes it has redeemed, paid ordelivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest. Any interest on any Note that is payable, but is not punctually paid or dulyprovided for, on the dates and in the manner provided in the Notes and this Indenture (all such interest herein called“Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Record Date by virtue of having beensuch Holder, and such Defaulted Interest may be paid by the Issuers, at its election in each case, as provided in clause (a) or(b) of this Section 2.12:
(a) The Issuers may elect to make payment of any Defaulted Interest to the Persons in whose names theNotes are registered at the close of business on a special record date for the payment of such Defaulted Interest,which shall be fixed in the following manner. The Issuers shall notify the Trustee in writing of the amount ofDefaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time theIssuers may deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid inrespect of such Defaulted Interest; or shall make arrangements satisfactory to the Trustee for such deposit prior tothe date of the proposed payment, such money when deposited to be held in trust for the benefit of the Personsentitled to such Defaulted Interest as provided in this clause. In addition, the Issuers shall fix a special record datefor the payment of such Defaulted Interest, such date to be not more than 15 days and not less than 10 days prior tothe proposed payment date and not less than 15 days after the receipt by the Trustee of the notice of the proposedpayment date. The Issuers shall promptly but,
-40-
in any event, not less than 15 days prior to the special record date, notify the Trustee of such special record date and,in the name and at the expense of the Issuers, the Trustee shall cause notice of the proposed payment date of suchDefaulted Interest and the special record date therefor to be mailed first-class, postage prepaid to each Holder assuch Holder’s address appears in the Security Register, not less than 10 days prior to such special record date.Notice of the proposed payment date of such Defaulted Interest and the special record date therefor having been somailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes are registered at the close ofbusiness on such special record date and shall no longer be payable pursuant to Section 2.12(b).
(b) The Issuers may make payment of any Defaulted Interest on the Notes in any other lawful mannernot inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon suchnotice as may be required by such exchange, if, after notice given by the Issuers to the Trustee of the proposedpayment date pursuant to this clause, such manner of payment shall be deemed reasonably practicable.
Subject to the foregoing provisions of this Section 2.12, each Note delivered under this Indenture upon registrationof transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and toaccrue, which were carried by such other Note.
SECTION 2.13. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day yearof twelve 30-day months.
SECTION 2.14. ISIN and CUSIP Numbers. The Issuers in issuing the Notes may use ISIN and CUSIP numbers(if then generally in use), and, if so, the Trustee shall use ISIN and CUSIP numbers, as appropriate, in notices of redemptionas a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness ofsuch numbers or codes either as printed on the Notes or as contained in any notice of a redemption and that reliance may beplaced only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by anydefect in or omission of such numbers. The Issuers shall promptly notify the Trustee of any change in the ISIN or CUSIPnumbers.
SECTION 2.15. Issuance of Additional Notes. The Issuers may, subject to Section 4.06 of this Indenture, issueAdditional Notes under this Indenture in accordance with the procedures of Section 2.02. The Original Notes issued on theIssue Date and any Additional Notes subsequently issued shall be treated as a single class for all purposes under thisIndenture.
ARTICLE 3 REDEMPTION; OFFERS TO PURCHASE
SECTION 3.01. Right of Redemption. The Issuers may redeem all or any portion of the Notes upon the termsand at the Redemption Prices set forth in the Notes. Any redemption pursuant to this Section 3.01 shall be made pursuant tothe provisions of this Article Three.
SECTION 3.02. Notices to Trustee. If the Issuers elect to redeem Notes pursuant to Section 3.01, they shallnotify the Trustee in writing of the Redemption Date and the record date, the principal amount of Notes to be redeemed, theRedemption Price and the paragraph of the Notes pursuant to which the redemption will occur. If and so long as the Notesare listed on Euronext Dublin and the rules and regulations of Euronext Dublin so require, the Issuers shall publish thenotice of redemption in a newspaper having general circulation in Ireland (which is expected to be The Irish Times or, to theextent and in the manner permitted by the rules of Euronext Dublin, posted on the official website of Euronext Dublin).
-41-
The Issuers shall give each notice to the Trustee provided for in this Section 3.02 in writing at least 10 days beforethe date notice is mailed to the Holders pursuant to Section 3.04 unless the Trustee consents to a shorter period. Such noticeshall be accompanied by an Officer’s Certificate from the Issuers to the effect that such redemption will comply with theconditions herein. If fewer than all the Notes are to be redeemed, the record date relating to such redemption shall beselected by the Issuers and given to the Trustee.
SECTION 3.03. Selection of Notes to Be Redeemed. If fewer than all of the Notes are to be redeemed at anytime, the Trustee or the Registrar shall select the Notes to be redeemed by a method that complies with the requirements, ascertified to it by the Issuers, of the principal securities exchange, if any, on which the Notes are listed at such time, and incompliance with the requirements of the relevant clearing system or, if the Notes are not listed on a securities exchange, orsuch securities exchange prescribes no method of selection and the Notes are not held through a clearing system or theclearing system prescribes no method of selection, by lot; provided, however, that no such partial redemption shall reducethe portion of the principal amount of a Note not redeemed to less than $200,000.
The Trustee or the Registrar shall make the selection from the Notes outstanding and not previously called forredemption. The Trustee or the Registrar may select for redemption portions equal to $1,000 in principal amount and anyintegral multiple thereof; provided that no Notes of $200,000 in principal amount or less may be redeemed in part.Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.The Trustee or the Registrar, as applicable, shall notify the Issuers promptly in writing of the Notes or portions of Notes tobe called for redemption.
Neither the Trustee nor the Registrar shall be liable for selections made in accordance with the provisions of thisSection 3.03.
Any redemption and notice may, in the Issuers’ discretion, be subject to the satisfaction of one or more conditionsprecedent. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, suchredemption or notice shall state that in the Issuers’ discretion, the Redemption Date may be delayed until such time as any orall such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event thatany or all such conditions shall not have been satisfied by the Redemption Date or by the Redemption Date so delayed.
SECTION 3.04. Notice of Redemption.
(a) At least 10 days but not more than 60 days before a date for redemption of the Notes, the Issuers shall mail anotice of redemption by first-class mail to each Holder to be redeemed and shall comply with the provisions ofSection 12.02(b).
(b) The notice shall identify the Notes to be redeemed (including ISIN and CUSIP numbers, as applicable) andshall state:
(i) the Redemption Date and the record date;
(ii) the appropriate calculation of the Redemption Price and the amount of accrued interest, if any, andAdditional Amounts, if any, to be paid;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the Paying Agent to collect the RedemptionPrice plus accrued interest, if any, and Additional Amounts, if any;
-42-
(v) that, if any Note is being redeemed in part, the portion of the principal amount (equal to $1,000 inprincipal amount or any integral multiple thereof) of such Note to be redeemed and that, on and after the Redemption Date,upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof will bereissued;
(vi) that, if any Note contains an ISIN or CUSIP number, no representation is being made as to thecorrectness of such ISIN or CUSIP number either as printed on the Notes or as contained in the notice of redemption andthat reliance may be placed only on the other identification numbers printed on the Notes;
(vii) that, unless the Issuers and the Guarantors default in making such redemption payment, interest on theNotes (or portion thereof) called for redemption shall cease to accrue on and after the Redemption Date;
(viii) the paragraph of the Notes pursuant to which the Notes called for redemption are beingredeemed; and
(ix) whether the redemption is conditioned on any events and, if so, the notice shall specify such events.
At the Issuers’ written request, the Trustee shall give a notice of redemption in the Issuers’ name and at the Issuers’expense. In such event, the Issuers shall provide the Trustee with the notice and the other information required by thisSection 3.04.
SECTION 3.05. Deposit of Redemption Price. At least one Business Day prior to any Redemption Date, by nolater than 12:00 p.m. (London time) on that date, the Issuers shall deposit or cause to be deposited with the Paying Agent(or, if either Issuer or any of their respective Affiliates is the Paying Agent, shall segregate and hold in trust) a sum in sameday funds sufficient to pay the Redemption Price of and accrued interest and Additional Amounts, if any, on all Notes to beredeemed on that date other than Notes or portions of Notes called for redemption that have previously been delivered by theIssuers to the Trustee for cancellation. The Paying Agent shall return to the Issuers following a written request by the Issuersany money so deposited that is not required for that purpose.
SECTION 3.06. Payment of Notes Called for Redemption. If notice of redemption has been given in the mannerprovided in Section 3.04, the Notes or portion of Notes specified in such notice to be redeemed shall become due andpayable on the Redemption Date at the Redemption Price stated therein, together with accrued interest to such RedemptionDate, and on and after such date (unless the Issuers shall default in the payment of such Notes at the Redemption Price andaccrued interest to the Redemption Date, in which case the principal, until paid, shall bear interest from the RedemptionDate at the rate prescribed in the Notes) such Notes shall cease to accrue interest. Upon surrender of any Note forredemption in accordance with a notice of redemption, such Note shall be paid and redeemed by the Issuers at theRedemption Price, together with accrued interest, if any, to the Redemption Date; provided that installments of interestwhose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders registered as such at the closeof business on the relevant Record Date.
Notice of redemption shall be deemed to be given when mailed, whether or not the Holder receives the notice. Inany event, failure to give such notice, or any defect therein, shall not affect the validity of the proceedings for theredemption of Notes held by Holders to whom such notice was properly given.
SECTION 3.07. Notes Redeemed in Part.
-43-
(a) Upon surrender of a Global Note that is redeemed in part, the Paying Agent shall forward such Global Noteto the Trustee who shall make a notation on the Security Register to reduce the principal amount of such Global Note to anamount equal to the unredeemed portion of the Global Note surrendered; provided that each such Global Note shall be in aprincipal amount at final Stated Maturity of $200,000 or an integral multiple of $1,000 in excess thereof.
(b) Upon surrender and cancellation of a certificated Note that is redeemed in part, the Issuers shall execute andthe Trustee shall authenticate for the Holder (at the Issuers’ expense) a new Note equal in principal amount to theunredeemed portion of the Note surrendered and canceled; provided that each such certificated Note shall be in a principalamount at final Stated Maturity of $200,000 or an integral multiple of $1,000 in excess thereof.
ARTICLE 4 COVENANTS
SECTION 4.01. Payment of Notes. The Issuers, jointly and severally, and the Guarantors covenant and agreefor the benefit of the Holders that they shall duly and punctually pay the principal of, premium, if any, interest andAdditional Amounts, if any, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Subjectto Section 2.04, principal, premium, if any, interest and Additional Amounts, if any, shall be considered paid on the date dueif on such date the Trustee or the Paying Agent (other than either Issuer or any of their respective Affiliates) holds, as of10:00 a.m., London, United Kingdom time on the due date, in accordance with this Indenture, money sufficient to pay allprincipal, premium, if any, interest and Additional Amounts, if any, then due. If either Issuer or any of their respectiveAffiliates acts as Paying Agent, principal, premium, if any, interest and Additional Amounts, if any, shall be considered paidon the due date if the entity acting as Paying Agent complies with Section 2.04.
The Issuers or the Guarantors shall pay interest on overdue principal at the rate specified therefor in the Notes. TheIssuers or the Guarantors shall pay interest on overdue installments of interest at the same rate to the extent lawful.
SECTION 4.02. Corporate Existence. Subject to Article Five, the Issuers, the Parent Guarantor and eachRestricted Subsidiary shall do or cause to be done all things necessary to preserve and keep in full force and effect theircorporate, partnership, limited liability company or other existence and the rights (charter and statutory), licenses andfranchises of the Issuers, the Parent Guarantor and each Restricted Subsidiary; provided that none of the Issuers and theParent Guarantor shall be required to preserve or keep in full force and effect any such existence or such right, license orfranchise if the Board of Directors of the applicable Issuer and the Parent Guarantor shall determine that the preservationthereof is no longer desirable in the conduct of the business of the Issuers, the Parent Guarantor and the RestrictedSubsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.03. Maintenance of Properties. The Parent Guarantor shall cause all properties owned by it or anyRestricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to bemaintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall causeto be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment ofthe Parent Guarantor may be necessary so that the business carried on in connection therewith may be properly andadvantageously conducted at all times; provided that nothing in this Section 4.03 shall prevent the Parent Guarantor fromdiscontinuing the maintenance of any such properties if such discontinuance is, in the judgment of the
-44-
Parent Guarantor, desirable in the conduct of the business of the Issuers, the Parent Guarantor and the RestrictedSubsidiaries as a whole and not disadvantageous in any material respect to the Holders.
SECTION 4.04. Insurance. The Parent Guarantor shall maintain, and shall cause the Restricted Subsidiaries tomaintain, insurance with carriers believed by the Parent Guarantor to be responsible, against such risks and in such amounts,and with such deductibles, retentions, self-insured amounts and coinsurance provisions, as the Parent Guarantor believes arecustomarily carried by businesses similarly situated and owning like properties, including as appropriate general liability,property and casualty loss and interruption of business insurance.
SECTION 4.05. Statement as to Compliance.
(a) The Parent Guarantor shall deliver to the Trustee, within 120 days after the end of each fiscal year or within14 days of written request by the Trustee, an Officer’s Certificate stating that in the course of the performance by the signerof its duties as an officer of the Parent Guarantor he would normally have knowledge of any Default and whether or not thesigner knows of any Default that occurred during such period and if any specifying such Default, its status and what actionthe Parent Guarantor is taking or proposed to take with respect thereto. For purposes of this Section 4.05(a), suchcompliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
(b) If the Parent Guarantor or the Issuers shall become aware that (i) any Default or Event of Default hasoccurred and is continuing or (ii) any Holder seeks to exercise any remedy hereunder with respect to a claimed Defaultunder this Indenture or the Notes, the Parent Guarantor or the Issuers, as the case may be, shall immediately deliver to theTrustee an Officer’s Certificate specifying such event, notice or other action (including any action the Parent Guarantor orthe Issuers are taking or propose to take in respect thereof).
SECTION 4.06. Limitation on Debt.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, create, issue, incur,assume, guarantee or in any manner become directly or indirectly liable with respect to or otherwise become responsible for,contingently or otherwise, the payment of (individually and collectively, to “incur” or, as appropriate, an “incurrence”), anyDebt (including any Acquired Debt); provided that the Parent Guarantor, each Issuer and any Restricted Subsidiary shall bepermitted to incur Debt (including Acquired Debt) if in each case (i) after giving effect to the incurrence of such Debt andthe application of the proceeds thereof, on a pro forma basis, no Default or Event of Default would occur or be continuingand (ii) at the time of such incurrence and after giving effect to the incurrence of such Debt and the application of theproceeds thereof, on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters forwhich financial statements are available immediately preceding the incurrence of such Debt, taken as one period, would begreater than 2.0 to 1.0.
(b) Section 4.06(a) shall not, however, prohibit the following (collectively, “Permitted Debt”):
(i) the August 2019 Notes issued on the August 2019 Issue Date;
(ii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under Credit Facilities inan aggregate principal amount not to exceed the greater of (i) (x) at any time prior to the completion of the Disposition,$850,000,000 or (y) at any time after completion of the Disposition, $700,000,000 and (ii) an amount equal to (I) 85.0% ofTotal Receivables plus 70.0% of Total Inventories less (II) $275,000,000;
-45-
(iii) any Existing Debt of the Parent Guarantor or any Restricted Subsidiary (other than Debt described inclauses (i) and (ii) of this Section 4.06(b));
(iv) the incurrence by the Parent Guarantor or any Restricted Subsidiary of intercompany Debt between theParent Guarantor and any Restricted Subsidiary or between or among Restricted Subsidiaries; provided that:
(A) if an Issuer or a Guarantor is the obligor on any such Debt, unless required by a CreditFacility and only to the extent legally permitted, such Debt must be unsecured (except in respect of theintercompany current liabilities incurred in the ordinary course of business in connection with cashmanagement, cash pooling, tax and accounting operations of the Parent Guarantor and its RestrictedSubsidiaries); and
(B) (x) any disposition, pledge or transfer of any such Debt to a Person (other than a disposition,pledge or transfer to the Parent Guarantor or a Restricted Subsidiary) and (y) any transaction pursuant towhich any Restricted Subsidiary that has Debt owing by the Parent Guarantor or another RestrictedSubsidiary ceases to be a Restricted Subsidiary, will, in each case, be deemed to be an incurrence of suchDebt not permitted by this clause (iv);
(v) guarantees of the Parent Guarantor or any Restricted Subsidiary of Debt of the Parent Guarantor or anyRestricted Subsidiary to the extent that the guaranteed Debt was permitted to be incurred by another provision of thisSection 4.06;
(vi) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt represented by CapitalizedLease Obligations, mortgage financings, purchase money obligations or other Debt incurred or assumed in connection withthe acquisition or development of real or personal, movable or immovable, property or assets, in each case, incurred for thepurpose of financing or refinancing all or any part of the purchase price, lease expense or cost of construction orimprovement of property, plant, equipment or other assets used in the Parent Guarantor’s or any Restricted Subsidiary’sbusiness (including any reasonable related fees or expenses incurred in connection with such acquisition or development);provided that the principal amount of such Debt so incurred when aggregated with other Debt previously incurred in relianceon this clause (vi) and still outstanding shall not in the aggregate exceed the greater of $510,000,000 and 6.0% of TotalAssets; and provided, further , that the total principal amount of any Debt incurred in connection with an acquisition ordevelopment permitted under this clause (vi) did not in each case at the time of incurrence exceed (A) the Fair Market Valueof the acquired or constructed asset or improvement so financed or (B) in the case of an uncompleted constructed asset, theamount of the asset to be constructed, as determined on the date the contract for construction of such asset was entered intoby the Parent Guarantor or the relevant Restricted Subsidiary (including, in each case, any reasonable related fees andexpenses incurred in connection with such acquisition, construction or development);
(vii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt arising from agreementsproviding for guarantees, indemnities or obligations in respect of purchase price adjustments in connection with theacquisition or disposition of assets, including, without limitation, shares of Capital Stock (other than guarantees or similarcredit support given by the Parent Guarantor or any Restricted Subsidiary of Debt incurred by any Person acquiring all orany portion of such assets for the purpose of financing such acquisition); provided that the maximum aggregate liability inrespect of all such Debt permitted pursuant to this clause (vii) shall at no time exceed the net proceeds, including non-cashproceeds (the Fair Market Value of such non-cash
-46-
proceeds being measured at the time received and without giving effect to any subsequent changes in value) actuallyreceived from the sale of such assets;
(viii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under CommodityHedging Agreements not for speculative purposes;
(ix) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under CurrencyAgreements not for speculative purposes;
(x) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under Interest RateAgreements not for speculative purposes;
(xi) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary of Debt in respect ofworkers’ compensation and claims arising under similar legislation, or pursuant to self-insurance obligations and not inconnection with the borrowing of money or the obtaining of advances or credit;
(xii) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary arising from (A) thehonoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case ofdaylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided that such Debt isextinguished within five Business Days of incurrence, (B) bankers’ acceptances, performance, surety, judgment, completion,payment, appeal or similar bonds, instruments or obligations, (C) completion guarantees, advance payment, customs, VATor other tax guarantees or similar instruments provided or letters of credit obtained by the Parent Guarantor or any RestrictedSubsidiary in the ordinary course of business, and (D) the financing of insurance premiums in the ordinary course ofbusiness;
(xiii) any Debt of the Parent Guarantor or any Restricted Subsidiary incurred pursuant to anyPermitted Receivables Financing;
(xiv) the incurrence by a Person of Permitted Refinancing Debt in exchange for or the net proceeds of whichare used to refund, replace or refinance Debt incurred by it pursuant to, or described in, Section 4.06(a), sub clauses (i) and(iii), this sub-clause (xiv) and sub-clauses (xviii), (xix) and (xx) of this Section 4.06(b), as the case may be;
(xv) guarantees by the Parent Guarantor or a Restricted Subsidiary of Debt incurred by Permitted JointVentures in an aggregate principal amount at any one time outstanding not to exceed an amount equal to the greater of$150,000,000 and 2.0% of Total Assets;
(xvi) cash management obligations and Debt in respect of netting services, pooling arrangements or similararrangements in connection with cash management in the ordinary course of business consistent with past practice;
(xvii) (i) take-or-pay obligations in the ordinary course of business, (ii) customer deposits andadvance payments in the ordinary course of business received from customers for goods or services purchased in theordinary course of business and (iii) manufacturer, vendor financing, customer and supply arrangements in the ordinarycourse of business;
(xviii) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary (other than and inaddition to Debt permitted under clauses (i) through (xvii) above and clauses (xix) and (xx) below) in an aggregate principalamount at any one time outstanding not to
-47-
exceed, together with any Permitted Refinancing Debt in respect thereof, the greater of $350,000,000 and 5.0% ofTotal Assets;
(xix) Debt of any Person (x) incurred and outstanding on the date on which such Person becomes a RestrictedSubsidiary of the Parent Guarantor or another Restricted Subsidiary of the Parent Guarantor or is merged, consolidated,amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of relatedliabilities) the Parent Guarantor or any Restricted Subsidiary or (y) incurred to provide all or any portion of the fundsutilized to consummate the transaction or series of related transactions pursuant to which such Person became a RestrictedSubsidiary or was otherwise acquired by the Parent Guarantor or a Restricted Subsidiary; provided, however, with respect toeach of sub-clause (x) and (y) of this Section 4.06(b)(xix), that at the time of such acquisition or other transaction (1) theParent Guarantor would have been able to incur $1.00 of additional Debt pursuant to Section 4.06(a) after giving effect tothe incurrence of such Debt pursuant to this Section 4.06(b)(xix) or (2) the Fixed Charge Coverage Ratio of the ParentGuarantor and its Restricted Subsidiaries would not be less than it was immediately prior to giving pro forma effect to suchacquisition or other transaction;
(xx) Contribution Debt; and
(xxi) Debt consisting of local lines of credit, overdraft facilities or local working capital facilities in anaggregate outstanding principal amount at any one time not to exceed the greater of $75,000,000 and 1.0% of Total Assets.
(c) Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of originalissue discount and the payment of interest or dividends in the form of additional Debt of the same class will not be deemedto be an incurrence of Debt for purposes of this Section 4.06.
(d) For purposes of determining compliance with any restriction on the incurrence of Debt in U.S. dollars whereDebt is denominated in a different currency, the amount of such Debt will be the Dollar Equivalent determined on the dateof such determination; provided that if any such Debt denominated in a different currency is subject to a CurrencyAgreement (with respect to U.S. dollars) covering principal amounts payable on such Debt, the amount of such Debtexpressed in U.S. dollars shall be adjusted to take into account the effect of such agreement. The principal amount of anyPermitted Refinancing Debt incurred in the same currency as the Debt being refinanced shall be the Dollar Equivalent of theDebt refinanced determined on the date such Debt being refinanced was initially incurred. Notwithstanding any otherprovision of this Section 4.06, for purposes of determining compliance with this Section 4.06, increases in Debt solely dueto fluctuations in the exchange rates of currencies will not be deemed to exceed the maximum amount that an Issuer, theParent Guarantor or a Subsidiary Guarantor may incur under this Section 4.06.
(e) For purposes of determining any particular amount of Debt under this Section 4.06:
(i) obligations with respect to letters of credit, guarantees or Liens, in each case supporting Debt otherwiseincluded in the determination of such particular amount shall not be included;
(ii) any Liens granted pursuant to the equal and ratable provisions referred to in Section 4.07 shall not betreated as Debt;
-48-
(iii) accrual of interest, accrual of dividends, the accretion of accreted value, the obligation to paycommitment fees and the payment of interest in the form of additional preferred stock or Debt shall not be treated as Debt;and
(iv) the reclassification of preferred stock as Debt due to a change in accounting principles shall not betreated as Debt.
(f) In the event that an item of Debt meets the criteria of more than one of the types of Debt described in thisSection 4.06, the Parent Guarantor, in its sole discretion, shall classify items of Debt and shall only be required to includethe amount and type of such Debt in one of such clauses and the Parent Guarantor shall be entitled to divide and classify anitem of Debt in more than one of the types of Debt described in this Section 4.06, and may change the classification of anitem of Debt (or any portion thereof) to any other type of Debt described in this Section 4.06 at any time.
(g) The amount of any Debt outstanding as of any date will be:
(i) in the case of any Debt issued with original issue discount, the amount of the liability in respect thereofdetermined in accordance with IFRS;
(ii) the principal amount of the Debt, in the case of any other Debt; and
(iii) in respect of Debt of another Person secured by a Lien on the assets of the specified Person, the lesserof:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Debt of the other Person.
SECTION 4.07. Limitation on Liens. The Parent Guarantor shall not, and shall not permit any RestrictedSubsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind securing any Debt (exceptfor Permitted Liens) or assign or otherwise convey any right to receive any income, profits or proceeds on or with respect toany of the Parent Guarantor’s or any Restricted Subsidiary’s property or assets, including any shares of stock or any Debt ofany Restricted Subsidiary but excluding any Capital Stock, Debt or other securities of any Unrestricted Subsidiary, whetherowned at or acquired after the August 2019 Issue Date, or any income, profits or proceeds therefrom unless:
(a) in the case of any Lien securing Subordinated Debt, the Issuers’ obligations in respect of the Notes(or a Guarantee in the case of Liens securing Subordinated Debt of a Guarantor) are directly secured by a Lien onsuch property, assets or proceeds that is senior in priority to the Lien securing the Subordinated Debt until such timeas the Subordinated Debt is no longer secured by a Lien; and
(b) in the case of any other Lien, the Issuers’ obligations in respect of the Notes (or a Guarantee in thecase of Liens securing Debt of a Guarantor), and all other amounts due under this Indenture are equally and ratablysecured with the obligation or liability secured by such Lien.
SECTION 4.08. Limitation on Restricted Payments.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, takeany of the following actions (each of which is a “Restricted Payment” and which are collectively referred to as “RestrictedPayments”):
-49-
(i) declare or pay any dividend on or make any distribution (whether made in cash, securities or otherproperty) with respect to any of the Parent Guarantor’s or any Restricted Subsidiary’s Capital Stock (including, withoutlimitation, any payment in connection with any merger or consolidation involving the Parent Guarantor or any RestrictedSubsidiary) (other than (A) to the Parent Guarantor or any Restricted Subsidiary or (B) to all holders of Capital Stock ofsuch Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Parent Guarantor or a RestrictedSubsidiary of dividends or distributions of greater value than the Parent Guarantor or such Restricted Subsidiary wouldreceive on a pro rata basis; provided that any amount so paid or distributed to holders of Capital Stock of a RestrictedSubsidiary other than the Parent Guarantor or a Restricted Subsidiary shall be included in the calculation of the aggregateamount of all Restricted Payments declared or made after July 1, 2014 for the purposes of Section 4.08(b)), except fordividends or distributions payable solely in shares of the Parent Guarantor’s Qualified Capital Stock or in options, warrantsor other rights to acquire such shares of Qualified Capital Stock, or make any payment of cash interest on DeeplySubordinated Funding;
(ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connectionwith any merger or consolidation), directly or indirectly, any shares of the Parent Guarantor’s Capital Stock held by personsother than the Parent Guarantor or a Restricted Subsidiary (other than Capital Stock of any Restricted Subsidiary or anyentity that becomes a Restricted Subsidiary as a result thereof) or any options, warrants or other rights to acquire such sharesof Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease or otherwise acquire or retire for value,prior to any scheduled principal payment, sinking fund payment or maturity, any Subordinated Debt or any DeeplySubordinated Funding; or
(iv) make any Investment (other than any Permitted Investment) in any Person.
If any Restricted Payment described in this Section 4.08(a) is not made in cash, the amount of the proposedRestricted Payment shall be the Fair Market Value of the asset to be transferred as of the date of transfer.
(b) Notwithstanding Section 4.08(a), the Parent Guarantor or any Restricted Subsidiary may make a RestrictedPayment if, at the time of and after giving pro forma effect to such proposed Restricted Payment:
(i) no Default or Event of Default has occurred and is continuing;
(ii) the Parent Guarantor could incur at least $1.00 of additional Debt (other than Permitted Debt) pursuantto Section 4.06; and
(iii) the aggregate amount of all Restricted Payments declared or made after July 1, 2014 does not exceedthe sum of:
(A) 50% of aggregate Consolidated Adjusted Net Income on a cumulative basis during theperiod beginning on July 1, 2014 and ending on the last day of the Parent Guarantor’s last fiscal quarterending prior to the date of such proposed Restricted Payment (or, if such aggregate cumulative ConsolidatedAdjusted Net Income shall be a negative number, minus 100% of such negative amount),; plus
-50-
(B) the aggregate Net Cash Proceeds, and the Fair Market Value of property or assets ormarketable securities, received by the Parent Guarantor as a contribution to its common equity capital afterthe August 2019 Issue Date or from the issuance or sale (other than to any Subsidiary) of shares of theParent Guarantor’s Qualified Capital Stock or Deeply Subordinated Funding (including upon the exercise ofoptions, warrants or rights) or warrants, options or rights to purchase shares of the Parent Guarantor’sQualified Capital Stock or Deeply Subordinated Funding (except, in each case to the extent such proceedsare used to purchase, redeem or otherwise retire Capital Stock or Subordinated Debt or Deeply SubordinatedFunding as set forth in sub-clause (ii) or (iii) of Section 4.08(c) or constitute an Excluded Contribution or theproceeds of any Contribution Debt) (excluding the Net Cash Proceeds from the issuance of the ParentGuarantor’s Qualified Capital Stock or Deeply Subordinated Funding financed, directly or indirectly, usingfunds borrowed from the Parent Guarantor or any Subsidiary until and to the extent such borrowing is repaidand Excluded Contributions); plus
(C) (x) the amount by which the Parent Guarantor’s Debt or Debt of any Restricted Subsidiary isreduced after the August 2019 Issue Date upon the conversion or exchange (other than by the ParentGuarantor or its Subsidiary) of such Debt into the Parent Guarantor’s Qualified Capital Stock or DeeplySubordinated Funding, and (y) the aggregate Net Cash Proceeds, and the Fair Market Value of property orassets or marketable securities, received after the August 2019 Issue Date by the Parent Guarantor from theissuance or sale (other than to any Subsidiary) of Redeemable Capital Stock that has been converted into orexchanged for the Parent Guarantor’s Qualified Capital Stock or Deeply Subordinated Funding, to the extentsuch Redeemable Capital Stock was originally sold for cash or Cash Equivalents, together with, in the caseof both sub-clauses (x) and (y) of this Section 4.08(b)(iii)(C), the aggregate Net Cash Proceeds received bythe Parent Guarantor at the time of such conversion or exchange (excluding the Net Cash Proceeds from theissuance of the Parent Guarantor’s Qualified Capital Stock or Deeply Subordinated Funding financed,directly or indirectly, using funds borrowed from the Parent Guarantor or any Subsidiary until and to theextent such borrowing is repaid); plus
(D) (x) in the case of the disposition or repayment of any Investment constituting a RestrictedPayment made after the August 2019 Issue Date, an amount (to the extent not included in ConsolidatedAdjusted Net Income) equal to the cash proceeds of such disposition or repayment or the Fair Market Valueof property received by the Parent Guarantor or a Restricted Subsidiary thereof, in either case, less the costof the disposition of such Investment and net of taxes, and (y) in the case of the designation of anUnrestricted Subsidiary as a Restricted Subsidiary (as long as the designation of such Subsidiary as anUnrestricted Subsidiary was deemed a Restricted Payment), the Fair Market Value of the Parent Guarantor’sinterest in such Subsidiary; provided that such amount shall not in any case exceed the amount of theRestricted Payment deemed made at the time that the Subsidiary was designated as an UnrestrictedSubsidiary, plus
(E) $80,000,000.
(c) Notwithstanding clauses (a) and (b) of this Section 4.08, the Parent Guarantor and any Restricted Subsidiarymay take the following actions (“Permitted Payments”) so long as (with respect to sub-clauses (viii), (xi), (xii) and (xvii) ofthis clause (c)) no Default or Event of Default has occurred and is continuing:
-51-
(i) the payment of any dividend within 180 days after the date of its declaration if at such date of itsdeclaration such payment would have been permitted by this Section 4.08;
(ii) the repurchase, redemption or other acquisition or retirement for value of any shares of the ParentGuarantor’s Capital Stock or options, warrants or other rights to acquire such Capital Stock in exchange for (including anysuch exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of theissuance of fractional shares or scrip), or out of the Net Cash Proceeds of a substantially concurrent issuance and sale (otherthan to a Subsidiary of the Parent Guarantor) of, shares of the Parent Guarantor’s Qualified Capital Stock, options, warrantsor other rights to acquire such Qualified Capital Stock or Deeply Subordinated Funding (other than any ExcludedContribution or the proceeds of any Contribution Debt);
(iii) the repurchase, redemption, defeasance or other acquisition or retirement for value or payment ofprincipal of any Subordinated Debt or Deeply Subordinated Funding in exchange for, or out of the Net Cash Proceeds of asubstantially concurrent issuance and sale (other than to a Subsidiary of the Parent Guarantor) of, shares of the ParentGuarantor’s Qualified Capital Stock or Deeply Subordinated Funding (other than any Excluded Contribution or the proceedsof any Contribution Debt);
(iv) the purchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Debt(other than Redeemable Capital Stock) in exchange for, or out of the Net Cash Proceeds of a substantially concurrentincurrence (other than to a Subsidiary) of, Permitted Refinancing Debt;
(v) the repurchase of Capital Stock deemed to occur upon the exercise of stock options with respect towhich payment of the cash exercise price has been forgiven if the cumulative aggregate value of such deemed repurchasesdoes not exceed the cumulative aggregate amount of the exercise price of such options received;
(vi) payments or distributions to dissenting shareholders pursuant to applicable law in connection with or incontemplation of a merger, consolidation or transfer of assets that complies with the provisions of Article Five;
(vii) cash payments in lieu of issuing fractional shares pursuant to the exchange or conversion of anyexchangeable or convertible securities;
(viii) cash payments, advances, loans or expense reimbursements made to any parent company of theParent Guarantor to permit any such company to pay (i) general operating expenses, customary directors’ fees, accounting,legal, corporate reporting and administrative expenses incurred in the ordinary course of business in an amount not to exceed$25,000,000 in the aggregate in any fiscal year, and (ii) any taxes, duties or similar governmental fees of any such parentcompany to the extent such tax obligations are directly attributable to its ownership of the Parent Guarantor and itsRestricted Subsidiaries;
(ix) any payments (including pursuant to a tax sharing agreement or similar arrangement) between theParent Guarantor and any other Person or a Restricted Subsidiary and any other Person with which the Parent Guarantor orany of its Restricted Subsidiaries files a consolidated tax return or with which the Parent Guarantor or any of its RestrictedSubsidiaries is part of a group for tax purposes (including a fiscal unity) or any tax advantageous group contribution madepursuant to applicable legislation; provided, however, that any such payments
-52-
do not exceed the amounts of such tax that would have been payable by the Parent Guarantor and its RestrictedSubsidiaries on a stand-alone basis and the related tax liabilities of the Parent Guarantor and its Restricted Subsidiaries arerelieved thereby;
(x) the repurchase, redemption or other acquisition or retirement, and any loans, advances, dividends ordistributions by the Parent Guarantor to any direct or indirect parent company to repurchase, redeem or otherwise acquire orretire, for value of any Capital Stock of the Parent Guarantor or any Restricted Subsidiary or any direct or indirect parentcompany held by any current or former officer, director, employee or consultant of the Parent Guarantor or any of itsRestricted Subsidiaries; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retiredCapital Stock may not exceed $10,000,000 plus an amount equal to $10,000,000 multiplied by the number of years that haveelapsed since the August 2019 Issue Date; and provided, further, that such amount in any calendar year may be increased byan amount not to exceed (A) the cash proceeds from the sale of Capital Stock of the Parent Guarantor or a RestrictedSubsidiary during such calendar year, in each case to members of management, directors or consultants of the ParentGuarantor, any of its Restricted Subsidiaries or any of its direct or indirect parent companies and (B) the cash proceeds ofkey man life insurance policies of the Parent Guarantor or a Restricted Subsidiary received by the Parent Guarantor or aRestricted Subsidiary after the August 2019 Issue Date less any amount previously applied to the making of RestrictedPayments pursuant to this clause (x), in each case, to the extent the cash proceeds have not otherwise been applied to themaking of Restricted Payments pursuant to Section 4.08(b)(iii)(B) or Section 4.08(c)(iii);
(xi) the declaration and payment by the Parent Guarantor of, or loans, advances, dividends or distributionsto any parent company of the Parent Guarantor to pay, dividends on the common stock or common equity interests of theParent Guarantor or in respect of any parent company that has had a Public Equity Offering, in an amount not to exceed inany fiscal year, 50% of aggregate Consolidated Adjusted Net Income on a cumulative basis during such fiscal year (the“Relevant Fiscal Year”); provided that such dividends shall be declared and paid no later than 180 days after the end of theRelevant Fiscal Year;
(xii) any other Restricted Payment; provided that the Consolidated Leverage Ratio of the Parent Guarantoron a pro forma basis after giving effect to any such Restricted Payment made pursuant to this clause (xii) but not includingany Restricted Payment made in reliance on Section 4.08(b) or another clause of Section 4.08(c) (other than this sub-clause(xii)) does not exceed 5.25 to 1.0.
(xiii) Restricted Payments in an amount equal to the amount of Excluded Contributions made;
(xiv) the payment, purchase, redemption, defeasance or other acquisition or retirement for value of anySubordinated Debt of the Parent Guarantor and its Restricted Subsidiaries pursuant to Section 4.09 and Section 4.11;provided that, prior to such payment, purchase, redemption, defeasance or other acquisition or retirement for value, theIssuers or the Parent Guarantor has made a Change of Control Offer or Asset Sale Offer, as the case may be, with respect tothe Notes as a result of such Change of Control or Asset Sale, as the case may be, and has repurchased all such Notes validlytendered and not withdrawn in connection with such Change of Control Offer or Asset Sale Offer, as the case may be;
(xv) the declaration and payment of dividends to holders of any class or series of Redeemable Capital Stockincurred in accordance with Section 4.06;
-53-
(xvi) dividends or other distributions of Capital Stock of Unrestricted Subsidiaries; and
(xvii) any other Restricted Payment; provided that the total aggregate amount of Restricted Paymentsmade under this clause (xvii) does not exceed the greater of $150,000,000 and 2.0% of Total Assets; and
(xviii) any Restricted Payment made in connection with the Trivium Transactions (including, for theavoidance of doubt, any payments contemplated by the Transaction Agreement), and any costs and expenses (including alllegal, accounting and other professional fees and expenses) related thereto or used to fund amounts owed to Affiliates inconnection with the Trivium Transactions (including dividends to any parent entity to permit payment by such parent entityof such amounts).
The actions described in sub-clauses (i), (vi), (xi) and (xvii) of Section 4.08(c) are Restricted Payments that will bepermitted to be made in accordance with this Section 4.08(c) but that reduce the amount that would otherwise be availablefor Restricted Payments under Section 4.08(b)(iii).
For purposes of determining compliance with this Section 4.08, in the event that a Restricted Payment meets thecriteria of more than one of the categories described in sub-clauses (i) through (xviii) of Section 4.08(c), or is permittedpursuant to Section 4.08(b), the Parent Guarantor and its Restricted Subsidiaries will be entitled to classify such RestrictedPayment (or portion thereof) on the date of its payment or later reclassify such Restricted Payment (or portion thereof) inany manner that complies with this Section 4.08. The amount of all Restricted Payments (other than cash) will be the FairMarket Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by theParent Guarantor or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
SECTION 4.09. Limitation on Sale of Certain Assets.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, consummate any AssetSale unless:
(i) the consideration the Parent Guarantor or such Restricted Subsidiary receives for such Asset Sale is notless than the Fair Market Value of the assets sold (as determined in good faith by the Parent Guarantor’s Board ofDirectors);
(ii) at least 75% of the consideration the Parent Guarantor or such Restricted Subsidiary receives in respectof such Asset Sale consists of (A) cash (including any Net Cash Proceeds received from the conversion within 90 days ofsuch Asset Sale of securities, notes or other obligations received in consideration of such Asset Sale); (B) Cash Equivalents;(C) the assumption by the purchaser of (x) the Parent Guarantor’s Debt or Debt of any Restricted Subsidiary (other thanSubordinated Debt) as a result of which neither the Parent Guarantor nor any of the Restricted Subsidiaries remainsobligated in respect of such Debt or (y) Debt of a Restricted Subsidiary that is no longer a Restricted Subsidiary as a resultof such Asset Sale, if the Parent Guarantor and each other Restricted Subsidiary is released from any guarantee of such Debtas a result of such Asset Sale; (D) Replacement Assets; (E) any Designated Non-cash Consideration received by the ParentGuarantor or such Restricted Subsidiary in such Asset Sale having an aggregate Fair Market Value, taken together with allother Designated Non-cash Consideration received pursuant to this clause (ii), not to exceed the greater of $225,000,000 and3.00% of Total Assets at the time of the receipt of such Designated Non-cash Consideration, with the Fair Market Value ofeach item of Designated Non-cash Consideration being measured at the time received and
-54-
without giving effect to subsequent changes in value; or (F) a combination of the consideration specified in sub-clauses (A) to (E) of this Section 4.09(a)(ii); and
(iii) the Parent Guarantor delivers an Officer’s Certificate to the Trustee certifying that such Asset Salecomplies with the provisions described in sub-clauses (i) and (ii) of this Section 4.09(a).
(b) If the Parent Guarantor or any Restricted Subsidiary consummates an Asset Sale, the Net Cash Proceedsfrom such Asset Sale, within 360 days after the consummation of such Asset Sale, may be used by the Parent Guarantor orsuch Restricted Subsidiary to (A) permanently repay, purchase or prepay any then outstanding Debt (other than Debt that issubordinated to the Notes or the Guarantees of the Notes) of the Parent Guarantor or any Restricted Subsidiary (and to effecta corresponding commitment reduction if such Debt is revolving credit borrowings) owing to a Person other than the ParentGuarantor or a Restricted Subsidiary or (B) invest in any Replacement Assets, (C) acquire all or substantially all of theassets of, or any Capital Stock of, another Similar Business, if, after giving effect to any such acquisition of Capital Stock,the Similar Business is or becomes a Restricted Subsidiary, or (D) any combination of the foregoing; provided that in thecase of sub-clause (B) of this Section 4.09(b), if the Parent Guarantor or such Restricted Subsidiary, as the case may be, hasentered into a binding commitment in definitive form within such 360-day period to so apply such Net Cash Proceeds withthe good faith expectation that such Net Cash Proceeds will be applied to satisfy such commitment within 180 days of suchcommitment (an “Acceptable Commitment”), such binding commitment shall be treated as a permitted application of suchNet Cash Proceeds; provided, further, that if any Acceptable Commitment is later cancelled or terminated for any reasonbefore such Net Cash Proceeds are applied and after such initial 360-day period, then such Net Cash Proceeds shallconstitute Excess Proceeds. The amount of such Net Cash Proceeds not so used as set forth in this Section 4.09(b)constitutes “Excess Proceeds”. The Parent Guarantor may reduce revolving credit borrowings or otherwise invest such NetCash Proceeds in any manner that is not prohibited by the terms of this Indenture.
(c) The Parent Guarantor or the Issuers may also at any time, and the Parent Guarantor or the Issuers shallwithin 20 Business Days after the aggregate amount of Excess Proceeds exceeds the greater of $100,000,000 and 1.5% ofTotal Assets, make an offer to purchase (an “Excess Proceeds Offer”) from all Holders and from the holders of any PariPassu Debt, to the extent required by the terms thereof, on a pro rata basis, in accordance with the procedures set forth inthis Indenture or the agreements governing any such Pari Passu Debt, the maximum principal amount (expressed as anintegral multiple of $1,000) of the Notes and any such Pari Passu Debt that may be purchased with the amount of the ExcessProceeds. The offer price as to each Note and any such Pari Passu Debt will be payable in cash in an amount equal to (solelyin the case of the Notes) 100% of the principal amount of such Note and (solely in the case of Pari Passu Debt) no greaterthan 100% of the principal amount (or accreted value, as applicable) of such Pari Passu Debt, plus in each case accrued andunpaid interest, if any, to the date of purchase.
(d) To the extent that the aggregate principal amount of Notes and any such Pari Passu Debt tendered pursuantto an Excess Proceeds Offer is less than the aggregate amount of Excess Proceeds, the Parent Guarantor may use the amountof such Excess Proceeds not used to purchase the Notes and Pari Passu Debt for general corporate purposes that are nototherwise prohibited by this Indenture. If the aggregate principal amount of the Notes and any such Pari Passu Debt validlytendered and not withdrawn by holders thereof exceeds the aggregate amount of Excess Proceeds, the Notes and any suchPari Passu Debt to be purchased shall be selected by the Trustee on a pro rata basis (based upon the principal amount of theNotes and the principal amount or accreted value of such Pari Passu Debt tendered by each Holder). Upon completion ofeach such Excess Proceeds Offer, the amount of Excess Proceeds will be reset to zero.
-55-
(e) If the Parent Guarantor or the Issuers are obligated to make an Excess Proceeds Offer, the Parent Guarantoror the Issuers shall purchase the Notes and Pari Passu Debt, at the option of the holders thereof, in whole or in part (as anintegral multiple of $1,000), on a date that is not earlier than 30 days and not later than 60 days from the date the notice ofthe Excess Proceeds Offer is given to such holders, or such later date as may be required under the Exchange Act providedthat Notes of $200,000 will be purchased in full.
If the Parent Guarantor or the Issuers are required to make an Excess Proceeds Offer, the Parent Guarantor and theIssuers shall comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any otherapplicable securities laws and regulations, including any securities laws of Ireland and the requirements of any applicablesecurities exchange on which Notes, the Existing Ardagh Bonds, the August 2019 Senior Notes or the April 2020 SecuredNotes are then listed. To the extent that the provisions of any securities laws or regulations conflict with the provisions ofthis Section 4.09, the Issuers shall comply with such securities laws and regulations and shall not be deemed to havebreached their obligations described in this Section 4.09 by virtue thereof.
SECTION 4.10. Limitation on Transactions with Affiliates.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, enterinto or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase,exchange or lease of assets or property or the rendering of any service) with, or for the benefit of, any Affiliate of the ParentGuarantor or any Restricted Subsidiary’s Affiliate involving aggregate consideration in excess of the greater of $75,000,000and 2.0% of Total Assets unless:
(i) such transaction or series of transactions is on terms that, taken as a whole, are not materially lessfavorable to the Parent Guarantor or such Restricted Subsidiary, as the case may be, than those that could have beenobtained in a comparable arm’s-length transaction with third parties that are not Affiliates; and
(ii) with respect to any transaction or series of related transactions involving aggregate payments or thetransfer of assets or provision of services, in each case having a value greater than the greater of $150,000,000 and 2.0% ofTotal Assets, the Parent Guarantor shall deliver a resolution of its Board of Directors (set out in an Officer’s Certificate tothe Trustee) resolving that such transaction complies with Section 4.10(a)(i) and that the fairness of such transaction hasbeen approved by a majority of the Disinterested Directors (or in the event there is only one Disinterested Director, by suchDisinterested Director) of the Parent Guarantor’s Board of Directors.
(b) Notwithstanding the foregoing, the restrictions set forth in Section 4.10(a) will not apply to:
(i) customary directors’ fees, indemnification and similar arrangements (including the payment ofdirectors’ and officers’ insurance premiums), consulting fees, employee salaries, bonuses, employment agreements andarrangements, compensation or employee benefit arrangements, including stock options or legal fees;
(ii) any Restricted Payment not prohibited by Section 4.08 or the making of an Investment that is aPermitted Investment;
(iii) the agreements and arrangements existing on the August 2019 Issue Date and any amendment,modification or supplement thereto; provided that any such amendment, modification or supplement to the terms thereof isnot more disadvantageous to the Holders and to the Parent
-56-
Guarantor and the Restricted Subsidiaries, as applicable, in any material respect than the original agreement orarrangement as in effect on the August 2019 Issue Date;
(iv) any payments or other transactions pursuant to a tax sharing agreement between the Parent Guarantorand any other Person or a Restricted Subsidiary and any other Person with which the Parent Guarantor or any of itsRestricted Subsidiaries file a consolidated tax return or with which the Issuers are part of a consolidated group for taxpurposes or any tax advantageous group contribution made pursuant to applicable legislation; provided, however, that anysuch payments do not exceed the amounts of such tax that would have been payable by the Parent Guarantor and itsRestricted Subsidiaries on a stand-alone basis and the related tax liabilities of the Parent Guarantor and its RestrictedSubsidiaries are relieved thereby;
(v) transactions in the ordinary course of business with a Person (other than an Unrestricted Subsidiary)that is an Affiliate of the Parent Guarantor solely because the Parent Guarantor owns, directly or through a RestrictedSubsidiary, Capital Stock in, or controls, such Person;
(vi) the issuance of securities pursuant to, or for the purpose of the funding of, employment arrangements,stock options, and stock ownership plans, as long as the terms thereof are or have been previously approved by the ParentGuarantor’s Board of Directors;
(vii) the granting and performance of registration rights for the Parent Guarantor’s securities;
(viii) (A) issuances or sales of Qualified Capital Stock of the Parent Guarantor or DeeplySubordinated Funding and (B) any amendment, waiver or other transaction with respect to any Deeply SubordinatedFunding in compliance with the other provisions of this Indenture;
(ix) pledges by the Parent Guarantor or any Restricted Subsidiary of the Capital Stock of an UnrestrictedSubsidiary or a Permitted Joint Venture securing Debt owing by such Unrestricted Subsidiary or a Permitted Joint Venture;
(x) transactions with a joint venture made in the ordinary course of business;
(xi) transactions between or among the Parent Guarantor and the Restricted Subsidiaries or between oramong Restricted Subsidiaries;
(xii) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services or providersof employees or other labor, in each case in the ordinary course of business and otherwise in compliance with the terms ofthis Indenture that are fair to the Parent Guarantor or the Restricted Subsidiaries, in the reasonable determination of themembers of the Board of Directors of the Parent Guarantor or the senior management thereof, or are on terms at least asfavorable as might reasonably have been obtained at such time from an unaffiliated Person;
(xiii) any transaction effected as part of a Permitted Receivables Financing;
(xiv) pledges of equity interests of Unrestricted Subsidiaries;
(xv) any employment agreement, consultancy agreement or employee benefit arrangement with anyemployee, consultant, officer or director of the Parent Guarantor or any
-57-
Restricted Subsidiary, including under any stock option, stock appreciation rights, stock incentive or similar plans,entered into in the ordinary course of business; and
(xvi) (x) the Trivium Transactions and the payment of all costs and expenses (including all legal, accountingand other professional fees and expenses) related to the Trivium Transactions or any payment as contemplated by theTransaction Agreement; (y) any transactions or services pursuant to the Mutual Services Agreement and any services ortransactions that are similar or incidental to the services or transactions contemplated therein provided on an arm’s lengthbasis; and (z) any transactions or services pursuant to the IP Cross-License Agreement and any services or transactions thatare similar or incidental to the services or transactions contemplated therein provided on an arm’s length basis.
SECTION 4.11. Purchase of Notes upon a Change of Control.
(a) If a Change of Control occurs at any time, then the Issuers or the Parent Guarantor shall make an offer (a“Change of Control Offer”) to each Holder to purchase such Holder’s Notes, at a purchase price (the “Change of ControlPurchase Price”) in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, ifany, to the date of purchase (the “Change of Control Purchase Date”) (subject to the rights of holders of record on relevantregular Record Dates that are prior to the Change of Control Purchase Date to receive interest due on an Interest PaymentDate).
(b) Within 30 days following any Change of Control, the Issuers or the Parent Guarantor shall:
(i) cause a notice of the Change of Control Offer to be:
(A) delivered to holders of the Notes electronically or mailed by first-class mail, postageprepaid; and
(B) if at the time of such notice the Notes are listed on Euronext Dublin and the rules ofEuronext Dublin so require, published in The Irish Times (or another leading newspaper of generalcirculation in Ireland or, to the extent and in the manner permitted by the rules of Euronext Dublin, postedon the official website of Euronext Dublin); and
(ii) send notice of the Change of Control Offer by first-class mail, with a copy to the Trustee, to eachHolder to the address of such Holder appearing in the Security Register, which notice shall state:
(A) that a Change of Control has occurred, and the date it occurred;
(B) the circumstances and relevant facts regarding such Change of Control (including, but notlimited to, applicable information with respect to pro forma historical income, cash flow and capitalizationafter giving effect to the Change of Control);
(C) the Change of Control Purchase Price and the Change of Control Purchase Date, which shallbe a Business Day no earlier than 10 days nor later than 60 days from the date such notice is mailed, or suchlater date as is necessary to comply with requirements under the Exchange Act and any applicable securitieslaws or regulations;
(D) that any Note accepted for payment pursuant to the Change of Control Offer shall cease toaccrue interest after the Change of Control Purchase Date unless the Change of Control Purchase Price is notpaid;
-58-
(E) that any Note (or part thereof) not tendered shall continue to accrue interest; and
(F) any other procedures that a Holder must follow to accept a Change of Control Offer or towithdraw such acceptance (which procedures may also be performed at the office of the paying agent inIreland as long as the Notes are listed on Euronext Dublin).
(c) On the Change of Control Purchase Date, the Issuers shall, to the extent lawful:
(i) accept for payment all Notes or portions thereof (equal to $200,000 or an integral multiple of $1,000 inexcess thereof) properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of Control Purchase Price in respect ofall Notes or portions thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officer’sCertificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Issuers.
The Issuers or the Parent Guarantor will publicly announce the results of the Change of Control Offer on, oras soon as practical after, the Change of Control Purchase Date.
(d) The Paying Agent shall promptly mail to each Holder that has properly tendered its Notes pursuant to theChange of Control Offer an amount equal to the Change of Control Purchase Price for such Notes and the Trustee shall itselfor via the authenticating agent promptly authenticate and mail (or cause to be transferred by book-entry) to each such Holdera new Note or Notes equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided thateach such new Note shall be in a principal amount of $200,000 and in integral multiples of $1,000 in excess thereof.
(e) If the Change of Control Purchase Date is on or after an interest Record Date and on or before the relatedInterest Payment Date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Note isregistered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tenderpursuant to the Change of Control Offer.
(f) Neither the Issuers nor the Parent Guarantor shall be required to make a Change of Control Offer if a thirdparty makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements setforth herein applicable to a Change of Control Offer made by the Issuers or the Parent Guarantor and purchases all Notesvalidly tendered and not withdrawn under such Change of Control Offer.
(g) The Issuers and the Parent Guarantor shall comply with the applicable tender offer rules, includingRule 14e-l under the Exchange Act, and any other applicable securities laws and regulations (including those of Ireland) inconnection with a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflictwith provisions of this Indenture, the Issuers and the Parent Guarantor shall comply with the applicable securities laws andregulations and shall not be deemed to have breached their obligations under this Indenture by virtue of such conflict.
(h) Notwithstanding anything to the contrary contained in this Section 4.11, a Change of Control Offer may bemade in advance of a Change of Control, conditioned upon the consummation of
-59-
such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of ControlOffer is made.
SECTION 4.12. Additional Amounts.
(a) All payments that the Issuers make under or with respect to the Notes or that the Guarantors make under orwith respect to the Guarantees shall be made free and clear of and without withholding or deduction for or on account of anypresent or future tax, duty, levy, impost, assessment or other governmental charge (including, without limitation, penalties,interest and other similar liabilities related thereto) of whatever nature (collectively, “Taxes”) imposed or levied on suchpayments by or on behalf of any jurisdiction (other than the United States, any state thereof or the District of Columbia) inwhich any Issuer or Guarantor is organized, resident or doing business for tax purposes or from or through which any of theforegoing (or its agents, including the Paying Agent) makes any payment on the Notes or by or within any department,political subdivision or governmental authority of or in any of the foregoing having power to tax (each, a “Relevant TaxingJurisdiction”), unless such Issuer or Guarantor or other applicable withholding agent, as the case may be, is required towithhold or deduct Taxes by law or by the interpretation or administration of law. If either Issuer, a Guarantor or otherapplicable withholding agent is required to withhold or deduct any amount for or on account of Taxes imposed or levied onbehalf of a Relevant Taxing Jurisdiction from any payment made under or with respect to the Notes or any Guarantee, suchIssuer or Guarantor, as the case may be, shall pay additional amounts (“Additional Amounts”) as may be necessary to ensurethat the net amount received by each beneficial owner of the Notes after such withholding or deduction (including anywithholding or deduction in respect of any Additional Amounts) will not be less than the amount the beneficial owner wouldhave received if such Taxes had not been withheld or deducted.
(b) None of the Issuers or Guarantors shall, however, pay Additional Amounts in respect or on account of:
(i) any Taxes, to the extent such Taxes are imposed or levied by a Relevant Taxing Jurisdiction by reasonof the Holder’s or beneficial owner’s present or former connection with such Relevant Taxing Jurisdiction (other than themere receipt, ownership, holding or disposition of the Notes, or by reason of the receipt of any payments in respect of anyNotes or any Guarantee, or the exercise or enforcement of rights under any Notes or any Guarantee);
(ii) any Taxes to the extent such Taxes are imposed or withheld by reason of the failure of the Holder orbeneficial owner of the Notes, following the Issuers’ written request addressed to the Holder or beneficial owner, to complywith any certification, identification, information or other reporting requirements (to the extent such holder or beneficialowner is legally eligible to do so), whether required by statute, treaty, regulation or administrative practice of a RelevantTaxing Jurisdiction, as a precondition to exemption from, or reduction in the rate of deduction or withholding of, such Taxesimposed by the Relevant Taxing Jurisdiction (including, without limitation, a certification that the Holder or beneficialowner is not resident in the Relevant Taxing Jurisdiction);
(iii) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;
(iv) any Tax which is payable otherwise than by deduction or withholding from payments made under orwith respect to the Notes or any Guarantee;
(v) any Tax imposed on or with respect to any payment by any of the Issuers or Guarantors to the Holder ifsuch Holder is a fiduciary or partnership or Person other than the sole
-60-
beneficial owner of such payment to the extent that such Taxes would not have been imposed on such payment hadsuch beneficial owner been the holder of such Note;
(vi) any Tax that is imposed on or with respect to a payment made to a Holder or beneficial owner whowould have been able to avoid such withholding or deduction by presenting the relevant Notes to another paying agent in amember state of the European Union or the United Kingdom;
(vii) any Taxes, to the extent such Taxes were imposed as a result of the presentation of a Note for payment(where presentation is required) more than 30 days after the relevant payment is first made available to the Holder (except tothe extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day ofsuch 30-day period);
(viii) any U.S. federal withholding Taxes or equivalent thereof imposed pursuant to Sections 1471through 1474 of the Internal Revenue Code of 1986 as of the August 2019 Issue Date (or any amended or successor versionthat is substantively comparable and not materially more onerous to comply with), any current or future regulationspromulgated thereunder or other official administrative interpretations thereof and any agreements entered into pursuant tocurrent Section 1471(b)(1) of the Internal Revenue Code of 1986 as of the August 2019 Issue Date (or any amended orsuccessor version described above), and including (for the avoidance of doubt) any intergovernmental agreements (and anylaw, regulation, rule or practice implementing any such intergovernmental agreement) in respect of the foregoing; or
(ix) any combination of the foregoing.
(c) The Issuers and the Guarantors, if the applicable withholding agents, shall (i) make such withholding ordeduction as is required by applicable law and (ii) remit the full amount deducted or withheld to the relevant authority inaccordance with applicable law.
(d) At least 30 calendar days prior to each date on which any payment under or with respect to the Notes or anyGuarantee is due and payable, if the Issuers or any Guarantor shall be obligated to pay Additional Amounts with respect tosuch payment (unless such obligation to pay Additional Amounts arises after the 30th day prior to the date on whichpayment under or with respect to the Notes or any Guarantee is due and payable, in which case it will be promptlythereafter), the Issuers shall deliver to the Trustee, with a copy to the Paying Agent, an Officer’s Certificate stating that suchAdditional Amounts will be payable and the amounts so payable and setting forth such other information as is necessary toenable the Paying Agent to pay such Additional Amounts to the Holders on the payment date. The Trustee and the PayingAgent shall be entitled to rely solely on such Officer’s Certificate as conclusive proof that such payments are necessary. TheIssuers shall promptly publish a notice in accordance with Section 12.02 stating that such Additional Amounts will bepayable and describing the obligation to pay such amounts.
In addition, the Issuers or any Guarantor, as the case may be, shall pay any present or future stamp, issuance,registration, court, documentary, excise or property taxes or other similar taxes, charges and duties, including, withoutlimitation, interest, penalties and other similar liabilities with respect thereto, imposed by any Relevant Taxing Jurisdictionin respect of (i) the execution, issue, delivery or registration of the Notes or any Guarantee or any other document orinstrument referred to thereunder, or (ii) the receipt of any payments under or with respect to, or enforcement of, the Notesor any Guarantee.
Upon written request, any of the Issuers or a Guarantor will furnish to the Trustee or a Holder within a reasonabletime certified copies of tax receipts evidencing any payment by such Issuer or Guarantor (as the case may be) of any Taxesimposed or levied by a Relevant Taxing Jurisdiction, in accordance with
-61-
the procedures described in Section 12.02, in such form as provided in the normal course by the taxing authority imposingsuch Taxes. If, notwithstanding the efforts of such Issuer or Guarantor to obtain such receipts, the same are not obtainable,such Issuer or Guarantor will provide the Trustee or such Holder with other evidence reasonably satisfactory to the Trusteeor holder of such payments by such Issuer or Guarantor. If requested by the Trustee, the Issuers and (to the extent necessary)any Guarantors will provide to the Trustee such information as may be reasonably available to such Issuer and theGuarantors (and not otherwise in the possession of the Trustee) to enable determination of the amount of any withholdingTaxes attributable to any particular Holder(s).
(e) Whenever this Indenture or the Notes refers to, in any context, the payment of principal, premium, if any,interest or any other amount payable under or with respect to any Note (including payments thereof made pursuant to aGuarantee), such reference includes the payment of Additional Amounts, if applicable.
(f) This Section 4.12 will survive any termination, defeasance or discharge of this Indenture and shall applymutatis mutandis to any jurisdiction (other than the United States, any state thereof or the District of Columbia) in whichany successor Person to any of the Issuers or Guarantors is organized, resident or doing business for tax purposes or anyjurisdiction from or through which any such person (or its agents, including the Paying Agent) makes any payment on theNotes (or any Guarantee) and any department, political subdivision or governmental authority of or in any of the foregoinghaving the power to tax.
SECTION 4.13. Additional Intercreditor Agreements.
(a) At the request and direction of the Parent Guarantor and without the consent of the Holders, in connectionwith the incurrence by the Parent Guarantor or its Restricted Subsidiaries of any Permitted Debt, the Parent Guarantor, therelevant Restricted Subsidiaries, the Trustee shall enter into with the Holders (or their duly authorized representatives) anintercreditor agreement (an “Additional Intercreditor Agreement”) or a restatement, amendment or other modification of theexisting Intercreditor Agreement, in each case on substantially the same terms as the Intercreditor Agreement or terms notviolating the terms of this Indenture (for such matters covered by this Indenture) or terms not affecting adversely the rightsof the Holders of the Notes in material respects (for such matters not covered by this Indenture), including containingsubstantially the same terms with respect to release of Guarantees; provided that such Additional Intercreditor Agreementwill not impose any personal obligations on the Trustee or, in the opinion of the Trustee, as applicable, adversely affect therights, duties, liabilities or immunities of the Trustee under this Indenture or the Intercreditor Agreement.
(b) At the request and direction of the Parent Guarantor and without the consent of the Holders, the Trusteeshall from time to time enter into one or more amendments to any Intercreditor Agreement to: (i) cure any ambiguity,omission, defect or inconsistency of any such agreement, (ii) increase the amount or types of Debt covered by any suchagreement that may be incurred by an Issuer or a Guarantor that is subject to any such agreement (including with respect toany Intercreditor Agreement or Additional Intercreditor Agreement, the addition of provisions relating to new Debt rankingjunior in right of payment to the Notes), (iii) add Restricted Subsidiaries to the Intercreditor Agreement or an AdditionalIntercreditor Agreement, (iv) amend the Intercreditor Agreement or any Additional Intercreditor Agreement in accordancewith the terms thereof or (v) make any other change to any such agreement that does not violate the terms of this Indenture.The Parent Guarantor shall not otherwise direct the Trustee to enter into any amendment to any Intercreditor Agreementwithout the consent of the Holders of the majority in aggregate principal amount of the Notes then outstanding, except asotherwise permitted below under Article Nine, and the Parent Guarantor may only direct the Trustee to enter into anyamendment to the extent such amendment does not impose any personal obligations on the Trustee or, in the opinion of theTrustee,
-62-
adversely affect their respective rights, duties, liabilities or immunities under this Indenture or the Intercreditor Agreementor any Additional Intercreditor Agreement.
(c) In relation to any Intercreditor Agreement or Additional Intercreditor Agreement, the Trustee shall consenton behalf of the Holders to the payment, repayment, purchase, repurchase, defeasance, acquisition, retirement or redemptionof any obligations subordinated to the Notes thereby; provided, however, that such transaction would comply with Section4.08.
(d) Each Holder, by accepting a Note, shall be deemed to have agreed to and accepted the terms and conditionsof the Intercreditor Agreement or any Additional Intercreditor Agreement (whether then entered into or entered into in thefuture pursuant to the provisions described in this Section 4.13) and to have directed the Trustee to enter into any suchAdditional Intercreditor Agreement. The Issuers shall make a copy of the Intercreditor Agreement or any AdditionalIntercreditor Agreement available for inspection by Holders during normal business hours on any Business Day upon priorwritten request at the offices of the Listing Agent.
SECTION 4.14. Additional Subsidiary Guarantees. On or prior to the 90th day following the Issue Date andsubject to the Agreed Security Principles, the Parent Guarantor shall ensure that each of the Subsidiaries of the ParentGuarantor (other than the Issuers) that is a guarantor of the Existing Ardagh Bonds and the August 2019 Senior Notesbecomes a Subsidiary Guarantor and, in connection therewith, cause such Subsidiary and entities to deliver suchagreements, instruments, certificates and opinions of counsel that may be reasonably requested by the Trustee, provided thatupon delivery of an Officer’s Certificate to the Trustee stating that in the good faith determination of the Issuers the outbreakof COVID-19 and measures to prevent its spread have made it impracticable to provide such guarantees within 90 daysfollowing the Issue Date, such guarantees and accompanying agreements, instruments, certificates and opinions of counselthat may be reasonably requested by the Trustee may be provided within 120 days following the Issue Date .
SECTION 4.15. Limitation on Guarantees of Debt by Restricted Subsidiaries.
(a) The Parent Guarantor shall not permit any Restricted Subsidiary that is not an Issuer or a Guarantor, directlyor indirectly, to guarantee, assume or in any other manner become liable for the payment of any Pari Passu Debt orSubordinated Debt of either Issuer (other than the Notes), the Parent Guarantor or any Subsidiary Guarantor, unless:
(i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to thisIndenture providing for a Guarantee of payment of the Notes by such Restricted Subsidiary on the same terms as theguarantee of such Debt; and
(ii) with respect to any guarantee of Subordinated Debt by such Restricted Subsidiary, any such guaranteeshall be subordinated to such Restricted Subsidiary’s Guarantee with respect to the Notes at least to the same extent as suchSubordinated Debt is subordinated to the Notes.
This clause (a) shall not be applicable to any guarantees of any Restricted Subsidiary:
(A) existing on the August 2019 Issue Date, guaranteeing Debt under Credit Facilities permitted to beincurred pursuant to Section 4.06(b)(ii) and Section 4.06(b)(xiii) or guaranteeing Debt in an aggregate principalamount that is less than the greater of $100,000,000 and 1.5% of Total Assets;
-63-
(B) that existed at the time such Person became a Restricted Subsidiary if the guarantee was not incurredin connection with, or in contemplation of, such Person becoming a Restricted Subsidiary; or
(C) given to a bank or trust company having combined capital and surplus and undivided profits of notless than €500,000,000, whose debt has a rating, at the time such guarantee was given, of at least BBB+ or theequivalent thereof by S&P and at least Baa1 or the equivalent thereof by Moody’s, in connection with the operationof cash management programs established for the Parent Guarantor’s benefit or that of any Restricted Subsidiary.
(b) Notwithstanding the foregoing, any Guarantee of the Notes created pursuant to the provisions described inSection 4.15(a) above may provide by its terms that it will be automatically and unconditionally released and dischargedupon:
(i) any sale, exchange or transfer, to any Person who is not the Parent Guarantor or a Restricted Subsidiaryof all of the Capital Stock owned by the Parent Guarantor and its other Restricted Subsidiaries in, or all or substantially allthe assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture); or
(ii) (with respect to any Guarantee created after the August 2019 Issue Date) the release by the Holders ofthe applicable Issuer’s, the Parent Guarantor’s or the Subsidiary Guarantor’s Debt described in Section 4.15(a) above, oftheir Guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all Obligations undersuch Debt other than as a result of payment under such Guarantee), at a time when:
(A) no other Debt of either Issuer, the Parent Guarantor or any Subsidiary Guarantor has beenguaranteed by such Restricted Subsidiary; or
(B) the holders of all such other Debt that is guaranteed by such Restricted Subsidiary alsorelease their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full ofall Obligations under such Debt other than as a result of payment under such Guarantee); or
(iii) the release of the Guarantees on the terms and conditions and in the circumstances described in Section10.03.
(c) Notwithstanding the foregoing, the Parent Guarantor shall not be obligated to cause any such RestrictedSubsidiary to guarantee the Notes to the extent that such Guarantee would reasonably be expected to give rise to or result in(A) any violation of applicable law, rule, regulation or order that cannot be avoided or otherwise prevented throughmeasures reasonably available to the Parent Guarantor or such Restricted Subsidiary, (B) personal liability for the officers,directors or shareholders of such Restricted Subsidiary or (C) any significant cost, expense, liability or obligation (includingwith respect to any Taxes but excluding any reasonable guarantee or similar fee payable to the Parent Guarantor or aRestricted Subsidiary) other than any governmental or regulatory filings required as a result of, or any measures pursuant tosub-clause (A) of this Section 4.15(c) undertaken in connection with, such Guarantee, which cannot be avoided throughmeasures reasonably available to the Parent Guarantor or the Restricted Subsidiary; provided, however, that any RestrictedSubsidiary who directly or indirectly, guarantees, assumes or in any other manner become liable for the payment of anyobligations under the Existing Ardagh Bonds shall also be required to Guarantee payment of the Notes on the same terms asthe guarantee of such obligations.
-64-
(d) Each such additional Guarantee will be limited as necessary to recognize certain defenses generallyavailable to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference, financialassistance, corporate purpose and corporate benefit, thin capitalization, distributable reserves, capital maintenance or similarlaws, regulations or defenses affecting the rights of creditors generally) or other considerations under applicable law.
SECTION 4.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly,create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on theability of any Restricted Subsidiary to:
(i) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stockor any other interest or participation in, or measured by, its profits;
(ii) pay any Debt owed to the Parent Guarantor or any other Restricted Subsidiary;
(iii) make loans or advances to the Parent Guarantor or any other Restricted Subsidiary; or
(iv) transfer any of its properties or assets to the Parent Guarantor or any other Restricted Subsidiary.
(b) The provisions of Section 4.16(a) shall not apply to:
(i) encumbrances and restrictions imposed by the August 2019 Notes, the Existing Ardagh Bonds, thisIndenture, the indenture governing the August 2019 Notes, any Credit Facility, the indentures governing the ExistingArdagh Bonds, the Intercreditor Agreement (or any Additional Intercreditor Agreement), the Senior Holdco Notes and thesecurity documents related thereto or by other indentures or agreements governing other Debt incurred ranking equally withthe Notes;
(ii) any customary encumbrances or restrictions created under any agreements with respect to Debt of theParent Guarantor or any Restricted Subsidiary permitted to be incurred subsequent to the August 2019 Issue Date pursuantto the provisions of Section 4.06, including encumbrances or restrictions imposed by Debt permitted to be incurred underCredit Facilities or any guarantees thereof in accordance with Section 4.06; provided that such agreements do not prohibitthe payment of interest with respect to the Notes or the Guarantees absent a default or event of default under suchagreement;
(iii) encumbrances or restrictions contained in any agreement in effect on the August 2019 Issue Date (otherthan an agreement described in another sub-clause of this Section 4.16(b));
(iv) with respect to restrictions or encumbrances referred to in Section 4.16(a)(iv), encumbrances andrestrictions that restrict in a customary manner the subletting, assignment or transfer of any properties or assets that aresubject to a lease, license, conveyance or other similar agreement to which the Parent Guarantor or any RestrictedSubsidiary is a party;
(v) encumbrances or restrictions contained in any agreement or other instrument of a Person (including itsSubsidiaries), acquired by the Parent Guarantor or any Restricted Subsidiary
-65-
in effect at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restrictionis not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets ofthe Person, so acquired (including its Subsidiaries);
(vi) encumbrances or restrictions contained in contracts for sales of Capital Stock or assets permitted by theprovisions of Section 4.09 with respect to the assets or Capital Stock to be sold pursuant to such contract or in customarymerger or acquisition agreements (or any option to enter into such contract) for the purchase or acquisition of Capital Stockor assets or any of the Parent Guarantor’s Subsidiaries by another Person;
(vii) with respect to restrictions or encumbrances referred to in Section 4.16(a)(iv), any customaryencumbrances or restrictions pertaining to any asset or property subject to a Lien to the extent set forth in the securitydocument or any related document governing such Lien;
(viii) encumbrances or restrictions imposed by applicable law or regulation or by governmentallicenses, concessions, franchises or permits;
(ix) encumbrances or restrictions on cash or other deposits or net worth imposed by customers undercontracts entered into the ordinary course of business;
(x) customary limitations on the distribution or disposition of assets or property in joint venture agreementsentered into the ordinary course of business and in good faith by any Restricted Subsidiary; provided that such encumbranceor restriction is applicable only to such Restricted Subsidiary and its Subsidiaries;
(xi) in the case of Section 4.16(a)(iv), customary encumbrances or restrictions in connection with purchasemoney obligations, mortgage financings and Capitalized Lease Obligations for property acquired in the ordinary course ofbusiness;
(xii) any encumbrance or restriction arising by reason of customary non-assignment provisions inagreements;
(xiii) encumbrances or restrictions with respect to any Permitted Receivables Financing; providedthat such encumbrances or restrictions are customarily required by the institutional sponsor or arranger of such PermittedReceivables Financing in similar types of documents relating to the purchase of similar receivables in connection with thefinancing thereof;
(xiv) encumbrances or restrictions with respect to a Restricted Subsidiary imposed pursuant to a PermittedJoint Venture;
(xv) encumbrances or restrictions incurred in accordance with Section 4.07; or
(xvi) any encumbrances or restrictions existing under any agreement that extends, renews, amends, modifies,restates, supplements, refunds, refinances or replaces the agreements containing the encumbrances or restrictions in theforegoing sub-clauses (i) through (xv); provided that the terms and conditions of any such encumbrances or restrictions arenot materially less favorable, taken as a whole, to the Holders of the Notes than those under or pursuant to the agreement soextended, renewed, amended, modified, restated, supplemented, refunded, refinanced or replaced.
-66-
SECTION 4.17. Designation of Unrestricted and Restricted Subsidiaries.
(a) The Parent Guarantor’s Board of Directors may designate any Subsidiary (including newly acquired ornewly established Subsidiaries) to be an “Unrestricted Subsidiary” only if no Default has occurred and is continuing at thetime of or after giving effect to such designation.
(b) In the event of any designation of a Subsidiary as an Unrestricted Subsidiary in accordance with this Section4.17, the Parent Guarantor shall be deemed to have made an Investment constituting a Restricted Payment pursuant toSection 4.08 for all purposes of this Indenture in an amount equal to the greater of (i) the net book value of the ParentGuarantor’s interest in such Subsidiary calculated in accordance with IFRS or (ii) the Fair Market Value of the ParentGuarantor’s interest in such Subsidiary.
(c) The Parent Guarantor’s Board of Directors may designate any Unrestricted Subsidiary as a RestrictedSubsidiary if:
(i) no Default or Event of Default has occurred and is continuing at the time of or will occur and becontinuing after giving effect to such designation; and
(ii) (x) the Parent Guarantor could incur at least $1.00 of additional Debt (pursuant to Section 4.06(a)) or(y) the Fixed Charge Coverage Ratio would not be less than it was immediately prior to giving effect to such designation, ineach case, on a pro forma basis taking into account such designation.
(d) Any designation of a Subsidiary as an Unrestricted Subsidiary or Restricted Subsidiary by the ParentGuarantor’s Board of Directors in accordance with this Section 4.17 shall be evidenced to the Trustee by filing a resolutionof the Parent Guarantor’s Board of Directors with the Trustee giving effect to such designation and an Officer’s Certificatecertifying that such designation complies with the foregoing conditions, and giving the effective date of such designation.Any such filing with the Trustee must occur within 45 days after the end of the Parent Guarantor’s fiscal quarter in whichsuch designation is made (or, in the case of a designation made during the last fiscal quarter of the Parent Guarantor’s fiscalyear, within 90 days after the end of such fiscal year).
SECTION 4.18. Payment of Taxes and Other Claims. The Parent Guarantor shall pay or discharge and shallcause each of its Subsidiaries to pay or discharge, or cause to be paid or discharged, before the same shall becomedelinquent (a) all material taxes, assessments and governmental charges levied or imposed upon (i) the Parent Guarantor orany such Subsidiary, (ii) the income or profits of any such Subsidiary which is a corporation or (iii) the property of theParent Guarantor or any such Subsidiary and (b) all material lawful claims for labor, materials and supplies that, if unpaid,might by law become a lien upon the property of the Parent Guarantor or any such Subsidiary; provided that the ParentGuarantor shall not be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge orclaim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings or for whichadequate reserves have been established.
SECTION 4.19. Reports to Holders. So long as any Notes are outstanding, the Issuers or the Parent Guarantorshall furnish to the Trustee:
(a) within 120 days after the end of each of the Parent Guarantor’s fiscal year’s annual reportscontaining the following information: (a) audited consolidated balance sheets of the Parent Guarantor as of the endof the two most recent fiscal years and audited consolidated income statements and statements of cash flow of theParent Guarantor for the two most recent fiscal years, including footnotes to such financial statements and the reportof the Parent Guarantor’s
-67-
independent auditors on the financial statements; (b) an operating and financial review of the audited financialstatements, including a discussion of the results of operations, financial condition and liquidity and capital resources,and a discussion of material commitments and contingencies and critical accounting policies; (c) a description of thebusiness and management of the Parent Guarantor; and (d) material recent developments to the extent not previouslyreported;
(b) within 60 days following the end of each of the first three fiscal quarters in each fiscal year of theParent Guarantor’s quarterly reports containing the following information: (a) an unaudited condensed consolidatedbalance sheet as of the end of such quarter and unaudited condensed statements of income and cash flow for thequarterly and year-to-date periods ending on the unaudited condensed balance sheet date, and the comparable prioryear periods for the Parent Guarantor, together with condensed footnote disclosure; (b) operating and financialreview of the unaudited financial statements, including a discussion of the consolidated financial condition andresults of operations of the Parent Guarantor and any material change between the current quarterly period and thecorresponding period of the prior year; and (c) material recent developments to the extent not previously reported;and
(c) promptly after the occurrence of any material acquisition, disposition or restructuring of the ParentGuarantor and the Restricted Subsidiaries, taken as a whole, or any change of the entire Board of Directors,chairman of the Board of Directors, chief executive officer or chief financial officer at the Parent Guarantor orchange in auditors of the Parent Guarantor, a press release containing a description of such event.
In addition, the Issuers or the Parent Guarantor shall furnish to the Holders and to prospective investors, upon therequests of such Holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act solong as the Notes are not freely transferable under the Exchange Act by Persons who are not “affiliates” under the SecuritiesAct.
The Issuers or the Parent Guarantor shall also make available copies of all reports furnished to the Trustee (a) on thewebsite of the Ardagh group of companies and (b) through the newswire service of Bloomberg, or, if Bloomberg does notthen operate, any similar agency.
SECTION 4.20. Further Instruments and Acts. Upon request of the Trustee (but without imposing any duty orobligation of any kind on the Trustee to make any such request), the Issuers and the Guarantors shall execute and deliversuch further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively thepurpose of this Indenture.
SECTION 4.21. Limitation on Layered Debt. The Subsidiary Guarantors shall not incur, create, issue, assume,guarantee or otherwise become liable for any Debt that is subordinate or junior in right of payment to any Senior Debt of theSubsidiary Guarantors and senior in any respect in right of payment to the Guarantees or any other Pari Passu Debt of theSubsidiary Guarantors; provided that the foregoing limitation will not apply to distinctions between categories of SeniorDebt that exist by reason of any Liens or guarantees arising or created in respect of some but not all of such Senior Debt orpursuant to the Intercreditor Agreement (and/or any Additional Intercreditor Agreement).
SECTION 4.22. Suspension of Covenants. If on any date following the Issue Date, the Notes have achievedInvestment Grade Status and no Default or Event of Default has occurred and is continuing (a “Suspension Event”), then,beginning on that day and continuing until the Reversion Date, the provisions of Sections 4.06, 4.08, 4.09, 4.10, 4.15 and4.16 and the provisions of Section 5.01(b)(iii) and, in each case, any related default provision of this Indenture will cease tobe effective and will not be applicable to the Parent Guarantor and its Restricted Subsidiaries. Such Sections and any relateddefault provisions shall
-68-
apply according to their terms from the first day on which a Suspension Event ceases to be in effect. Such Sections shall not,however, be of any effect with regard to actions of the Parent Guarantor properly taken during the continuance of theSuspension Event, and Section 4.08 shall be interpreted as if it has been in effect since the date of this Indenture except thatno default will be deemed to have occurred solely by reason of a Restricted Payment made while Section 4.08 wassuspended. On the Reversion Date, all Debt incurred during the continuance of the Suspension Event shall be classified, atthe Parent Guarantor’s option, as having been incurred pursuant to Section 4.06(a) or one of the sub-clauses set forth inSection 4.06(b) (to the extent such Debt would be permitted to be incurred thereunder as of the Reversion Date and aftergiving effect to Debt incurred prior to the Suspension Event and outstanding on the Reversion Date). To the extent suchDebt shall not be so permitted to be incurred under Section 4.06(a) or Section 4.06(b), such Debt shall be deemed to havebeen outstanding on the August 2019 Issue Date, so that it is classified as permitted under Section 4.06(b)(iii).
ARTICLE 5 CONSOLIDATION, MERGER AND SALE OF ASSETS
SECTION 5.01. Consolidation, Merger and Sale of Assets.
(a) The Parent Guarantor shall not, in a single transaction or through a series of transactions, consolidate with ormerge with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of, or take any actionpursuant to any resolution passed by the Parent Guarantor’s Board of Directors or shareholders with respect to a demerger ordivision pursuant to which the Parent Guarantor would dispose of, all or substantially all of the Parent Guarantor’sproperties and assets (other than Capital Stock, Debt or other securities of any Unrestricted Subsidiary) to any other Personor Persons and the Parent Guarantor shall not permit any Restricted Subsidiary to enter into any such transaction or series oftransactions if such transaction or series of transactions, in the aggregate, would result in the sale, assignment, conveyance,transfer, lease or other disposition of all or substantially all of the properties and assets (other than Capital Stock, Debt orother securities of any Unrestricted Subsidiary) of the Parent Guarantor and its Restricted Subsidiaries on a consolidatedbasis to any other Person or Persons.
(b) Section 5.01(a) shall not apply if:
(i) at the time of, and immediately after giving effect to, any such transaction or series of transactions,either the Parent Guarantor will be the continuing corporation or the Person (if other than the Parent Guarantor) formed byor surviving any such consolidation or merger or to which such sale, assignment, conveyance, transfer, lease or dispositionof all or substantially all the properties and assets of the Parent Guarantor and the Restricted Subsidiaries on a consolidatedbasis has been made (the “Surviving Entity”):
(A) will be a corporation duly incorporated and validly existing under the laws of any memberstate of the European Union or the European Economic Area, the United Kingdom, the United States ofAmerica, any state thereof, the District of Columbia, Canada, Switzerland, Australia or Bermuda; and
(B) expressly assumes, by a supplemental indenture in form satisfactory to the Trustee, theParent Guarantor’s obligations under the Notes and this Indenture, and the Notes and this Indenture shallremain in full force and effect as so supplemented;
(ii) immediately after giving effect to such transaction or series of transactions on a pro forma basis (andtreating any Obligation of the Parent Guarantor or any Restricted Subsidiary incurred in connection with or as a result ofsuch transaction or series of transactions as having
-69-
been incurred by the Parent Guarantor or such Restricted Subsidiary at the time of such transaction), no Default orEvent of Default will have occurred and be continuing;
(iii) immediately before and immediately after giving effect to such transaction or series of transactions on apro forma basis (on the assumption that the transaction or series of transactions occurred on the first day of the four-quarterfiscal period immediately prior to the consummation of such transaction or series of transactions with the appropriateadjustments with respect to the transaction or series of transactions being included in such pro forma calculation), the ParentGuarantor (or the Surviving Entity if the Parent Guarantor is not the continuing obligor under this Indenture) could incur atleast $1.00 of additional Debt under the provisions of Section 4.06;
(iv) any Subsidiary Guarantor, unless it is the other party to the transactions described in this Section 5.01,shall have by supplemental indenture confirmed that its Guarantee will apply to such Person’s obligations under thisIndenture and the Notes;
(v) any of the Parent Guarantor’s or any Restricted Subsidiary’s property or assets would thereuponbecome subject to any Lien, the provisions of Section 4.07 are complied with; and
(vi) the Parent Guarantor or the Surviving Entity shall have delivered to the Trustee, in form and substancesatisfactory to the Trustee, an Officer’s Certificate (attaching the computations to demonstrate compliance with Section5.01(b)(iii)) and an opinion of independent counsel, each stating that such consolidation, merger, sale, assignment,conveyance, transfer, lease or other disposition, and if a supplemental indenture is required in connection with suchtransaction, such supplemental indenture, comply with the requirements of this Indenture and that this Indenture and theNotes constitute legal, valid and binding obligations of the continuing person, enforceable in accordance with their terms.
(c) Notwithstanding anything to the contrary set forth above, the Parent Guarantor may designate any Person asa successor parent guarantor (the “Successor Parent Guarantor”); provided that the Parent Guarantor could have merged oramalgamated into such Person in accordance with the provisions hereof, at the time of, and immediately after giving effectto such designation; provided, further, that such Successor Parent Guarantor expressly assumes, by a supplemental indenturein form satisfactory to the Trustee, the Parent Guarantor’s obligations under the Notes and this Indenture.
(d) The Surviving Entity or Successor Parent Guarantor, as applicable, shall succeed to, and be substituted for,and may exercise every right and power of, the Parent Guarantor under this Indenture, but, in the case of a lease of all orsubstantially all of the Parent Guarantor’s assets or in the case of the designation of a Successor Parent Guarantor inaccordance with Section 5.01(c), the Parent Guarantor shall not be released from the obligation to pay the principal of,premium, if any, and interest, on the Notes.
(e) Nothing in this Indenture shall prevent (i) any Restricted Subsidiary from consolidating with, merging intoor transferring all or substantially all of its properties and assets to the Parent Guarantor or any other Restricted Subsidiary,(ii) any Subsidiary Guarantor from consolidating with, merging into or transferring all or substantially all of its propertiesand assets to the Parent Guarantor, either Issuer or another Subsidiary Guarantor (and upon any such transfer, the Guaranteeof the transferring Subsidiary Guarantor shall automatically be released) or (iii) the Parent Guarantor from appointing anyPerson as Successor Parent Guarantor; provided that such appointment is made in accordance with Section 5.01(c) above.
-70-
The Parent Guarantor shall publish a notice of any consolidation, merger or sale of assets described in Section5.01(a) in accordance with Section 12.02 and, so long as the rules of Euronext Dublin so require, notify such exchange ofany such consolidation, merger or sale.
SECTION 5.02. Successor Substituted. Upon any consolidation or merger, or any sale, conveyance, transfer,lease or other disposition of all or substantially all of the property and assets of the Parent Guarantor in accordance withSection 5.01 of this Indenture, any Surviving Entity formed by such consolidation or into which the Parent Guarantor ismerged or to which such sale, conveyance, transfer, lease or other disposition is made, shall succeed to, and be substitutedfor, and may exercise every right and power of, the Parent Guarantor under this Indenture with the same effect as if suchSurviving Entity had been named as the Parent Guarantor herein; provided that the Parent Guarantor shall not be releasedfrom its obligation to pay the principal of, premium, if any, or interest and Additional Amounts, if any, on the Notes in thecase of a lease of all or substantially all of its property and assets.
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
(a) “Event of Default”, wherever used herein, means any of the following events:
(i) a default for 30 days in the payment when due of any interest or any Additional Amounts on any Note;or
(ii) default in the payment of the principal of or premium, if any, on any Note at its Maturity (uponacceleration, optional or mandatory redemption, if any, required repurchase or otherwise), whether or not prohibited by thesubordination provisions of this Indenture or the Intercreditor Agreement (and/or any Additional Intercreditor Agreement);or
(iii) failure to comply with the provisions of Article Five; or
(iv) failure to comply with any covenant or agreement of the Parent Guarantor or of any RestrictedSubsidiary that is contained herein or any Guarantees (other than specified in sub-clause (i), (ii) or (iii) of this Section6.01(a)) and such failure continues for a period of 60 days or more, in each case after the written notice specified in Section6.02(a); or
(v) default under the terms of any instrument evidencing or securing the Debt of the Parent Guarantor orany Restricted Subsidiary having an outstanding principal amount in excess of the greater of (i) for so long the ExistingArdagh Bonds remain outstanding, €75,000,000 and (ii) thereafter, the greater of $200,000,000 and 2.75% of Total Assets,in each case, individually or in the aggregate, if that default: (x) results in the acceleration of the payment of such Debt or(y) is caused by the failure to pay such Debt at final maturity thereof after giving effect to the expiration of any applicablegrace periods and other than by regularly scheduled required prepayment, and such failure to make any payment has notbeen waived or the maturity of such Debt has not been extended, and in either case the total amount of such Debt unpaid oraccelerated exceeds (i) for so long the Existing Ardagh Bonds remain outstanding, €75,000,000 and (ii) thereafter, thegreater of $200,000,000 and 2.75% of Total Assets or its equivalent at the time; or
(vi) any Guarantee ceases to be, or shall be asserted in writing by any Guarantor, or any Person acting onbehalf of any Guarantor, not to be in full force and effect or enforceable in
-71-
accordance with its terms (other than as provided for in this Indenture, any Guarantee, the Intercreditor Agreementor any Additional Intercreditor Agreement); or
(vii) one or more final judgments, orders or decrees (not subject to appeal and not covered by insurance orindemnities) shall be rendered against the Parent Guarantor or any Material Subsidiary, either individually or in an aggregateamount, in excess of (i) for so long the Existing Ardagh Bonds remain outstanding, €75,000,000 and (ii) therafter, thegreater of $200,000,000 and 2.75% of Total Assets or its equivalent at the time, and either a creditor shall have commencedan enforcement proceeding upon such judgment, order or decree or there shall have been a period of 60 consecutive days ormore during which a stay of enforcement of such judgment, order or decree was not (by reason of pending appeal orotherwise) in effect; or
(viii) the entry by a court of competent jurisdiction of (A) a decree or order for relief in respect of theParent Guarantor or any Material Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or(B) a decree or order adjudging the Parent Guarantor or any Material Subsidiary bankrupt or insolvent, or seekingreorganization, arrangement, adjustment or composition of or in respect of the Parent Guarantor or any Material Subsidiaryunder any applicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similarofficial) of the Parent Guarantor or any Material Subsidiary or of any substantial part of their respective properties orordering the winding up or liquidation of their affairs, and any such decree, order or appointment pursuant to anyBankruptcy Law for relief shall continue to be in effect, or any such other decree, appointment or order shall be unstayedand in effect, for a period of 100 consecutive days; or
(ix) (A) the Parent Guarantor or any Material Subsidiary (x) commences a voluntary case or proceedingunder any applicable Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or insolvent or (y)consents to the filing of a petition, application, answer or consent seeking reorganization or relief under any applicableBankruptcy Law, (B) the Parent Guarantor or any Material Subsidiary consents to the entry of a decree or order for relief inrespect of the Parent Guarantor or such Material Subsidiary in an involuntary case or proceeding under any applicableBankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it or, (C) the ParentGuarantor or any Material Subsidiary (x) consents to the appointment of, or taking possession by, a custodian, receiver,liquidator, administrator, supervisor, assignee, trustee, sequestrator or similar official of the Parent Guarantor or suchMaterial Subsidiary or of any substantial part of their respective properties, (y) makes an assignment for the benefit ofcreditors or (z) admits in writing its inability to pay its debts generally as they become due.
(b) If a Default or an Event of Default occurs and is continuing and is known to a responsible officer of theTrustee, the Trustee shall mail to each Holder notice of the Default or Event of Default within 15 Business Days after itsoccurrence by registered or certified mail or facsimile transmission of an Officer’s Certificate specifying such event, noticeor other action, its status and what action the Issuers are taking or proposes to take with respect thereto. Except in the case ofa Default or an Event of Default in payment of principal of, premium, if any, and Additional Amounts or interest on anyNotes, the Trustee may withhold the notice to the Holders of such Notes if its Trust Officers in good faith determines thatwithholding the notice is in the interests of the Holders. The Trustee shall not be deemed to have knowledge of a Defaultunless a Trust Officer has actual knowledge of such Default. The Issuers and the Parent Guarantor shall also notify theTrustee within 15 Business Days of the occurrence of any Default stating what action, if any, they are taking with respect tothat Default.
SECTION 6.02. Acceleration.
-72-
(a) If an Event of Default with respect to the Notes (other than an Event of Default specified in clauses (viii) or(ix) of Section 6.01(a)) occurs and is continuing, the Trustee or the Holders of not less than 30% in aggregate principalamount of the Notes then outstanding by written notice to the Issuers and the Parent Guarantor (and to the Trustee if suchnotice is given by the Holders) may, and the Trustee, upon the written request of such Holders shall, declare the principalamount of, premium, if any, and any Additional Amounts and accrued interest on all of the outstanding Notes immediatelydue and payable, and upon any such declaration all such amounts payable in respect of the Notes shall become immediatelydue and payable.
(b) If an Event of Default specified in clauses (viii) or (ix) of Section 6.01(a) occurs and is continuing, then theprincipal amount of, premium, if any, and Additional Amounts and accrued and unpaid interest on all of the outstandingNotes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee orany Holder.
(c) At any time after a declaration of acceleration under this Indenture, but before a judgment or decree forpayment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of theoutstanding Notes, by written notice to the Issuers, the Parent Guarantor and the Trustee, may rescind and annul suchdeclaration of acceleration and its consequences if:
(i) the Parent Guarantor or either Issuer has paid or deposited with the Trustee a sum sufficient to pay:
(A) all overdue interest and Additional Amounts, if any, on all Notes then outstanding;
(B) all unpaid principal of and premium, if any, on any outstanding Notes that have become dueotherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes;
(C) to the extent that payment of such interest is lawful, interest upon overdue interest andoverdue principal at the rate borne by the Notes; and
(D) all sums paid or advanced by the Trustee under this Indenture and the reasonablecompensation, expenses, disbursements and advances of the Trustee, its agents and counsel;
(ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and
(iii) all Events of Default, other than the non-payment of amounts of principal of, premium, if any, and anyAdditional Amounts and interest on the Notes that have become due solely by such declaration of acceleration, have beencured or waived as provided in Section 6.04.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
(d) In the event of a declaration of acceleration of the Notes because an Event of Default as described in Section6.01(a)(v) has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if theevent of default or payment default triggering such Event of Default pursuant to Section 6.01(a)(v) shall be remedied orcured, or waived by the holders of the Debt that gave rise to such Event of Default, or such Debt shall have been dischargedin full, within 20 days after the Event of Default arose and if (1) the annulment of the acceleration (if applicable) of theNotes would not conflict
-73-
with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpaymentof principal, premium or interest, including Additional Amounts, if any, on the Notes that became due solely because of theacceleration of the Notes, have been cured or waived.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may in itsdiscretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings asthe Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of anycovenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other properremedy.
All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee,without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any suchproceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery ofjudgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances ofthe Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has beenrecovered.
SECTION 6.04. Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amountof the outstanding Notes may, by written notice to the Trustee, on behalf of the Holders of all the Notes, waive any pastDefault hereunder and its consequences, except a Default:
(a) in the payment of the principal of, premium, if any, Additional Amounts, if any, or interest on anyNote; or
(b) in respect of a covenant or provision hereof which under Article Nine cannot be modified oramended without the consent of the holders of 90% of the outstanding Notes.
Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemedto have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Defaultor Event of Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority. The Holders of a majority in aggregate principal amount of the Notes maydirect the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising anytrust or power conferred on the Trustee under this Indenture; provided that:
(a) the Trustee may refuse to follow any direction that conflicts with law, this Indenture or that theTrustee determines, without obligation, in good faith may be unduly prejudicial to the rights of Holders not joiningin the giving of such direction;
(b) the Trustee may refuse to follow any direction that the Trustee determines is unduly prejudicial tothe rights of other Holders or would involve the Trustee in personal liability; and
(c) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent withsuch direction.
SECTION 6.06. Limitation on Suits. A Holder may not institute any proceedings or pursue any remedy withrespect to this Indenture or the Notes unless:
-74-
(a) the Holders of at least 30% in aggregate principal amount of outstanding Notes shall have made awritten request to the Trustee to pursue such remedy;
(b) such Holder or Holders offer the Trustee indemnity and/or security (including by way of pre-funding) reasonably satisfactory to the Trustee against any costs, liability or expense;
(c) the Trustee does not comply with the request within 30 days after receipt of the request and the offerof indemnity and/or security (including by way of pre-funding); and
(d) during such 30-day period, the Holders of a majority in aggregate principal amount of theoutstanding Notes do not give the Trustee a direction that is inconsistent with the request.
The limitations in the foregoing provisions of this Section 6.06, however, do not apply to a suit instituted by aHolder for the enforcement of the payment of the principal of, premium, if any, Additional Amounts, if any, or interest, ifany, on such Note on or after the respective due dates expressed in such Note.
A Holder may not use this Indenture to prejudice the rights of any other Holder or to obtain a preference or priorityover another Holder.
SECTION 6.07. Unconditional Right of Holders to Bring Suit for Payment. Notwithstanding any otherprovision of this Indenture, the right of any Holder to bring suit for the enforcement of payment of principal, premium, ifany, Additional Amounts, if any, and interest, if any, on the Notes held by such Holder, on or after the respective due datesexpressed in the Notes shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. The Issuers covenant that if default is made in the payment of:
(a) any installment of interest on any Note when such interest becomes due and payable and suchdefault continues for a period of 30 days, or
(b) the principal of (or premium, if any, on) any Note at the Maturity thereof,
the Issuers shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Notes, the wholeamount then due and payable on such Notes for principal (and premium, if any), Additional Amounts, if any and interest,and interest on any overdue principal (and premium, if any) and Additional Amounts, if any and, to the extent that paymentof such interest shall be legally enforceable, upon any overdue installment of interest, at the rate borne by the Notes, and, inaddition thereto, such further amount as shall be sufficient to cover the amounts provided for in Section 7.05 and suchfurther amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation,expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Issuers fail to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of anexpress trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute suchproceeding to judgment or final decree and may enforce the same against the Issuers or any other obligor upon the Notesand collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Issuersor any other obligor upon the Notes, wherever situated.
-75-
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papersor documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for theproperly incurred compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any otheramounts due the Trustee under Section 7.05) and the Holders allowed in any judicial proceedings relative to any of theIssuers or Guarantors, their creditors or their property and, unless prohibited by law or applicable regulations, may vote onbehalf of the Holders at their direction in any election of a trustee in bankruptcy or other Person performing similarfunctions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to theTrustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to theTrustee any amount due it for the properly incurred compensation, expenses, disbursements and advances of the Trustee, itsagents and its counsel, and any other amounts due the Trustee under Section 7.05. To the extent that the payment of anysuch compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts dueto the Trustee under Section 7.05 out of the estate in any such proceeding, shall be denied for any reason, payment of thesame shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money securities and otherproperties which the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan ofreorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt onbehalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights ofany Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Application of Money Collected. If the Trustee collects any money or property pursuant to thisArticle Six, it shall pay out the money or property in the following order:
FIRST: to the Trustee and any Agent for amounts due under Section 7.05;
SECOND: to Holders for amounts due and unpaid on the Notes for principal of, premium, if any, interest, ifany, and Additional Amounts, if any, ratably, without preference or priority of any kind, accordingto the amounts due and payable on the Notes for principal, premium, if any, interest, if any, andAdditional Amounts, if any, respectively; and
THIRD: to the Issuers, any Guarantor or any other obligors of the Notes, as their interests may appear, or as acourt of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. Atleast 30 days before such record date, the Issuers shall mail to each Holder and the Trustee a notice that states the recorddate, the payment date and amount to be paid. This Section 6.10 is subject at all times to the provisions set forth in Section11.02.
SECTION 6.11. Undertaking for Costs. A court may in its discretion require, in any suit for the enforcement ofany right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee,the filing by any party litigant in the suit of an undertaking to pay the costs of such suit, and such court may in its discretionassess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to themerits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by theTrustee, a suit by Holders of more than 10% in aggregate principal amount of the outstanding Notes or to any suit by anyHolder pursuant to Section 6.07.
-76-
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceedingto enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason,or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determinationin such proceeding, the Issuers, any Guarantor, the Trustee and the Holders shall be restored severally and respectively totheir former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue asthough no such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise provided with respect to thereplacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07, no right or remedy herein conferredupon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every rightand remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy givenhereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, orotherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of anyNote to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitutea waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Six or bylaw to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by theTrustee or by the Holders, as the case may be.
SECTION 6.15. Record Date. The Issuers may set a record date for purposes of determining the identity ofHolders entitled to vote or to consent to any action by vote or consent authorized or permitted by Sections 6.04 and 6.05.Unless this Indenture provides otherwise, such record date shall be the later of 30 days prior to the first solicitation of suchconsent or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 2.05 prior to suchsolicitation.
SECTION 6.16. Waiver of Stay or Extension Laws. Each Issuer covenants (to the extent that it may lawfully doso) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of,any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or theperformance of this Indenture; and the Issuers (to the extent that it may lawfully do so) hereby expressly waives all benefitor advantage of any such law and covenants that it shall not hinder, delay or impede the execution of any power hereingranted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had beenenacted.
ARTICLE 7 TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing of which a Trust Officer of the Trustee has actualknowledge, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, the IntercreditorAgreement, and any Additional Intercreditor Agreement and use the same degree of care and skill in their exercise as aprudent person would exercise or use under the circumstances in the conduct of such person’s own affairs;
(b) Subject to the provisions of Section 7.01(a), (i) the Trustee undertakes to perform such duties and only suchduties as are specifically set forth in this Indenture, the Intercreditor Agreement, any Additional Intercreditor Agreement andno others and no implied covenants or obligations shall be read
-77-
into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as tothe truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished tothe Trustee and conforming to the requirements of this Indenture, the Intercreditor Agreement and any AdditionalIntercreditor Agreement. In the case of any such certificates or opinions which by any provisions hereof are specificallyrequired to be furnished to the Trustee, the Trustee, shall examine same to determine whether they conform to therequirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other factsstated therein);
(c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to actor its own willful misconduct, except that:
(i) this clause (d) does not limit the effect of Section 7.01(b);
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer of theTrustee unless it is proved 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 inaccordance with a direction received by it pursuant to Section 6.02 or 6.05;
(d) The Trustee and any Paying Agent shall not be liable for interest on any money received by it except as theTrustee and any Paying Agent may agree in writing with the Issuers or the Subsidiary Guarantors. Money held in trust bythe Trustee or the Principal Paying Agent need not be segregated from other funds except to the extent required by law and,for the avoidance of doubt, shall not be held in accordance with the UK Client Money Rules;
(e) No provision of this Indenture, the Intercreditor Agreement, or any Additional Intercreditor Agreement shallrequire the Trustee, each Agent, or the Principal Paying Agent to expend or risk its own funds or otherwise incur financialliability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall havegrounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not assured to it; and
(f) Any provisions hereof or of the Intercreditor Agreement or any Additional Intercreditor Agreement relatingto the conduct or affecting the liability of or affording protection to the Trustee or each Agent, as the case may be, shall besubject to the provisions of this Section 7.01.
SECTION 7.02. Certain Rights of Trustee.
(a) Subject to Section 7.01:
(i) following the occurrence of a Default or an Event of Default, the Trustee is entitled to require allAgents to act under its direction;
(ii) the Trustee may rely conclusively, and shall be protected in acting or refraining from acting, upon anyresolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note,other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presentedby the proper person;
(iii) before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion ofCounsel or both, which shall conform to Section 12.04. The Trustee
-78-
shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion andsuch certificate or opinion will be equal to complete authorization;
(iv) the Trustee may act through its attorneys and agents and shall not be responsible for the misconduct ornegligence of any attorney or agent appointed with due care by it hereunder;
(v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by thisIndenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee securityand/or indemnity (including by way of pre-funding) satisfactory to the Trustee against the costs, expenses and liabilities thatmight be incurred by it in compliance with such request or direction;
(vi) unless otherwise specifically provided in this Indenture, any demand, request, direction or notice fromeither Issuer will be sufficient if signed by an officer of such Issuer;
(vii) the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to beauthorized or within its rights or powers;
(viii) whenever, in the administration of this Indenture, the Intercreditor Agreement and anyAdditional Intercreditor Agreement, the Trustee shall deem it desirable that a matter be proved or established prior to taking,suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in theabsence of bad faith on its part, rely upon an Officer’s Certificate;
(ix) The Trustee shall not be bound to make any investigation into the facts or matters stated in anyresolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note,other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, individually, may make suchfurther inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make suchfurther inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuers personally orby agent or attorney;
(x) the Trustee shall not be required to give any bond or surety with respect to the performance of its dutiesor the exercise of its powers under this Indenture;
(xi) in the event the Trustee receives inconsistent or conflicting requests and indemnity from two or moregroups of Holders, each representing less than a majority in aggregate principal amount of the Notes then outstanding,pursuant to the provisions of this Indenture, the Trustee, in its discretion, may determine what action, if any, will be taken;
(xii) the permissive rights of the Trustee to take the actions permitted by this Indenture will not be construedas an obligation or duty to do so;
(xiii) delivery of reports, information and documents to the Trustee under Section 4.19 is forinformational purposes only and the Trustee’s receipt of the foregoing will not constitute actual or constructive notice of anyinformation contained therein or determinable from information contained therein, including the Parent Guarantor’s or anyof its Restricted Subsidiary’s compliance with any of their covenants hereunder (as to which the Trustee is entitled to relyexclusively on Officer’s Certificates);
-79-
(xiv) the rights, privileges, protections, immunities and benefits given to the Trustee in this Indenture,including, without limitation, its rights to be indemnified and compensated, are extended to, and will be enforceable by, theTrustee in its capacities hereunder, by the Registrar, the Agents, and each agent, custodian and other Person employed to acthereunder;
(xv) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel will,subject to Section 7.01(c), be full and complete authorization and protection from liability in respect of any action taken,suffered or omitted by it hereunder in good faith and in reliance thereon;
(xvi) the Trustee shall have no duty to inquire as to the performance of the covenants of the Parent Guarantorand/or its Restricted Subsidiaries in Article Four hereof;
(xvii) the Trustee shall not have any obligation or duty to monitor, determine or inquire as tocompliance, and shall not be responsible or liable for compliance with restrictions on transfer, exchange, redemption,purchase or repurchase, as applicable, of minimum denominations imposed under this Indenture or under applicable law orregulation with respect to any transfer, exchange, redemption, purchase or repurchase, as applicable, of any interest in anyNotes, but may at its sole discretion, choose to do so;
(xviii) in no event shall the Trustee be responsible or liable for any failure or delay in the performanceof its obligations hereunder arising out of, or caused by, directly or indirectly, forces beyond its control, including, withoutlimitation, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God; it beingunderstood that the Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry toresume performance as soon as practicable under the circumstances; and
(xix) the Trustee shall not under any circumstance be liable for any consequential loss or punitive damages(including loss of business, goodwill, opportunity or profit of any kind) of the Issuers, any Guarantor or any RestrictedSubsidiary.
(b) The Trustee may request that the Issuers deliver an Officer’s Certificate setting forth the names of theindividuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, whichOfficer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specifiedas so authorized in any such certificate previously delivered and not superseded.
(c) The Trustee is not required to give any bond or surety with respect to the performance of its duties or theexercise of its powers under this Indenture or the Notes.
(d) The Trustee will not be liable to any person if prevented or delayed in performing any of its obligations ordiscretionary functions under this Indenture by reason of any present or future law applicable to it, by any governmental orregulatory authority or by any circumstances beyond its control.
(e) Notwithstanding anything else herein contained, the Trustee and Agents may refrain without liability fromdoing anything that would or might in its opinion be contrary to any law of any state or jurisdiction (including but notlimited to include the European Union, the United Kingdom and the United States of America or any jurisdiction forming apart of it) or any directive or regulation of any agency of any such state or jurisdiction and may without liability do anythingwhich is, in its opinion, necessary to comply with any such law, directive or regulation.
-80-
(f) The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in thatjurisdiction would, in its opinion, based upon legal advice in the relevant jurisdiction, be contrary to any law of thatjurisdiction or, to the extent applicable, the State of New York.
(g) The Trustee may assume without inquiry in the absence of actual knowledge that the Issuers are dulycomplying with their obligations contained in this Indenture required to be performed and observed by it, and that noDefault or Event of Default or other event which would require repayment of the Notes has occurred.
SECTION 7.03. Individual Rights of Trustee. The Trustee, any Transfer Agent, any Paying Agent, anyRegistrar or any other agent of the Issuers or of the Trustee, in its individual or any other capacity, may become the owner orpledgee of Notes and, may otherwise deal with the Issuers with the same rights it would have if it were not Trustee, PayingAgent, Transfer Agent, Registrar or such other agent. The Trustee may accept deposits from, lend money to, and generallyengage in any kind of banking, trust or other business with either Issuer or any of their respective Affiliates or Subsidiariesas if it were not performing the duties specified herein, in the Intercreditor Agreement and any Additional IntercreditorAgreement, and may accept fees and other consideration from the Issuers for services in connection with this Indenture andotherwise without having to account for the same to the Trustee or to the Holders from time to time.
SECTION 7.04. Disclaimer of Trustee. The recitals contained herein and in the Notes, except for the Trustee’scertificates of authentication, shall be taken as the statements of the Issuers, and the Trustee assumes no responsibility fortheir correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or the Notes, exceptthat the Trustee represents that it is duly authorized to execute and deliver this Indenture and to authenticate the Notes. TheTrustee shall not be accountable for the Issuers’ use of the proceeds from the Notes or any money paid to the Issuers or uponthe Issuers’ direction under any provision of this Indenture nor shall it be responsible for the use or application of anymoney received by any Paying Agent other than the Trustee.
SECTION 7.05. Compensation and Indemnity. The Issuers, failing which the Guarantors, shall pay to theTrustee such compensation as shall be agreed in writing for its services hereunder. The Trustee’s compensation shall not belimited by any law on compensation of a trustee of an express trust. The Issuers, failing which the Guarantors, shallreimburse the Trustee promptly upon request for all properly incurred disbursements, advances or expenses incurred ormade by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include theproperly incurred compensation, disbursements, advances and expenses of the Trustee’s agents and counsel.
The Issuers, failing which the Guarantors, shall indemnify the Trustee against any and all loss, liability or expense(including attorneys’ fees and expenses) incurred by it without willful misconduct or negligence on its part arising out of orin connection with the administration of this trust and the performance of its duties hereunder (including the costs andexpenses of enforcing this Indenture, the Intercreditor Agreement and any Additional Intercreditor Agreement against theIssuers and the Guarantors (including this Section 7.05) and defending itself against any claim, whether asserted by theIssuers, the Guarantors, any Holder or any other Person, or liability in connection with the execution and performance of anyof their powers and duties hereunder). The Trustee shall notify the Issuers promptly of any claim for which it may seekindemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers or any Guarantor of its obligationshereunder. The Issuers shall, at the sole discretion of the Trustee, as applicable, defend the claim and the Trustee maycooperate and may participate at the Issuers’ expense in such defense. Alternatively, the Trustee may at its option haveseparate counsel of its own choosing and the Issuers shall pay the properly incurred fees and expenses of such counsel. TheIssuers need not pay for any settlement made without its consent, which consent may not be unreasonably withheld. TheIssuers
-81-
shall not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through theTrustee’s own willful misconduct, negligence or bad faith.
To secure the Issuers’ payment obligations in this Section 7.05, the Trustee shall have a Lien prior to the Notes onall money or property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust topay principal of, premium, if any, additional amounts, if any, and interest on particular Notes. Such Lien shall survive thesatisfaction and discharge of all Notes under this Indenture.
When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(a)(viii) or (ix) withrespect to the Issuers, the Guarantors, or any Restricted Subsidiary, the expenses are intended to constitute expenses ofadministration under Bankruptcy Law.
The Issuers’ obligations under this Section 7.05 and any claim or Lien arising hereunder shall survive theresignation or removal of any Trustee, the satisfaction and discharge of the Issuers’ obligations pursuant to Article Eight andany rejection or termination under any Bankruptcy Law, and the termination of this Indenture.
SECTION 7.06. Replacement of Trustee. A resignation or removal of the Trustee and appointment of asuccessor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in thisSection 7.06.
The Trustee may resign at any time without giving any reason by so notifying the Issuers. The Holders of a majorityin outstanding principal amount of the outstanding Notes may remove the Trustee by so notifying the Trustee and theIssuers. The Issuers shall remove the Trustee if:
(a) the Trustee fails to comply with Section 7.09;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee or its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the office of Trustee for any reason, the Issuers shallpromptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority inprincipal amount of the outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by theIssuers. If the successor Trustee does not deliver its written acceptance required by the next succeeding paragraph of thisSection 7.06 within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the Holders ofa majority in principal amount of the outstanding Notes may, at the expense of the Issuers, petition any court of competentjurisdiction for the appointment of 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 allthe rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its successionto Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; providedthat all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.05.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiringTrustee, the Issuers or the Holders of at least 30% in outstanding principal amount of
-82-
the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of theIssuers. Without prejudice to the right of the Issuers to appoint a successor Trustee in accordance with the provisions of thisIndenture, the retiring Trustee may appoint a successor Trustee at any time prior to the date on which a successor Trusteetakes office.
If the Trustee fails to comply with Section 7.09, any Holder who has been a bona fide Holder of a Note for at leastsix months may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of asuccessor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section 7.06, the Issuers’ and the Guarantors’obligations under Section 7.05 shall continue for the benefit of the retiring Trustee.
SECTION 7.07. Successor Trustee by Merger. Any corporation into which the Trustee may be merged orconverted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidationto which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust businessof the Trustee, shall be the successor of the Trustee hereunder; provided such corporation shall be otherwise qualified andeligible under this Article Seven, without the execution or filing of any paper or any further act on the part of any of theparties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, anysuccessor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliverthe Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. In case atthat time any of the Notes shall not have been authenticated, any successor Trustee may authenticate such Notes either in thename of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have thefull force and effect which this Indenture provides for the certificate of authentication of the Trustee shall have; providedthat the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of anypredecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
SECTION 7.08. [Reserved].
SECTION 7.09. Eligibility; Disqualification. There will at all times be a Trustee hereunder that is a corporationorganized and doing business under the laws of England and Wales or the United States of America or of any state thereofthat is authorized under such laws to exercise corporate trustee power and which is generally recognized as a corporationwhich customarily performs such corporate trustee roles and provides such corporate trustee services in transactions similarin nature to the offering of the Notes as described in the Offering Memorandum.
SECTION 7.10. Appointment of Co-Trustee.
(a) It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction denying orrestricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It isrecognized that in case of litigation under this Indenture, and in particular in case of the enforcement thereof on Default, orin the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of thepowers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted or take anyaction which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint anindividual or institution as a separate or co-trustee.
(b) In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, eachand every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and Lien expressed orintended by this Indenture to be exercised by or vested in or conveyed to the
-83-
Trustee with respect thereto shall be exercisable by and vest in such separate or co-trustee but only to the extent necessary toenable such separate or co-trustee to exercise such powers, rights and remedies, and only to the extent that the Trustee by thelaws of any jurisdiction is incapable of exercising such powers, rights and remedies, and every covenant and obligationnecessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.
(c) Should any instrument in writing from the Issuers be required by the separate or co-trustee so appointed bythe Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, dutiesand obligations, any and all such instruments in writing shall to the extent permitted by the laws of the State of New Yorkand the jurisdictions of organization of the Issuers, on request, be executed, acknowledged and delivered by the Issuers;provided that if an Event of Default shall have occurred and be continuing, if the Issuers do not execute any such instrumentwithin 15 days after request therefor, the Trustee shall be empowered as an attorney-in-fact for the Issuers to execute anysuch instrument in the Issuers’ name and stead. In case any separate or co-trustee or a successor to either shall die, becomeincapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of suchseparate or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of anew trustee or successor to such separate or co-trustee.
(d) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to thefollowing provisions and conditions:
(i) all rights and powers, conferred or imposed upon the Trustee shall be conferred or imposed upon andmay be exercised or performed by such separate trustee or co-trustee; and
(ii) no trustee hereunder shall be liable by reason of any act or omission of any other trustee hereunder.
(e) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of thethen separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separatetrustee or co-trustee shall refer to this Indenture and the conditions of this Article Seven.
(f) Any separate trustee or co-trustee may at any time appoint the Trustee as its agent or attorney-in-fact withfull power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on itsbehalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, allof its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted bylaw, without the appointment of a new or successors trustee.
SECTION 7.11. Resignation of Agents.
(a) Any Agent may resign its appointment hereunder at any time without the need to give any reason andwithout being responsible for any costs associated therewith by giving to the Issuers and the Trustee and (except in the caseof resignation of the Principal Paying Agent) the Principal Paying Agent 30 days’ written notice to that effect (waivable bythe Issuers and the Trustee); provided that in the case of resignation of the Principal Paying Agent no such resignation shalltake effect until a new Principal Paying Agent (approved in advance in writing by the Trustee) shall have been appointed bythe Issuers to exercise the powers and undertake the duties hereby conferred and imposed upon the Principal Paying Agent.Following receipt of a notice of resignation from any Agent, the Issuers shall promptly give notice thereof to the Holders inaccordance with Section 12.02. Such notice shall expire at least 30 days before or after any due date for payment in respectof the Notes.
-84-
(b) If any Agent gives notice of its resignation in accordance with this Section 7.11 and a replacement Agent isrequired and by the tenth day before the expiration of such notice such replacement has not been duly appointed, such Agentmay itself appoint as its replacement any reputable and experienced financial institution. Immediately following suchappointment, the Issuers shall give notice of such appointment to the Trustee, the remaining Agents and the Holderswhereupon the Issuers, the Trustee, the remaining Agents and the replacement Agent shall acquire and become subject to thesame rights and obligations between themselves as if they had entered into an agreement in the form mutatis mutandis ofthis Indenture.
(c) Upon its resignation becoming effective the Principal Paying Agent shall forthwith transfer all moneys heldby it hereunder hereof to the successor Principal Paying Agent or, if none, the Trustee or to the Trustee’s order, but shallhave no other duties or responsibilities hereunder, and shall be entitled to the payment by the Issuers of its remuneration forthe services previously rendered hereunder and to the reimbursement of all reasonable expenses (including legal fees)incurred in connection therewith.
SECTION 7.12. Agents General Provisions.
(a) Actions of Agents. The rights, powers, duties and obligations and actions of each Agent under this Indentureare several and not joint or joint and several.
(b) Agents of Trustee. The Issuers and the Agents acknowledge and agree that in the event of a Default or Eventof Default, the Trustee may, by notice in writing to the Issuers and the Agents, require that the Agents act as agents of, andtake instructions exclusively from, the Trustee. Prior to receiving such written notification from the Trustee, the Agents shallbe the agents of the Issuers and need have no concern for the interests of the Holders.
(c) Funds held by Agents. The Agents will hold all funds as banker subject to the terms of this Indenture and asa result, such money will not be held in accordance with the rules established by the Financial Conduct Authority in theFinancial Conduct Authority’s Handbook of rules and guidance from time to time in relation to client money.
(d) Publication of Notices. Any obligation the Agents may have to publish a notice to Holders of Global Noteson behalf of the Issuers will be met upon delivery of the notice to DTC.
(e) Instructions. In the event that instructions given to any Agent are not reasonably clear, then such Agent shallbe entitled to seek clarification from the Issuers or other party entitled to give the Agents instructions under this Indenture bywritten request promptly, and in any event within one Business Day of receipt by such Agent of such instructions. If anAgent has sought clarification in accordance with this Section 7.12, then such Agent shall be entitled to take no action untilsuch clarification is provided, and shall not incur any liability for not taking any action pending receipt of such clarification.
(f) No Fiduciary Duty. No Agent shall be under any fiduciary duty or other obligation towards, or have anyrelationship of agency or trust, for or with any person other than the Issuers.
(g) Mutual Undertaking. Each Party shall, within ten Business Days of a written request by another Party,supply to that other Party such forms, documentation and other information relating to it, its operations, or the Notes as thatother Party reasonably requests for the purposes of that other Party's compliance with Applicable Law and shall notify therelevant other Party reasonably promptly in the event that it becomes aware that any of the forms, documentation or otherinformation provided by such Party is (or becomes) inaccurate in any material respect; provided, however, that no Partyshall be required to provide any forms, documentation or other information pursuant to this Section 7.12(g) to the extentthat:
-85-
(i) any such form, documentation or other information (or the information required to be provided on such form ordocumentation) is not reasonably available to such Party and cannot be obtained by such Party using reasonable efforts; or(ii) doing so would or might in the reasonable opinion of such Party constitute a breach of any: (a) Applicable Law; (b)fiduciary duty; or (c) duty of confidentiality. For purposes of this Section 7.12(g), “Applicable Law” shall be deemed toinclude (i) any rule or practice of any Authority by which any Party is bound or with which it is accustomed to comply; (ii)any agreement between any Authorities; and (iii) any agreement between any Authority and any Party that is customarilyentered into by institutions of a similar nature.
(h) Tax Withholding.
(i) The Issuers shall notify each Agent in the event that they determine that any payment to be made by anAgent under the Notes is a payment which could be subject to FATCA Withholding if such payment were made to arecipient that is generally unable to receive payments free from FATCA Withholding, and the extent to which the relevantpayment is so treated; provided, however, that the Issuers’ obligations under this Section 7.12(h) shall apply only to theextent that such payments are so treated by virtue of characteristics of either Issuer, the Notes, or both.
(ii) Notwithstanding any other provision of this Indenture, each Agent shall be entitled to make a deduction orwithholding from any payment which it makes under the Notes for or on account of any Tax, if and only to the extent sorequired by Applicable Law, in which event the Agent shall make such payment after such deduction or withholding hasbeen made and shall account to the relevant Authority within the time allowed for the amount so deducted or withheld or, atits option, shall reasonably promptly after making such payment return to the Issuers the amount so deducted or withheld, inwhich case, the Issuers shall so account to the relevant Authority for such amount. For the avoidance of doubt, FATCAWithholding is a deduction or withholding which is deemed to be required by Applicable Law for the purposes of thisSection 7.12(h)(ii).
ARTICLE 8 DEFEASANCE; SATISFACTION AND DISCHARGE
SECTION 8.01. Issuers’ Option to Effect Defeasance or Covenant Defeasance. The Issuers and the ParentGuarantor may, at their option and at any time prior to the Stated Maturity of the Notes, by a resolution of their Board ofDirectors, at any time, with respect to the Notes, elect to have either Section 8.02 or Section 8.03 be applied to alloutstanding Notes upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. Defeasance and Discharge. Upon the Issuers’ or the Parent Guarantor’s exercise underSection 8.01 of the option applicable to this Section 8.02, the Issuers, the Parent Guarantor and the Subsidiary Guarantorsshall be deemed to have been discharged from their obligations with respect to the Notes on the date the conditions set forthin Section 8.04 are satisfied (hereinafter, “legal defeasance”). For this purpose, such legal defeasance means that the Issuersshall be deemed to have paid and discharged the entire Debt represented by the outstanding Notes and to have satisfied alltheir other obligations under the Notes and this Indenture (and the Trustee, at the expense of the Issuers, shall execute properinstruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated ordischarged hereunder: (a) the rights of Holders of outstanding Notes to receive, solely from the trust fund described inSection 8.08 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on)and interest on such Notes when such payments are due, (b) the provisions set forth in Section 8.06, (c) the rights, powers,trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Guarantors’ obligations in connectiontherewith and (d) this Section 8.02. Subject to compliance with this Article Eight, the Issuers and the Parent Guarantor may
-86-
exercise their option under this Section 8.02 notwithstanding the prior exercise of their option under Section 8.03 withrespect to the Notes. If the Issuers or the Parent Guarantor exercises their legal defeasance option, payment of the Notes maynot be accelerated because of an Event of Default.
If the Issuers exercise their legal defeasance option, each Guarantor, if any, shall be released from all its obligationsunder its Guarantee, and the Trustee shall execute a release of such Guarantee.
SECTION 8.03. Covenant Defeasance. Upon the Issuers’ or the Parent Guarantor’s exercise under Section 8.01of the option applicable to this Section 8.03, the Issuers, the Parent Guarantor and the Subsidiary Guarantors shall bereleased from their obligations under any covenant contained in Sections 4.04 through 4.11 (inclusive), Sections 4.13through 4.17 (inclusive), Sections 4.19 through 4.21 (inclusive) and Section 5.01 with respect to the Notes on and after thedate the conditions set forth in Section 8.04 are satisfied (hereinafter, “covenant defeasance”). For this purpose, suchcovenant defeasance means that, the Issuers and the Parent Guarantor may omit to comply with and shall have no liability inrespect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of anyreference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provisionherein or in any other document and such omission to comply shall not constitute a Default or an Event of Default, but,except as specified in this Section 8.03, the remainder of this Indenture and such Notes shall be unaffected thereby.
SECTION 8.04. Conditions to Defeasance. In order to exercise either legal defeasance or covenant defeasance:
(a) the Issuers or the Parent Guarantor must irrevocably deposit or cause to be deposited as trust fundsin trust with the Trustee (or such other party as directed by the Trustee), for the benefit of the Holders, cash in U.S.dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient, inthe opinion of an internationally recognized law firm of independent public accountants, to pay and discharge theprincipal of, premium, if any, and accrued and unpaid interest and any Additional Amounts, if any, on theoutstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Issuersor the Parent Guarantor must (i) specify whether the Notes are being defeased to maturity or to a particularRedemption Date; and (ii) if applicable, have delivered to the Trustee an irrevocable notice to redeem all of theoutstanding Notes of such principal, premium, if any, or interest;
(b) in the case of an election under Section 8.02, the Issuers or the Parent Guarantor shall have deliveredto the Trustee an Opinion of Counsel reasonably acceptable to the Trustee stating that (A) the U.S. Internal RevenueService has either published a revenue ruling or issued to the Issuers a private letter ruling, or (B) since the IssueDate, there has been a change in applicable U.S. federal income tax law, in either case to the effect that, and basedthereon such opinion shall confirm that, the beneficial owners of the outstanding Notes will not recognize income,gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will 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 ifsuch legal defeasance had not occurred;
(c) in the case of an election under Section 8.03, the Issuers or the Parent Guarantor shall have deliveredto the Trustee an Opinion of Counsel reasonably acceptable to the Trustee to the effect that the beneficial owners ofthe outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result ofsuch covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same mannerand at the same times as would have been the case if such covenant defeasance had not occurred;
-87-
(d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit(other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or,insofar as bankruptcy or insolvency events described in Section 6.01(a)(viii) or (ix) are concerned, at any timeduring the period ending on the 123rd day after the date of such deposit;
(e) such legal defeasance or covenant defeasance shall not cause the Trustee to have a conflictinginterest as defined in this Indenture with respect to any of the Issuers’ securities;
(f) such legal defeasance or covenant defeasance shall not result in a breach or violation of, orconstitute a default (other than a Default or Event of Default resulting from the borrowing of funds to be applied tosuch deposit) under, this Indenture or any material agreement or instrument to which the Parent Guarantor or anyRestricted Subsidiary is a party or by which the Parent Guarantor or any Restricted Subsidiary is bound;
(g) such legal defeasance or covenant defeasance shall not result in the trust arising from such depositconstituting an investment company within the meaning of the U.S. Investment Company Act of 1940, as amended,unless such trust shall be registered under such Act or exempt from registration thereunder;
(h) the Issuers or the Parent Guarantor shall have delivered to the Trustee an Opinion of Counsel in thecountry of each Issuer’s or the Parent Guarantor’s incorporation to the effect that after the 123rd day following thedeposit, the trust funds shall not be subject to the effect of any applicable bankruptcy, insolvency, reorganization orsimilar laws affecting creditors’ rights generally and an Opinion of Counsel reasonably acceptable to the Trusteethat the Trustee shall have a perfected security interest in such trust funds for the ratable benefit of the Holders;
(i) the Issuers or the Parent Guarantor shall have delivered to the Trustee an Officer’s Certificate statingthat the deposit was not made by the Issuers or the Parent Guarantor with the intent of preferring the Holders overthe other creditors of the Issuers or the Parent Guarantor with the intent of defeating, hindering, delaying ordefrauding creditors of the Issuers or the Parent Guarantor or others, or removing assets beyond the reach of therelevant creditors or increasing debts of the Issuers or the Parent Guarantor to the detriment of the relevant creditors;
(j) no event or condition shall exist that would prevent the Issuers from making payments of theprincipal of, premium, if any, and interest on the Notes on the date of such deposit or at any time ending on the123rd day after the date of such deposit; and
(k) the Issuers or the Parent Guarantor shall have delivered to the Trustee an Officer’s Certificate and anOpinion of Counsel, each stating that all conditions precedent provided for relating to either the legal defeasance orthe covenant defeasance, as the case may be, have been complied with.
If the funds deposited with the Trustee to effect covenant defeasance are insufficient to pay the principal of,premium, if any, and interest on the Notes when due because of any acceleration occurring after an Event of Default, thenthe Issuers and the Guarantors shall remain liable for such payments.
SECTION 8.05. Satisfaction and Discharge of Indenture. This Indenture shall be discharged and shall cease tobe of further effect as to all Notes issued hereunder (except, in each case, as to surviving rights under Section 2.06) when:
-88-
(a) the Issuers or the Parent Guarantor has irrevocably deposited or caused to be deposited with theTrustee (or such other party as directed by the Trustee) as funds in trust for such purpose an amount in cash in U.S.dollars, U.S. Government Securities or a combination thereof sufficient to pay and discharge the entire Debt on suchNotes not theretofore delivered to the Trustee for cancellation, for principal, premium, if any, and accrued andunpaid interest, Additional Amounts, if any, to the date of such deposit (in the case of Notes which have become dueand payable) or to the Stated Maturity or Redemption Date, as the case may be and the Issuers or the ParentGuarantor shall have delivered irrevocable instructions to the Trustee to apply the deposited money toward thepayment of such Notes at Maturity or on the Redemption Date, as the case may be, and either:
(i) all Notes previously authenticated and delivered (other than lost, stolen or destroyed Notesthat have been replaced or paid and Notes for whose payment money has theretofore been deposited in trustor segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from suchtrust, as provided in Section 8.07) have been delivered to the Trustee for cancellation; or
(ii) all Notes not theretofore delivered to the Trustee for cancellation (A) have become due andpayable (by reason of the mailing of a notice of redemption or otherwise) or (B) will become due andpayable at Stated Maturity within one year or (C) are to be called for redemption within one year underarrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the Issuers’name, and at the Issuers’ expense;
(b) the Issuers or the Parent Guarantor has paid or caused to be paid all other amounts payable by theIssuers under this Indenture; and
(c) the Issuers or the Parent Guarantor has delivered an Officer’s Certificate and an Opinion of Counselto the Trustee each stating that: (x) all conditions precedent to satisfaction and discharge have been satisfied, and (y)such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, this Indentureor any other agreement or instrument governed by the laws of the State of New York to which either Issuer or anySubsidiary is a party or by which either Issuer or any Subsidiary is bound.
SECTION 8.06. Survival of Certain Obligations. Notwithstanding Sections 8.01 and 8.03, any obligations of theIssuers, the Parent Guarantor and the Subsidiary Guarantors in Sections 2.02 through 2.14 (inclusive), Section 6.07, Section7.05 and Section 7.06 shall survive until the Notes have been paid in full. Thereafter, any obligations of the Issuers or theParent Guarantor and the Subsidiary Guarantors in Section 7.05 shall survive such satisfaction and discharge. Nothingcontained in this Article Eight shall abrogate any of the obligations or duties of the Trustee under this Indenture.
SECTION 8.07. Acknowledgment of Discharge by Trustee. Subject to Section 8.09, after the conditions ofSection 8.02 or 8.03 have been satisfied, the Trustee upon written request shall acknowledge in writing the discharge of allof the Issuers’, Parent Guarantor’s and Subsidiary Guarantor’s obligations under this Indenture except for those survivingobligations specified in this Article Eight.
SECTION 8.08. Application of Trust Money. Subject to Section 8.09, the Trustee shall hold in trust cash inU.S. dollars or U.S. Government Securities deposited with it pursuant to this Article Eight. It shall apply the deposited cashor U.S. Government Securities through the Paying Agent and in accordance with this Indenture to the payment of principalof, premium, if any, interest, and Additional Amounts, if
-89-
any, on the Notes; but such money need not be segregated from other funds except to the extent required by law.
SECTION 8.09. Repayment to Issuers. Subject to Section 7.05 and Sections 8.01 through 8.04 (inclusive), theTrustee and the Paying Agent shall promptly pay to the Issuers upon request set forth in an Officer’s Certificate any excessmoney held by them at any time and thereupon shall be relieved from all liability with respect to such money. The Trusteeand the Paying Agent shall pay to the Issuers upon request any money held by them for the payment of principal, premium,if any, interest or Additional Amounts, if any, that remains unclaimed for two years; provided that the Trustee or PayingAgent before being required to make any payment may cause to be published (a) through the newswire service ofBloomberg or, if Bloomberg does not then operate, any similar agency and, (b) if and so long as the Notes are listed onEuronext Dublin and the rules and regulations of such exchange so require, a newspaper having a general circulation inIreland (which is expected to be The Irish Times) or, to the extent and in the manner permitted by the rules of EuronextDublin, posted on the official website of Euronext Dublin or mail to each Holder entitled to such money at such Holder’saddress (as set forth in the Security Register) notice that such money remains unclaimed and that after a date specifiedtherein (which shall be at least 30 days from the date of such publication or mailing) any unclaimed balance of such moneythen remaining will be repaid to the Issuers. After payment to the Issuers, Holders entitled to such money must look to theIssuers for payment as general creditors unless an applicable law designates another Person, and all liability of the Trusteeand such Paying Agent with respect to such money shall cease.
SECTION 8.10. Indemnity for Government Securities. The Issuers or the Parent Guarantor shall pay and shallindemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. GovernmentSecurities or the principal, premium, if any, interest, if any, and Additional Amounts, if any, received on such U.S.Government Securities.
SECTION 8.11. Reinstatement. If the Trustee or Paying Agent is unable to apply cash in U.S. dollars or U.S.Government Securities, in accordance with this Article Eight by reason of any legal proceeding or by reason of any order orjudgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, theIssuers’ and the Guarantors’ obligations under this Indenture and the Notes shall be revived and reinstated as though nodeposit had occurred pursuant to this Article Eight until such time as the Trustee or any such Paying Agent is permitted toapply all such cash or U.S. Government Securities in accordance with this Article Eight; provided that, if the Issuers havemade any payment of principal of, premium, if any, interest, if any, and Additional Amounts, if any, on any Notes becauseof the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receivesuch payment from the cash in U.S. dollars or U.S. Government Securities, held by the Trustee or Paying Agent.
ARTICLE 9 AMENDMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
(a) The Issuers, each when authorized by a resolution of its respective Board of Directors (as evidenced by thedelivery of such resolutions to the Trustee), the Guarantors and the Trustee may modify, amend or supplement thisIndenture, any Guarantee or the Notes and the Issuers, each when authorized by a resolution of its Board of Directors, theGuarantors, in each case without notice to or consent of any Holder:
(i) to evidence the succession of another Person to the Parent Guarantor and the assumption by any suchsuccessor of the covenants herein and in the Notes; provided that such
-90-
successor Person would have been permitted to so succeed in a transaction that would have complied with ArticleFive; provided, further, that such transaction need not be of a specific type identified in Article Five (it being understoodthat in the case of any other transaction, the requirements of Article Five shall apply mutatis mutandis);
(ii) to add to the covenants of the Issuers, any Guarantor or any other obligor upon the Notes for the benefitof the Holders or to surrender any right or power conferred upon the Issuers, any Guarantor, or any other obligor upon theNotes, as applicable, herein, in the Notes or in any Guarantees;
(iii) to cure any ambiguity, or to correct or supplement any provision herein, in the Notes or any Guaranteesthat may be defective or inconsistent with any other provision herein or in the Notes or any Guarantee or to make any otherprovisions with respect to matters or questions arising under this Indenture, the Notes or any Guarantee; provided that, ineach case, such provisions shall not adversely affect the rights of the Holders in any material respect;
(iv) to conform the text of this Indenture, the Guarantees or the Notes to any provision of the “Descriptionof the Senior Notes” in the Offering Memorandum to the extent that such provision in such “Description of the SeniorNotes” was intended to be a verbatim recitation of a provision of this Indenture, the Guarantees or the Notes;
(v) to release any Guarantor in accordance with and if permitted by the terms of and limitations set forth inthis Indenture and to add a Subsidiary Guarantor or other guarantor under this Indenture (which shall require execution ofthe relevant supplemental indenture only by the Issuers, the Parent Guarantor and such additional Subsidiary Guarantor(s) orother guarantor(s));
(vi) to evidence and provide the acceptance of the appointment of a successor Trustee hereunder;
(vii) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of theHolders as additional security for the payment and performance of the Issuers’ and any Guarantor’s obligations hereunder,in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which asecurity interest is required to be granted to the Trustee pursuant to this Indenture or otherwise ; or
(viii) to provide for the issuance of Additional Notes in accordance with and if permitted by the termsand limitations set forth in this Indenture.
(b) The Issuers, each when authorized by a resolution of its respective Board of Directors (as evidenced by thedelivery of such resolutions to the Trustee), the Parent Guarantor, the Trustee and the Restricted Subsidiary being added as aSubsidiary Guarantor or other entity becoming a Guarantor under this Indenture may supplement this Indenture to add aSubsidiary Guarantor or other Guarantor under this Indenture (which shall require execution of the relevant supplementalindenture only by the Issuers, the Parent Guarantor and such additional Subsidiary Guarantor(s) or other Guarantor(s)) ineach case without notice to or consent of any Holder.
(c) In formulating its opinion on such matters, the Trustee shall be entitled to require and rely conclusively onsuch evidence as it deems appropriate, including an Opinion of Counsel and an Officer’s Certificate.
SECTION 9.02. With Consent of Holders.
-91-
(a) Except as provided in Section 9.02(b) and Section 6.04 and without prejudice to Section 9.01, the Issuers,the Guarantors and the Trustee may:
(i) modify, amend or supplement this Indenture or the Notes; or
(ii) waive compliance by the Issuers with any provision of this Indenture or the Notes,
with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes thenoutstanding (including consents obtained in connection with a tender offer or in exchange for the Notes) provided that if anyamendment, waiver or other modification will only affect one series of the Notes, only the consent of the Holders of not lessthan a majority in principal amount of the then outstanding Notes of such series shall be required.
(b) Without the consent of the Holders of 90% of the outstanding Notes (provided, however, that if anyamendment, waiver or other modification will only affect one series of the Notes, only the consent of the Holders of at least90% of the aggregate principal amount of such series shall be required (and not the consent of at least 90% of the aggregateprincipal amount of all Notes then outstanding)), with respect to any such Notes held by a non-consenting Holder, noamendment, modification, supplement or waiver, including a waiver pursuant to Section 6.04 and an amendment,modification or supplement pursuant to Section 9.01, may:
(i) change the Stated Maturity of the principal of, or any installment of any Additional Amounts or intereston, any Note;
(ii) reduce the principal amount of any Note (or Additional Amounts or premium, if any) or the rate of orchange the time for payment of interest on any Note;
(iii) change the coin or currency in which the principal of any Note or any premium or any AdditionalAmounts or the interest thereon is payable;
(iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturitythereof (or, in the case of redemption, on or after the Redemption Date);
(v) reduce the principal amount of the outstanding Notes, the consent of whose Holders is required for anyamendment or supplement to, or waiver of certain provisions of this Indenture;
(vi) modify any of the provisions of this Article Nine or any provisions herein relating to the waiver of pastdefaults or relating to the waiver of certain covenants, except to increase the percentage of outstanding Notes required forsuch actions or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent ofthe Holder of each Note affected thereby;
(vii) make any change to the Intercreditor Agreement (and/or any Additional Intercreditor Agreement) orany provisions of this Indenture affecting the ranking of the Notes or the Guarantees, in each case in a manner that adverselyaffects the rights of the Holders; or
(viii) make any change in Section 4.12 that adversely affects the rights of any Holder or amend theterms of the Notes or this Indenture in a way that would result in a loss of an exemption from any of the Taxes describedthereunder or an exemption from any obligation to
-92-
withhold or deduct Taxes so described thereunder unless the Issuers or the Guarantors agree to pay AdditionalAmounts (if any) in respect thereof in the supplemental indenture.
(c) The consent of the Holders will not be necessary under this Indenture to approve the particular form of anyproposed amendment, modification, supplement, waiver or consent. It is sufficient if such consent approves the substance ofthe proposed amendment, modification, supplement, waiver or consent. A consent to any amendment or waiver under thisIndenture by any Holder given in connection with a tender of such Holder’s Notes will not be rendered invalid by suchtender.
SECTION 9.03. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture underthis Article Nine, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form apart of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and deliveredhereunder shall be bound thereby.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment, modification or supplement changes theterms of a Note, the Issuers or the Trustee may require the Holder to deliver it to the Trustee. The Trustee may place anappropriate notation on the Note and on any Note subsequently authenticated regarding the changed terms and return it tothe Holder. Alternatively, if the Issuers so determine, the Issuers in exchange for the Note shall issue and the Trustee shallauthenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shallnot affect the validity of such amendment, modification or supplement.
SECTION 9.05. [Reserved].
SECTION 9.06. Notice of Amendment or Waiver. Promptly after the execution by the Issuers and the Trusteeof any supplemental indenture or waiver pursuant to the provisions of Section 9.02, the Issuers shall give notice thereof tothe Holders of each outstanding Note affected, in the manner provided for in Section 12.02(b), setting forth in general termsthe substance of such supplemental indenture or waiver.
SECTION 9.07. Trustee to Sign Amendments, Etc. The Trustee shall execute any amendment, supplement orwaiver authorized pursuant and adopted in accordance with this Article Nine; provided that the Trustee may, but shall not beobligated to, execute any such amendment, supplement or waiver which affects the Trustee’s own rights, duties orimmunities under this Indenture. The Trustee shall be entitled to receive, if requested, an indemnity and/or security(including by way of pre-funding) satisfactory to it and to receive, and shall be fully protected in relying upon, an Opinionof Counsel and an Officer’s Certificate each stating that the execution of any amendment, supplement or waiver authorizedpursuant to this Article Nine is authorized or permitted by this Indenture and that such amendment has been duly authorized,executed and delivered and is the legally valid and binding obligation of the Issuers and the Guarantors (if any) enforceableagainst them in accordance with its terms, subject to customary exceptions. Such Opinion of Counsel shall be an expense ofthe Issuers.
SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount.
(a) All Notes issued under this Indenture shall vote and consent together on all matters (as to which any of suchNotes may vote) as one class and no series of Notes will have the right to vote or consent as a separate series on any matter;provided, however, that if any amendment, waiver or other modification will only affect one series of Notes, only theconsent of the Holders of not less than a majority in principal amount of the affected series of Notes then outstanding (andnot the consent of the Holders of at least a majority of all Notes), shall be required. Determinations as to whether Holders ofthe requisite aggregate
-93-
principal amount of Notes have concurred in any direction, waiver or consent shall be made in accordance with this ArticleNine and Section 9.08(b).
(b) The aggregate principal amount of the Notes, at any date of determination, shall be the principal amount ofthe Notes at such date of determination. With respect to any matter requiring consent, waiver, approval or other action of theHolders of a specified percentage of the principal amount of all the Notes, such percentage shall be calculated, on therelevant date of determination, by dividing (i) the principal amount, as of such date of determination, of Notes, the Holdersof which have so consented by (b) the aggregate principal amount, as of such date of determination, of the Notes thenoutstanding, in each case, as determined in accordance with the preceding sentence, Section 2.08 and Section 2.09 of thisIndenture. Any such calculation made pursuant to this Section 9.08(b) shall be made by the Issuers and delivered to theTrustee pursuant to an Officer’s Certificate.
ARTICLE 10 GUARANTEE
SECTION 10.01. Notes Guarantees.
(a) (i) The Parent Guarantor hereby fully and, subject to the limitations on the effectiveness and enforceabilityset forth in Section 10.04, unconditionally guarantees, on a senior unsecured, joint and several basis, and (ii) eachSubsidiary Guarantor by execution of a supplemental indenture hereto, fully and, subject to the limitations on theeffectiveness and enforceability set forth in such supplemental indenture, unconditionally guarantees, on a seniorsubordinated, unsecured, joint and several basis, in each case to each Holder and to the Trustee and its successors andassigns on behalf of each Holder, the full payment of principal of, premium, if any, interest, if any, and Additional Amounts,if any on, and all other monetary obligations of the Issuers under this Indenture and the Notes (including obligations to theTrustee and the obligations to pay Additional Amounts, if any) with respect to each Note authenticated and delivered by theTrustee or its agent pursuant to and in accordance with this Indenture, in accordance with the terms of this Indenture (all theforegoing being hereinafter collectively called the “Obligations”). The Guarantors further agree that the Obligations may beextended or renewed, in whole or in part, without notice or further assent from the Guarantors and that the Guarantors shallremain bound under this Article Ten notwithstanding any extension or renewal of any Obligation. All payments under eachGuarantee will be made in U.S. dollars.
(b) The Guarantors hereby agree that their obligations hereunder shall be as if they were each principal debtorand not merely surety, unaffected by, and irrespective of, any invalidity, irregularity or unenforceability of any Note or thisIndenture, any failure to enforce the provisions of any Note or this Indenture, any waiver, modification or indulgencegranted to the Issuers with respect thereto by the Holders or the Trustee, or any other circumstance which may otherwiseconstitute a legal or equitable discharge of a surety or guarantor (except payment in full); provided that notwithstanding theforegoing, no such waiver, modification, indulgence or circumstance shall without the written consent of the Guarantorsincrease the principal amount of a Note or the interest rate thereon or change the currency of payment with respect to anyNote, or alter the Stated Maturity thereof. The Guarantors hereby waive diligence, presentment, demand of payment, filingof claims with a court in the event of merger or bankruptcy of either Issuer, any right to require that the Trustee pursue orexhaust its legal or equitable remedies against either Issuer prior to exercising its rights under a Guarantee (including, for theavoidance of doubt, any right which a Guarantor may have to require the seizure and sale of the assets of such Issuer tosatisfy the outstanding principal of, interest on or any other amount payable under each Note prior to recourse against suchGuarantor or its assets), protest or notice with respect to any Note or the Debt evidenced thereby and all demandswhatsoever, and each covenant that their Guarantee will not be discharged with respect to any Note except by payment infull of the principal thereof and interest thereon or as otherwise provided in this Indenture,
-94-
including Section 10.04. If at any time any payment of principal of, premium, if any, interest, if any, or Additional Amounts,if any, on such Note is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy orreorganization of either Issuer, the Guarantors’ obligations hereunder with respect to such payment shall be reinstated as ofthe date of such rescission, restoration or returns as though such payment had become due but had not been made at suchtimes.
(c) The Guarantors also agree to pay any and all costs and expenses (including reasonable attorneys’ fees)incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
(d) Each Subsidiary Guarantor agrees and each Holder by accepting a Note agrees, for the benefit of the holdersof Senior Debt from time to time of such Subsidiary Guarantor, that prior to the date upon which any Senior Debt of aSubsidiary Guarantor has been unconditionally discharged in full, the obligations of such Subsidiary Guarantor under itsGuarantee may not become due, and neither the Holders nor the Trustee may take any Enforcement Action against suchSubsidiary Guarantor without the prior consent of the applicable Senior Agent or Senior Agents unless:
(i) an Event of Default specified in Section 6.01(a)(viii) or (ix) has occurred in relation to such SubsidiaryGuarantor; or
(ii) the holders of Designated Senior Debt have taken any Enforcement Action in relation to suchSubsidiary Guarantor; or
(iii) a Default has occurred under the Notes; and
(A) the Holders or the Trustee has notified the applicable Senior Agents; and
(B) a period of not less than 90 days (in the case of a default specified under Sections 6.01(a)(i)or (ii) or 179 days (in the case of a non-payment default specified under Sections 6.01(a)(iii), (iv), (v), (vi)or (vii)) has passed from the date the applicable Senior Agents were first notified of the Default (a“Standstill Period”); and
(C) at the end of the Standstill Period, the Default is continuing and has not been waived by theHolders.
(e) Each Guarantee of a Guarantor hereunder is on parity with such Guarantor’s guarantee of the ExistingUnsecured Notes.
SECTION 10.02. Subrogation.
(a) Each Guarantor shall be subrogated to all rights of the Holders against the Issuers in respect of any amountspaid to such Holders by such Guarantor pursuant to the provisions of its Guarantee.
(b) The Guarantors agree that they shall not be entitled to any right of subrogation in relation to the Holders inrespect of any Obligations guaranteed hereby until payment in full of all Obligations. The Guarantors further agree that, asbetween them, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligationsguaranteed hereby may be accelerated as provided in Section 6.02 for the purposes of the Guarantees herein,notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligationsguaranteed hereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Section 6.02,such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for thepurposes of this Section 10.02 subject to Article Eleven.
-95-
SECTION 10.03. Release of Subsidiary Guarantees. A Subsidiary Guarantee (and any Subsidiary Guaranteeprovided pursuant to Section 4.15) shall be automatically and unconditionally released and the Subsidiary Guarantor thatgranted such Subsidiary Guarantee shall be automatically and unconditionally released from its obligations and liabilitiesthereunder and hereunder:
(a) upon any sale or disposition of (i) Capital Stock of a Subsidiary Guarantor following which suchSubsidiary Guarantor is no longer a Restricted Subsidiary or, (ii) all or substantially all of the properties and assetsof a Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the ParentGuarantor or a Restricted Subsidiary that does not violate Section 4.09;
(b) in the event that all of the Capital Stock of such Subsidiary Guarantor is sold or otherwise disposedof pursuant to an enforcement of the security over the Capital Stock of such Subsidiary Guarantor in accordancewith the terms of the Intercreditor Agreement and any Additional Intercreditor Agreement;
(c) upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary;
(d) upon legal defeasance under Section 8.02, covenant defeasance under Section 8.03 or uponsatisfaction and discharge under Section 8.05;
(e) in the circumstances set forth in Section 5.01(d); and
(f) as described in Article Nine.
Each Subsidiary Guarantor agrees and each Holder by accepting a Note agrees, that the provisions of Section10.03(b) are for the benefit of and enforceable by the Holders of Senior Debt of such Subsidiary Guarantor.
SECTION 10.04. Limitation and Effectiveness of Guarantees.
(a) Each Guarantee is limited to (i) an amount not to exceed the maximum amount that can be guaranteed by theGuarantor that gave such Guarantee without rendering such Guarantee, as it relates to such Guarantor, voidable underapplicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditorsgenerally or (ii) the maximum amount otherwise permitted by law.
(b) Ireland. The Guarantee by a Guarantor organized under the laws of Ireland shall not be lawful if itconstitutes financial assistance to any person for the purpose of an acquisition by subscription, purchase, exchange orotherwise of any shares in such Guarantor or a holding company of such Guarantor contrary to Section 82 of the CompaniesAct 2014.
SECTION 10.05. Notation Not Required. Neither the Issuers nor any Guarantor shall be required to make anotation on the Notes to reflect any Guarantee or any release, termination or discharge thereof.
SECTION 10.06. Successors and Assigns. This Article Ten shall be binding upon the Guarantors and each oftheir successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and,in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred uponthat party in this Indenture and in the Notes
-96-
shall automatically extend to and be vested in such transferee or assigns, all subject to the terms and conditions of thisIndenture.
SECTION 10.07. No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders inexercising any right, power or privilege under this Article Ten shall operate as a waiver thereof, nor shall a single or partialexercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits ofthe Trustee and the Holders herein expressly specified are cumulative and are not exclusive of any other rights, remedies orbenefits which either may have under this Article Ten at law, in equity, by statute or otherwise.
SECTION 10.08. Modification. No modification, amendment or waiver of any provision of this Article Ten, northe consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writingand signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for thepurpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other orfurther notice or demand in the same, similar or other circumstance.
ARTICLE 11 SUBORDINATION
SECTION 11.01. Agreement to Subordinate. Each Subsidiary Guarantor agrees and each Holder by accepting aNote agrees, that all payments pursuant to the Subsidiary Guarantee made by or on behalf of such Subsidiary Guarantor aresubordinated to the extent and in the manner provided in this Article Eleven to all existing and future obligations of suchSubsidiary Guarantor under the Senior Debt of such Subsidiary Guarantor and that such subordination is for the benefit ofand enforceable by the holders of Senior Debt of such Subsidiary Guarantor. Each Subsidiary Guarantee shall in all respectsrank senior in right of payment to any future Subordinated Debt of the Subsidiary Guarantor that made such SubsidiaryGuarantee.
SECTION 11.02. Liquidation, Dissolution, Bankruptcy.
(a) The holders of Senior Debt of each Subsidiary Guarantor will be entitled to receive payment in full in cashof all obligations in respect of such Senior Debt (including interest after the commencement of any proceedings in respectthereof at the rate specified therein whether or not such interest is an allowed claim enforceable against such SubsidiaryGuarantor under applicable bankruptcy law) before the Holders of Notes will be entitled to receive any payment from suchSubsidiary Guarantor (including, without limitation, as a result of redemption, purchase or other acquisition) with respect toits Subsidiary Guarantee (except that Holders of Notes may receive and retain Permitted Junior Securities and paymentsmade from the trust (if any) described in Section 8.04), in the event of any payment, distribution, division or application,partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of any kind orcharacter or the proceeds thereof to creditors of such Subsidiary Guarantor in any:
(i) liquidation or dissolution of such Subsidiary Guarantor;
(ii) insolvency, bankruptcy, reorganization, composition, receivership, administration, voluntaryarrangement or similar proceeding relating to such Subsidiary Guarantor or its property;
(iii) assignment for the benefit of the creditors of such Subsidiary Guarantor; or
(iv) marshaling of such Subsidiary Guarantor’s assets and liabilities.
-97-
(b) Notwithstanding the foregoing, any payment or distribution of any kind or character (other than PermittedJunior Securities and payments made from trust (if any) described in Section 8.04) and all and any rights in respect thereof,whether in cash, securities or other property which is payable or deliverable upon or with respect to the SubsidiaryGuarantee owed by a Subsidiary Guarantor, or any part thereof, by a liquidator, administrator or receiver (or the equivalentthereof) of such Subsidiary Guarantor (“rights”) made to or paid to, or received by the Trustee, or to which the Trustee isentitled, before all amounts with respect to the Senior Debt of such Subsidiary Guarantor are paid in full and, with respect toa payment or distribution to the Trustee, which the Trustee or such Holder has actual knowledge that such payment ordistribution was so prohibited prior to distributing that payment in accordance with the terms of this Indenture, shall be heldin trust by the Trustee, for the holders of Senior Debt of such Subsidiary Guarantor and shall forthwith be paid or, as thecase may be, transferred or assigned to the applicable Senior Agent or any other proper representative of the holders of therelevant Senior Debt.
(c) If the trust referred to in clause (b) above fails or cannot be given effect to, or the Trustee (and any agent ortrustee on its behalf) receives and retains any such payment or distribution (and has actual knowledge that such payment ordistribution was so prohibited) or the Issuer, will pay over such rights in the form received to the Senior Agent or any otherproper representative of the holders of the relevant Senior Debt to be applied against the relevant Senior Debt (after takinginto account any concurrent payment or distribution being made to the holders of such Senior Debt).
SECTION 11.03. Payment Blockage. Each Subsidiary Guarantor agrees that it shall not make any payment inrespect of its Guarantee (except for certain Trustee expenses and except in Permitted Junior Securities or from the trust (ifany) described in Section 8.04) if:
(a) a payment default on Designated Senior Debt of such Subsidiary Guarantor has occurred and iscontinuing beyond any applicable grace period; or
(b) any other default occurs and is continuing on any Designated Senior Debt of such SubsidiaryGuarantor that permits the holders of that Designated Senior Debt to accelerate its maturity and the Trustee receivesa notice of such default (a “Payment Blockage Notice”) from the Issuer or the holders of such Designated SeniorDebt.
Payments on any such Guarantee of a Subsidiary Guarantor shall and will be resumed:
(i) in the case of a payment default, when such default is cured or waived; or
(ii) in the case of a non-payment default, upon the earlier of the date on which such non-payment default iscured or waived and 179 days after the date on which the applicable Payment Blockage Notice is received, unless thematurity of any Designated Senior Debt has been accelerated.
Neither the Trustee, the Issuers nor any such Subsidiary Guarantor shall be required to give effect to any newPayment Blockage Notice that may be delivered unless and until (A) 360 days have elapsed since the delivery of theimmediately prior Payment Blockage Notice and (B) all scheduled payments of principal, premium, if any, and interest onthe Notes that have come due have been paid in full in cash. No non-payment default that existed or was continuing on thedate of delivery of a Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent PaymentBlockage Notice.
SECTION 11.04. Trustee Entitled to Rely. Upon any payment or distribution pursuant to this Article Eleven theTrustee and the Holders shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in whichany proceedings of the nature referred to in Section 11.02 are pending,
-98-
(ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trusteeor to the Holders or (iii) upon the Senior Agent or any other proper representative of the holders of the relevant Senior Debtfor the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the amount thereof orpayable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this ArticleEleven. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of anyPerson as a holder of a relevant Subsidiary Guarantor’s Senior Debt to participate in any payment or distribution pursuant tothis Article Eleven, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee asto the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such paymentor distribution and other facts pertinent to the rights of such Person under this Article Eleven, and, if such evidence is notfurnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person toreceive such payment. The provisions of Sections 7.01, 7.02 and 7.03 shall be applicable to all actions or omissions ofactions by the Trustee pursuant to this Article Eleven.
SECTION 11.05. Trustee to Effectuate Subordination of Each Subsidiary Guarantee; Intercreditor Agreement.
(a) Each Holder by accepting the Notes guaranteed by each Subsidiary Guarantor authorizes and expresslydirects the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge oreffectuate the subordination of such Subsidiary Guarantor’s Guarantee between the Holders and the holders of Senior Debtof such Subsidiary Guarantor as provided in Section 10.01(d) and this Article Eleven, including by entering into theIntercreditor Agreement or any Additional Intercreditor Agreement or deed in favor of holders of Senior Debt and appointsthe Trustee as attorney-in-fact for any and all such purposes, and the Trustee shall not be required to take any actionsinconsistent with this Indenture.
(b) The Issuers, each when authorized by a resolution of its respective board of directors (as evidenced by thedelivery of such resolutions to the Trustee), any Subsidiary Guarantor and the Trustee may, without notice to or consent ofany Holder, enter into any Additional Intercreditor Agreement to give effect to the ranking and subordination provisions inSection 10.01(d) and this Article Eleven hereof for the benefit of any holders of Designated Senior Debt of any SubsidiaryGuarantor. Each Holder, by accepting its Note, shall be deemed to have:
(i) appointed and authorized the Trustee to give effect to such ranking and subordination provisions;
(ii) authorized the Trustee to become a party to any Additional Intercreditor Agreement;
(iii) agreed to be bound by such subordination provisions and the provisions of any Additional IntercreditorAgreement that do not materially adversely affect the rights of Holders; and
(iv) irrevocably appointed the Trustee to act on its behalf to enter into and comply with such subordinationprovisions and the provisions of any Additional Intercreditor Agreements.
For the avoidance of doubt, the parties hereto agree that in the event of conflict between the provisions of thisArticle Eleven and the provisions of the Intercreditor Agreement or any Additional Intercreditor Agreement, theIntercreditor Agreement or any Additional Intercreditor Agreement shall prevail.
-99-
SECTION 11.06. Trustee Not Fiduciary for the Holders of Senior Debt. The Trustee shall not be deemed to oweany fiduciary duty to the holders of Senior Debt of any Subsidiary Guarantor and shall not be liable to any holder of SeniorDebt of any Subsidiary Guarantor if it shall in good faith mistakenly pay over or distribute to Holders or the Issuers, aSubsidiary Guarantor or any other Person, cash, property or securities to which any holder of Senior Debt of any SubsidiaryGuarantor shall be entitled by virtue of this Article Eleven or otherwise. With respect to the holders of Senior Debt and anySubsidiary Guarantor, the Trustee undertakes to perform or to observe only such of its covenants or obligations as arespecifically set forth in this Indenture and no implied covenants or obligations with respect to the holders of Senior Debt orany Subsidiary Guarantor shall be read into this Indenture against the Trustee.
SECTION 11.07. Reliance on Subordination Provisions; Amendments.
(a) Each Holder by accepting a Note acknowledges and agrees that the foregoing subordination provisions inSection 10.01(d) and this Article Eleven are intended to be an inducement and a consideration to any and all holders ofexisting and future Senior Debt of a Subsidiary Guarantor to acquire and continue to hold, or to continue to hold such SeniorDebt and such holders of Senior Debt shall be deemed conclusively to have relied on such subordination provisions inacquiring and continuing to hold, or in continuing to hold, such Senior Debt and no amendment or modification of theprovisions contained herein shall diminish the rights of any such holder of Senior Debt unless such holder shall have agreedin writing thereto.
(b) The Parent Guarantor and each Subsidiary Guarantor agree, for the benefit of each existing and future holderof Senior Debt that, as long as any Existing Ardagh Bonds or any amounts under the indentures governing the ExistingArdagh Bonds remain outstanding, no amendment or modification of the provisions of such indentures shall diminish therights of any such holder of Senior Debt unless such holder shall have agreed in writing thereto.
SECTION 11.08. Trustee’s Compensation Not Prejudiced. Nothing in this Article Eleven shall apply to amountsdue to the Trustee pursuant to other Sections of this Indenture.
SECTION 11.09. Subrogation to Rights of Holders of Senior Debt. Subject to the unconditional discharge in fullof the Senior Debt of a Subsidiary Guarantor and the Subsidiary Guarantors having no further obligations under such SeniorDebt, the Holders of the Notes shall be subrogated (equally and ratably with the holders of all Debt of such SubsidiaryGuarantor which by its express terms is pari passu and subordinated to Senior Debt of such Subsidiary Guarantor to thesame extent as such Subsidiary Guarantee is subordinated and which is entitled to like rights of subrogation) to the rights ofthe holders of Senior Debt of such Subsidiary Guarantor to receive payments and distributions of cash, property andsecurities applicable to the Senior Debt until amounts due under such Subsidiary Guarantee shall be paid in full. Forpurposes of such subrogation, no payments or distributions to the holders of Senior Debt of such Subsidiary Guarantor ofany cash, property or securities to which the Holders of the Notes or the Trustee would be entitled except for the provisionsof this Article Eleven, and no payments pursuant to the provisions of this Article Eleven to the holders of Senior Debt ofsuch Subsidiary Guarantor by Holders of the Notes or the Trustee, shall, as among the Subsidiary Guarantor, its creditors(other than the holders of Senior Debt of such Subsidiary Guarantor and the Holders), be deemed to be a payment ordistribution by such Subsidiary Guarantor to or on account of the holders of Senior Debt of such Subsidiary Guarantor.
SECTION 11.10. Provisions Solely to Define Relative Rights. The provisions of this Article Eleven are and areintended solely for the purpose of defining the relative rights of the Holders of the Notes on the one hand and the holders ofSenior Debt of each Subsidiary Guarantor on the other hand. Nothing contained in this Article Eleven or elsewhere in thisIndenture or in the Notes is intended to or shall (a) impair, as between a Subsidiary Guarantor and the Holders of the Notes,the obligation of such Subsidiary
-100-
Guarantor to pay to the Holders of the Notes of amounts due under its Subsidiary Guarantee as and when the same shallbecome due and payable in accordance with its terms; or (b) affect the relative rights against such Subsidiary Guarantor ofthe Holders of the Notes and creditors of such Subsidiary Guarantor other than the holders of Senior Debt of such SubsidiaryGuarantor; or (c) prevent the Trustee or the Holder of any Note from exercising all remedies otherwise permitted byapplicable law upon default under this Indenture, subject to the rights, if any, under this Article Eleven of the holders ofSenior Debt of such Subsidiary Guarantor.
SECTION 11.11. Notice to Trustee.
(a) Each Subsidiary Guarantor shall give prompt written notice to the Trustee of any fact known to suchSubsidiary Guarantor which would prohibit the making of any payment to or by the Trustee in respect of its SubsidiaryGuarantee. Notwithstanding the provisions of this Article Eleven or any other provision of this Indenture, the Trustee shallnot be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by theTrustee in respect of any Subsidiary Guarantee, unless and until a Trust Officer of the Trustee shall have received writtennotice thereof from the relevant Subsidiary Guarantor, the representative of the holders of Senior Debt of such SubsidiaryGuarantor or from any trustee, fiduciary or agent therefor; and, prior to the receipt of any such written notice, the Trusteeshall be entitled in all respects to assume that no such facts exist; provided that, if a Trust Officer of the Trustee shall nothave received the notice provided for in this Section at least three Business Days prior to the date upon which by the termshereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (andpremium, if any) or interest on any Note), then anything herein contained to the contrary notwithstanding, the Trustee shallhave full power and authority to receive such money and to apply the same to the purpose for which such money wasreceived and shall not be affected by any notice to the contrary which may be received by it within three Business Daysprior to such date.
(b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himselfto be a holder of Senior Debt of a Subsidiary Guarantor (or a trustee, fiduciary or agent therefor) to establish that such noticehas been given by a holder of Senior Debt of a Subsidiary Guarantor (or a trustee, fiduciary or agent therefor). In the eventthat the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holderof Senior Debt of a Subsidiary Guarantor to participate in any payment or distribution pursuant to this Article Eleven, theTrustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of SeniorDebt of the relevant Subsidiary Guarantor held by such Person, the extent to which such Person is entitled to participate insuch payment or distribution and any other facts pertinent to the rights of such Person under this Article Eleven and, if suchevidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the rightof such Person to receive such payment.
SECTION 11.12. No Suspense of Remedies. Nothing contained in this Article Eleven shall limit the right of theTrustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 to pursueany rights or remedies hereunder or under applicable law.
SECTION 11.13. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary,payments from cash or the proceeds of Cash Equivalents held in trust under Article Eight hereof by the Trustee (or otherqualifying trustee) and which were deposited in accordance with the terms of Article Eight hereof and not in violation ofSection 11.03 for the payment of principal of (and premium, if any) and interest on any Subordinated Guarantee shall not besubordinated to the prior payment of any Senior Debt of the Subsidiary Guarantor that granted such Subsidiary Guarantee orsubject to the restrictions set forth in this Article Eleven, and none of the Holders shall be obligated to pay over any such
-101-
amount to such Subsidiary Guarantor or any holder of Senior Debt of such Subsidiary Guarantor or any other creditor ofsuch Subsidiary Guarantor.
ARTICLE 12 MISCELLANEOUS
SECTION 12.01. Release of U.S. Issuer’s Obligations.
(a) Notwithstanding anything to the contrary in this Indenture, upon the sale or disposition directly or indirectlyof the Capital Stock of the U.S. Issuer pursuant to an enforcement by a security agent in accordance with the IntercreditorAgreement (or any Additional Intercreditor Agreement) and this Indenture (a “Holdings USA Disposition”), the obligationsof the U.S. Issuer under the Notes and this Indenture will be automatically and unconditionally released (and thereupon shallterminate and be discharged and be of no further effect); provided that each other guarantee by the U.S. Issuer in respect ofany Credit Facility and any other capital markets debt of the Parent Guarantor or any of its subsidiaries has been released (oris released simultaneously upon such Holdings USA Disposition). Upon a Holdings USA Disposition, the Irish Issuer shallbe the sole Issuer under the Notes and this Indenture, and the Notes and this Indenture shall remain in full force and effectand any reference in this indenture, the Notes and the Intercreditor Agreement (or any Additional Intercreditor Agreement)to the “Issuers” or the U.S. Issuer shall be deemed to be references only to the “Issuer” or the Irish Issuer, mutatis mutandis.
(b) The Parent Guarantor shall publish a notice of a Holdings USA Disposition described in Section 12.01(a) inaccordance with Section 12.02 and, so long as the rules of Euronext Dublin so require, notify such exchange of a HoldingsUSA Disposition.
(c) The U.S. Issuer agrees, and each Holder by accepting a Note agrees, that the provisions of this Section 12.01are for the benefit of and enforceable by the security agent referred to therein.
SECTION 12.02. Notices.
(a) Any notice or communication shall be in writing and delivered in person or mailed by first class mail or sentby facsimile transmission addressed as follows:
if to the Irish Issuer:
Ardagh House South County Business Park
Leopardstown Dublin 18 D18 PX68
Ireland
Attention: Finance Director Facsimile: +353 1 668 3416
if to the U.S. Issuer:
The Corporation Trust Company 1209 Orange Street
Wilmington, Delaware 19801 United States
-102-
if to the Guarantors:
Ardagh Group S.A. 56 rue Charles MartelL 2134 Luxembourg
Grand Duchy of Luxembourg
With copies to:
Shearman & Sterling 9 Appold Street
London, EC2A 2AP United Kingdom
Telephone: +44 (0)20 7655 5000 Email: [email protected]
Attention: Mr. Trevor Ingram
if to the Trustee, Principal Paying Agent or Transfer Agent:
Citibank, N.A., London Branch 25 Canada Square
Canary Wharf London E14 5LB United Kingdom
(i) for the Trustee:
Email: [email protected] Attention: The Directors, Agency & Trust
(ii) for the Principal Paying Agent:
Email: [email protected]; [email protected] Attention: PPA desk
(iii) for the Transfer Agent:
Email: [email protected] Attention: Transfer Agent
The Issuers, the Guarantors or the Trustee by notice to the other may designate additional or different addresses forsubsequent notices or communications.
(b) Notices regarding the Notes shall be:
(i) delivered to Holders electronically or mailed by first-class mail, postage paid, and, if and so long as theNotes are listed on Euronext Dublin and the rules and regulations of such exchange so require, published in a newspaperhaving a general circulation in Ireland (which is expected to be The Irish Times or, to the extent and in the manner permittedby the rules of Euronext Dublin, posted on the official website of Euronext Dublin); and
-103-
(ii) in the case of certificated Notes, mailed to each Holder by first-class mail at such Holder’s respectiveaddress as it appears on the registration books of the Registrar.
Notices given by first-class mail shall be deemed given five calendar days after mailing and notices given bypublication shall be deemed given on the first date on which publication is made. Failure to mail a notice or communicationto a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication ismailed in the manner provided above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticableto give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute asufficient notification for every purpose hereunder.
(c) If and so long as the Notes are listed on any securities exchange instead of or in addition to Euronext Dublin,notices shall also be given in accordance with any applicable requirements of such alternative or additional securitiesexchange.
(d) If and so long as the Notes are represented by Global Notes, notices may be given by delivery of the relevantnotices to DTC for communication to entitled account holders in substitution for the mailing required under Section 12.02(b)(i).
SECTION 12.03. Certificate and Opinion as to Conditions Precedent. Upon any request or application by theIssuers or any Guarantor to the Trustee to take or refrain from taking any action under this Indenture (except in connectionwith the original issuance of the Original Notes on the date hereof), the Issuers or any Guarantor, as the case may be, shallfurnish upon request to the Trustee:
(a) an Officer’s Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion ofthe signer, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have beencomplied with; and
(b) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion ofsuch counsel, all such conditions precedent have been complied with.
Any Officer’s Certificate may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless theofficer signing such certificate knows, or in the exercise of reasonable care should know, that such Opinion of Counsel withrespect to the matters upon which such Officer’s Certificate is based are erroneous. Any Opinion of Counsel may be basedand may state that it is so based, insofar as it relates to factual matters, upon certificates of public officials or an Officer’sCertificate stating that the information with respect to such factual matters is in the possession of the Issuers, unless thecounsel signing such Opinion of Counsel knows, or in the exercise of reasonable care should know, that the Officer’sCertificate with respect to the matters upon which such Opinion of Counsel is based are erroneous.
SECTION 12.04. Statements Required in Certificate or Opinion. Every certificate or opinion with respect tocompliance with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or opinion has read such covenant orcondition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which thestatements or opinions contained in such certificate or opinion are based;
-104-
(c) a statement that, in the opinion of each such individual, he has made such examination orinvestigation as is necessary to enable him to express an informed opinion as to whether or not such covenant orcondition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual, such condition or covenant hasbeen complied with.
SECTION 12.05. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules foraction by or at a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 12.06. Legal Holidays. If an Interest Payment Date or other 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 interveningperiod. If a Record Date is not a Business Day, the Record Date shall not be affected.
SECTION 12.07. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OFLAW RULES THEREOF.
SECTION 12.08. Jurisdiction. The Issuers and each Guarantor agree that any suit, action or proceeding againstthe Issuers or any Guarantor brought by any Holder or the Trustee arising out of or based upon this Indenture, the Guaranteeor the Notes may be instituted in any state or Federal court in the Borough of Manhattan, New York, New York, and anyappellate court from any thereof, and each of them irrevocably submits to the non-exclusive jurisdiction of such courts inany suit, action or proceeding. Each of the Issuers and the Guarantors irrevocably waives, to the fullest extent permitted bylaw, any objection to any suit, action, or proceeding that may be brought in connection with this Indenture, the Guaranteesor the Notes, including such actions, suits or proceedings relating to securities laws of the United States of America or anystate thereof, in such courts whether on the grounds of venue, residence or domicile or on the ground that any such suit,action or proceeding has been brought in an inconvenient forum. The Issuers and the Guarantors agree that final judgment inany such suit, action or proceeding brought in such court shall be conclusive and binding upon the Issuers or any Guarantor,as the case may be, and may be enforced in any court to the jurisdiction of which the Issuers or any Guarantor, as the casemay be, are subject by a suit upon such judgment; provided that service of process is effected upon the Issuers or anyGuarantor, as the case may be, in the manner provided by this Indenture. Each of the Irish Issuer and the Guarantors notresident in the United States has appointed the U.S. Issuer, with offices on the date hereof at Ardagh Holdings USA Inc., c/oThe Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, or any successor so long as suchsuccessor is resident in the United States and can act for this purpose, as its authorized agent (the “Authorized Agent”), uponwhom process may be served in any suit, action or proceeding arising out of or based upon this Indenture, the Guarantee orthe Notes or the transactions contemplated herein which may be instituted in any state or Federal court in the Borough ofManhattan, New York, New York, by any Holder or the Trustee, and expressly accepts the non-exclusive jurisdiction of anysuch court in respect of any such suit, action or proceeding. The U.S. Issuer has hereby accepted such appointment and hasagreed to act as said agent for service of process, and the Issuers and the Parent Guarantor agree to take any and all action,including the filing of any and all documents that may be necessary to continue such respective appointment in full forceand effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service ofprocess upon the Issuers and the Parent Guarantor. Notwithstanding the foregoing, any action involving the Issuers or theParent Guarantor arising out of or based upon this Indenture, the Guarantees or the Notes may be instituted by any Holder orthe Trustee in any other court of competent jurisdiction. Each Issuer expressly consents to the
-105-
jurisdiction of any such court in respect of any such action and waives any other requirements of or objections to personaljurisdiction with respect thereto and waives any right to trial by jury.
SECTION 12.09. No Recourse Against Others. A director, officer, employee, incorporator, member orshareholder, as such, of the Issuers or any Guarantor shall not have any liability for any obligations of the Issuers or anyGuarantor under the Notes, this Indenture or any Guarantee or for any claim based on, in respect of or by reason of suchobligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver andrelease shall be part of the consideration for the issue of the Notes. Such waiver and release may not be effective to waiveliabilities under the U.S. federal securities laws.
SECTION 12.10. Successors. All agreements of the Issuers and any Guarantor in this Indenture and the Notesshall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.11. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signedcopy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove thisIndenture.
SECTION 12.12. Table of Contents, Cross-Reference Sheet and Headings. The table of contents, cross-referencesheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, arenot intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
SECTION 12.13. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal orunenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected orimpaired thereby.
SECTION 12.14. Currency Indemnity. U.S. dollars is the required currency (the “Required Currency”) ofaccount and payment for all sums payable under the Notes, the Guarantees and this Indenture. Any amount received orrecovered in respect of the Notes, any Guarantee or otherwise under this Indenture in a currency other than the RequiredCurrency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the windingup or dissolution of each Issuer, any Subsidiary or otherwise) by the Trustee or a Holder in respect of any sum expressed tobe due to such Holder from the Issuers or the Guarantors shall constitute a discharge of the Issuers’ or the Guarantors’obligations only to the extent of the amount of the Required Currency which the recipient is able to purchase with theamount so received or recovered in such other currency on the date of that receipt or recovery (or, if it is not possible topurchase the Required Currency on that date, on the first date on which it is possible to do so). If the amount of the RequiredCurrency to be recovered is less than the amount of the Required Currency expressed to be due to the recipient under anyNote, the Issuers or the Guarantors shall indemnify the recipient against the cost of making any further purchase of theRequired Currency in an amount equal to such difference. For the purposes of this Section 12.14, it will be sufficient for theholder to certify that it would have suffered a loss had the actual purchase of the Required Currency been made with theamount so received in that other currency on the date of receipt or recovery (or, if a purchase of the Required Currency onthat date had not been possible, on the first date on which it would have been possible). The foregoing indemnities, to theextent permitted by law: (a) constitute a separate and independent obligation from the other obligations of the Issuers and theGuarantors’; (b) shall give rise to a separate and independent cause of action; (c) shall apply irrespective of any waivergranted by any Holder; and (d) shall continue in full force and effect despite any other judgment, order, claim or proof for aliquidated amount in respect of any sum due under any Note or other judgment or order.
-106-
SECTION 12.15. Contractual Recognition of Bail-In. The Issuers acknowledge and accept that, notwithstandingany other provision of this Indenture or any other agreement, arrangement or understanding between the parties:
(a) any Liability may be subject to the exercise of Write-down and Conversion Powers by the ResolutionAuthority;
(b) the Issuers will be bound by the effect of any application of any Write-down and Conversion Powers inrelation to any Liability and in particular (but without limitation) by:
(1) any reduction in the principal amount, in full or in part, or outstanding amount due (including anyaccrued but unpaid interest) in respect of any Liability; and
(2) any conversion of all or part of any Liability into ordinary shares or other instruments of ownershipof Citigroup Global Markets Europe AG or any other Person; that may result from any exercise of any Write-downand Conversion Powers in relation to any Liability;
(c) the terms of this Indenture and the rights of the Issuers hereunder may be varied, to the extent necessary, togive effect to any exercise of any Write-down and Conversion Powers in relation to any Liability and the Issuers will bebound by any such variation;
(d) ordinary shares or other instruments of ownership of Citigroup Global Markets Europe AG or any otherPerson may be issued to or conferred on an Issuer as a result of any exercise of any Write-down and Conversion Powers inrelation to any Liability.
For purposes of this Section 12.15:
“Liability” means any liability of Citigroup Global Markets Europe AG to the Issuers arising under or in connectionwith this Indenture;
“Resolution Authority” means the German Federal Agency for Financial Markets Stabilisation (Bundesanstalt fürFinanzmarktstabilisierung), or any other body which has authority to exercise any Write-down and Conversion Powers; and
“Write-down and Conversion Powers” means any write-down, conversion, transfer, modification or suspensionpower existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements ineffect in Germany, relating to the transposition of Directive 2014/59/EU establishing a framework for the recovery andresolution of credit institutions and investment firms as amended from time to time, including but not limited to the GermanRecovery and Resolution Act (Sanerungs-und Abwicklungsgesetz) as amended from time to time, and the instruments, rulesand standards created thereunder, pursuant to which:
(a) any obligation of Citigroup Global Markets Europe AG (or other affiliate of such entity) can be reduced,cancelled, modified or converted into shares, other securities or other obligations of such entity or any other person (orsuspended for a temporary period); and
(b) any right in a contract governing an obligation of Citigroup Global Markets Europe AG may be deemed tohave been exercised.
[Remainder of Page Intentionally Left Blank]
[Indenture]
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first writtenabove.
ARDAGH PACKAGING FINANCE PLC, as Issuer
By: Name: Title:
ARDAGH HOLDINGS USA INC. as Issuer
By: Name: Title:
ARDAGH GROUP S.A., as Parent Guarantor
By: Name: Title:
[Indenture]
CITIBANK, N.A., LONDON BRANCH, as Trustee, Principal Paying Agent and Transfer Agent
By: Name: Title:
CITIGROUP GLOBAL MARKETS EUROPE AG, as Registrar
By: Name: Title:
By: Name: Title:
Schedule I-1
Schedule I
AGREED SECURITY PRINCIPLES
1. AGREED SECURITY PRINCIPLES
The guarantees to be provided under and in connection with this Indenture will be given in accordance with theguarantee principles set out in this Schedule I (the “Agreed Security Principles”). Notwithstanding anythingcontained in the Agreed Security Principles, so long as the Existing Ardagh Bonds remain outstanding, theguarantees provided in respect of the Notes shall be the same as those provided in respect of the Existing ArdaghBonds.
2. GENERAL PRINCIPLES
2.1 The Agreed Security Principles embody a recognition by all parties that there may be certain legal and practicaldifficulties in obtaining effective guarantees from the Parent Guarantor and its Subsidiaries (collectively, the“Group”) in certain jurisdictions. In particular:
(a) mandatory law provisions, general legal, statutory and constitutional documents’ limitations, capitalmaintenance, the prohibition of an intervention threatening the existence of a German member of the Group(Verstoß gegen das Verbot des existenzvernichtenden Eingriffs), financial assistance, corporate benefit,fraudulent preference, “thin capitalization” rules, “transfer pricing”, retention of title claims, exchangecontrol restrictions, employee consultation or approval requirements, regulatory restrictions and similarprinciples may limit the ability of a member of the Group to provide a guarantee or may require that theguarantee be limited by an amount or otherwise. If any such limit applies, the guarantees provided will belimited to the maximum amount which the relevant member of the Group may provide having regard toapplicable law;
(b) unless each consent required by law, statute, the terms of any applicable contract, instrument orconstitutional document or otherwise from the minority shareholders in, or any relevant corporate body of,any member of the Group which is not wholly owned (directly or indirectly) by another member of theGroup is obtained, such Group member shall not be required to grant guarantees provided that the relevantcompany and the Parent Guarantor have used reasonable efforts to obtain such consent;
(c) guarantees should not be granted to the extent that it would result in a risk to the directors or officers of therelevant grantor of such guarantee of contravention of any statutory duty in such capacity or their fiduciaryduties and/or which could reasonably be expected to result in personal, civil or criminal liability on the partof any such director or officer;
(d) the maximum guaranteed amount may be limited to minimize stamp duty, notarization, registration or otherapplicable fees, taxes and duties where the benefit of increasing the guaranteed amount is disproportionate tothe level of such fee, taxes and duties; and
(e) the giving of a guarantee will not be required if:
[Schedule I-2]
(i) it would have a material adverse effect on the ability of the relevant member of the Group toconduct its operations and business in the ordinary course as otherwise permitted by theIndenture; or
(ii) it would have a material adverse effect on the tax arrangements of the Group or any memberof the Group,
provided that, in each case, the relevant member of the Group shall use reasonable efforts to overcome suchobstacle. The guaranteed obligations will be limited where necessary to prevent any material additional taxliability of any member of the Group.
3. GUARANTEES
3.1 In the case of guarantees to be granted by a Guarantor incorporated in The Netherlands or France, if the relevantGuarantor has at least 50 employees, and/or over any Dutch or French Assets, if the relevant entity granting suchpledge has at least 50 employees, or any other jurisdictions or assets requiring receipt of advice from a workscouncil, such guarantees shall not be granted until neutral or positive advice is received from any relevant workscouncil and such work council shall be allowed to assist to the relevant board meeting of such Guarantor or relevantentity granting such pledge.
3.2 In the case of guarantees to be granted by a Guarantor incorporated in The Netherlands or France or any otherjurisdictions requiring receipt of advice from a works council such guarantees shall not be granted until neutral orpositive advice is received from any relevant works council.
3.3 Each guarantee will be an upstream, cross-stream and downstream guarantee and each guarantee will be for allliabilities of the relevant members of the Group under the Indenture in accordance with, and subject to, therequirements of the Agreed Security Principles in each relevant jurisdiction.
3.4 No subsidiary of the Parent Guarantor that is a Controlled Foreign Corporation (as defined in the United StatesInternal Revenue Code of 1986, as amended) (or that is a disregarded entity for U.S. federal income tax purposesowned by any such Controlled Foreign Corporation) shall be required to give a guarantee. These principles alsoapply with respect to any entity that becomes a United States Person and/or a Controlled Foreign Corporationfollowing any guarantee.
3.5 No Subsidiary of the Parent Guarantor shall guarantee the August 2019 Secured Notes unless such Subsidiaryprovides a Guarantee.
4. JURISDICTIONS
4.1 The guarantees to be provided under and in connection with the Notes and the Indenture will only be granted bymembers of the Group organized under the laws of the following jurisdictions:
(i) Austria;(ii) Denmark;(iii) Germany;(iv) Ireland;(v) Italy;(vi) Luxembourg;(vii) Poland;
[Schedule I-3]
(viii) Sweden;(ix) Switzerland;(x) The Netherlands;(xi) The United Kingdom; and(xii) The United States of America.
A-1
Exhibit A
[FORM OF FACE OF NOTE]
ARDAGH PACKAGING FINANCE PLC
ARDAGH HOLDINGS USA INC.
If Regulation S Global Note – CUSIP Number [●]/ISIN [●]1
If Restricted Global Note – CUSIP Number [●]/ISIN [●]2
No. [ ]
[Include if Global Note — UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZEDREPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THEISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANYCERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS ISREQUESTED 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), ANYTRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON ISWRONGFUL 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 INTHE NAME OF DTC OR A NOMINEE OF DTC OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOTEXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITSNOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NOTRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY DTC TO A NOMINEEOF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCHNOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BEREGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACTOF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHERJURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BEOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF INTHE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOTSUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT.
1 If the original Regulation S Global Note – CUSIP Number G04586AU0 / ISIN USG04586AU00.
2 If the original Restricted Global Note – CUSIP Number 03969AAR1 / ISIN US03969AAR14.
A-2
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A“QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT) OR(B) IT IS A NON U.S. PERSON ACQUIRING THIS NOTE IN AN “OFFSHORE TRANSACTION” PURSUANT TORULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (2) AGREES ON ITS OWN BEHALF AND ONBEHALF OF ANY INVESTOR FOR WHICH IT HAS PURCHASED SECURITIES TO OFFER, SELL OR OTHERWISETRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”)WHICH IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUEDATE HEREOF AND THE LAST DATE ON WHICH AN ISSUER OR ANY AFFILIATE OF AN ISSUER WAS THEOWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)] [IN THE CASE OF REGULATION SNOTES: 40 DAYS AFTER THE LATER OF THE DATE WHEN THE SECURITIES WERE FIRST OFFERED TOPERSONS OTHER THAN DISTRIBUTORS IN RELIANCE ON REGULATION S AND THE DATE OF THECOMPLETION OF THE DISTRIBUTION] ONLY (A) TO AN ISSUER, (B) PURSUANT TO A REGISTRATIONSTATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SOLONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON ITREASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THATPURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TOWHOM 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 INCOMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT OR (E) PURSUANT TO ANY OTHERAVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT,SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITIONOF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMESWITHIN ITS OR THEIR CONTROL AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWSAND ANY APPLICABLE LOCAL LAWS AND REGULATIONS AND FURTHER SUBJECT TO EACH ISSUER’SAND THE TRUSTEE’S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE(E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHERINFORMATION SATISFACTORY TO EACH OF THEM AND (II) IN EACH OF THE FOREGOING CASES, TOREQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THISSECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND (3) AGREESTHAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICESUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ONBEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES THAT IT SHALL NOTTRANSFER THE SECURITIES IN AN AMOUNT LESS THAN $200,000.
BY ITS PURCHASE AND HOLDING OF THIS NOTE (OR ANY INTEREST HEREIN), THE PURCHASER ORHOLDER WILL BE DEEMED TO HAVE REPRESENTED AND AGREED THAT (A) IT IS NOT AND FOR SO LONGAS IT HOLDS THIS NOTE (OR ANY INTEREST HEREIN) WILL NOT BE (I) AN “EMPLOYEE BENEFIT PLAN” ASDEFINED IN SECTION 3(3) OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, ASAMENDED (“ERISA”), THAT IS SUBJECT TO TITLE I OF ERISA, (II) A “PLAN” AS DEFINED IN AND SUBJECTTO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (III) ANENTITY OR ACCOUNT WHOSE UNDERLYING ASSETS ARE DEEMED TO INCLUDE THE ASSETS OF ANYSUCH EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR OTHER PLAN
A-3
SUBJECT TO SECTION 4975 OF THE CODE OR (IV) A NON U.S., GOVERNMENTAL, CHURCH OR OTHERBENEFIT PLAN WHICH IS SUBJECT TO ANY NON U.S. OR U.S. FEDERAL, STATE, OR LOCAL LAW THAT ISSIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF TITLE I OF ERISA OR SECTION 4975 OF THECODE (“SIMILAR LAW”) (EACH OF (I), (II), (III) AND (IV), A “PLAN”), (B) NO ASSETS OF A PLAN HAVE BEENUSED BY IT TO ACQUIRE THIS NOTE (OR ANY INTEREST HEREIN) OR (C) ITS PURCHASE AND HOLDING OFTHIS NOTE (OR ANY INTEREST HEREIN) WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDERTITLE I OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH AN EXEMPTION IS NOT AVAILABLE ORVIOLATION OF ANY SIMILAR LAW, AND NONE OF THE ISSUER, THE INITIAL PURCHASERS NOR ANY OFTHEIR RESPECTIVE AFFILIATES IS ITS FIDUCIARY IN CONNECTION WITH THE PURCHASE AND HOLDINGOF THIS NOTE.
[IN THE CASE OF ADDITIONAL REGULATION S NOTES: THIS NOTE SHALL BEAR THE TEMPORARYCUSIP AND TEMPORARY ISIN NUMBERS INDICATED ON THIS NOTE UNTIL THE DAY THAT IS 40 DAYSAFTER [●], AFTER WHICH DATE THE PERMANENT CUSIP AND PERMANENT ISIN NUMBERS INDICATEDON THIS NOTE SHALL BE BORNE.]
A-4
5.250% SENIOR NOTE DUE 2027
Ardagh Packaging Finance plc, a public limited company incorporated under the laws of Ireland, and ArdaghHoldings USA Inc., a Delaware corporation, for value received, jointly and severally promise to pay to [●] or registeredassigns the principal sum of $[●] (as such amount may be increased or decreased as indicated in Schedule A (Schedule ofPrincipal Amount) of this Note) on August 15, 2027.
From [ ] or from the most recent Interest Payment Date to which interest has been paid or provided for, cashinterest on this Note will accrue at 5.250%, payable semi-annually on May 15 and November 15 of each year, beginning on[●], to the Person in whose name this Note (or any predecessor Note) is registered at the close of business on the BusinessDay immediately preceding such Interest Payment Date, as the case may be.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWSOF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof bymanual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid orobligatory for any purpose.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and to the provisionsof the Indenture, which provisions shall for all purposes have the same effect as if set forth at this place.
A-5
IN WITNESS WHEREOF, Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. have caused this Note tobe signed manually or by facsimile by its duly authorized signatory.
Dated: [●]
ARDAGH PACKAGING FINANCE PLC
By:Name: Title: Authorized Signatory
ARDAGH HOLDINGS USA INC.
By:Name: Title: Authorized Signatory
A-6
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the Indenture.
CITIBANK, N.A., LONDON BRANCH,as Trustee
By:Authorized Officer
A-7
[FORM OF REVERSE SIDE OF NOTE]
5.250% Senior Secured Note Due 2027
1. Interest
Ardagh Packaging Finance plc, a public limited company incorporated under the laws of Ireland, and ArdaghHoldings USA Inc. a Delaware corporation (each corporation, and such respective successors and assigns under theIndenture hereinafter referred to, being herein collectively called the “Issuers”), for value received, promises to pay intereston the principal amount of this Note from [●] at the rate per annum of 5.250%. Interest will be computed on the basis of a360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the interest rate borne by theNotes compounded semi-annually, and it shall pay interest on other overdue amounts at the same rate to the extent lawful.Any interest paid on this Note shall be increased to the extent necessary to pay Additional Amounts as set forth in this Note.
2. Additional Amounts
(a) All payments that the Issuers make under or with respect to the Notes or that the Guarantors make under orwith respect to the Guarantees shall be made free and clear of and without withholding or deduction for or on account of anypresent or future tax, duty, levy, impost, assessment or other governmental charge (including, without limitation, penalties,interest and other similar liabilities related thereto) of whatever nature (collectively, “Taxes”) imposed or levied on suchpayments by or on behalf of any jurisdiction (other than the United States, any state thereof or the District of Columbia) inwhich any Issuer or Guarantor is organized, resident or doing business for tax purposes or from or through which any of theforegoing (or its agents, including the Paying Agent) makes any payment on this Note or by or within any department,political subdivision or governmental authority of or in any of the foregoing having power to tax (each, a “Relevant TaxingJurisdiction”), unless such Issuer or Guarantor or other applicable withholding agent, as the case may be, is required towithhold or deduct Taxes by law or by the interpretation or administration of law. If either Issuer, a Guarantor or otherapplicable withholding agent is required to withhold or deduct any amount for or on account of Taxes imposed or levied onbehalf of a Relevant Taxing Jurisdiction from any payment made under or with respect to this Note or any Guarantee, suchIssuer or Guarantor, as the case may be, shall pay additional amounts (“Additional Amounts”) as may be necessary to ensurethat the net amount received by each beneficial owner of the Notes, after such withholding or deduction (including anywithholding or deduction in respect of any Additional Amounts) will not be less than the amount the beneficial owner wouldhave received if such Taxes had not been withheld or deducted.
(b) None of the Issuers or Guarantors will, however, pay Additional Amounts in respect or on account of:
(i) any Taxes, to the extent such Taxes are imposed or levied by a Relevant Taxing Jurisdiction byreason of the Holder’s or beneficial owner’s present or former connection with such Relevant Taxing Jurisdiction(other than the mere receipt, ownership, holding or disposition of this Note, or by reason of the receipt of anypayments in respect of any Notes or any Guarantee, or the exercise or enforcement of rights under any Notes or anyGuarantee);
(ii) any Taxes to the extent such Taxes are imposed or withheld by reason of the failure of the Holder orbeneficial owner of this Note, following the Issuers’ written request addressed to the Holder or beneficial owner, tocomply with any certification, identification, information or other reporting requirements (to the extent such holderor beneficial owner is legally eligible to do so), whether required by statute, treaty, regulation or administrativepractice of a Relevant Taxing
A-8
Jurisdiction, as a precondition to exemption from, or reduction in the rate of deduction or withholding of, such Taxesimposed by the Relevant Taxing Jurisdiction (including, without limitation, a certification that the Holder orbeneficial owner is not resident in the Relevant Taxing Jurisdiction);
(iii) any estate, inheritance, gift, sales, transfer, personal property or similar Taxes;
(iv) any Tax which is payable otherwise than by deduction or withholding from payments made under orwith respect to this Note or any Guarantee;
(v) any Tax imposed on or with respect to any payment by any of the Issuers or Guarantors to theHolder if such Holder is a fiduciary or partnership or Person other than the sole beneficial owner of such payment tothe extent that such Taxes would not have been imposed on such payment had such beneficial owner been the holderof such Note;
(vi) any Tax that is imposed on or with respect to a payment made to a Holder or beneficial owner whowould have been able to avoid such withholding or deduction by presenting the relevant Notes to another payingagent in a member state of the European Union or the United Kingdom;
(vii) any Taxes, to the extent such Taxes were imposed as a result of the presentation of a Note forpayment (where presentation is required) more than 30 days after the relevant payment is first made available to theHolder (except to the extent that the Holder would have been entitled to Additional Amounts had this Note beenpresented on the last day of such 30-day period);
(viii) any U.S. federal withholding Taxes or equivalent thereof imposed pursuant to Sections 1471 through1474 of the Internal Revenue Code of 1986 as of the August 2019 Issue Date (or any amended or successor versionthat is substantively comparable and not materially more onerous to comply with), any current or future regulationspromulgated thereunder or other official administrative interpretations thereof and any agreements entered intopursuant to current Section 1471(b)(1) of the Internal Revenue Code of 1986 as of the August 2019 Issue Date (orany amended or successor version described above), and including (for the avoidance of doubt) anyintergovernmental agreements (and any law, regulation, rule or practice implementing any such intergovernmentalagreement) in respect of the foregoing; or
(ix) any combination of the foregoing.
(c) The Issuers and the Guarantors, if the applicable withholding agents, shall (i) make such withholding ordeduction as is required by applicable law and (ii) remit the full amount deducted or withheld to the relevant authority inaccordance with applicable law.
(d) At least 30 calendar days prior to each date on which any payment under or with respect to this Note or anyGuarantee is due and payable, if the Issuers or any Guarantor shall be obligated to pay Additional Amounts with respect tosuch payment (unless such obligation to pay Additional Amounts arises after the 30th day prior to the date on whichpayment under or with respect to this Note or any Guarantee is due and payable, in which case it will be promptlythereafter), the Issuers shall deliver to the Trustee, with a copy to the Paying Agent, an Officer’s Certificate stating that suchAdditional Amounts will be payable and the amounts so payable and setting forth such other information as is necessary toenable the Paying Agent to pay such Additional Amounts to the Holders on the payment date. The Trustee and the PayingAgent shall be entitled to rely solely on such Officer’s Certificate as conclusive proof that such payments are necessary. TheIssuers shall promptly publish a notice in accordance with Section 12.02 of
A-9
the Indenture stating that such Additional Amounts will be payable and describing the obligation to pay such amounts.
In addition, the Issuers or any Guarantor, as the case may be, shall pay any present or future stamp, issuance,registration, court, documentary, excise or property taxes or other similar taxes, charges and duties, including withoutlimitation, interest, penalties and other similar liabilities with respect thereto, imposed by any Relevant Taxing Jurisdictionin respect of (i) the execution, issue, delivery or registration of this Note or any Guarantee or any other document orinstrument referred to thereunder, or (ii) the receipt of any payments under or with respect to, or enforcement of, this Note orany Guarantee.
Upon written request, any of the Issuers or a Guarantor will furnish to the Trustee or a Holder within a reasonabletime certified copies of tax receipts evidencing any payment by such Issuer or such Guarantor (as the case may be) of anyTaxes imposed or levied by a Relevant Taxing Jurisdiction, in accordance with the procedures described in Section 12.02 ofthe Indenture, in such form as provided in the normal course by the taxing authority imposing such Taxes. If,notwithstanding the efforts of such Issuer or Guarantor to obtain such receipts, the same are not obtainable, such Issuer orsuch Guarantor will provide the Trustee or such Holder with other evidence reasonably satisfactory to the Trustee or holderof such payments by such Issuer or Guarantor. If requested by the Trustee, the Issuers and (to the extent necessary) anyGuarantors will provide to the Trustee such information as may be reasonably available to such Issuers and the Guarantors(and not otherwise in the possession of the Trustee) to enable the determination of the amount of any withholding taxesattributable to any particular Holder(s).
(e) Whenever the Indenture or this Note refers to, in any context, the payment of principal, premium, if any,interest or any other amount payable under or with respect to this or any other Note (including payments thereof madepursuant to a Guarantee), such reference includes the payment of Additional Amounts, if applicable.
(f) This paragraph 2 will survive any termination, defeasance or discharge of the Indenture and shall applymutatis mutandis to any jurisdiction (other than the United States, any state thereof or the District of Columbia) in whichany successor Person to any of the Issuers or Guarantors is organized, resident or doing business for tax purposes or anyjurisdiction from or through which any such person (or its agents, including the Paying Agent) makes any payment on thisor any other Note (or any Guarantee) and any department, political subdivision or governmental authority of or in any of theforegoing having the power to tax.
3. Method of Payment
The Issuers shall pay interest on this Note (except defaulted interest) to the persons who are registered Holders ofthis Note at the close of business on the Record Date for the next Interest Payment Date even if this Note is cancelled afterthe Record Date and on or before the Interest Payment Date. The Issuers shall pay principal and interest in dollars inimmediately available funds that at the time of payment is legal tender for payment of public and private debts; providedthat payment of interest may be made at the option of the Issuers by check mailed to the Holder.
The amount of payments in respect of interest on each Interest Payment Date shall correspond to the aggregateprincipal amount of Notes represented by the Regulation S Global Note and the Restricted Global Note, as established bythe Registrar at the close of business on the relevant Record Date. Payments of principal shall be made upon surrender of theRegulation S Global Note and the Restricted Global Note to the Paying Agent.
A-10
4. Paying Agent and Registrar
Initially, Citibank, N.A., London Branch or one of its affiliates will act as Principal Paying Agent, and CitigroupGlobal Markets Europe AG will act as Registrar. The Issuers or any of its Affiliates may act as Paying Agent, Registrar orco-Registrar.
5. Indenture
The Issuers issued this Note under an indenture dated as of June 2, 2020 (the “Indenture”), among, inter alios, theIssuers, Ardagh Group S.A., as parent guarantor (the “Parent Guarantor”) and Citibank, N.A., London Branch, as trustee(the “Trustee”). The terms of this Note include those stated in the Indenture. Terms defined in the Indenture and not definedherein have the meanings ascribed thereto in the Indenture. This Note is subject to all such terms, and Holders are referred tothe Indenture for a statement of those terms. To the extent any provision of this Note conflicts with the express provisions ofthe Indenture, the provisions of the Indenture shall govern and be controlling.
The Indenture imposes certain limitations on the Issuers, the Guarantors and their Affiliates, including, withoutlimitation, limitations on the incurrence of indebtedness and issuance of stock, the payment of dividends and other paymentrestrictions affecting the Parent Guarantor and its Restricted Subsidiaries, the sale of assets, transactions with and amongAffiliates of the Parent Guarantor and the Restricted Subsidiaries, Change of Control and Liens.
6. Optional Redemption
(a) At any time prior to August 15, 2022, upon not less than 10 nor more than 60 days’ notice, the Issuers mayon any one or more occasions redeem up to 40% of the aggregate principal amount of the Notes at a Redemption Price of105.250% of their principal amount, plus accrued and unpaid interest, if any, to (but excluding) the Redemption Date(subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest paymentdate), with the net cash proceeds from one or more Public Equity Offerings. The Issuers may only do this, however, if (i) atleast 60% of the aggregate principal amount of the applicable series of Notes that were initially issued would remainoutstanding immediately after the proposed redemption; and (ii) the redemption occurs within 120 days after the closing ofsuch Public Equity Offering.
(b) At any time prior to August 15, 2022, upon not less than 10 nor more than 60 days’ notice, the Issuers mayalso redeem all or part of the Notes at a Redemption Price equal to 100% of the principal amount of the Notes beingredeemed plus the Applicable Redemption Premium and accrued and unpaid interest to (but excluding) the RedemptionDate.
“Applicable Redemption Premium” means, with respect to any Note on any Redemption Date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess of:
(i) the present value at such Redemption Date of (x) the Redemption Price of such Note at August 15,2022 (such Redemption Price being set forth in the table appearing below in clause (c)), plus (y) allrequired interest payments due on such Note through August 15, 2022 (excluding accrued butunpaid interest), computed
A-11
using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points;over
(ii) the outstanding principal amount of such Note.
For the avoidance of doubt, calculation of the Applicable Redemption Premium shall not be a duty orobligation of the Trustee or any Paying Agent.
“Treasury Rate” means, as of any Redemption Date, the weekly average rounded to the nearest 1/l00th of apercentage point (for the most recently completed week for which such information is available as of the date that is twoBusiness Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constantmaturity (as compiled and published in Federal Reserve Statistical Release H.15 with respect to each applicable day duringsuch week or, if such Statistical Release is no longer published, any publicly available source of similar market data) mostnearly equal to the period from the Redemption Date to August 15, 2022; provided, however, that if the period from theRedemption Date to August 15, 2022 is not equal to the constant maturity of a United States Treasury security for whichsuch a yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of ayear) from the weekly average yields of United States Treasury securities for which such yields are given, except that if theperiod from the Redemption Date to August 15, 2022 is less than one year, the weekly average yield on actually tradedUnited States Treasury securities (or other comparable benchmark) adjusted to a constant maturity of one year shall be used.
(c) At any time on or after August 15, 2022 and prior to maturity, upon not less than 10 nor more than 60 days’notice, the Issuers may redeem all or part of the Notes. These redemptions will be in amounts of $1,000 or integral multiplesthereof at the following Redemption Prices (expressed as percentages of their principal amount at maturity), plus accruedand unpaid interest, if any, to the Redemption Date, if redeemed during the 12-month period commencing on August 15 ofthe years set forth below (subject to the right of holders of record on the relevant regular Record Date that is prior to theRedemption Date to receive interest due on an interest payment date).
YearRedemption Price
Notes102.625%101.313%100.000%
Any redemption and notice may, in the Issuers’ discretion, be subject to the satisfaction of one or more conditionsprecedent.
7. Redemption Upon Changes in Withholding Taxes
This Note and the other Global Notes may also be redeemed together, in whole but not in part, at the election of theIssuers, upon not less than 10 nor more than 60 days’ notice which notice shall be irrevocable and given in accordance withthe procedures described in Section 12.02 of the Indenture, at the Redemption Price equal to 100% of their principal amount,plus accrued and unpaid interest, if any to (but excluding) the Redemption Date if, as a result of (a) any amendment to, orchange in, the laws (or regulations or rulings promulgated thereunder) of any Relevant Taxing Jurisdiction which isannounced and becomes effective after the August 2019 Issue Date (or, where such Relevant Taxing Jurisdiction became aRelevant Taxing Jurisdiction at a later date, after such later date) or, (b) any change which is announced and becomeseffective after the August 2019 Issue Date (or, where such Relevant Taxing Jurisdiction became a Relevant TaxingJurisdiction at a later date, after such later date) in the official interpretation or official application of such laws, regulationsor rulings (including by virtue of a holding,
202220232024 and thereafter
A-12
judgment or order by a court of competent jurisdiction) of any Relevant Taxing Jurisdiction (each of the foregoing sub-clauses (a) and (b), a “Change in Tax Law”), the Issuers would be obligated to pay, on the next date for any payment and asa result of that amendment or change, Additional Amounts (as described above in paragraph 2), with respect to the RelevantTaxing Jurisdiction, which the Issuers cannot avoid by the use of reasonable measures available to the Issuers. Prior to thegiving of any notice of redemption pursuant to this paragraph 7, the Issuers shall deliver to the Trustee (a) an Officer’sCertificate stating that the obligation to pay Additional Amounts cannot be avoided by the Issuers taking reasonablemeasures available to it, and (b) a written opinion of independent tax counsel to the Issuers of recognized standing qualifiedunder the laws of the Relevant Taxing Jurisdiction and reasonably satisfactory to the Trustee to the effect that the Issuers hasor will become obligated to pay such 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 theconditions precedent described above, without further inquiry, in which event it will be conclusive and binding on Holdersof the Notes.
Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to theearliest date on which the Issuers would be obliged to make such payment of Additional Amounts if a payment in respect ofthe Notes were then due and (b) unless at the time such notice is given, the obligation to pay Additional Amounts remains ineffect.
Any redemption and notice may, in the Issuer’s discretion, be subject to the satisfaction of one or more conditionsprecedent.
8. Notice of Redemption
Notice of redemption will be mailed first-class postage prepaid at least 10 days but not more than 60 days before theRedemption Date to the Holder of this Note to be redeemed at the addresses contained in the Security Register. If this Noteis in a denomination larger than $200,000 of principal amount at maturity it may be redeemed in part but only in integralmultiples of $1,000 at maturity. In the event of a redemption of less than all of the Notes, the Notes for redemption will bechosen by the Trustee in accordance with the Indenture. If this Note is redeemed subsequent to a Record Date with respectto any Interest Payment Date specified above, then any accrued interest will be paid to the Holder at the close of business onsuch Record Date. If money sufficient to pay the Redemption Price of and accrued interest on all Notes (or portions thereof)to be redeemed on the Redemption Date is deposited with the applicable Paying Agent on or before the Redemption Dateand certain other conditions are satisfied, interest ceases to accrue on such Notes (or such portions thereof) called forredemption on or after such date.
9. Repurchase at the Option of Holders
If a Change of Control occurs at any time, the Issuers or the Parent Guarantor shall offer to purchase on the Changeof Control Purchase Date all or any part (equal to $200,000 or an integral multiple of $1,000 in excess thereof) of this Noteat a purchase price in cash in an amount equal to 101% of the principal amount hereof, plus any accrued and unpaid interest,if any, to the Change of Control Purchase Date (subject to the rights of Holders of record on the relevant Record Dates toreceive interest due on the relevant Interest Payment Date); provided that the Issuers and the Parent Guarantor shall not berequired to make a Change of Control Offer if, when a Change of Control occurs, it has given notice of its intention toredeem all of the Notes pursuant to paragraph 6 or paragraph 7 of this Note. The Issuers shall purchase all Notes properlyand timely tendered in the Change of Control Offer and not withdrawn in accordance with the procedures set forth in suchnotice. The Change of Control Offer will state, among other things, the procedures that Holders of the Notes must follow toaccept the Change of Control Offer.
A-13
When the aggregate amount of Excess Proceeds exceeds the greater of $100,000,000 and 1.5% of Total Assets, theParent Guarantor or the Issuers shall, within 20 Business Days, make an offer to purchase (an “Excess Proceeds Offer”)from all Holders and from the holders of any Pari Passu Debt, to the extent required by the terms thereof, on a pro ratabasis, in accordance with the procedures set forth in the Indenture or the agreements governing any such Pari Passu Debt,the maximum principal amount (expressed as an integral multiple of $1,000 with respect to the Notes) of the Notes and anysuch Pari Passu Debt that may be purchased with the amount of the Excess Proceeds. The offer price as to each Note andany such Pari Passu Debt will be payable in cash in an amount equal to (solely in the case of the Notes) 100% of theprincipal amount of such Note and (solely in the case of Pari Passu Debt) no greater than 100% of the principal amount (oraccreted value, as applicable) of such Pari Passu Debt, plus in each case accrued and unpaid interest, if any, to the date ofpurchase.
To the extent that the aggregate principal amount of Notes and any such Pari Passu Debt tendered pursuant to anExcess Proceeds Offer is less than the aggregate amount of Excess Proceeds, the Parent Guarantor may use the amount ofsuch Excess Proceeds not used to purchase Notes and Pari Passu Debt for general corporate purposes that are not otherwiseprohibited by the Indenture. If the aggregate principal amount of Notes and any such Pari Passu Debt validly tendered andnot withdrawn by holders thereof exceeds the aggregate amount of Excess Proceeds, the Notes and any such Pari Passu Debtto be purchased shall be selected by the Trustee on a pro rata basis (based upon the principal amount of the Notes and theprincipal amount or accreted value of such Pari Passu Debt tendered by each holder). Upon completion of each such ExcessProceeds Offer, the amount of Excess Proceeds will be reset to zero.
10. Denominations
The Notes (including this Note) are in denominations of $200,000 and integral multiples of $1,000 in excess thereofof principal amount at maturity. The transfer of Notes (including this Note) may be registered, and Notes (including thisNote) may be exchanged, as provided in the Indenture. The Registrar may require a Holder, among other things, to furnishappropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by theIndenture.
11. Unclaimed Money
All moneys paid by the Issuers or the Guarantors to the Trustee or a Paying Agent for the payment of the principalof, or premium, if any, or interest on, this Note or any other Note that remain unclaimed at the end of two years after suchprincipal, premium or interest has become due and payable may be repaid to the Issuers or the Guarantors, subject toapplicable law, and the Holder of such Note thereafter may look only to the Issuers or the Guarantors for payment thereof.
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may terminate some or all of its obligations and the obligationsof the Guarantors under this Note and each other Note, the Guarantees and the Indenture if the Issuers irrevocably depositwith the Trustee dollars or U.S. Government Securities for the payment of principal and interest on the Notes to redemptionor maturity, as the case may be.
13. Amendment, Supplement and Waiver
(a) (i) The Issuers, when authorized by a resolution of its Board of Directors (as evidenced by the delivery ofsuch resolution to the Trustee), the Guarantors and the Trustee may modify, amend or supplement the Indenture, anyGuarantee or this Note and each other Note and the Issuers, when authorized by a resolution of its Board of Directors, ineach case without notice to or consent of any Holder:
A-14
(A) to evidence the succession of another Person to the Parent Guarantor and the assumption by anysuch successor of the covenants in the Indenture and in this Note and each other Note; provided that such successorPerson would have been permitted to so succeed in a transaction that would have complied with Article Five;provided, further, that such transaction need not be of a specific type identified in Article Five (it being understoodthat in the case of any other transaction, the requirements of Article Five shall apply mutatis mutandis);
(B) to add to the covenants of the Issuers, any Guarantor or any other obligor upon this Note and eachother Note for the benefit of the Holders or to surrender any right or power conferred upon the Issuers, anyGuarantor, or any other obligor upon this Note and each other Note, as applicable, in the Indenture, in this Note andeach other Note or in any Guarantees;
(C) to cure any ambiguity, or to correct or supplement any provision in the Indenture, this Note and eachother Note or any Guarantees that may be defective or inconsistent with any other provision in the Indenture, thisNote and each other Note or any Guarantee or make any other provisions with respect to matters or questions arisingunder the Indenture, the Notes or any Guarantee; provided that, in each case, such provisions shall not adverselyaffect the rights of the Holders in any material respect;
(D) to conform the text of the Indenture, the Guarantees or the Notes to any provision of the“Description of the Senior Notes” section of the Offering Memorandum to the extent that such provision in the“Description of the Senior Notes” was intended to be a verbatim recitation of a provision of the Indenture, theGuarantees or the Notes;
(E) to release any Guarantor in accordance with and if permitted by the terms of and limitations set forthin the Indenture and to add a Subsidiary Guarantor or other guarantor under the Indenture (which will requireexecution of the relevant supplemental indenture only by the Issuers, the Parent Guarantor and such additionalSubsidiary Guarantor(s) or other guarantor(s));
(F) to evidence and provide the acceptance of the appointment of a successor Trustee under theIndenture; or
(G) to provide for the issuance of Additional Notes in accordance with and if permitted by the terms andlimitations set forth in the Indenture.
(ii) The Issuers, when authorized by a resolution of its Board of Directors (as evidenced by the delivery of suchresolution to the Trustee), the Parent Guarantor, the Trustee and the Restricted Subsidiary being added as a SubsidiaryGuarantor or other entity becoming a Guarantor under the Indenture may supplement the Indenture to add a SubsidiaryGuarantor or other guarantor under the Indenture, in each case without notice to or consent of any Holder.
(iii) In formulating its opinion on such matters, the Trustee shall be entitled to require and rely on such evidenceas it deems appropriate, including an Opinion of Counsel and an Officer’s Certificate.
(b) Except as provided in paragraph 13(c) of this Note and Section 6.04 of the Indenture, respectively, andwithout prejudice to paragraph 13(a) of this Note, the Issuers, the Guarantors and the Trustee may:
(i) modify, amend or supplement the Indenture or this Note and the other Notes; or
A-15
(ii) waive compliance by the Issuers with any provision of the Indenture or this Note and the otherNotes,
with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes thenoutstanding (including consents obtained in connection with a tender offer or in exchange for the Notes); provided that, ifany amendment, waiver or other modification will only affect one series of the Notes, only the consent of the holders of notless than a majority in principal amount of the then outstanding Notes of such series shall be required;
(c) Without the consent of the Holders of 90% of the outstanding Notes (provided, however, that if anyamendment, waiver or other modification will only affect one series of the Notes, only the consent of the holders of at least90% of the aggregate principal amount of such series shall be required (and not the consent of at least 90% of the aggregateprincipal amount of all Notes then outstanding)), with respect to any such Notes held by a non-consenting Holder, noamendment, modification, supplement or waiver, including a waiver pursuant to Section 6.04 of the Indenture and anamendment, modification or supplement pursuant to Section 9.01 of the Indenture, may:
(i) change the Stated Maturity of the principal of, or any installment of any Additional Amounts orinterest on, any Note;
(ii) reduce the principal amount of any Note (or Additional Amounts or premium, if any) or the rate ofor change the time for payment of interest on any Note;
(iii) change the coin or currency in which the principal of any Note or any premium or any AdditionalAmounts or the interest thereon is payable;
(iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturitythereof (or, in the case of redemption, on or after the Redemption Date);
(v) reduce the principal amount of the outstanding Notes, the consent of whose Holders is required forany amendment or supplement to, or waiver or compliance with, certain provisions of the Indenture;
(vi) modify any of the provisions of Article Nine of the Indenture or any provisions in the Indenturerelating to the waiver of past defaults or relating to the waiver of certain covenants, except to increase the percentageof outstanding Notes required for such actions or to provide that certain other provisions of the Indenture cannot bemodified or waived without the consent of the Holder of each Note affected thereby;
(vii) make any change to the Intercreditor Agreement (or any Additional Intercreditor Agreement) or anyprovisions of the Indenture affecting the ranking of the Notes or the Guarantees, in each case in a manner thatadversely affects the rights of the Holders; or
(viii) make any change in Section 4.12 of the Indenture that adversely affects the rights of any Holder oramend the terms of the Notes or the Indenture in a way that would result in a loss of an exemption from any of theTaxes described thereunder or an exemption from any obligation to withhold or deduct Taxes so describedthereunder unless the Issuers or the Guarantors agree to pay Additional Amounts (if any) in respect thereof in thesupplemental indenture.
(d) The consent of the Holders will not be necessary under the Indenture to approve the particular form of anyproposed amendment, modification, supplement, waiver or consent. It is sufficient
A-16
if such consent approves the substance of the proposed amendment, modification, supplement, waiver or consent. A consentto any amendment or waiver under the Indenture by any Holder given in connection with a tender of such Holder’s Noteswill not be rendered invalid by such tender.
14. Defaults and Remedies
This Note and the other Notes have the Events of Default as set forth in Section 6.01 of the Indenture. If an Event ofDefault (other than an Event of Default specified in clauses (ix) and (x) of Section 6.01(a) of the Indenture) occurs and iscontinuing, the Trustee or the registered Holders of not less than 30% in aggregate principal amount of the Notes thenoutstanding by written notice to the Issuers and the Parent Guarantor (and to the Trustee if such notice is given by theHolders), subject to certain limitations, may, and the Trustee, upon the written request of such Holders shall, declare thisNote and the other Notes, and any Additional Amounts and accrued interest, to be due and payable immediately. Certainevents of bankruptcy or insolvency are Events of Default and shall result in this Note and the other Notes being due andpayable immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture, this Note or the other Notes except as provided in the Indenture and subjectto the Intercreditor Agreement and any Additional Intercreditor Agreement. The Trustee may refuse to enforce theIndenture, this Note or the other Notes unless it receives security and/or indemnity (including by way of pre-funding)reasonably satisfactory to it. Subject to certain limitations and the Intercreditor Agreement (and any Additional IntercreditorAgreement), the Holders of a majority in aggregate principal amount of the Notes may direct the Trustee in its exercise ofany trust or power. The Holders of a majority in aggregate principal amount of the Notes then outstanding by written noticeto the Trustee may rescind any acceleration and its consequence if the rescission would not conflict with any judgment ordecree and if all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, orinterest that has become due solely because of such acceleration. The above description of Events of Default and remedies isqualified by reference, and subject in its entirety, to the provisions of the Indenture.
15. Ranking
This Note and the other Notes will be general obligations of each Issuer and will rank senior in right of payment toany and all of each Issuer’s existing and future Debt that is subordinated in right of payment to the Notes, rank equally inright of payment with all of each Issuer’s existing and future Debt that is not subordinated in right of payment to the Notes,and be structurally subordinated to all existing and future indebtedness of the Parent Guarantor’s Subsidiaries that do notprovide Guarantees.
16. Guarantees
The Subsidiary Guarantees will be subordinated in right of payment to Senior Debt and will be subject to certainlimitations on enforcement in favor of holders of Senior Debt, all as provided in the Indenture.
17. Trustee Dealings with the Issuers
The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notesand may otherwise deal with and collect obligations owed to it by the Issuers, the Guarantors or any of their Affiliates withthe same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-Registrar or co-Paying Agent may dothe same with like rights.
A-17
18. No Recourse Against Others
A director, officer, employee, incorporator, member or shareholder, as such, of the Issuers or the Guarantors shallnot have any liability for any obligations of the Issuers or the Guarantors under this Note, the other Notes, the Guarantees orthe Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting aNote, each Holder shall waive and release all such liability. The waiver and release are part of the consideration for issuanceof the Notes.
19. Authentication
This Note shall not be valid until an authorized officer of the Trustee (or an authenticating agent) manually signs thecertificate of authentication on the other side of this Note.
20. Abbreviations
Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants incommon), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants incommon), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. ISIN and CUSIP Numbers
The Issuers may cause ISIN and CUSIP numbers to be printed on the Notes, and if so the Trustee shall use ISIN andCUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of suchnumbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on theother identification numbers placed on the Notes.
22. Governing Law
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWSOF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
A-18
ASSIGNMENT FORM
To assign and transfer this Note, fill in the form below:
(I) or (the Issuers) assign and transfer this Note to
(Insert assignee’s social security or tax I.D. no.)
(Print or type assignee’s name, address and postal code)
and irrevocably appoint ______________________________________ agent to transfer this Note on the books of theIssuers. The agent may substitute another to act for him.
Your Signature: ____________________________________________________________(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: __________________________________________________________(Participant in a recognized signature guarantee medallion program)
Date: _______________________________________________________
Certifying Signature:
In connection with any transfer of any Notes evidenced by this certificate occurring prior to the date that is one yearafter the later of the date of original issuance of such Notes and the last date, if any, on which the Notes were owned by theIssuers or any of their respective Affiliates, the undersigned confirms that such Notes are being transferred in accordancewith the transfer restrictions set forth in such Notes and:
CHECK ONE BOX BELOW
(1) ◻ to the Parent Guarantor or any Subsidiary; or
(2) ◻ pursuant to an effective registration statement under the U.S. Securities Act of 1933; or
(3) ◻ pursuant to and in compliance with Rule 144A under the U.S. Securities Act of 1933; or
(4) ◻ pursuant to and in compliance with Regulation S under the U.S. Securities Act of 1933; or
(5) ◻ pursuant to another available exemption from the registration requirements of the U.S. Securities Actof 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificatein the name of any person other than the registered Holder thereof; provided, however, that if box (3) is checked, byexecuting this form, the Transferor is deemed to have certified that such Notes are being transferred to a person it reasonablybelieves is a “qualified institutional buyer” as defined in Rule 144A under the U.S. Securities Act of 1933 who has receivednotice that such transfer is being made in reliance on Rule 144A; if box (4) is checked, by executing this form, theTransferor is deemed to have
A-19
certified that such transfer is made pursuant to an offer and sale that occurred outside the United States in compliance withRegulation S under the U.S. Securities Act; and if box (5) is checked, the Trustee may require, prior to registering any suchtransfer of the Notes, such legal opinions, certifications and other information as the Issuers reasonably request to confirmthat such transfer is being made pursuant to an exemption from or in a transaction not subject to, the registrationrequirements of the U.S. Securities Act of 1933.
Signature: _________________________________
Signature Guarantee: __________________________________________________________(Participant in a recognized signature guarantee medallion program)
Certifying Signature: __________________ Date:______________________
Signature Guarantee: __________________________________________________________(Participant in a recognized signature guarantee medallion program)
A-20
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note or a portion thereof repurchased pursuant to Section 4.09 or Section 4.11 of theIndenture, check the box: ◻
If the purchase is in part, indicate the portion (in denominations of $200,000 or any integral multiple of $1,000 inexcess thereof) to be purchased:
Your Signature: ____________________________________________________________(Sign exactly as your name appears on the other side of this Note)
Date:
Certifying Signature: ______________________________________
A-21
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The following decreases/increases in the principal amount of this Security have been made:
Date of
Decrease/ Increase
Decrease in
Principal Amount
Increase in Principal Amount
Principal Amount
Following such Decrease/Increase
Notation Made by or on Behalf
of Paying Agent orRegistrar
__________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _______________________ _____________ _____________ _____________ _____________
B-1
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM RESTRICTED GLOBAL NOTE TO REGULATION S GLOBAL NOTE.*
Transfers pursuant to Section 2.06(b)(ii) of the Indenture
Citibank, N.A., London Branch 25 Canada Square Canary Wharf London E14 5LB United Kingdom
Attention: Transfer Agent
Re: 5.250% Senior Notes due 2027 (the “Notes”)
Reference is hereby made to the Indenture dated as of June 2, 2020 (the “Indenture”) among, inter alios, ArdaghPackaging Finance plc, a public limited company incorporated under the laws of Ireland and Ardagh Holdings USA Inc., aDelaware corporation, collectively, as Issuers, Ardagh Group S.A., as Parent Guarantor, and Citibank, N.A., LondonBranch, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.
This letter relates to $____________ aggregate principal amount of Notes that are held as a beneficial interest in theform of the Restricted Global Note ([CUSIP No. [●]]; [ISIN No: [●]]) with DTC in the name of [name of transferor] (the“Transferor”). The Transferor has requested an exchange or transfer of such beneficial interest for an equivalent beneficialinterest in the Regulation S Global Note ([CUSIP No. [●]]; [ISIN No: [●]]).
In connection with such request, the Transferor does hereby certify that such transfer has been effected inaccordance with the transfer restrictions set forth in the Notes and:
(a) with respect to transfers made in reliance on Regulation S (“Regulation S”) under the United StatesSecurities Act of 1933, as amended (the “U.S. Securities Act”), does certify that:
(i) the offer of the Notes was not made to a person in the United States;
(ii) either (i) at the time the buy order is originated the transferee is outside the United States or theTransferor and any person acting on its behalf reasonably believe that the transferee is outside theUnited States or; (ii) the transaction was executed in, on or through the facilities of a designatedoffshore securities market described in paragraph (b) of Rule 902 of Regulation S and neither theTransferor nor any person acting on its behalf knows that the transaction was pre-arranged with abuyer in the United States
B-2
(iii) no directed selling efforts have been made in the United States by the Transferor, an affiliate thereofor any person their behalf in contravention of the requirements of Rule 903 or 904 of Regulation S,as applicable;
(iv) the transaction is not part of a plan or scheme to evade the registration requirements of the U.S.Securities Act; and
(v) the Transferor is not an Issuer, a distributor of the Notes, an affiliate of an Issuer or any suchdistributor (except any officer or director who is an affiliate solely by virtue of holding suchposition) or a person acting on behalf of any of the foregoing.
(b) with respect to transfers made in reliance on Rule 144 the Transferor certifies that the Notes are beingtransferred in a transaction permitted by Rule 144 under the U.S. Securities Act.
You, the Issuers, the Guarantors and the Trustee are entitled to rely upon this letter and are irrevocably authorized toproduce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry withrespect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.
[Name of Transferor]
By: Name: Title:
Date:
cc:Attention:
____________________
* If the Note is a Definitive Note, appropriate changes need to be made to the form of this transfer certificate.
C-1
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM REGULATION S GLOBAL NOTE TO RESTRICTED GLOBAL NOTE
Transfers pursuant to Section 2.06(b)(iii) of the Indenture
Citibank, N.A., London Branch 25 Canada Square Canary Wharf London E14 5LB United Kingdom
Attention: Transfer Agent
Re: 5.250% Senior Notes due 2027 (the “Notes”)
Reference is hereby made to the Indenture dated as of June 2, 2020 (the “Indenture”) among, inter alios, ArdaghPackaging Finance plc, a public limited company incorporated under the laws of Ireland and Ardagh Holdings USA Inc., aDelaware corporation, collectively, as Issuers, Ardagh Group S.A., as Parent Guarantor, and Citibank, N.A., LondonBranch, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.
This letter relates to $__________ aggregate principal amount at maturity of Notes that are held in the form of theRegulation S Global Note with DTC ([CUSIP No.: [●]]; [ISIN No. [●]]) in the name of [name of transferor] (the“Transferor”) to effect the transfer of the Notes in exchange for an equivalent beneficial interest in the Restricted GlobalNote ([CUSIP No.: [●]]; [ISIN No. [●]]).
In connection with such request, and in respect of such Notes the Transferor does hereby certify that such Notes arebeing transferred in accordance with the transfer restrictions set forth in the Notes and that:
CHECK ONE BOX BELOW:
◻ the Transferor is relying on Rule 144A under the Securities Act for exemption from such Act’s registrationrequirements; it is transferring such Notes to a person it reasonably believes is a QIB as defined in Rule144A that purchases for its own account, or for the account of a qualified institutional buyer, and to whomthe Transferor has given notice that the transfer is made in reliance on Rule 144A and the transfer is beingmade in accordance with any applicable securities laws of any state of the United States; or
◻ the Transferor is relying on an exemption other than Rule 144A from the registration requirements of theSecurities Act, subject to the Issuers’ and the Trustee’s right prior to any such offer, sale or transfer torequire the delivery of an Opinion of Counsel, certification and/or other information satisfactory to each ofthem.
C-2
You, the Issuers, the Guarantors, and the Trustee are entitled to rely upon this letter and are irrevocably authorizedto produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquirywith respect to the matters covered hereby.
[Name of Transferor]
By: Name: Title:
Date:
cc:Attention:
Exhibit 99.9Execution Version
ARDAGH PACKAGING FINANCE PLC
AND
ARDAGH HOLDINGS USA INC. AS ISSUERS,
ARDAGH GROUP S.A., AS PARENT GUARANTOR,
CITIBANK, N.A., LONDON BRANCH, AS TRUSTEE, PRINCIPAL PAYING AGENT, TRANSFER AGENT AND SECURITY AGENT,
AND
CITIGROUP GLOBAL MARKETS EUROPE AG, AS REGISTRAR
_____________________________
INDENTURE
Dated as of June 10, 2020
_____________________________
2.125% SENIOR SECURED NOTES DUE 2026
-i-
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
ARTICLE TWO THE NOTES
ARTICLE THREE REDEMPTION; OFFERS TO PURCHASE
ARTICLE FOUR COVENANTS
SECTION 1.01. Definitions 1SECTION 1.02. Other Definitions 31SECTION 1.03. Rules of Construction 32SECTION 1.04. Financial Calculations 32SECTION 1.05. Agency of Irish Issuer 33
SECTION 2.01. The Notes 33SECTION 2.02. Execution and Authentication 34SECTION 2.03. Registrar, Transfer Agent and Paying Agent 35SECTION 2.04. Paying Agent to Hold Money 36SECTION 2.05. Holder Lists 36SECTION 2.06. Transfer and Exchange 37SECTION 2.07. Replacement Notes 39SECTION 2.08. Outstanding Notes 39SECTION 2.09. Notes Held by Issuers 39SECTION 2.10. Certificated Notes 40SECTION 2.11. Cancellation 40SECTION 2.12. Defaulted Interest 40SECTION 2.13. Computation of Interest 41SECTION 2.14. ISIN and Common Code Numbers 41SECTION 2.15. Issuance of Additional Notes 41
SECTION 3.01. Right of Redemption 42SECTION 3.02. Notices to Trustee 42SECTION 3.03. Selection of Notes to Be Redeemed 42SECTION 3.04. Notice of Redemption 43SECTION 3.05. Deposit of Redemption Price 43SECTION 3.06. [Reserved] 44SECTION 3.07. Payment of Notes Called for Redemption 44SECTION 3.08. Notes Redeemed in Part 44
SECTION 4.01. Payment of Notes 44SECTION 4.02. Corporate Existence 45SECTION 4.03. Maintenance of Properties 45SECTION 4.04. Insurance 45SECTION 4.05. Statement as to Compliance 45
ARTICLE FIVE CONSOLIDATION, MERGER AND SALE OF ASSETS
ARTICLE SIX DEFAULTS AND REMEDIES
ARTICLE SEVEN TRUSTEE AND SECURITY AGENT
SECTION 4.06. Limitation on Debt 45SECTION 4.07. Limitation on Liens 49SECTION 4.08. Limitation on Restricted Payments 50SECTION 4.09. Limitation on Sale of Certain Assets 54SECTION 4.10. Limitation on Transactions with Affiliates 56SECTION 4.11. Purchase of Notes upon a Change of Control 58SECTION 4.12. Additional Amounts 60SECTION 4.13. Additional Intercreditor Agreements. 62SECTION 4.14. Additional Subsidiary Guarantees and Security Interests 63SECTION 4.15. Limitation on Guarantees of Debt by Restricted Subsidiaries 64SECTION 4.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries 66SECTION 4.17. Designation of Unrestricted and Restricted Subsidiaries 67SECTION 4.18. Payment of Taxes and Other Claims 68SECTION 4.19. Reports to Holders 68SECTION 4.20. Further Instruments and Acts 69SECTION 4.21. Security Confirmations 69SECTION 4.22. Suspension of Covenants 69
SECTION 5.01. Consolidation, Merger and Sale of Assets 70SECTION 5.02. Successor Substituted 72
SECTION 6.01. Events of Default 72SECTION 6.02. Acceleration 74SECTION 6.03. Other Remedies 75SECTION 6.04. Waiver of Past Defaults 75SECTION 6.05. Control by Majority 76SECTION 6.06. Limitation on Suits 76SECTION 6.07. Unconditional Right of Holders to Bring Suit for Payment 76SECTION 6.08. Collection Suit by Trustee 76SECTION 6.09. Trustee May File Proofs of Claim 77SECTION 6.10. Application of Money Collected 77SECTION 6.11. Undertaking for Costs 78SECTION 6.12. Restoration of Rights and Remedies 78SECTION 6.13. Rights and Remedies Cumulative 78SECTION 6.14. Delay or Omission Not Waiver 78SECTION 6.15. Record Date 78SECTION 6.16. Waiver of Stay or Extension Laws 79
SECTION 7.01. Duties of Trustee and the Security Agent 79SECTION 7.02. Certain Rights of Trustee and the Security Agent 80SECTION 7.03. Individual Rights of Trustee and the Security Agent 84
ARTICLE EIGHT DEFEASANCE; SATISFACTION AND DISCHARGE
ARTICLE NINE AMENDMENTS AND WAIVERS
ARTICLE TEN GUARANTEE
SECTION 7.04. Disclaimer of Trustee and Security Agent 84SECTION 7.05. Compensation and Indemnity 84SECTION 7.06. Replacement of Trustee or Security Agent 85SECTION 7.07. Successor Trustee or Security Agent by Merger 87SECTION 7.08. Appointment of Security Agent and Supplemental Security Agents 87SECTION 7.09. Eligibility; Disqualification 88SECTION 7.10. Appointment of Co-Trustee 88SECTION 7.11. Resignation of Agents 89SECTION 7.12. Agents General Provisions 90
SECTION 8.01. Issuers’ Option to Effect Defeasance or Covenant Defeasance 91SECTION 8.02. Defeasance and Discharge 91SECTION 8.03. Covenant Defeasance 92SECTION 8.04. Conditions to Defeasance 92SECTION 8.05. Satisfaction and Discharge of Indenture 93SECTION 8.06. Survival of Certain Obligations 94SECTION 8.07. Acknowledgment of Discharge by Trustee 94SECTION 8.08. Application of Trust Money 94SECTION 8.09. Repayment to Issuers 95SECTION 8.10. Indemnity for Government Securities 95SECTION 8.11. Reinstatement 95
SECTION 9.01. Without Consent of Holders 95SECTION 9.02. With Consent of Holders 97SECTION 9.03. Effect of Supplemental Indentures 98SECTION 9.04. Notation on or Exchange of Notes 98SECTION 9.05. [Reserved] 98SECTION 9.06. Notice of Amendment or Waiver 98SECTION 9.07. Trustee to Sign Amendments, Etc. 98SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount 99
SECTION 10.01. Notes Guarantees 99SECTION 10.02. Subrogation 100SECTION 10.03. Release of Subsidiary Guarantees 100SECTION 10.04. Limitation and Effectiveness of Guarantees 101SECTION 10.05. Notation Not Required 101SECTION 10.06. Successors and Assigns 101SECTION 10.07. No Waiver 101SECTION 10.08. Modification 101SECTION 10.09. Trustee and Security Agent to Effectuate Subordination of Heye International GmbH Subsidiary
Guarantee 102
ARTICLE ELEVEN SECURITY
ARTICLE TWELVE MISCELLANEOUS
Schedules
Schedule I - Agreed Security Principles
Exhibits
Exhibit - Form of NotesExhibit B - Form of Transfer Certificate for Transfer from Restricted Global Note to Regulation S Global NoteExhibit C - Form of Transfer Certificate for Transfer from Regulation S Global Note to Restricted Global Note
SECTION 11.01. Security; Security Documents 102SECTION 11.02. Authorization of Actions to Be Taken by the Security Agent Under the Security Documents 103SECTION 11.03. Authorization of Receipt of Funds by the Security Agent Under the Security Documents 104SECTION 11.04. Release of the Collateral 104SECTION 11.05. Parallel Debt 105
SECTION 12.01. Release of U.S. Issuer’s Obligations 106SECTION 12.02. Notices 107SECTION 12.03. Certificate and Opinion as to Conditions Precedent 109SECTION 12.04. Statements Required in Certificate or Opinion 109SECTION 12.05. Rules by Trustee, Paying Agent and Registrar 109SECTION 12.06. Legal Holidays 109SECTION 12.07. Governing Law 110SECTION 12.08. Jurisdiction 110SECTION 12.09. No Recourse Against Others 110SECTION 12.10. Successors 110SECTION 12.11. Multiple Originals 111SECTION 12.12. Table of Contents, Cross-Reference Sheet and Headings 111SECTION 12.13. Severability 111SECTION 12.14. Currency Indemnity 111SECTION 12.15. Contractual Recognition of Bail-In 111
INDENTURE dated as of June 10, 2020 among Ardagh Packaging Finance plc, a public limited companyincorporated under the laws of Ireland (the “Irish Issuer”), Ardagh Holdings USA Inc., a Delaware corporation (the “U.S.Issuer” and, together with the Irish Issuer, the “Issuers”), Ardagh Group S.A. (the “Parent Guarantor”), Citibank, N.A.,London Branch, as trustee (the “Trustee”), as principal paying agent (the “Principal Paying Agent”) and as Transfer Agent,Citibank, N.A., London Branch, as security agent (the “Security Agent”), and Citigroup Global Markets Europe AG, asRegistrar.
RECITALS OF THE ISSUERS AND THE PARENT GUARANTOR
The Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance of their2.125% Senior Secured Notes due 2026 issued on the date hereof (the “Original Notes”) and any additional notes(“Additional Notes” and, together with the Original Notes, the “Notes”) that may be issued after the Issue Date (as definedherein). The Issuers and the Parent Guarantor have received good and valuable consideration for the execution and deliveryof this Indenture. The Parent Guarantor will derive substantial direct and indirect benefits from the issuance of the Notes. Allnecessary acts and things have been done to make (i) the Notes, when duly issued and executed by the Issuers andauthenticated and delivered hereunder, the legal, valid and binding obligations of the Issuers and (ii) this Indenture(including the Guarantees included herein) a legal, valid and binding agreement of the Issuers and the Parent Guarantor inaccordance with the terms of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutuallycovenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
“£” means the lawful currency of the United Kingdom of Great Britain and Northern Ireland.
“Acquired Debt” means Debt of a Person:
(a) existing at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with theParent Guarantor or any Restricted Subsidiary; or
(b) assumed in connection with the acquisition of assets from any such Person;
provided, in each case, that such Debt was not incurred in connection with, or in contemplation of, such Person becoming aRestricted Subsidiary or such acquisition, as the case may be.
Acquired Debt will be deemed to be incurred on the date the acquired Person becomes a Restricted Subsidiary or thedate of the related acquisition of assets from any such Person.
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling orcontrolled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, “control,” when used with respect to any specified Person, means the power todirect or cause the direction of the management and policies of such Person, directly or indirectly, whether through theownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meaningscorrelative to the foregoing.
-2-
“Agreed Security Principles” means the Agreed Security Principles as set forth on Schedule I hereto.
“April 2020 Secured Notes” means the existing $500,000,000 aggregate principal amount of 5.250% Senior SecuredNotes due 2025 and $200,000,000 aggregate principal amount of 5.250% additional Senior Secured Notes due 2025 issuedby the Issuers.
“Applicable Law” means any competent regulatory, prosecuting, Tax or governmental authority in any jurisdiction.
“Asset Sale” means any sale, issuance, conveyance, transfer, lease or other disposition (including, withoutlimitation, by way of merger, consolidation or sale and leaseback transaction) (collectively, a “transfer”), directly orindirectly, in one or a series of related transactions, of:
(a) any Capital Stock of any Restricted Subsidiary (other than directors’ qualifying shares or shares required byapplicable law to be held by a Person other than the Parent Guarantor or a Restricted Subsidiary);
(b) all or substantially all of the properties and assets of any division or line of business of the Parent Guarantoror any Restricted Subsidiary; or
(c) any other of the Parent Guarantor’s or any Restricted Subsidiary’s properties or assets.
Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:
(i) any transfer or disposition of assets that is governed by the provisions of Article Five and Section 4.11 orany transfer or disposition of assets consummated in connection with a Permitted Reorganization;
(ii) any transfer or disposition of assets by the Parent Guarantor to the Issuers or any Restricted Subsidiary, orby any Restricted Subsidiary to the Parent Guarantor, the Issuers or any Restricted Subsidiary in accordancewith the terms of this Indenture;
(iii) any transfer or disposition of obsolete or permanently retired equipment or facilities that are no longer usefulin the conduct of the Parent Guarantor’s and any Restricted Subsidiary’s business and that are disposed of inthe ordinary course of business;
(iv) any disposition of accounts receivable and related assets in a Permitted Receivables Financing;
(v) the disposition of receivables in connection with the compromise, settlement or collection thereof in theordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similararrangements;
(vi) the foreclosure, condemnation or any similar action with respect to any property or other assets;
(vii) any unwinding or termination of hedging obligations not for speculative purposes;
-3-
(viii) any single transaction or series of related transactions that involves assets or Capital Stock having a FairMarket Value of less than the greater of $50,000,000 and 0.75% of Total Assets;
(ix) for the purposes of Section 4.09 only, the making of a Permitted Investment or a disposition permitted underSection 4.08; or, solely for the purposes Section 4.09(b), asset sales, the proceeds of which are used within540 days of receipt of such proceeds to make such Restricted Payments, Permitted Payments or PermittedInvestments;
(x) the sale, lease or other disposition of equipment, inventory, property or other assets in the ordinary course ofbusiness;
(xi) the lease, assignment or sublease of any real or personal property in the ordinary course of business;
(xii) an issuance of Capital Stock by a Restricted Subsidiary to the Parent Guarantor or to another RestrictedSubsidiary;
(xiii) a Permitted Investment or a Restricted Payment (or a transaction that would constitute a Restricted Paymentbut for the exclusions from the definition thereof) that is not prohibited by Section 4.08;
(xiv) any disposition of Capital Stock, Debt or other securities of any Unrestricted Subsidiary or a Permitted JointVenture;
(xv) sales of assets received by the Parent Guarantor or any Restricted Subsidiary upon the foreclosure on a Liengranted in favor of the Parent Guarantor or any Restricted Subsidiary;
(xvi) sales or grants of licenses to use the patents, trade secrets, know-how and other intellectual property of theParent Guarantor or any of its Restricted Subsidiaries to the extent that such license does not prohibit theParent Guarantor or any of its Restricted Subsidiaries from using the technologies licensed (other thanpursuant to exclusivity or non-competition arrangements negotiated on an arm’s-length basis) or require theParent Guarantor or any of its Restricted Subsidiaries to pay any fees for any such use;
(xvii) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort orother claims in the ordinary course of business; or
(xviii) sales, issuances, conveyances, transfers, leases or other dispositions to the extent constituting PermittedLiens.
“Authority” means any competent regulatory, prosecuting, Tax or governmental authority in any jurisdiction.
“August 2019 Additional Secured Notes” means the existing $715,000,000 aggregate principal amount of 4.125%Senior Secured Notes due 2026 issued by the Issuers on June 4, 2020 of the same class as the Issuer’s existing$500,000,000 aggregate principal amount of 4.125% Senior Secured Notes due 2026.
“August 2019 Issue Date” means August 12, 2019, the date of issuance of the August 2019 Notes.
-4-
“August 2019 Notes” means the August 2019 Secured Notes and the August 2019 Senior Notes.
“August 2019 Original Secured Notes” means the existing $500,000,000 aggregate principal amount of 4.125%Senior Secured Notes due 2026 and the existing €440,000,000 aggregate principal amount of 2.125% Senior Secured Notesdue 2026 issued by the Issuers on the August 2019 Issue Date.
“August 2019 Secured Notes” means the August 2019 Original Secured Notes and the August 2019 AdditionalSecured Notes.
“August 2019 Senior Notes” means the existing $800,000,000 aggregate principal amount of 5.250% Senior Notesdue 2027 issued by the Issuers on the August 2019 Issue Date.
“Average Life” means, as of the date of determination with respect to any Debt, the quotient obtained by dividing:
(a) the sum of the products of:
(i) the numbers of years from the date of determination to the date or dates of each successivescheduled principal payment of such Debt; multiplied by
(ii) the amount of each such principal payment;
by
(b) the sum of all such principal payments.
“Bankruptcy Law” means any law relating to bankruptcy, insolvency, receivership, moratorium, winding-up,liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law, including,without limitation, (i) bankruptcy law of Ireland, (ii) bankruptcy law of The Netherlands, (iii) bankruptcy law of England,(iv) bankruptcy law of Germany, (v) bankruptcy law of Sweden, (vi) bankruptcy law of Denmark, (vii) bankruptcy law ofPoland, (viii) bankruptcy law of Italy or (ix) bankruptcy law of Luxembourg or (x) Title 11, United States Bankruptcy Codeof 1978, as amended.
“Board of Directors” means (i) with respect to any corporation, the board of directors or managers, as applicable, ofthe corporation, or any duly authorized committee thereof; (ii) with respect to any partnership, the board of directors or othergoverning body of the general partner, as applicable, of the partnership or any duly authorized committee thereof; (iii) withrespect to a limited liability company, the managing member or members or any duly authorized controlling committeethereof; and (iv) with respect to any other Person, the board or any duly authorized committee of such Person serving asimilar function. Whenever any provision of this Indenture requires any action or determination to be made by, or anyapproval of, a Board of Directors (including for the avoidance of doubt any committee thereof), such action, determinationor approval shall be deemed to have been taken or made if approved by a majority of the directors (excluding employeerepresentatives, if any) on any such Board of Directors (whether or not such action or approval is taken as part of a formalboard meeting or as a formal board approval), including for the avoidance of doubt any committee thereof. Unless thecontext requires otherwise, Board of Directors means the Board of Directors of the Parent Guarantor.
“Book-Entry Interest” means a beneficial interest in a Global Note held through and shown on, and transferred onlythrough, records maintained in book-entry form by Euroclear or Clearstream and their respective nominees and successors,in the case of Euroclear and Clearstream, acting through themselves or the Common Depositary.
-5-
“Bund Rate” means, with respect to any Redemption Date, the rate per annum equal to the equivalent yield tomaturity as of such Redemption Date of the Comparable German Bund Issue, assuming a price for the Comparable GermanBund Issue (expressed as a percentage of its principal amount) equal to the Comparable German Bund Price for suchRedemption Date, where:
(a) “Comparable German Bund Issue” means the German Bundesanleihe security selected by any ReferenceGerman Bund Dealer as having a fixed maturity most nearly equal to the period from such Redemption Dateto August 15, 2022, and that would be utilized, at the time of selection and in accordance with customaryfinancial practice, in pricing new issues of euro denominated corporate debt securities in a principal amountapproximately equal to the then outstanding principal amount of the Notes and of a maturity most nearlyequal to August 15, 2022; provided that if the period from such Redemption Date to August 15, 2022 is lessthan one year, a fixed maturity of one year shall be used;
(b) “Comparable German Bund Price” means, with respect to any Redemption Date, the average of theReference German Bund Dealer Quotations for such Redemption Date, after excluding the highest andlowest such Reference German Bund Dealer Quotations, or if an Issuer obtains fewer than four suchReference German Bund Dealer Quotations, the average of all such quotations;
(c) “Reference German Bund Dealer” means any dealer of German Bundesanleihe securities appointed by anIssuer (and notified to the Trustee); and
(d) “Reference German Bund Dealer Quotations” means, with respect to each Reference German Bund Dealerand any Redemption Date, the average as determined by an Issuer of the bid and offered prices for theComparable German Bund Issue (expressed in each case as a percentage of its principal amount) quoted inwriting to an Issuer by such Reference German Bund Dealer at 3:30 p.m. Frankfurt, Germany time on thethird Business Day preceding such Redemption Date.
“Business Day” means a day of the year on which banks are not required or authorized by law to close in Dublin,New York City or London and, in relation to a transaction involving euro, any TARGET day.
“Capital Stock” means, with respect to any Person, any and all shares, interests, partnership interests (whethergeneral or limited), participations, rights in or other equivalents (however designated) of such Person’s equity, any otherinterest or participation that confers the right to receive a share of the profits and losses, or distributions of assets of, suchPerson and any rights (other than debt securities convertible into or exchangeable for Capital Stock), warrants or optionsexchangeable for or convertible into such Capital Stock, whether now outstanding or issued after the Issue Date.
“Capitalized Lease Obligation” means, with respect to any Person, any obligation of such Person under a lease of (orother agreement conveying the right to use) any property (whether real, personal or mixed), which obligation is required tobe classified and accounted for as a capital lease obligation under IFRS, and, for purposes of this Indenture, the amount ofsuch obligation at any date will be the capitalized amount thereof at such date, determined in accordance with IFRS and theStated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the firstdate such lease may be terminated without penalty.
-6-
“Cash Equivalents” means any of the following:
(a) any evidence of Debt with a maturity of 180 days or less from the date of acquisition issued or directly andfully guaranteed or insured by a member state of the European Union or European Economic Area, theUnited Kingdom, the United States of America, any state thereof or the District of Columbia, Canada,Switzerland, Australia or any agency or instrumentality thereof (each, an “Approved Jurisdiction”);
(b) time deposit accounts, certificates of deposit, money market deposits or bankers’ acceptances with amaturity of 180 days or less from the date of acquisition issued by a bank or trust company having combinedcapital and surplus and undivided profits of not less than €500,000,000, whose debt has a rating, at the timeany investment is made therein, of at least BBB+ or the equivalent thereof by S&P and at least Baa1 or theequivalent thereof by Moody’s;
(c) commercial paper with a maturity of 180 days or less from the date of acquisition issued by a corporationthat is not either Issuer’s or any Restricted Subsidiary’s Affiliate and is at the time of acquisition, rated atleast A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s;
(d) repurchase obligations with a term of not more than seven days for underlying securities of the typedescribed in clause (a) or (b) above entered into with a financial institution meeting the qualificationsdescribed in clause (b) above;
(e) investments in money market mutual funds at least 95% of the assets of which constitute Cash Equivalentsof the kind described in clauses (a) through (d) above; or
(f) any investments classified as cash equivalents under IFRS.
“Change of Control” means the occurrence of any of the following events:
(a) the consummation of any transaction (including a merger or consolidation) the result of which is that (i) anyperson or group, other than one or more Permitted Holders, is or as a result of such transaction becomes, thebeneficial owner, directly or indirectly, of more than 50% (or so long as any of the Existing Ardagh Bondsremain outstanding, 35%) of the total voting power of the Voting Stock of the Parent Guarantor and (ii) thePermitted Holders, individually or in the aggregate, do not beneficially own, directly or indirectly, a largerpercentage of the total voting power of such Voting Stock than such other person or group;
(b) the sale, transfer, conveyance or other disposition (other than by way of merger, consolidation or transfer ofthe Parent Guarantor’s Voting Stock or in connection with a Permitted Reorganization) of all orsubstantially all of the assets (other than Capital Stock, Debt or other securities of any UnrestrictedSubsidiary) of the Parent Guarantor, the Issuers and the Restricted Subsidiaries, on a consolidated basis, toany person or group other than one or more Permitted Holders;
(c) the Parent Guarantor or either Issuer is liquidated or dissolved or adopts a plan of liquidation or dissolutionother than in a transaction which does not violate the provisions described under Article Five or inconnection with a Permitted Reorganization; or
-7-
(d) the Parent Guarantor or any Surviving Entity ceases to beneficially own, directly or indirectly, 100% of theVoting Stock of either Issuer, other than director’s qualifying shares and other shares required to be issuedby law.
For the purposes of this definition, (i) “person” and “group” have the meanings they have in Sections 13(d) and14(d) of the Exchange Act; (ii) “beneficial owner” is used as defined in Rules 13d-3 and 13d-5 under the Exchange Act,except that a person shall be deemed to have “beneficial ownership” of all securities that such Person has the right toacquire, whether such right is exercisable immediately or only after the passage of time; and (iii) a Person or group will bedeemed to beneficially own all Voting Stock of an entity held by a parent entity, if such Person or group is or becomes thebeneficial owner, directly or indirectly, of more than 35% of the total voting power of the Voting Stock of such parent entityand the Permitted Holders, individually or in the aggregate, do not beneficially own, directly or indirectly, a largerpercentage of the total voting power of such Voting Stock than such Person or group.
“Clearstream” means Clearstream Banking, S.A. or any successor thereof.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means the collateral that secures the obligations of the Issuers and the Guarantors under the Notes andthis Indenture pursuant to the Security Documents.
“Commission” means the U.S. Securities and Exchange Commission.
“Commodity Hedging Agreements” means any type of commodity hedging agreement (including emissionshedging) designed to protect against or manage exposure to fluctuations in commodity prices and entered into in good faithfor such purposes.
“Common Depositary” means a depositary common to Euroclear and Clearstream, being initially Citibank Europeplc, until a successor Common Depositary, if any, shall have become such pursuant to this Indenture, and thereafterCommon Depositary shall mean or include each Person who is then a Common Depositary hereunder.
“Consolidated Adjusted Net Income” means, for any period, the Parent Guarantor’s and the Restricted Subsidiaries’consolidated net income (or loss) for such period as determined in accordance with IFRS, adjusted by excluding (to theextent included in such consolidated net income or loss), without duplication:
(a) any net after-tax extraordinary gains or losses;
(b) any net after-tax gains or losses attributable to sales of assets of the Parent Guarantor or any RestrictedSubsidiary that are not sold in the ordinary course of business;
(c) the portion of net income or loss of any Person (other than the Parent Guarantor or a Restricted Subsidiary),including Unrestricted Subsidiaries, in which the Parent Guarantor or any Restricted Subsidiary has anequity ownership interest, except that the Parent Guarantor’s or a Restricted Subsidiary’s equity in the netincome of such Person for such period shall be included in such Consolidated Adjusted Net Income to theextent of the aggregate amount of dividends or other distributions actually paid to the Parent Guarantor orany Restricted Subsidiary in cash dividends or other distributions during such period;
-8-
(d) the net income or loss of any Restricted Subsidiary to the extent that the declaration or payment of dividendsor similar distributions by such Restricted Subsidiary is not at the date of determination permitted, directlyor indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order,statute, rule or governmental regulation applicable to such Restricted Subsidiary or its shareholders (otherthan restrictions contained in the Credit Facilities and related agreements permitted by Section 4.06(b)(ii));
(e) any extraordinary, exceptional, unusual or nonrecurring loss, expense or charge (including severance,relocation, plant closure, operational improvement or restructuring costs or reserves or provisions therefor)relating to, or directly or indirectly resulting from, or incurred in connection with, any Asset Sale,Investment, acquisition, reorganization, restructuring or operational improvement initiative, or offering orrefinancing of debt or equity securities;
(f) the non-cash accounting effects of any acquisition, purchase, merger, reorganization or other similartransaction, including any increase in amortization or depreciation resulting from adjustments to tangible orintangible assets, the consequence of any revaluation of inventory or other non-cash charges or effects(including losses on derivatives);
(g) the cumulative effect of a change in accounting principles after the August 2019 Issue Date;
(h) any charge or expense recorded for non-cash or capitalized interest on Deeply Subordinated Funding;
(i) net after tax gains or losses attributable to (i) the termination of pension plans, (ii) the acquisition ofsecurities or the extinguishment of debt or (iii) currency exchange transactions that are not in the ordinarycourse of business;
(j) net income or loss attributable to discontinued operations; and
(k) any restoration to net income of any contingency reserve, except to the extent it was provided for in a priorperiod.
“Consolidated Fixed Charge Coverage Ratio” of the Parent Guarantor means, for any period, the ratio of:
(a) the sum of Consolidated Adjusted Net Income, plus in each case to the extent deducted in computingConsolidated Adjusted Net Income for such period:
(i) Consolidated Net Interest Expense;
(ii) Consolidated Tax Expense; and
(iii) Consolidated Non-cash Charges, less all non-cash items increasing Consolidated Adjusted NetIncome for such period and less all cash payments during such period relating to non-cash chargesthat were added back to Consolidated Adjusted Net Income in determining the Consolidated FixedCharge Coverage Ratio in any prior period;
(b) to the sum of:
-9-
(i) Consolidated Net Interest Expense; and
(ii) cash and non-cash dividends due (whether or not declared) on the Parent Guarantor’s and anyRestricted Subsidiary’s Preferred Stock (to any Person other than the Parent Guarantor and anyWholly Owned Restricted Subsidiary), in each case for such period;
provided that in calculating the Consolidated Fixed Charge Coverage Ratio or any element thereof for any period, pro formaeffect will be given to any realized or expected synergies, cost efficiencies and cost savings relating to, or directly orindirectly resulting from, or associated with, any Asset Sale, Investment, acquisition, reorganization, restructuring oroperational improvement initiative that has occurred during the period included in the calculation or any prior period orwould reasonably be expected to occur in connection with an acquisition or other transaction in relation to which “proforma” effect is given as if such synergies, cost efficiencies or cost savings had been effective throughout the periodincluded in the calculation; provided, further, without limiting the application of the previous proviso, that:
(i) if the Parent Guarantor or any Restricted Subsidiary has incurred any Debt since the beginning of suchperiod that remains outstanding or if the transaction giving rise to the need to calculate the ConsolidatedFixed Charge Coverage Ratio is an incurrence of Debt or both, Consolidated Adjusted Net Income andConsolidated Net Interest Expense for such period shall be calculated after giving effect on a pro formabasis to such Debt as if such Debt had been incurred on the first day of such period and the discharge of anyother Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as ifsuch discharge had occurred on the first day of such period;
(ii) if, since the beginning of such period, the Parent Guarantor or any Restricted Subsidiary shall have madeany Asset Sale, Consolidated Adjusted Net Income for such period shall be reduced by an amount equal tothe Consolidated Adjusted Net Income (if positive) directly attributable to the assets which are the subject ofsuch Asset Sale for such period, or increased by an amount equal to the Consolidated Adjusted Net Income(if negative) directly attributable thereto, for such period and the Consolidated Net Interest Expense for suchperiod shall be reduced by an amount equal to the Consolidated Net Interest Expense directly attributable toany Debt of the Parent Guarantor or of any Restricted Subsidiary repaid, repurchased, defeased or otherwisedischarged with respect to the Parent Guarantor and the continuing Restricted Subsidiaries in connectionwith such Asset Sale for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, theConsolidated Net Interest Expense for such period directly attributable to the Debt of such RestrictedSubsidiary to the extent the Parent Guarantor and the continuing Restricted Subsidiaries are no longer liablefor such Debt after such sale);
(iii) if, since the beginning of such period, the Parent Guarantor or any Restricted Subsidiary (by merger orotherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes aRestricted Subsidiary) or an acquisition of assets, including any acquisition of an asset occurring inconnection with a transaction causing a calculation to be made hereunder, which constitutes all orsubstantially all of an operating unit of a business, Consolidated Adjusted Net Income and Consolidated NetInterest Expense for such period shall be calculated after giving pro forma effect thereto (including theincurrence of any Debt) as if such Investment or acquisition occurred on the first day of such period;
-10-
(iv) if, since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or wasmerged with or into the Parent Guarantor or any Restricted Subsidiary since the beginning of such period)shall have made any Asset Sale or any Investment or acquisition of assets that would have required anadjustment pursuant to clause (x) or (y) above if made by the Parent Guarantor or a Restricted Subsidiaryduring such period, Consolidated Adjusted Net Income and Consolidated Net Interest Expense for suchperiod shall be calculated after giving pro forma effect thereto as if such Asset Sale or Investment oracquisition occurred on the first day of such period; and
(v) that the pro forma calculation shall not give effect to: (i) any amounts under clause (b) above attributable toDebt or Preferred Stock incurred on such determination date pursuant to Section 4.06(b) (other than amountsattributable to Debt or Preferred Stock incurred pursuant to Section 4.06(b)(xix)) or (ii) amounts attributableto any Debt or Preferred Stock discharged on such determination date to the extent that such dischargeresults from the proceeds incurred pursuant to Section 4.06(b) (other than amounts attributable to Debt orPreferred Stock discharged on such determination date using proceeds of Debt Preferred Stock incurredpursuant to Section 4.06(b)(xix)).
If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debtshall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period(taking into account any Interest Rate Agreement applicable to such Debt for a period equal to the remaining term of suchInterest Rate Agreement).
“Consolidated Leverage Ratio” of the Parent Guarantor means, as of the date of determination, the ratio of (a) (i) thesum of consolidated Debt of the Parent Guarantor (other than working capital and other than Debt described in clause (f) ofthe definition of “Debt”) less (ii) cash and Cash Equivalents on the most recent consolidated balance sheet of the ParentGuarantor which has been delivered in accordance with Section 4.19 to (b) the aggregate consolidated EBITDA of theParent Guarantor for the period of the most recent four consecutive quarters for which financial statements are availableunder Section 4.19, in each case with such pro forma adjustments to consolidated Debt and consolidated EBITDA as areappropriate and consistent with the pro forma provisions set forth in the definition of “Consolidated Fixed Charge CoverageRatio”.
“Consolidated Net Interest Expense” means, for any period, without duplication and in each case determined on aconsolidated basis in accordance with IFRS, the sum of:
(a) the Parent Guarantor’s and the Restricted Subsidiaries’ total interest expense for such period, including,without limitation:
(i) amortization of debt discount;
(ii) the net costs of Commodity Hedging Agreements, Interest Rate Agreements and CurrencyAgreements (including amortization of fees and discounts);
(iii) commissions, discounts and other fees and charges owed with respect to letters of credit andbankers’ acceptance financing and similar transactions; and
(iv) the interest portion of any deferred payment obligation and amortization of debt issuance costs; plus
-11-
(b) the interest component of the Parent Guarantor’s and the Restricted Subsidiaries’ Capitalized LeaseObligations accrued and/or scheduled to be paid or accrued during such period other than the interestcomponent of Capitalized Lease Obligations between or among the Parent Guarantor and any RestrictedSubsidiary or between or among Restricted Subsidiaries; plus
(c) the Parent Guarantor’s and the Restricted Subsidiaries non-cash interest expenses and interest that wascapitalized during such period; plus
(d) the interest expense on Debt of another Person to the extent such Debt is guaranteed by the Parent Guarantoror any Restricted Subsidiary or secured by a Lien on the Parent Guarantor’s or any Restricted Subsidiary’sassets, but only to the extent that such interest is actually paid by the Parent Guarantor or such RestrictedSubsidiary; minus
(e) the interest income of the Parent Guarantor and the Restricted Subsidiaries during such period.
Notwithstanding any of the foregoing, Consolidated Net Interest Expense shall not include any of the following:
(a) interest accrued, capitalized or paid in respect of Deeply Subordinated Funding;
(b) gains, losses, expenses or charges associated with refinancing of debt;
(c) gains, losses, expenses or charges associated with the total or partial extinguishment of debt;
(d) gains, losses, expenses or charges resulting from “mark to market” provisions or fair value charges appliedto or resulting from derivatives; or
(e) any non-cash pension expense.
“Consolidated Non-cash Charges” means, for any period, the aggregate depreciation, amortization and other non-cash expenses of the Parent Guarantor and the Restricted Subsidiaries for such period, determined on a consolidated basis inaccordance with IFRS (excluding any such non-cash charge that requires an accrual of or reserve for cash charges for anyfuture period).
“Consolidated Secured Debt Leverage Ratio” of the Parent Guarantor means, as of the date of determination, theratio of (a) (i) the sum of consolidated Debt of the Parent Guarantor secured by Liens ranking equal to (by law or contract)the Liens on the Collateral securing the Notes on all or any portion of the Collateral (other than Debt incurred pursuant toclause (b)(ii) and clause (b)(xiii) of Section 4.06 and other than Debt described in clause (f) of the definition of “Debt”) less(ii) cash and Cash Equivalents on the most recent consolidated balance sheet of the Parent Guarantor which has beendelivered in accordance with Section 4.19 to (b) the aggregate consolidated EBITDA of the Parent Guarantor for the periodof the most recent four consecutive quarters for which financial statements are available under Section 4.19 in each casewith such pro forma adjustments to consolidated Debt and consolidated EBITDA as are appropriate and consistent with thepro forma provisions set forth in the definition of “Consolidated Fixed Charge Coverage Ratio”.
“Consolidated Tax Expense” means, for any period with respect to any Relevant Taxing Jurisdiction, the provisionfor all national, local and foreign federal, state or other income taxes of the Parent
-12-
Guarantor and the Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with IFRS.
“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has notbeen cured or waived.
“Contribution Debt” means Debt of the Parent Guarantor or any Restricted Subsidiary in an aggregate principalamount not greater than the aggregate amount of cash contributions (other than Excluded Contributions and any such cashcontributions that have been used to make a Restricted Payment or a Permitted Investment) made to the equity (other thanthrough the issuance of Redeemable Capital Stock) of the Parent Guarantor or in the form of Deeply Subordinated Funding,in each case, after the August 2019 Issue Date; provided that (without prejudice to the rights of the Parent Guarantor and theRestricted Subsidiaries, including the right to divide and/or classify and/or reclassify as described in Section 4.06) suchContribution Debt is so designated as Contribution Debt pursuant to an Officer’s Certificate on the incurrence date thereof.
“Credit Facility” or “Credit Facilities” means one or more debt facilities, indentures or other arrangements withbanks, insurance companies, other financial institutions or investors providing for revolving credit loans, term loans, notes,receivables financings, letters of credit or other forms of guarantees and assurances, or other Debt, including overdrafts, ineach case, as amended, restated, modified, renewed, refunded, replaced, restructured, repaid or refinanced (and whether inwhole or in part and whether or not with the original administrative agent or lenders or another administrative agent oragents or other bank or institutions and whether provided under one or more other credit or other agreements, indentures,financing agreements or otherwise) and, for the avoidance of doubt, includes any agreement extending the maturity of,refinancing or restructuring all or any portion of the indebtedness under such agreements or any successor agreements.
“Currency Agreements” means, in respect of a Person, any spot or forward foreign exchange agreements andcurrency swap, currency option or other similar financial agreements or arrangements designed to protect such Personagainst or manage exposure to fluctuations in foreign currency exchange rates.
“Custodian” means any receiver, trustee, assignee, liquidator, custodian, administrator or similar official under anyBankruptcy Law.
“Debt” means, with respect to any Person, without duplication:
(a) all liabilities of such Person for borrowed money (including overdrafts) or for the deferred purchase price ofproperty or services, excluding any trade payables and other accrued current liabilities incurred in theordinary course of business;
(b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments;
(c) all obligations, contingent or otherwise, of such Person in connection with any letters of credit, bankers’acceptances, receivables facilities or other similar facilities;
(d) all indebtedness of such Person created or arising under any conditional sale or other title retentionagreement with respect to property acquired by such Person (even if the rights and remedies of the seller orlender under such agreement in the event of default are limited
-13-
to repossession or sale of such property), but excluding trade payables arising in the ordinary course ofbusiness;
(e) all Capitalized Lease Obligations of such Person;
(f) all obligations of such Person under or in respect of Commodity Hedging Agreements, Interest RateAgreements and Currency Agreements; and
(g) all Redeemable Capital Stock of such Person valued at the greater of its voluntary maximum fixedrepurchase price and involuntary maximum fixed repurchase price plus accrued and unpaid dividends;
if and to the extent any of the preceding items would appear as debt on a balance sheet (excluding the footnotes thereto) ofthe specified Person prepared in accordance with IFRS, provided that the term “Debt” shall not include (i) non-interestbearing installment obligations and accrued liabilities incurred in the ordinary course of business that are not more than90 days past due; (ii) Debt in respect of the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt inrespect of standby letters of credit, performance bonds or surety bonds provided by the Parent Guarantor or any RestrictedSubsidiary in the ordinary course of business to the extent such letters of credit or bonds are not drawn upon or, if and to theextent drawn upon are honored in accordance with their terms and if, to be reimbursed, are reimbursed no later than the fifthBusiness Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit orbond; (iii) anything accounted for as an operating lease in accordance with the Election Option; (iv) any pension obligationsof the Parent Guarantor or a Restricted Subsidiary; (v) Debt incurred by the Parent Guarantor or one of the RestrictedSubsidiaries in connection with a transaction where (x) such Debt is borrowed from a bank or trust company having acombined capital and surplus and undivided profits of not less than €500,000,000, whose debt has a rating immediately priorto the time such transaction is entered into, of at least A or the equivalent thereof by S&P and A2 or the equivalent thereofby Moody’s and (y) a substantially concurrent Investment is made by the Parent Guarantor or a Restricted Subsidiary in theform of cash deposited with the lender of such Debt, or a Subsidiary or Affiliate thereof, in amount equal to such Debt; and(vi) Deeply Subordinated Funding. In addition, “Debt” of the specified Person shall include all Debt of another Personsecured by a Lien on any asset of the specified Person (whether or not such Debt is assumed by the specified Person) and, tothe extent not otherwise included, the guarantee by the specified Person of Debt of another Person, and Preferred Stock ofany Restricted Subsidiary.
For purposes of this definition, the “maximum fixed repurchase price” of any Redeemable Capital Stock that doesnot have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of suchRedeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Debt will be requiredto be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value of suchRedeemable Capital Stock, such Fair Market Value will be determined in good faith by the Board of Directors of the issuerof such Redeemable Capital Stock; provided, that if such Redeemable Capital Stock is not then permitted to be redeemed,repaid or repurchased, the redemption, repayment or repurchase price shall be the book value of such Redeemable CapitalStock as reflected in the most recent financial statements of such Person.
“Deeply Subordinated Funding” means any funds provided to the Parent Guarantor pursuant to an agreement, note,security or other instrument, other than Capital Stock, that (i) is subordinated in right of payment to all Debt of the ParentGuarantor, (ii)(A) does not mature or require any amortization, redemption or other repayment of principal, (B) does notrequire payment of any cash interest or any similar cash amounts, and (C) contains no change of control or similarprovisions and does not accelerate and has no right to declare a default or event of default or take any enforcement action orotherwise require any cash
-14-
payment (other than as a result of insolvency proceedings of the Parent Guarantor), in each case prior to the 90th dayfollowing the repayment in full of the Notes and all other amounts due under this Indenture, (iii) does not provide for orrequire any security interest or encumbrance over any asset of the Parent Guarantor or any Restricted Subsidiary and(iv) does not contain any covenants (financial or otherwise) other than a covenant to pay such Deeply SubordinatedFunding.
“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.
“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by theParent Guarantor or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cashConsideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, executed by the principalfinancial officer of the Parent Guarantor, less the amount of Cash Equivalents received in connection with a subsequent sale,redemption, repurchase of, or collection or payment on, such Designated Non-cash Consideration.
“Disinterested Director” means, with respect to any transaction or series of related transactions, a member of theParent Guarantor’s Board of Directors who does not have any material direct or indirect financial interest in or with respectto such transaction or series of related transactions or is not an Affiliate, or an officer, director or employee of any Person(other than the Parent Guarantor or any Restricted Subsidiary) who has any direct or indirect financial interest in or withrespect to such transaction or series of related transactions; provided that no member of the Parent Guarantor’s Board ofDirectors shall be deemed to have any such direct or indirect financial interest solely as a result of such member’s ownershipof Capital Stock of the Parent Guarantor or any successor or any company holding shares, directly or indirectly, in theParent Guarantor or such member’s serving on the Board of Directors of any company holding shares, directly or indirectly,in the Parent Guarantor.
“Disposition” has the meaning assigned to such term in the Offering Memorandum.
“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any timefor the determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in suchcomputation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency aspublished under “Currency Rates” in the section of the Financial Times entitled “Currencies, Bonds & Interest Rates” on thedate that is two Business Days prior to such determination.
“euro” or “€” means the lawful currency of the member states of the European Union who have agreed to share acommon currency in accordance with the provisions of the Maastricht Treaty dealing with European monetary union.
“Euroclear” means Euroclear SA/NV or any successor thereof.
“European Government Obligations” means direct obligations (or certificates representing an ownership interest insuch obligations) of a member state of the European Union (including any agency or instrumentality thereof) for thepayment of which the full faith and credit of such government is pledged.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, or any successor statute, and therules and regulations promulgated by the Commission thereunder.
“Excluded Contribution” means Net Cash Proceeds or property or assets received by the Parent Guarantor as capitalcontributions (other than Contribution Debt and any contributions used to make a
-15-
Restricted Payment or a Permitted Investment) to the equity (other than through the issuance of Redeemable Capital Stock)of the Parent Guarantor or in the form of Deeply Subordinated Funding, in each case of such capital contribution or DeeplySubordinated Funding, after the August 2019 Issue Date or from the issuance or sale (other than to a Restricted Subsidiaryor an employee stock ownership plan or trust established by the Parent Guarantor or any Subsidiary of the Parent Guarantorfor the benefit of its employees to the extent funded by the Parent Guarantor or any Restricted Subsidiary) of Capital Stock(other than Redeemable Capital Stock) of the Parent Guarantor, in each case, to the extent designated as an ExcludedContribution pursuant to an Officer’s Certificate of the Parent Guarantor.
“Existing Ardagh Bonds” means (i) the Existing Secured Notes and (ii) the Existing Unsecured Notes and any otherinternational debt securities of the Parent Guarantor or any of its Restricted Subsidiaries outstanding on the August 2019Issue Date. For the avoidance of doubt, the August 2019 Notes, April 2020 Secured Notes and June 2020 Senior Notes shallnot constitute Existing Ardagh Bonds.
“Existing Debt” means all Debt of the Parent Guarantor and its Restricted Subsidiaries outstanding on the August2019 Issue Date after giving effect to the issue of the August 2019 Notes and the use of proceeds therefrom.
“Existing Secured Notes” means the March 2017 Secured Notes.
“Existing Unsecured Notes” means the January 2017 Senior Notes and the June 2017 Senior Notes.
“Fair Market Value” means, with respect to any asset or property, the sale value that would be obtained in an arm’s-length free market transaction between an informed and willing seller under no compulsion to sell and an informed andwilling buyer under no compulsion to buy, as determined in good faith by the Parent Guarantor’s Board of Directors.
“FATCA Withholding” means any withholding or deduction required pursuant to an agreement described in section1471(b) of the Code, or otherwise imposed pursuant to sections 1471 through 1474 of the Code, any regulations oragreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
“Guarantee” means any guarantee of the Issuers’ obligations under this Indenture and the Notes by the ParentGuarantor, any Restricted Subsidiary or any other Person in accordance with the provisions of this Indenture, including theGuarantees by the Guarantors dated as of the Issue Date. When used as a verb, “Guarantee” shall have a correspondingmeaning.
“guarantees” means, as applied to any obligation,
(a) a guarantee (other than by endorsement of negotiable instruments for collection or deposit in the ordinarycourse of business), direct or indirect, in any manner, of any part or all of such obligation; and
(b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any waythe payment or performance (or payment of damages in the event of non-performance) of all or any part ofsuch obligation, including, without limiting the foregoing, by the pledge of assets and the payment ofamounts drawn down under letters of credit.
“Guarantor” means the Parent Guarantor and the Subsidiary Guarantors, together, and any other Person that is aguarantor of the Notes, including any Person that is required after the Issue Date to execute
-16-
a guarantee of the Notes pursuant to Section 4.14 or Section 4.15 until a successor replaces such party pursuant to theapplicable provisions of this Indenture and, thereafter, shall mean such successor.
“Holder” means the Person in whose name a Note is registered on the Registrar’s books.
“IFRS” means International Financial Reporting Standards (formerly International Accounting Standards) endorsedfrom time to time by the European Union or any variation thereof with which the Parent Guarantor or its RestrictedSubsidiaries are, or may be, required to comply, as in effect on the August 2019 Issue Date or, with respect to Section 4.19as in effect from time to time. Except as otherwise set forth in this Indenture, all ratios and calculations based on IFRS (or,as applicable, GAAP) contained in this Indenture shall be computed in accordance with IFRS as in effect on the August2019 Issue Date (or, as applicable, GAAP as in effect at the date specified by the Parent Guarantor in its election to adoptGAAP in accordance with the fourth sentence of this definition). At any time after the August 2019 Issue Date, the ParentGuarantor may elect to implement any new measures or other changes to IFRS (or, as applicable, GAAP) in effect on orprior to the date of such election; provided that any such election, once made, shall be irrevocable. At any time after theAugust 2019 Issue Date, the Parent Guarantor may elect to apply GAAP accounting principles in lieu of IFRS and, upon anysuch election, references herein to IFRS shall thereafter be construed to mean GAAP (except as otherwise provided in thisIndenture), including as to the ability of the Parent Guarantor to make an election pursuant to the previous sentence;provided that any such election, once made, shall be irrevocable; provided, further, that any calculation or determination inthis Indenture that requires the application of IFRS for periods that include fiscal quarters ended prior to the ParentGuarantor’s election to apply GAAP shall remain as previously calculated or determined in accordance with IFRS;provided, further again, that the Parent Guarantor may only make such election if it also elects to report any subsequentfinancial reports required to be made by the Parent Guarantor. The Parent Guarantor shall give notice of any such electionmade in accordance with this definition to the Trustee and the Holders. Notwithstanding any of the foregoing, (i) in relationto the making of any determination or calculation under this Indenture, the Parent Guarantor shall be required to elect (the“Election Option”), from time to time and each time, either (A) to apply IFRS 16 (Leases) or (B) to apply IAS 17 (Leases)(or, in each case, the equivalent measure under GAAP) to the making of such determination or calculation, provided that, ifsuch determination or calculation involves more than one element (including for the calculation of a financial ratio), suchselected accounting standard shall be consistently applied to each element of such determination or calculation (other than,for the avoidance of doubt, in relation to Section 4.19); and (ii) any adverse impact directly or indirectly relating to orresulting from the implementation of IFRS 15 (Revenue from Contracts with Customers) and any successor standard thereto(or any equivalent measure under GAAP) shall be disregarded with respect to all ratios, calculations and determinationsbased upon IFRS to be calculated or made, as the case may be, pursuant to this Indenture (other than, for the avoidance ofdoubt, in relation to Section 4.19).
“Indenture” means this instrument as originally executed or as it may from time to time be supplemented oramended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
“Intercreditor Agreement” means the Intercreditor Agreement entered into on December 7, 2010, as amended andrestated most recently on March 21, 2017 and from time to time among, inter alios, Ardagh Group SA. and certain of itssubsidiaries and Citibank, N.A., London Branch in its capacity as security agent thereunder and trustee for the ExistingSecured Notes.
“Interest Payment Date” means the Stated Maturity of an installment of interest on the Notes.
“Interest Rate Agreements” means, in respect of a Person, any interest rate protection agreements and other types ofinterest rate hedging agreements (including, without limitation, interest rate swaps, caps,
-17-
floors, collars and similar agreements) designed to protect such Person against or manage exposure to fluctuations in interestrates.
“Investment” means, with respect to any Person, any direct or indirect advance, loan or other extension of credit(including guarantees) or capital contribution to (by means of any transfer of cash or other property to others or any paymentfor property or services for the account or use of others), or any purchase, acquisition or ownership by such Person of anyCapital Stock, bonds, notes, debentures or other securities or evidences of Debt issued or owned by, any other Person and allother items that would be classified as investments on a balance sheet prepared in accordance with IFRS. In addition, theportion (proportionate to the Parent Guarantor’s equity interest in such Restricted Subsidiary) of the Fair Market Value ofthe net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an UnrestrictedSubsidiary will be deemed to be an “Investment” that the Parent Guarantor made in such Unrestricted Subsidiary at suchtime. The portion (proportionate to the Parent Guarantor’s equity interest in such Restricted Subsidiary) of the Fair MarketValue of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a RestrictedSubsidiary will be considered a reduction in outstanding Investments. “Investments” excludes extensions of trade credit oncommercially reasonable terms in accordance with normal trade practices.
“Investment Grade Status” shall occur when the Notes receive both of the following:
(1) a rating of “BBB-” or higher from S&P; and
(2) a rating of “Baa3” or higher from Moody’s;
or the equivalent of such rating by either such rating organization or, if no rating of Moody’s or S&P then exists, theequivalent of such rating by any other Nationally Recognized Statistical Rating Organization.
“IP Cross License Agreement” means an intellectual property cross license agreement entered into between theParent Guarantor and Trivium Packaging B.V. and any modification, amendment, replacement or extension or any similaragreement.
“Issue Date” means June 10, 2020.
“Issuers Order” means a written order signed in the name of the Issuers by any Person authorized by a resolution ofthe Board of Directors of each Issuer.
“January 2017 Senior Notes” means the existing $1,000,000,000 aggregate principal amount of 6.000% SeniorNotes and $700,000,000 aggregate principal amount of 6.000% additional Senior Notes due 2025 issued by the Issuers.
“June 2017 Senior Notes” means the existing £400,000,000 aggregate principal amount of 4.750% Senior Notes due2027 issued by the Issuers on June 12, 2017.
“June 2020 Senior Notes” means the existing $1,000,000,000 aggregate principal amount of 5.250% Senior Notesdue 2027 issued by the Issuers on June 2, 2020.
“Lien” means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest,hypothecation, assignment for security, standard security, assignation in security claim, or preference or priority or otherencumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned orhereafter acquired. A Person shall be deemed to own
-18-
subject to a Lien any property which such Person has acquired or holds subject to the interest of a vendor or lessor under anyconditional sale agreement, capital lease or other title retention agreement.
“March 2017 Secured Notes” means the existing $715,000,000 aggregate principal amount of 4.250% SeniorSecured Notes due 2022 and the existing €750,000,000 aggregate principal amount of 2.750% Senior Secured Notes due2024 issued by the Issuers on March 8, 2017.
“Material Subsidiary” means any Restricted Subsidiary or group of Restricted Subsidiaries (taken together) thatwould be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to theSecurities Act, as such regulation is in effect on the August 2019 Issue Date, measured, as of the last day of the most recentfiscal quarter for which financial statements are available or for the four fiscal quarters ended most recently for whichfinancial statements are available, as the case may be.
“Maturity” means, with respect to any indebtedness, the date on which any principal of such indebtedness becomesdue and payable as therein or herein provided, whether at the Stated Maturity with respect to such principal or by declarationof acceleration, call for redemption or purchase or otherwise.
“Moody’s” means Moody’s Investors Service, Inc. and its successors.
“Mutual Services Agreement” means the mutual services agreement dated October 31, 2019 entered into among theParent Guarantor and Trivium Packaging B.V. and any modification, amendment, replacement or extension or any similaragreement.
“Nationally Recognized Statistical Rating Organization” means a nationally recognized statistical ratingorganization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.
"natural person Affiliates" means, with respect to any natural Person, any Person having a relationship with suchPerson by blood, marriage, adoption not more remote than first cousin.
“Net Cash Proceeds” means:
(a) with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including(x) payments in respect of deferred payment obligations when received in the form of, or stock or otherassets when disposed for, cash or Cash Equivalents (except to the extent that such obligations are financedor sold with recourse to the Parent Guarantor or any Restricted Subsidiary) and (y) any cash or CashEquivalents received upon the sale or other disposition of any Designated Non-cash Consideration receivedin any Asset Sale, net of:
(i) brokerage commissions and other fees and expenses (including, without limitation, fees andexpenses of legal counsel, accountants, investment banks and other consultants) related to suchAsset Sale;
(ii) provisions for all taxes paid or payable, or required to be accrued as a liability under IFRS as a resultof such Asset Sale;
(iii) all distributions and other payments required to be made to any Person (other than the ParentGuarantor or any Restricted Subsidiary) owning a beneficial interest in the assets subject to theAsset Sale; and
-19-
(iv) appropriate amounts required to be provided by the Parent Guarantor or any Restricted Subsidiary,as the case may be, as a reserve in accordance with IFRS against any liabilities associated with suchAsset Sale and retained by the Parent Guarantor or any Restricted Subsidiary, as the case may be,after such Asset Sale, including, without limitation, pension and other post-employment benefitliabilities, liabilities related to environmental matters and liabilities under any indemnificationobligations associated with such Asset Sale, all as reflected in an Officer’s Certificate delivered tothe Trustee; and
(b) with respect to any capital contributions, issuance or sale of Capital Stock or options, warrants or rights topurchase Capital Stock, or debt securities or Capital Stock that have been converted into or exchanged forCapital Stock as referred to in Section 4.08, the proceeds of such issuance or sale in the form of cash or CashEquivalents, payments in respect of deferred payment obligations when received in the form of, or stock orother assets when disposed of for, cash or Cash Equivalents (except to the extent that such obligations arefinanced or sold with recourse to the Parent Guarantor or any Restricted Subsidiary), net of attorney’s fees,accountant’s fees and brokerage, consultation, underwriting and other fees and expenses actually incurred inconnection with such issuance or sale and net of taxes paid or payable as a result thereof.
“Offering Memorandum” means the final offering memorandum of the Issuers, dated July 30, 2019 relating to theoffering of the Issuers’ August 2019 Notes.
“Officer’s Certificate” means a certificate signed by an officer of the Parent Guarantor, either Issuer, a Guarantor ora Surviving Entity, as the case may be, and delivered to the Trustee.
“Opinion of Counsel” means a written opinion from legal counsel. The counsel may be an employee of or counsel tothe Issuers.
“Pari Passu Debt” means (a) any Debt of the applicable Issuer that ranks equally in right of payment with the Notesor (b) with respect to any Guarantee, any Debt that ranks equally in right of payment to such Guarantee.
“Parties” means the Issuers, the Parent Guarantor, the Trustee, the Principal Paying Agent and the Security Agentand any other party from time to time hereto (each, a “Party”).
“Permitted Collateral Lien” means the following types of Liens:
(a) Liens securing the August 2019 Secured Notes issued on the August 2019 Issue Date, the Existing SecuredNotes and, in each case, any Permitted Refinancing Debt incurred to refinance such notes;
(b) Liens on the Collateral to secure Debt permitted under Section 4.06; provided that the assets and propertiessecuring such Debt will also secure the Notes on a first ranking basis; and provided, further, that, followingthe incurrence of such Debt secured by such Liens on the Collateral and giving effect to the application ofthe proceeds thereof, on a pro forma basis, the Consolidated Secured Debt Leverage Ratio for the four fullfiscal quarters for which financial statements are available immediately preceding the incurrence of suchDebt, taken as one period, would be less than 3.50 to 1.0;
-20-
(c) Liens on the Collateral to secure Debt permitted under clauses (ii), (iv), (v) (to the extent such guarantee isin respect of Debt otherwise permitted to be secured and is specified in this definition of “PermittedCollateral Liens”), (vi), (viii), (ix),(x), (xv), (xviii) and (xix) in Section 4.06(b) (provided, however, that atthe time of incurrence of such Debt secured by such Liens on the Collateral and giving effect to theapplication of the proceeds thereof, on a pro forma basis, (1) the Consolidated Secured Debt Leverage Ratiofor the four fiscal quarters for which financial statements are available immediately preceding the incurrenceof such Debt, taken as one period, would be less than 3.50 to 1.0 or (2) the Consolidated Secured DebtLeverage Ratio of the Parent Guarantor and its Restricted Subsidiaries would not be greater than it wasimmediately prior to giving effect to such acquisition or other transaction), Section 4.06(b)(xx) and Section4.06(b)(xxi);
(d) Liens on Collateral to secure Debt permitted under Section 4.06(b)(xiii); provided that such Liens do notextend to assets other than the accounts receivable (and related assets) that are the subject of the relatedPermitted Receivables Financing;
(e) Liens of the type described in clauses (g), (h), (i), (j), (k), (l), (m), (n), (o), (q), (r) and (v) of the definition of“Permitted Liens”; and
(f) any extension, renewal or replacement, in whole or in part, of any Lien described in the foregoingclauses (a) through (e); provided that any such extension, renewal or replacement will be of the samepriority and be no more restrictive in any material respect than the Lien so extended, renewed or replacedand will not extend in any material respect to any additional property or assets.
“Permitted Debt” has the meaning given to such term under Section 4.06(b).
“Permitted Holders” means (a) Yeoman Capital S.A., (b) any of Paul Coulson, Brendan Dowling, Houghton Fry,Edward Kilty, John Riordan or Niall Wall, and any trust created for the benefit of one or more of the foregoing or theirrespective natural person Affiliates, or the estate, executor, administrator, committee or beneficiaries of any thereof, and(c) any of their respective Affiliates.
“Permitted Investments” means any of the following:
(a) Investments in cash or Cash Equivalents;
(b) intercompany Debt to the extent permitted under clause (iv) of the definition of “Permitted Debt”;
(c) Investments in (i) the form of loans borrowed by or advances to, or debt securities issued by, the ParentGuarantor, (ii) a Restricted Subsidiary or (iii) another Person if as a result of such Investment such otherPerson becomes a Restricted Subsidiary or such other Person is merged or consolidated with or into, ortransfers or conveys all or substantially all of its assets to, the Parent Guarantor or a Restricted Subsidiary;
(d) Investments made by the Parent Guarantor or any Restricted Subsidiary as a result of or retained inconnection with an Asset Sale that does not violate Section 4.09;
(e) expenses or advances to cover payroll, travel, entertainment, moving, other relocation and similar matters;
-21-
(f) Investments in the August 2019 Notes and the Existing Ardagh Bonds;
(g) Investments existing at the August 2019 Issue Date and any Investment consisting of an extension,modification or renewal of any Investment existing on, or made pursuant to a binding commitment existingon, the August 2019 Issue Date; provided that the amount of any such Investment may be increased asrequired by the terms of such Investment existing on the August 2019 Issue Date;
(h) Investments in Commodity Hedging Agreements, Interest Rate Agreements and Currency Agreementspermitted under Section 4.06(b)(viii), Section 4.06(b)(ix) and Section 4.06(b)(x) ;
(i) Investments made in the ordinary course of business, the Fair Market Value of which in the aggregate doesnot exceed $15,000,000 in any fiscal year in any transaction or series of related transactions;
(j) loans and advances (or guarantees to third-party loans) to directors, officers or employees of the ParentGuarantor or any Restricted Subsidiary made in the ordinary course of business and consistent with theParent Guarantor’s past practices or past practices of the Restricted Subsidiaries, as the case may be, in anamount outstanding not to exceed at any one time the greater of $30,000,000 and 0.5% of Total Assets;
(k) Investments in a Person to the extent that the consideration therefor consists of the issue and sale (other thanto any Subsidiary) of shares of the Parent Guarantor’s Qualified Capital Stock or Deeply SubordinatedFunding or the net proceeds thereof (other than any Excluded Contribution or the proceeds of anyContribution Debt); provided that the net proceeds of such sale have been excluded from, and shall not havebeen included in, the calculation of the amount determined under clause (b)(iii)(B) of Section 4.08;
(l) pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course ofbusiness;
(m) Investments of the Parent Guarantor or the Restricted Subsidiaries described under item (v) to the proviso tothe definition of “Debt”;
(n) Investments, the amount of which, measured by reference to the Fair Market Value of each such Investmenton the date it was made, not to exceed the sum of (x) the greater of $300,000,000 and 4.0% of Total Assetsin the aggregate outstanding at any one time and (y) the sum of (i) the aggregate net after-tax amountreturned in cash or through interest payments, principal payments, dividends or other distributions orpayments on account of such Investment and (ii) the net after-tax cash proceeds received by the ParentGuarantor or any Restricted Subsidiary from the disposition of all or any portion of such Investments (otherthan to a Subsidiary); provided, however, that such net after-tax amounts have not been included inConsolidated Adjusted Net Income for the purpose of calculating clause (b)(iii)(A) of Section 4.08;
(o) Investments resulting from the acquisition of a Person that at the time of such acquisition held instrumentsconstituting Investments that were not acquired in contemplation of the acquisition of such Person;
-22-
(p) Investments by the Parent Guarantor or any Restricted Subsidiary in connection with a PermittedReceivables Financing;
(q) loans or advances to (i) directors, officers or employees of the Parent Guarantor or any Restricted Subsidiaryto pay for the purchase of Capital Stock of the Parent Guarantor or any direct or indirect parent companythereof pursuant to management equity plans or similar management or employee benefit arrangement or(ii) stock option plans, trust and similar asset pools to pay for the purchase of Capital Stock of the ParentGuarantor or any direct or indirect parent company thereof not to exceed the greater of $30,000,000 and0.5% of Total Assets in the aggregate outstanding at any one time;
(r) (i) stock, obligations or securities received in satisfaction of judgments, foreclosure of liens, or settlement ofdebts or arbitration awards, and (ii) any Investments received in compromise of obligations of such personsincurred in the ordinary course of trade creditors or customers that were incurred in the ordinary course ofbusiness, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy orinsolvency of any trade creditor or customer;
(s) any Investments received in comprise or resolution of litigation, arbitration or other disputes;
(t) any guarantee of Debt permitted to be incurred by Section 4.06, performance guarantees and contingentobligations incurred in the ordinary course of business and creation of Liens on the assets of the ParentGuarantor or any Restricted Subsidiary in compliance with Section 4.07;
(u) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance withSection 4.10(b) (except transactions described in sub-clauses (ii), (v) and (x) thereof);
(v) advances, loans, rebates and extensions of credit (including the creation of receivables) to suppliers,customers and vendors, and advance payment made and deferred consideration and performance guarantees,in each case in the ordinary course of business; and
(w) any Investment in any Subsidiary or any joint venture in connection with intercompany cash managementarrangements or related activities arising in the ordinary course of business.
“Permitted Joint Venture” means any joint venture or similar combinations or other transaction pursuant to whichthe Parent Guarantor or any Restricted Subsidiary enters into, acquires or subscribes for any shares, stock, securities or otherinterest in or transfers any assets to any joint venture; provided, however, that the primary business of such joint venture is aSimilar Business.
“Permitted Liens” means the following types of Liens:
(a) Liens existing as of the August 2019 Issue Date;
(b) Liens on any property or assets of the Parent Guarantor or a Restricted Subsidiary to secure Debt permittedto be incurred pursuant to Section 4.06(b)(ii);
-23-
(c) Liens on assets given, disposed of, or otherwise transferred in connection with a Permitted ReceivablesFinancing permitted to be incurred pursuant to Section 4.06(b)(xiii);
(d) Liens on any property or assets of a Restricted Subsidiary granted in favor of the Parent Guarantor or anyRestricted Subsidiary;
(e) Liens on any of the Parent Guarantor’s or any Restricted Subsidiary’s property or assets securing the Notesor any Guarantees;
(f) any interest or title of a lessor under any Capitalized Lease Obligation and Liens to secure Debt (includingCapitalized Lease Obligations) permitted under Section 4.06 covering only the assets acquired with suchDebt;
(g) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale ofgoods entered into by the Parent Guarantor or any Restricted Subsidiary in the ordinary course of business;
(h) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen,employees, pension plan administrators or other like Liens arising in the ordinary course of business andwith respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings orLiens arising solely by virtue of any statutory or common law provisions relating to attorney’s liens orbankers’ liens, rights of set-off or similar rights and remedies as to deposit accounts or other fundsmaintained with a creditor depositary institution;
(i) Liens for taxes, assessments, government charges or claims that are not yet delinquent or that are beingcontested in good faith by appropriate proceedings for which a reserve or other appropriate provision, if any,as shall be required in conformity with IFRS shall have been made;
(j) Liens incurred or deposits made to secure the performance of tenders, bids or trade or government contracts,or to secure leases, statutory or regulatory obligations, surety or appeal bonds, performance bonds or otherobligations of a like nature incurred in the ordinary course of business (other than obligations for thepayment of money);
(k) zoning restrictions, easements, licenses, reservations, title defects, rights of others for rights-of-way, utilities,sewers, electrical lines, telephone lines, telegraph wires, restrictions, encroachments and other similarcharges, encumbrances or title defects and incurred in the ordinary course of business that do not in theaggregate materially interfere with in any material respect the ordinary conduct of the business of the ParentGuarantor and its Restricted Subsidiaries on the properties subject thereto, taken as a whole;
(l) Liens arising by reason of any judgment, decree or order of any court so long as such Lien is adequatelybonded and any appropriate legal proceedings that may have been duly initiated for the review of suchjudgment, decree or order shall not have been finally terminated or the period within which suchproceedings may be initiated shall not have expired;
(m) Liens on property existing at the time such property is acquired or on property of, or on shares of CapitalStock or Debt of, any Person existing at the time such Person is acquired by, merged with or into orconsolidated with, the Parent Guarantor or any Restricted
-24-
Subsidiary; provided that such Liens (i) do not extend to or cover any property or assets of the ParentGuarantor or any Restricted Subsidiary other than (A) the property or assets acquired or (B) the property orassets of the Person acquired, merged with or into or consolidated with the Parent Guarantor or RestrictedSubsidiary and (ii) were created prior to, and not in connection with or in contemplation of such acquisition,merger or consolidation;
(n) Liens securing the Parent Guarantor’s or any Restricted Subsidiary’s obligations under Commodity HedgingAgreements, Interest Rate Agreements or Currency Agreements permitted under Sections 4.06(b)(viii),4.06(b)(ix) and 4.06(b)(x) or any collateral for the Debt to which such Commodity Hedging Agreements,Interest Rate Agreements or Currency Agreements relate;
(o) Liens incurred or deposits made in the ordinary course of business in connection with workers’compensation, unemployment insurance and other types of social security or other insurance (includingunemployment insurance) or deposits to secure public or statutory obligations of such Person or deposits ofcash or government bonds to secure performance, bid, surety or appeal bonds and completion bonds andguarantees to which such Person is a party, or deposits as security for contested taxes or import duties or forthe payment of rent, in each case incurred in the ordinary course of business;
(p) Liens incurred in connection with a cash management program established in the ordinary course ofbusiness;
(q) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, orwarranty requirements of the Parent Guarantor or any Restricted Subsidiary, including rights of offset andset-off;
(r) any extension, renewal or replacement, in whole or in part, of any Permitted Lien; provided that any suchextension, renewal or replacement shall not extend in any material respect to any additional property orassets;
(s) Liens securing Debt incurred to refinance Permitted Refinancing Debt permitted to be incurred under thisIndenture; provided that any such Lien shall not extend to or cover materially any assets not securing theDebt so refinanced plus improvements and accessions to such property and assets and proceeds anddistributions thereof;
(t) purchase money Liens to finance property or assets of the Parent Guarantor or any Restricted Subsidiaryacquired in the ordinary course of business; provided that the related purchase money Debt shall not exceedthe cost of such property or assets and shall not be secured by any property or assets of the Parent Guarantoror any Restricted Subsidiary other than the property and assets so acquired;
(u) Permitted Collateral Liens;
(v) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customsduties in connection with the importation of goods;
(w) Liens over the Capital Stock of an Unrestricted Subsidiary or a Permitted Joint Venture that secures Debt ofsuch Unrestricted Subsidiary or Permitted Joint Venture;
-25-
(x) Liens incurred in the ordinary course of business of the Parent Guarantor or any Restricted Subsidiary withrespect to an amount that does not exceed the greater of $225,000,000 and 3.0% of Total Assets at any onetime outstanding and any replacements, extensions, modifications or renewals thereof;
(y) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing suchPerson’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of businessfor the account of such Person to facilitate the purchase, shipment or storage of such inventory or othergoods;
(z) leases, licenses, subleases and sublicenses of assets in the ordinary course of business;
(aa) Liens on property or assets under construction (and related rights) in favor of a contractor or developer orarising from progress or partial payments by a third-party relating to such property or assets;
(bb) Liens on equipment of the Issuer or any Restricted Subsidiary granted in the ordinary course of business;
(cc) customary Liens on and in respect of deposits required in connection with the purchase of property,equipment and inventory, in each case incurred in the ordinary course of business;
(dd) (i) Liens on escrowed proceeds for the benefit of the related holders of debt securities or other Debt (or theunderwriters or arrangers thereof) or (ii) Liens on cash set aside at the time of the incurrence of any Debt orgovernment securities purchased with such cash, in either case, to the extent such cash or governmentsecurities prefund the payment of interest on such Debt and are held in escrow accounts or similararrangements to be applied for such purpose; and
(ee) Liens on assets or property of a Restricted Subsidiary that is not a Subsidiary Guarantor securing Debt andother Obligations of any Restricted Subsidiary that is not a Subsidiary Guarantor.
“Permitted Receivables Financing” means any financing pursuant to which the Parent Guarantor or any RestrictedSubsidiary may sell, convey or otherwise transfer to any other Person or grant a security interest in, any accounts receivable(and related assets) in an aggregate principal amount equivalent to the Fair Market Value of such accounts receivable (andrelated assets) of the Parent Guarantor or any Restricted Subsidiary; provided that (a) the covenants, events of default andother provisions applicable to such financing shall be customary for such transactions and shall be on market terms (asdetermined in good faith by the Parent Guarantor’s Board of Directors) at the time such financing is entered into, (b) theinterest rate applicable to such financing shall be a market interest rate (as determined in good faith by the ParentGuarantor’s Board of Directors) at the time such financing is entered into, and (c) such financing shall be non-recourse tothe Parent Guarantor or any Restricted Subsidiary except to a limited extent customary for such transactions.
“Permitted Refinancing Debt” means any renewals, extensions, substitutions, refinancings or replacements (each,for purposes of this definition and Section 4.06(b)(xiv), a “refinancing”) of any Debt of the Parent Guarantor or a RestrictedSubsidiary or pursuant to this definition, including any successive refinancings, so long as:
-26-
(a) such Debt is in an aggregate principal amount (or if incurred with original issue discount, an aggregate issueprice) not in excess of the sum of (i) the aggregate principal amount (or if incurred with original issuediscount, the aggregate accreted value) then outstanding of the Debt being refinanced and (ii) an amountnecessary to pay any fees and expenses, including premiums and defeasance costs, related to suchrefinancing;
(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being refinanced;
(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being refinanced;
(d) the new Debt is not senior in right of payment to the Debt that is being refinanced; and
(e) such Debt is unsecured or is secured by a Silent Second Lien, if the Debt being refinanced is unsecured.
“Permitted Reorganization” means any amalgamation, demerger, merger, voluntary liquidation, consolidation,reorganization, winding up or corporate reconstruction, directly or indirectly, in one or a series of related transactionsinvolving the Parent Guarantor or any of its Restricted Subsidiaries (a “Reorganization”) that is made on a solvent basis;provided that any payments or assets distributed in connection with such Reorganization remain within the applicable Issuerand its Restricted Subsidiaries. For the avoidance of doubt, the term “Permitted Reorganization” shall include the closure ofbank accounts and the conversion of debt instruments into Capital Stock or other equity instruments.
“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, jointstock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Preferred Stock” means, with respect to any Person, Capital Stock of any class or classes (however designated) ofsuch Person which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon anyvoluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class of such Personwhether now outstanding, or issued after the Issue Date, and including, without limitation, all classes and series of preferredor preference stock of such Person.
“pro forma” means, with respect to any calculation made or required to be made pursuant to the terms of thisIndenture, a calculation made in good faith by a responsible financial or accounting officer of the Parent Guarantor;provided that any such calculation shall (x) give effect to any realized or expected synergies, cost efficiencies and costsavings relating to, or directly or indirectly resulting from, or associated with, any Asset Sale, Investment, acquisition,reorganization, restructuring or operational improvement initiative that has occurred during the period included in thecalculation or any prior period or would reasonably be expected to occur in connection with an acquisition or othertransaction in relation to which “pro forma” effect is given, as if such synergies, cost efficiencies or cost savings had beeneffective throughout the period included in the calculation and (y) eliminate any extraordinary, exceptional, unusual ornonrecurring loss, expense or charge (including severance, relocation, plant closure, operational improvement orrestructuring costs or reserves therefor) relating to, or directly or indirectly resulting from, or incurred in connection with,any Asset Sale, Investment, acquisition, reorganization, restructuring or operational improvement initiative, or offering ofdebt or equity securities.
“Property” means, with respect to any Person, any interest of such Person in any kind of property or asset, whetherreal, personal or mixed, or tangible or intangible, including Capital Stock, and other
-27-
securities of, any other Person. For purposes of any calculation required pursuant to this Indenture, the value of any Propertyshall be its Fair Market Value.
“Public Equity Offering” means an offer and sale of Qualified Capital Stock that are listed on an internationalsecurities exchange or publicly offered (which shall include an offering pursuant to Rule 144A and/or Regulation S underthe Securities Act to professional market investors or similar persons).
“QIB” means a “Qualified Institutional Buyer” as defined in Rule 144A.
“Qualified Capital Stock” of any Person means any and all Capital Stock of such Person other than RedeemableCapital Stock.
“Record Date” for the interest payable on any Interest Payment Date means the Business Day immediatelypreceding such Interest Payment Date.
“Redeemable Capital Stock” means any class or series of Capital Stock that, either by its terms, by the terms of anysecurity into which it is convertible or exchangeable, or by contract or otherwise, is, or upon the happening of an event orpassage of time would be, required to be redeemed prior to the final Stated Maturity of the Notes or is redeemable at theoption of the holder thereof at any time prior to such final Stated Maturity (other than upon a Change of Control of theParent Guarantor in circumstances in which the Holders would have similar rights), or is convertible into or exchangeablefor debt securities at any time prior to such final Stated Maturity; provided that any Capital Stock that would constituteQualified Capital Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase orredeem such Capital Stock upon the occurrence of any “asset sale” or “change of control” occurring prior to the StatedMaturity of the Notes will not constitute Redeemable Capital Stock if the “asset sale” or “change of control” provisionsapplicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained inSection 4.09 and Section 4.11 and such Capital Stock specifically provides that such Person will not repurchase or redeemany such stock pursuant to such provision prior to the Parent Guarantor’s or the Issuers’ repurchase of such Notes as arerequired to be repurchased pursuant to Section 4.09 and Section 4.11.
“Redemption Date” means, when used with respect to any Note to be redeemed, in whole or in part, the date fixedfor such redemption by or pursuant to this Indenture.
“Redemption Price” means, when used with respect to any Note to be redeemed, the price at which it is to beredeemed pursuant to this Indenture.
“Refinance” means, with respect to any Debt, to amend, modify, extend, substitute, renew, replace, refund, prepay,repay, repurchase, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. “Refinanced”and “Refinancing” shall have correlative meanings.
“Regulation S” means Regulation S under the Securities Act (including any successor regulation thereto), as it maybe amended from time to time.
“Replacement Assets” means properties and assets that replace the properties and assets that were the subject of anAsset Sale or properties and assets that are, or will be, used in the Parent Guarantor’s business or in that of the RestrictedSubsidiaries or in a Similar Business or any and all businesses that in the good faith judgment of the Board of Directors ofthe Parent Guarantor are reasonably related, and, in each case, any capital expenditure relating thereto.
“Restricted Investment” means any Investment other than a Permitted Investment.
-28-
“Restricted Subsidiary” means any Subsidiary of the Parent Guarantor other than an Unrestricted Subsidiary.
“Reversion Date” means, after the Notes have achieved Investment Grade Status, the date, if any, that such Notesshall cease to have such Investment Grade Status.
“Rule 144” means Rule 144 under the Securities Act (including any successor regulation thereto), as it may beamended from time to time.
“Rule 144A” means Rule 144A under the Securities Act (including any successor regulation thereto), as it may beamended from time to time.
“S&P” means Standard and Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. and itssuccessors.
“Securities Act” means the U.S. Securities Act of 1933, as amended, or any successor statute, and the rules andregulations promulgated by the Commission thereunder.
“Security Agent” means Citibank, N.A., London Branch, and its successors, as security agent under the IntercreditorAgreement, and any additional security agent or sub-agent.
“Security Documents” means, collectively, all security agreements, mortgages, standard securities, deeds of trust,pledges, collateral assignments and other agreements or instruments evidencing or creating any security entered into by theParent Guarantor or any of its Subsidiaries pursuant to Section 4.14 of this Indenture in favor of the Security Agent or anyHolders in any or all of the Collateral, the Intercreditor Agreement and any Additional Intercreditor Agreement, in each caseas amended from time to time in accordance with their terms and the terms of this Indenture.
“Security Interests” means security interests in the Collateral securing the Notes and the Guarantees.
“Senior Holdco Notes” means (i) the existing €845,000,000 aggregate principal amount of 6.625% / 7.375% SeniorSecured Toggle Notes due 2023 and $770,000,000 aggregate principal amount of 7.125% / 7.875% Senior Secured ToggleNotes due 2023 issued by ARD Finance S.A. on September 16, 2016 and (ii) the existing $350,000,000 aggregate principalamount of 8.750% Senior Secured PIK Notes due 2023 issued by ARD Securities Finance SARL on January 23, 2018 and,in each case, any replacements or refinancings thereof, directly or indirectly.
“Silent Second Liens” means Liens granted in favor of Debt (the “second priority Debt”) on property or assets of theParent Guarantor or any of its Restricted Subsidiaries that:
(a) are by law or under the terms of an intercreditor agreement reasonably acceptable to the Trustee second inpriority to first priority Liens on such property or assets; and
(b) are subject to arrangements in form and substance reasonably satisfactory to the Trustee which provide(x) that any payments on enforcement of the Liens in such property or assets (other than payments to thesecurity agent, trustee, administrative agent or other representative of the holders of the second priorityDebt) to the holders of the second priority Debt (or their representatives) will only be made once the Debtsecured by the first priority Liens on such property or assets have been satisfied in full and (y) that theholders of the second priority Debt (and their representatives) will have no ability to cause the
-29-
enforcement of, or direct the relevant security agent in the enforcement of, the Liens in such property orassets until the Debt secured by the first priority Liens on such property or assets have been satisfied in full.
“Similar Business” means any business, service or other activity engaged in by the Parent Guarantor or anyRestricted Subsidiaries of the Parent Guarantor on the August 2019 Issue Date and any business, service or other activitiesthat are reasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of,the businesses in which the Parent Guarantor and the Restricted Subsidiaries are engaged on the August 2019 Issue Date orany business that, in the good faith business judgment of the Parent Guarantor, constitutes a reasonable diversification ofbusiness conducted by the Parent Guarantor and its Subsidiaries.
“Stated Maturity” means, when used with respect to any note or any installment of interest thereon, the datespecified in such note as the fixed date on which the principal of such note or such installment of interest, respectively, isdue and payable, and, when used with respect to any other indebtedness, means the date specified in the instrumentgoverning such indebtedness as the fixed date on which the principal of such indebtedness, or any installment of interestthereon, is due and payable.
“Subordinated Debt” means Debt of either Issuer or any of the Guarantors (other than the Existing Ardagh Bonds,the August 2019 Notes and any Permitted Refinancing Debt in respect of the foregoing) that is subordinated in right ofpayment to the Notes or the Guarantees of such Guarantors, as the case may be; provided that no Debt shall be deemed to besubordinated in right of payment to any other Debt solely by virtue of being unsecured or by virtue of being secured on ajunior Lien basis.
“Subsidiary” means, with respect to any Person:
(a) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person,by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof; and
(b) any other Person (other than a corporation), including, without limitation, a partnership, limited liabilitycompany, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or suchPerson and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, hasat least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof(or other Person performing similar functions).
“Subsidiary Guarantee” means any Guarantee given by a Subsidiary Guarantor.
“Subsidiary Guarantors” means any Restricted Subsidiary that provides a Guarantee, in each case until it is releasedfrom its obligations under its Guarantee and this Indenture in accordance with the terms of this Indenture.
“TARGET Day” means a day on which the trans-European Automated Real-time Gross Settlement Express Transfersystem is operating.
“Total Assets” means the consolidated total assets of the Parent Guarantor and its Restricted Subsidiaries as shownon the most recent consolidated balance sheet of the Parent Guarantor.
“Total Inventories” means, as of any date, the amount of raw materials, packaging materials, work-in-progress andfinished goods of the Parent Guarantor and the Restricted Subsidiaries, net of any
-30-
provisions in respect of the foregoing items, in each case as of the date of the most recent consolidated balance sheet of theParent Guarantor which has been delivered in accordance with Section 4.19.
“Total Receivables” means, as of any date, (a) the amount of accounts receivable of the Parent Guarantor and theRestricted Subsidiaries plus (b) the amount of accounts receivable of the Parent Guarantor and the Restricted Subsidiariesthat has been sold, conveyed or otherwise transferred in Permitted Receivables Financings and is outstanding, in each case,as of the date of the most recent consolidated balance sheet of the Parent Guarantor which has been delivered in accordancewith Section 4.19.
“Transaction Agreement” means the transaction agreement dated July 14, 2019, among Ardagh Group S.A.,Element Holdings II L.P. and Trivium Packaging B.V. as described in the Offering Memorandum.
“Treasury Rate” means, as of any Redemption Date, the weekly average rounded to the nearest 1/l00th of apercentage point (for the most recently completed week for which such information is available as of the date that is twoBusiness Days prior to the Redemption Date) of the yield to maturity of United States Treasury securities with a constantmaturity (as compiled and published in Federal Reserve Statistical Release H.15 with respect to each applicable day duringsuch week or, if such Statistical Release is no longer published, any publicly available source of similar market data) mostnearly equal to the period from the Redemption Date to August 15, 2022; provided, however, that if the period from theRedemption Date to August 15, 2022 is not equal to the constant maturity of a United States Treasury security for whichsuch a yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of ayear) from the weekly average yields of United States Treasury securities for which such yields are given, except that if theperiod from the Redemption Date to August 15, 2022 is less than one year, the weekly average yield on actually tradedUnited States Treasury securities (or other comparable benchmark) adjusted to a constant maturity of one year shall be used.
“Trivium Transactions” shall have the meaning assigned to the term Transactions in the Offering Memorandum.
“Trust Officer” means any officer within the agency and corporate trust group, division or section of the Trustee(however named, or any successor group of the Trustee) and also means, with respect to any particular corporate trustmatter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particularsubject.
“Unrestricted Subsidiary” means:
(a) any Subsidiary of the Parent Guarantor that at the time of determination is an Unrestricted Subsidiary (asdesignated by the Parent Guarantor’s Board of Directors pursuant to Section 4.17);
(b) any Subsidiary of an Unrestricted Subsidiary; and
(c) Enville Limited, UniMould S.A., Ardagh Packaging Finance UK Limited, Recan GmbH, Ardagh ContainersHoldings Limited and Recan UK Limited.
“U.S. dollars” or “$” means the lawful currency of the United States of America.
“Voting Stock” means any class or classes of Capital Stock pursuant to which the holders thereof have the generalvoting power under ordinary circumstances to elect at least a majority of the Board of Directors, managers or trustees (orPersons performing similar functions) of any Person (irrespective of
-31-
whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of thehappening of any contingency).
“Wholly Owned Restricted Subsidiary” means any Restricted Subsidiary, all of the outstanding Capital Stock (otherthan directors’ qualifying shares or shares of Restricted Subsidiaries required to be owned by third parties pursuant toapplicable law) of which are owned by the Parent Guarantor or by one or more other Wholly Owned Restricted Subsidiariesor by the Parent Guarantor and one or more other Wholly Owned Restricted Subsidiaries.
SECTION 1.02. Other Definitions.
Term Defined in Section
4.12(a)Recitals4.13(a)Recitals2.0312.084.11(a)4.11(a)4.11(a)8.032.12Definition of IFRS6.01(a)4.09(b)4.09(c)2.01(c)12.01(a)4.06(a)4.06(a)12.15PreamblePreamble8.02Recitals10.01(a)RecitalsPreamble2.01(c)2.034.06(b)4.08(c)Preamble2.032.01(b)4.08(c)(xi)4.12(a)12.142.01(b)
“Additional Amounts”“Additional Notes”“Additional Intercreditor Agreement”“Additional Notes”“Agents”“Authorized Agent”“Change of Control Offer”“Change of Control Purchase Date”“Change of Control Purchase Price”“covenant defeasance”“Defaulted Interest”“Election Option”“Event of Default”“Excess Proceeds”“Excess Proceeds Offer”“Global Notes”“Holdings USA Disposition”“incur”“incurrence”“Interest Amount”“Irish Issuer”“Issuers”“legal defeasance”“Notes”“Obligations”“Original Notes”“Parent Guarantor”“Participants”“Paying Agent”“Permitted Debt”“Permitted Payments”“Principal Paying Agent”“Registrar”“Regulation S Global Note”“Relevant Fiscal Year”“Relevant Taxing Jurisdiction”“Required Currency”“Restricted Global Note”
-32-
Term Defined in Section
4.08(a)4.132.035.01(b)(i)4.224.12(a)2.03PreamblePreamble
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with IFRS;
(iii) “or” is not exclusive;
(iv) “including” or “include” means including or include without limitation;
(v) words in the singular include the plural and words in the plural include the singular;
(vi) unsecured or unguaranteed Debt shall not be deemed to be subordinate or junior to secured orguaranteed Debt merely by virtue of its nature as unsecured or unguaranteed Debt; and
(vii) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indentureas a whole and not to any particular Article, Section, clause or other subdivision.
SECTION 1.04. Financial Calculations. In the event that the Parent Guarantor or any of its RestrictedSubsidiaries (w) incurs Debt to finance an acquisition (including an acquisition of assets) or other transaction or (x) assumesDebt of Persons that are, or secured by assets that are, acquired by the Parent Guarantor or any of its Restricted Subsidiariesor merged into, amalgamated or consolidated with, the Parent Guarantor or any of its Restricted Subsidiaries in accordancewith the terms of this Indenture or (y) commits to an acquisition or transaction pursuant to which it may incur AcquiredDebt or (z) is subject to a Change of Control, the date of determination of Consolidated Adjusted Net Income, theConsolidated Fixed Charge Coverage Ratio, the Consolidated Secured Debt Leverage Ratio or the Consolidated LeverageRatio, as applicable, shall, at the option of the Parent Guarantor, be (a) the date that a definitive agreement, put option orsimilar arrangement for such acquisition, transaction, merger, amalgamation, consolidation or Change of Control is enteredinto and the Consolidated Adjusted Net Income, the Consolidated Fixed Charge Coverage Ratio, the Consolidated SecuredDebt Leverage Ratio or the Consolidated Leverage Ratio, as applicable, shall be calculated giving pro forma effect to suchacquisition, Change of Control and the other transactions to be entered into in connection therewith (including anyincurrence of Debt and the use of proceeds thereof) consistent with the definitions of “Consolidated Adjusted Net Income”,“Consolidated Fixed Charge Coverage Ratio” and “pro forma”, as applicable, and, for the avoidance of doubt, (A) if anysuch ratios are exceeded as a result of fluctuations in such ratio (including due to fluctuations in the Consolidated AdjustedNet Income of the Parent Guarantor or the target company) at or prior to the consummation of the relevant acquisition orChange of Control, such ratios will not be deemed
“Restricted Payment”“Security Confirmations”“Security Register”“Surviving Entity”“Suspension Event”“Taxes”“Transfer Agent”“Trustee”“U.S. Issuer”
-33-
to have been exceeded as a result of such fluctuations solely for purposes of determining whether such acquisition and anyrelated transactions are permitted hereunder and (B) such ratios shall not be tested at the time of consummation of suchacquisition, transaction, merger, amalgamation or consolidation; provided that if the Parent Guarantor elects to have suchdeterminations occur at the time of entry into such definitive agreement, put option or similar arrangement, (i) any suchtransaction shall be deemed to have occurred on the date the definitive agreement, put option or similar arrangement isentered into and to be outstanding thereafter for purposes of calculating any ratios under this Indenture after the date of suchagreement and before the earlier of the date of consummation of such acquisition or the date such agreement is terminated orexpires without consummation of such acquisition and (ii) to the extent any covenant baskets were utilized in satisfying anycovenants, such baskets shall be deemed utilized until the earlier of the date of consummation of such acquisition or the datesuch agreement is terminated or expires without consummation of such acquisition, but any calculation of ConsolidatedAdjusted Net Income for purposes of other incurrences of Debt or Liens or making of Restricted Payments (not related tosuch acquisition) shall not reflect such acquisition until it has been consummated unless such other incurrence of Debt orLiens is conditional or contingent on the occurrence of such acquisition or Change of Control or (b) the date such Debt isborrowed or assumed or such Change of Control occurs.
SECTION 1.05. Agency of Irish Issuer. The U.S. Issuer irrevocably appoints the Irish Issuer as its agent for allpurposes relevant to this Indenture, including the giving and receipt of notices and execution and delivery of all documents,instruments, and certificates contemplated herein (including, without limitation, execution and delivery to the Trustee of anIssuers Order) and all modifications hereto. Any acknowledgment, consent, direction, certification, or other action whichmight otherwise be valid or effective only if given or taken by all Issuers or either Issuer or acting singly, shall be valid andeffective if given or taken only by the Irish Issuer, whether or not the U.S. Issuer joins therein, and the Trustee, other Agentsand the Holders shall have no duty or obligation to make further inquiry with respect to the authority of the Irish Issuerunder this Section 1.05; provided that nothing in this Section 1.05 shall limit the effectiveness of, or the right of the Trustee,other Agents and the Holders to rely upon, any notice (including, without limitation, an Issuers Order), document,instrument, certificate, acknowledgment, consent, direction, certification or other action delivered by either Issuer pursuantto this Indenture.
ARTICLE 2 THE NOTES
SECTION 2.01. The Notes.
(a) Form and Dating. The Notes and the Trustee’s (or the authenticating agent’s) certificate of authenticationshall be substantially in the form of Exhibit A hereto with such appropriate insertions, omissions, substitutions and othervariations as are required or permitted by this Indenture. The Notes may have notations, legends or endorsements requiredby law, the rules of any securities exchange agreements to which the Issuers are subject, if any, or usage; provided that anysuch notation, legend or endorsement is in form reasonably acceptable to the Issuers. The Issuers shall approve the form ofthe Notes. Each Note shall be dated the date of its authentication. The terms and provisions contained in the form of theNotes shall constitute and are hereby expressly made a part of this Indenture. The Notes shall be issued only in registeredform without coupons and only in minimum denominations of €100,000 in principal amount and any integral multiples of€1,000 in excess thereof.
(b) Global Notes. Notes offered and sold to QIBs in reliance on Rule 144A shall be issued initially in the formof one or more Global Notes substantially in the form of Exhibit A hereto, with such applicable legends as are provided inExhibit A hereto, except as otherwise permitted herein (the “Restricted Global Notes”), which shall be deposited on behalfof the purchasers of the Notes represented thereby with the Common Depositary, and registered in the name of the CommonDepositary or its nominee for the
-34-
accounts of Euroclear and Clearstream, duly executed by the Issuers and authenticated by the Trustee (or its agent inaccordance with Section 2.02) as hereinafter provided. The aggregate principal amount of the Restricted Global Note mayfrom time to time be increased or decreased by adjustments made by the Registrar on Schedule A to the Restricted GlobalNote and recorded in the Security Register, as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued initially in the form of one or more Global Notessubstantially in the form of Exhibit A hereto, with such applicable legends as are provided in Exhibit A hereto, except asotherwise permitted herein (the “Regulation S Global Notes”), which shall be deposited on behalf of the purchasers of theNotes represented thereby with the Common Depositary, and registered in the name of the Common Depositary or itsnominee for the accounts of Euroclear and Clearstream, duly executed by the Issuers and authenticated by the Trustee (or itsagent in accordance with Section 2.02) as hereinafter provided. The aggregate principal amount of the Regulation S GlobalNote may from time to time be increased or decreased by adjustments made by the Registrar on Schedule A to theRegulation S Global Note and recorded in the Security Register, as hereinafter provided.
(c) Book-Entry Provisions. This Section 2.01(c) shall apply to the Regulation S Global Notes and the RestrictedGlobal Notes (together, the “Global Notes”) deposited with or on behalf of the Common Depositary.
Members of, or participants and account holders in Euroclear and Clearstream (“Participants”) shall have no rightsunder this Indenture with respect to any Global Note held on their behalf by the Common Depositary or by the Trustee orany custodian of the Common Depositary or under such Global Note, and the Common Depositary or its nominee may betreated by the Issuers, a Guarantor, the Trustee and any agent of the Issuers, a Guarantor or the Trustee as the sole owner ofsuch Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, aGuarantor, the Trustee or any agent of the Issuers, a Guarantor or the Trustee from giving effect to any written certification,proxy or other authorization furnished by the Common Depositary or impair, as between the Common Depositary, on theone hand, and the Participants, on the other, the operation of customary practices of such persons governing the exercise ofthe rights of a Holder of a beneficial interest in any Global Note.
Subject to the provisions of Section 2.10(b), the registered Holder of a Global Note may grant proxies and otherwiseauthorize any Person, including Participants and Persons that may hold interests through Participants, to take any action thata Holder is entitled to take under this Indenture or the Notes.
Except as provided in Section 2.10, owners of a beneficial interest in Global Notes will not be entitled to receivephysical delivery of certificated Notes.
SECTION 2.02. Execution and Authentication. An authorized member of the Issuers’ boards of directors or anexecutive officer of the Issuers shall sign the Notes on behalf of the Issuers by manual or facsimile signature.
If an authorized member of the Issuers’ boards of directors or an executive officer whose signature is on a Note nolonger holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.
A Note shall not be valid or obligatory for any purpose until an authorized signatory of the Trustee manually signsthe certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticatedunder this Indenture.
-35-
The Issuers shall execute and, upon receipt of an Issuers Order, the Trustee shall authenticate (whether itself or viathe authenticating agent) Original Notes, on the date hereof, for original issue up to an aggregate principal amount of€790,000,000 and Additional Notes, from time to time, subject to compliance at the time of issuance of such AdditionalNotes with the provisions of Section 4.06. The Issuers are permitted to issue Additional Notes as part of a further issueunder this Indenture, from time to time; provided that, if the Additional Notes are not fungible with any series of OriginalNotes for U.S. federal income tax purposes, such Additional Notes will have a separate ISIN numbers, if applicable.
The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate the Notes.Unless limited by the terms of such appointment, any such authenticating agent may authenticate Notes whenever theTrustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by any suchagent. An authenticating agent has the same rights as any Registrar, co-Registrar, Transfer Agent or Paying Agent to dealwith the Issuers or an Affiliate of the Issuers.
The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section 2.02 if theTrustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shalldetermine that such action would expose the Trustee to personal liability to existing Holders.
SECTION 2.03. Registrar, Transfer Agent and Paying Agent. The Issuers shall maintain an office or agency forthe registration of the Notes and of their transfer or exchange (the “Registrar”), an office or agency where Notes may betransferred or exchanged (the “Transfer Agent”), an office or agency where the Notes may be presented for payment (the“Paying Agent” and references to the Paying Agent shall include the Principal Paying Agent) and an office or agency wherenotices or demands to or upon the Issuers in respect of the Notes may be served. The Issuers may appoint one or moreTransfer Agents, one or more co-Registrars and one or more additional Paying Agents.
The Issuers shall maintain a Transfer Agent and Principal Paying Agent in London, United Kingdom. Either Issueror any of their respective Affiliates may act as Transfer Agent, Registrar, co-Registrar, Paying Agent and agent for serviceof notices and demands in connection with the Notes; provided that neither Issuer nor any of their respective Affiliates shallact as Paying Agent for the purposes of Articles Three and Eight and Sections 4.09 and 4.11.
The Issuers hereby appoint Citibank, N.A., London Branch located at 25 Canada Square, London E14 5LB, UnitedKingdom as Transfer Agent, as Principal Paying Agent (the “Principal Paying Agent”) in London, United Kingdom, and asagent for service of notices and demands in connection with the Notes and Citigroup Global Markets Europe AG, at 5thFloor Reuterweg 16, 60323 Frankfurt, Germany, as Registrar. Each hereby accepts such appointments. The Transfer Agent,the Principal Paying Agent and the Registrar and any authenticating agent are collectively referred to in this Indenture as the“Agents”. The roles, duties and functions of the Agents are of a mechanical nature and each Agent shall only perform thoseacts and duties as specifically set out in this Indenture and no other acts, covenants, obligations or duties shall be implied orread into this Indenture against any of the Agents. For the avoidance of doubt, a Paying Agent’s obligation to disburse anyfunds shall be subject to prior receipt by it of those funds to be disbursed.
Subject to any applicable laws and regulations, the Issuers shall cause the Registrar to keep a register (the “SecurityRegister”) at its corporate trust office in which, subject to such reasonable regulations it may prescribe, the Issuers shallprovide for the registration of ownership, exchange, and transfer of the Notes. Such registration in the Security Registershall be conclusive evidence of the ownership of Notes. Included in the books and records for the Notes shall be notations asto whether such Notes have been paid,
-36-
exchanged or transferred, canceled, lost, stolen, mutilated or destroyed and whether such Notes have been replaced. In thecase of the replacement of any of the Notes, the Registrar shall keep a record of the Note so replaced and the Note issued inreplacement thereof. In the case of the cancellation of any of the Notes, the Registrar shall keep a record of the Note socanceled and the date on which such Note was canceled.
The Issuers shall enter into an appropriate agency agreement with any Paying Agent or co-Registrar not a party tothis Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuers shallnotify the Trustee of the name and address of any such agent. If the Issuers fail to maintain a Registrar or Paying Agent, theTrustee may appoint a suitably qualified and reputable party to act as such and shall be entitled to appropriate compensationtherefor pursuant to Section 7.05.
SECTION 2.04. Paying Agent to Hold Money . Not later than 12:00 p.m. London, United Kingdom time, oneBusiness Day prior to each due date of the principal, premium, if any, and interest on any Notes, the Issuers shall depositwith the Principal Paying Agent money in immediately available funds in euro sufficient to pay such principal, premium, ifany, and interest so becoming due on the due date for payment under the Notes. The Principal Paying Agent (and, ifapplicable, each other Paying Agent) shall remit such payment in a timely manner to the Holders on the relevant due date forpayment, it being acknowledged by each Holder that if the Issuers deposit such money with the Principal Paying Agent afterthe time specified in the immediately preceding sentence, the Principal Paying Agent shall remit such money to the Holderson the relevant due date for payment, unless such remittance is impracticable having regard to applicable bankingprocedures and timing constraints, in which case the Principal Paying Agent shall remit such money to the Holders on thenext Business Day, but without liability for any interest resulting from such late payment. For the avoidance of doubt, thePrincipal Paying Agent shall only be obliged to remit money to Holders if it has actually received such money from theIssuers. The Issuers shall require each Paying Agent other than the Trustee (including where acting as the Principal PayingAgent) to agree in writing that such Paying Agent shall hold for the benefit of the Trustee all money held by the PayingAgent for the payment of principal of, premium, if any, and interest on the Notes (whether such money has been paid to it bythe Issuers or any other obligor on the Notes), and such Paying Agent shall promptly notify the Trustee of any default by theIssuers (or any other obligor on the Notes) in making any such payment. The Issuers at any time may require a Paying Agentto pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during thecontinuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all moneyheld by it to the Trustee and to account for any funds disbursed. Upon doing so, the Paying Agent shall have no furtherliability for the money so paid over to the Trustee. If the Issuers or any Affiliate of the Issuers acts as Paying Agent, it shall,on or before each due date of any principal, premium, if any, or interest on the Notes, segregate and hold in a separate trustfund for the benefit of the Holders a sum of money sufficient to pay such principal, premium, if any, or interest so becomingdue until such sum of money shall be paid to such Holders or otherwise disposed of as provided in this Indenture, and shallpromptly notify the Trustee of its action or failure to act.
The Trustee may, if the Issuers have notified it in writing that the Issuers intend to effect a defeasance or to satisfyand discharge this Indenture in accordance with the provisions of Article Eight, notify the Paying Agent in writing of thisfact and require the Paying Agent (until notified by the Trustee to the contrary), to act thereafter as Paying Agent of theTrustee and not the Issuers in relation to any amounts deposited with it in accordance with the provisions of Article Eight.
SECTION 2.05. Holder Lists. The Registrar shall preserve in as current a form as is reasonably practicable themost recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuers shallfurnish to the Trustee, in writing no later than the Record Date for each Interest Payment Date and at such other times as theTrustee may request in writing, a list in such form and
-37-
as of such Record Date as the Trustee may reasonably require of the names and addresses of Holders, including theaggregate principal amount of Notes held by each Holder.
SECTION 2.06. Transfer and Exchange.
(a) Where Notes are presented to the Registrar or a co-Registrar with a request to register a transfer or toexchange them for an equal principal amount of Notes of other denominations, the Registrar shall register the transfer ormake the exchange in accordance with the requirements of this Section 2.06. To permit registration of transfers andexchanges, the Issuers shall execute and the Trustee (or the authenticating agent) shall, upon receipt of an Issuers Order,authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes, of any authorizeddenominations and of a like aggregate principal amount, at the Registrar’s request, provided that no Note of less than€100,000 may be transferred or exchanged. No service charge shall be made for any registration of transfer or exchange ofNotes (except as otherwise expressly permitted herein), but the Issuers may require payment of a sum sufficient to cover anyagency fee or similar charge payable in connection with any such registration of transfer or exchange of Notes (other thanany agency fee or similar charge payable in connection with any redemption of the Notes or upon exchanges pursuant toSections 2.10, 3.08 or 9.05) or in accordance with an Excess Proceeds Offer pursuant to Section 4.09 or Change of ControlOffer pursuant to Section 4.11, not involving a transfer.
Upon presentation for exchange or transfer of any Note as permitted by the terms of this Indenture and by anylegend appearing on such Note, such Note shall be exchanged or transferred upon the Security Register and one or morenew Notes shall be authenticated and issued in the name of the Holder (in the case of exchanges only) or the transferee, asthe case may be. No exchange or transfer of a Note shall be effective under this Indenture unless and until such Note hasbeen registered in the name of such Person in the Security Register. Furthermore, the exchange or transfer of any Note shallnot be effective under this Indenture unless the request for such exchange or transfer is made by the Holder or by a dulyauthorized attorney-in-fact at the office of the Registrar.
Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Issuers orthe Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Issuersand the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.
All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuersevidencing the same indebtedness, and entitled to the same benefits under this Indenture, as the Notes surrendered upon suchregistration of transfer or exchange.
Neither the Issuers nor the Trustee, Registrar or any Paying Agent shall be required (i) to issue, register the transferof, or exchange any Note during a period beginning at the opening of 15 Business Days before the day of the mailing of anotice of redemption of Notes selected for redemption under Section 3.02 and ending at the close of business on the day ofsuch mailing, or (ii) to register the transfer of or exchange any Note so selected for redemption in whole or in part, exceptthe unredeemed portion of any Note being redeemed in part.
(b) Notwithstanding any provision to the contrary herein, so long as a Global Note remains outstanding and isheld by or on behalf of the Common Depositary, transfers of a Global Note, in whole or in part, or of any beneficial interesttherein, shall only be made in accordance with Section 2.01(c), Section 2.06(a) and this Section 2.06(b); provided, that abeneficial interest in a Global Note may be transferred to Persons who take delivery thereof in the form of a beneficialinterest in the same Global Note in accordance with the transfer restrictions set forth in the restricted Note legend on theNote, if any.
-38-
(i) Except for transfers or exchanges made in accordance with any of clauses (ii) through (v) of thisSection 2.06(b), transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, tonominees of the Common Depositary or to a successor of the Common Depositary or such successor’s nominee.
(ii) [Reserved.]
(iii) [Reserved.]
(iv) Restricted Global Note to Regulation S Global Note. If the holder of a beneficial interest in theRestricted Global Note at any time wishes to exchange its interest in such Restricted Global Note for an interest in theRegulation S Global Note, or to transfer its interest in such Restricted Global Note to a Person who wishes to take deliverythereof in the form of a beneficial interest in the Regulation S Global Note, such transfer or exchange may be effected, onlyin accordance with this clause (iv) and the Applicable Procedures. Upon receipt by the Registrar from the Transfer Agent of(A) written instructions directing the Registrar to credit or cause to be credited an interest in the Regulation S Global Note ina specified principal amount and to cause to be debited an interest in the Restricted Global Note in such specified principalamount, and (B) a certificate in the form of Exhibit B attached hereto given by the holder of such beneficial interest statingthat the transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notesand (x) pursuant to and in accordance with Regulation S or (y) that the interest in the Restricted Global Note beingtransferred is being transferred in a transaction permitted by Rule 144, then the Registrar shall reduce or cause to be reducedthe principal amount of the Restricted Global Note and shall cause the Common Depositary to increase or cause to beincreased the principal amount of the Regulation S Global Note by the aggregate principal amount of the interest in theRestricted Global Note to be exchanged or transferred.
(v) Regulation S Global Note to Restricted Global Note. If the holder of a beneficial interest in theRegulation S Global Note at any time wishes to transfer such interest to a Person who wishes to take delivery thereof in theform of a beneficial interest in the Restricted Global Note, such transfer may be effected only in accordance with this clause(v) and the Applicable Procedures. Upon receipt by the Registrar from the Transfer Agent of (A) written instructionsdirecting the Registrar to credit or cause to be credited an interest in the Restricted Global Note in a specified principalamount and to cause to be debited an interest in the Regulation S Global Note in such specified principal amount, and (B) acertificate in the form of Exhibit C attached hereto given by the holder of such beneficial interest stating that the transfer ofsuch interest has been made in compliance with the transfer restrictions applicable to the Global Notes and stating that (x)the Person transferring such interest reasonably believes that the Person acquiring such interest is a QIB and is obtainingsuch interest in a transaction meeting the requirements of Rule 144A and any applicable securities laws of any state of theUnited States or (y) that the Person transferring such interest is relying on an exemption other than Rule 144A from theregistration requirements of the Securities Act and, in such circumstances, such Opinion of Counsel as the Issuers or theTrustee may reasonably request to ensure that the requested transfer or exchange is being made pursuant to an exemptionfrom, or in a transaction not subject to, the registration requirements of the Securities Act, then the Registrar shall reduce orcause to be reduced the principal amount of the Regulation S Global Note and to increase or cause to be increased theprincipal amount of the Restricted Global Note by the aggregate principal amount of the interest in the Regulation S GlobalNote to be exchanged or transferred.
(c) If Notes are issued upon the transfer, exchange or replacement of Notes bearing the restricted Notes legendsset forth in Exhibit A hereto the Notes so issued shall bear the restricted Notes
-39-
legends, and a request to remove such restricted Notes legends from Notes shall not be honored unless there is delivered tothe Issuers such satisfactory evidence, which may include an Opinion of Counsel licensed to practice law in the State ofNew York, as may be reasonably required by the Issuers, that neither the legend nor the restrictions on transfer set forththerein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 under theSecurities Act. Upon provision of such satisfactory evidence, the Trustee, at the direction of the Issuers, shall (or shall directthe authenticating agent to) authenticate and deliver Notes that do not bear the legend.
(d) The Trustee and the Agents shall have no responsibility for any actions taken or not taken by Euroclear orClearstream.
SECTION 2.07. Replacement Notes. If a mutilated certificated Note is surrendered to the Registrar or if theHolder claims that the Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall (orshall direct the authenticating agent to), upon receipt of an Issuers Order, authenticate a replacement Note in such form asthe Note mutilated, lost, destroyed or wrongfully taken if the Holder satisfies any other reasonable requirements of theIssuers and any requirement of the Trustee. If required by the Trustee or the Issuers, such Holder shall furnish an indemnitybond sufficient in the judgment of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying Agent, theTransfer Agent, the Registrar and any co-Registrar, and any authenticating agent from any loss that any of them may sufferif a Note is replaced. The Issuers and the Trustee may charge the Holder for their expenses in replacing a Note.
In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due andpayable, the Issuers in its discretion may pay such Note instead of issuing a new Note in replacement thereof.
Every replacement Note shall be an additional obligation of the Issuers.
The provisions of this Section 2.07 are exclusive and will preclude (to the extent lawful) all other rights andremedies with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Notes.
SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all Notes authenticated by or on behalf ofthe Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 asnot outstanding. Subject to Section 2.09, a Note does not cease to be outstanding because the Issuers or an Affiliate of theIssuers holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Issuers receiveproof satisfactory to them that the Note that has been replaced is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date or maturity date moneysufficient to pay all principal, interest and Additional Amounts, if any, payable on that date with respect to the Notes (orportions thereof) to be redeemed or maturing and the Paying Agent is not prohibited from paying such money to the Holderson that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to beoutstanding and interest on them ceases to accrue.
SECTION 2.09. Notes Held by Issuers. In determining whether the Holders of the required principal amount ofNotes have concurred in any direction or consent or any amendment, modification or other change to this Indenture, Notesowned by either Issuer or by any of their respective Affiliates shall be
-40-
disregarded and treated as if they were not outstanding, except that for the purposes of determining whether the Trustee shallbe protected in relying on any such direction, waiver or consent or any amendment, modification or other change to thisIndenture, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Notes soowned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of theTrustee the pledgee’s right so to act with respect to the Notes and that the pledgee is not either Issuer or any of theirrespective Affiliates.
SECTION 2.10. Certificated Notes.
(a) A Global Note deposited with the Common Depositary pursuant to Section 2.01 shall be transferred inwhole to the beneficial owners thereof in the form of certificated Notes only if such transfer complies with Section 2.06 and(i) Euroclear or Clearstream notifies the Issuers that it is unwilling or unable to continue to act as depositary and a successordepositary is not appointed by the Issuers within 120 days of such notice, or (ii) the owner of a Book-Entry Interest requestssuch an exchange in writing delivered through Euroclear or Clearstream following an Event of Default under this Indenture.Notice of any such transfer shall be given by the Issuers in accordance with the provisions of Section 12.02(a).
(b) Any Global Note that is transferable to the beneficial owners thereof in the form of certificated Notespursuant to this Section 2.10 shall be surrendered by the Common Depositary, to the Transfer Agent, to be so transferred, inwhole or from time to time in part, without charge, and the Trustee shall itself or via the authenticating agent authenticateand deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount at maturity ofNotes of authorized denominations in the form of certificated Notes. Any portion of a Global Note transferred or exchangedpursuant to this Section 2.10 shall be executed, authenticated and delivered only in registered form in minimumdenominations of €100,000 and any integral multiples of €1,000 in excess thereof and registered in such names as theCommon Depositary shall direct. Subject to the foregoing, a Global Note is not exchangeable except for a Global Note oflike denomination to be registered in the name of the Common Depositary or its nominee. In the event that a Global Notebecomes exchangeable for certificated Notes, payment of principal, premium, if any, and interest on the certificated Noteswill be payable, and the transfer of the certificated Notes will be registrable, at the office or agency of the Issuers maintainedfor such purposes in accordance with Section 2.03. Such certificated Notes shall bear the applicable legends set forth inExhibit A hereto.
(c) In the event of the occurrence of any of the events specified in Section 2.10(a), the Issuers shall promptlymake available to the Trustee and the authenticating agent a reasonable supply of certificated Notes in definitive, fullyregistered form without interest coupons.
SECTION 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. TheRegistrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer,exchange or payment. The Trustee, in accordance with its customary procedures, and no one else shall cancel (subject to therecord retention requirements of the Exchange Act and the Trustee’s retention policy) all Notes surrendered for registrationof transfer, exchange, payment or cancellation and dispose of such cancelled Notes in its customary manner. Except asotherwise provided in this Indenture, the Issuers may not issue new Notes to replace Notes it has redeemed, paid ordelivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest. Any interest on any Note that is payable, but is not punctually paid or dulyprovided for, on the dates and in the manner provided in the Notes and this Indenture (all such interest herein called“Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Record Date by virtue of having beensuch Holder, and such Defaulted Interest may be paid by the Issuers, at its election in each case, as provided in clause (a) or(b) of this Section 2.12:
-41-
(a) The Issuers may elect to make payment of any Defaulted Interest to the Persons in whose names theNotes are registered at the close of business on a special record date for the payment of such Defaulted Interest,which shall be fixed in the following manner. The Issuers shall notify the Trustee in writing of the amount ofDefaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time theIssuers may deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid inrespect of such Defaulted Interest; or shall make arrangements satisfactory to the Trustee for such deposit prior tothe date of the proposed payment, such money when deposited to be held in trust for the benefit of the Personsentitled to such Defaulted Interest as provided in this clause. In addition, the Issuers shall fix a special record datefor the payment of such Defaulted Interest, such date to be not more than 15 days and not less than 10 days prior tothe proposed payment date and not less than 15 days after the receipt by the Trustee of the notice of the proposedpayment date. The Issuers shall promptly but, in any event, not less than 15 days prior to the special record date,notify the Trustee of such special record date and, in the name and at the expense of the Issuers, the Trustee shallcause notice of the proposed payment date of such Defaulted Interest and the special record date therefor to bemailed first-class, postage prepaid to each Holder as such Holder’s address appears in the Security Register, not lessthan 10 days prior to such special record date. Notice of the proposed payment date of such Defaulted Interest andthe special record date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whosenames the Notes are registered at the close of business on such special record date and shall no longer be payablepursuant to Section 2.12(b).
(b) The Issuers may make payment of any Defaulted Interest on the Notes in any other lawful mannernot inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon suchnotice as may be required by such exchange, if, after notice given by the Issuers to the Trustee of the proposedpayment date pursuant to this clause, such manner of payment shall be deemed reasonably practicable.
Subject to the foregoing provisions of this Section 2.12, each Note delivered under this Indenture upon registrationof transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and toaccrue, which were carried by such other Note.
SECTION 2.13. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day yearof twelve 30-day months.
SECTION 2.14. ISIN and Common Code Numbers. The Issuers in issuing the Notes may use ISIN andCommon Code numbers (if then generally in use), and, if so, the Trustee shall use ISIN and Common Code numbers, asappropriate, in notices of redemption as a convenience to Holders; provided that any such notice may state that norepresentation is made as to the correctness of such numbers or codes either as printed on the Notes or as contained in anynotice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, andany such redemption shall not be affected by any defect in or omission of such numbers. The Issuers shall promptly notifythe Trustee of any change in the ISIN or Common Code numbers.
SECTION 2.15. Issuance of Additional Notes. The Issuers may, subject to Section 4.06 of this Indenture, issueAdditional Notes under this Indenture in accordance with the procedures of Section 2.02. The Original Notes issued on theIssue Date and any Additional Notes subsequently issued shall be treated as a single class for all purposes under thisIndenture.
-42-
ARTICLE 3 REDEMPTION; OFFERS TO PURCHASE
SECTION 3.01. Right of Redemption. The Issuers may redeem all or any portion of the Notes upon the termsand at the Redemption Prices set forth in the Notes. Any redemption pursuant to this Section 3.01 shall be made pursuant tothe provisions of this Article Three.
SECTION 3.02. Notices to Trustee. If the Issuers elect to redeem Notes pursuant to Section 3.01, they shallnotify the Trustee in writing of the Redemption Date and the record date, the principal amount of Notes to be redeemed, theRedemption Price and the paragraph of the Notes pursuant to which the redemption will occur. If and so long as the Notesare listed on Euronext Dublin and the rules and regulations of Euronext Dublin so require, the Issuers shall publish thenotice of redemption in a newspaper having general circulation in Ireland (which is expected to be The Irish Times or, to theextent and in the manner permitted by the rules of Euronext Dublin, posted on the official website of Euronext Dublin).
The Issuers shall give each notice to the Trustee provided for in this Section 3.02 in writing at least 10 days beforethe date notice is mailed to the Holders pursuant to Section 3.04 unless the Trustee consents to a shorter period. Such noticeshall be accompanied by an Officer’s Certificate from the Issuers to the effect that such redemption will comply with theconditions herein. If fewer than all the Notes are to be redeemed, the record date relating to such redemption shall beselected by the Issuers and given to the Trustee.
SECTION 3.03. Selection of Notes to Be Redeemed. If fewer than all of the Notes are to be redeemed at anytime, the Notes will be selected by a method that complies with the requirements, as certified to the Trustee by the Issuers,of the principal securities exchange, if any, on which the Notes are listed at such time, and in compliance with therequirements of the relevant clearing system or, if the Notes are not listed on a securities exchange, or such securitiesexchange prescribes no method of selection and the Notes are not held through a clearing system or the clearing systemprescribes no method of selection, by lot; provided, however, that no such partial redemption shall reduce the portion of theprincipal amount of a Note not redeemed to less than €100,000.
The Trustee or the Registrar shall make the selection from the Notes outstanding and not previously called forredemption. The Trustee or the Registrar may select for redemption portions equal to €1,000 in principal amount and anyintegral multiple thereof; provided that no Notes of €100,000 in principal amount or less may be redeemed in part.Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.The Trustee or the Registrar, as applicable, shall notify the Issuers promptly in writing of the Notes or portions of Notes tobe called for redemption.
Neither the Trustee nor the Registrar shall be liable for any selections made in accordance with the provisions of thisSection 3.03.
Any redemption and notice may, in the Issuers’ discretion, be subject to the satisfaction of one or more conditionsprecedent. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, suchredemption or notice shall state that in the Issuers’ discretion, the Redemption Date may be delayed until such time as any orall such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event thatany or all such conditions shall not have been satisfied by the Redemption Date or by the Redemption Date so delayed.
-43-
SECTION 3.04. Notice of Redemption.
(a) At least 10 days but not more than 60 days before a date for redemption of the Notes, the Issuers shall mail anotice of redemption by first-class mail to each Holder to be redeemed and shall comply with the provisions ofSection 12.02(b).
(b) The notice shall identify the Notes to be redeemed (including ISIN and Common Code numbers, asapplicable) and shall state:
(i) the Redemption Date and the record date;
(ii) the appropriate calculation of the Redemption Price and the amount of accrued interest, if any, andAdditional Amounts, if any, to be paid;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the Paying Agent to collect the RedemptionPrice plus accrued interest, if any, and Additional Amounts, if any;
(v) that, if any Note is being redeemed in part, the portion of the principal amount (equal to €1,000 inprincipal amount or any integral multiple thereof) of such Note to be redeemed and that, on and after the Redemption Date,upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof will bereissued;
(vi) that, if any Note contains an ISIN or Common Code number, no representation is being made as to thecorrectness of such ISIN or Common Code number either as printed on the Notes or as contained in the notice of redemptionand that reliance may be placed only on the other identification numbers printed on the Notes;
(vii) that, unless the Issuers and the Guarantors default in making such redemption payment, interest on theNotes (or portion thereof) called for redemption shall cease to accrue on and after the Redemption Date;
(viii) the paragraph of the Notes pursuant to which the Notes called for redemption are beingredeemed; and
(ix) whether the redemption is conditioned on any events and, if so, the notice shall specify such events.
At the Issuers’ written request, the Trustee shall give a notice of redemption in the Issuers’ name and at the Issuers’expense. In such event, the Issuers shall provide the Trustee with the notice and the other information required by thisSection 3.04.
SECTION 3.05. Deposit of Redemption Price. At least one Business Day prior to any Redemption Date, by nolater than 12:00 p.m. (London time) on that date, the Issuers shall deposit or cause to be deposited with the Paying Agent(or, if either Issuer or any of their respective Affiliates is the Paying Agent, shall segregate and hold in trust) a sum in sameday funds sufficient to pay the Redemption Price of and accrued interest and Additional Amounts, if any, on all Notes to beredeemed on that date other than Notes or portions of Notes called for redemption that have previously been delivered by theIssuers to the Trustee for cancellation. The Paying Agent shall return to the Issuers following a written request by the Issuersany money so deposited that is not required for that purpose.
-44-
SECTION 3.06. [Reserved].
SECTION 3.07. Payment of Notes Called for Redemption. If notice of redemption has been given in the mannerprovided in Section 3.04, the Notes or portion of Notes specified in such notice to be redeemed shall become due andpayable on the Redemption Date at the Redemption Price stated therein, together with accrued interest to such RedemptionDate, and on and after such date (unless the Issuers shall default in the payment of such Notes at the Redemption Price andaccrued interest to the Redemption Date, in which case the principal, until paid, shall bear interest from the RedemptionDate at the rate prescribed in the Notes) such Notes shall cease to accrue interest. Upon surrender of any Note forredemption in accordance with a notice of redemption, such Note shall be paid and redeemed by the Issuers at theRedemption Price, together with accrued interest, if any, to the Redemption Date; provided that installments of interestwhose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders registered as such at the closeof business on the relevant Record Date.
Notice of redemption shall be deemed to be given when mailed, whether or not the Holder receives the notice. Inany event, failure to give such notice, or any defect therein, shall not affect the validity of the proceedings for theredemption of Notes held by Holders to whom such notice was properly given.
SECTION 3.08. Notes Redeemed in Part.
(a) Upon surrender of a Global Note that is redeemed in part, the Paying Agent shall forward such Global Noteto the Trustee who shall make a notation on the Security Register to reduce the principal amount of such Global Note to anamount equal to the unredeemed portion of the Global Note surrendered; provided that each such Global Note shall be in aprincipal amount at final Stated Maturity of €100,000 or an integral multiple of €1,000 in excess thereof.
(b) Upon surrender and cancellation of a certificated Note that is redeemed in part, the Issuers shall execute andthe Trustee shall authenticate for the Holder (at the Issuers’ expense) a new Note equal in principal amount to theunredeemed portion of the Note surrendered and canceled; provided that each such certificated Note shall be in a principalamount at final Stated Maturity of €100,000 or an integral multiple of €1,000 in excess thereof.
ARTICLE 4 COVENANTS
SECTION 4.01. Payment of Notes. The Issuers, jointly and severally, and the Guarantors covenant and agree forthe benefit of the Holders that they shall duly and punctually pay the principal of, premium, if any, interest and AdditionalAmounts, if any, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Subject to Section2.04, principal, premium, if any, interest and Additional Amounts, if any, shall be considered paid on the date due if on suchdate the Trustee or the Paying Agent (other than either Issuer or any of their respective Affiliates) holds, as of 10:00 a.m.,London, United Kingdom time on the due date, in accordance with this Indenture, money sufficient to pay all principal,premium, if any, interest and Additional Amounts, if any, then due. If either Issuer or any of their respective Affiliates actsas Paying Agent, principal, premium, if any, interest and Additional Amounts, if any, shall be considered paid on the duedate if the entity acting as Paying Agent complies with Section 2.04.
The Issuers or the Guarantors shall pay interest on overdue principal at the rate specified therefor in the Notes. TheIssuers or the Guarantors shall pay interest on overdue installments of interest at the same rate to the extent lawful.
-45-
SECTION 4.02. Corporate Existence. Subject to Article Five, the Issuers, the Parent Guarantor and eachRestricted Subsidiary shall do or cause to be done all things necessary to preserve and keep in full force and effect theircorporate, partnership, limited liability company or other existence and the rights (charter and statutory), licenses andfranchises of the Issuers, the Parent Guarantor and each Restricted Subsidiary; provided that none of the Issuers and theParent Guarantor shall be required to preserve or keep in full force and effect any such existence or such right, license orfranchise if the Board of Directors of the applicable Issuer and the Parent Guarantor shall determine that the preservationthereof is no longer desirable in the conduct of the business of the Issuers, the Parent Guarantor and the RestrictedSubsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.03. Maintenance of Properties. The Parent Guarantor shall cause all properties owned by it or anyRestricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to bemaintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall causeto be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment ofthe Parent Guarantor may be necessary so that the business carried on in connection therewith may be properly andadvantageously conducted at all times; provided that nothing in this Section 4.03 shall prevent the Parent Guarantor fromdiscontinuing the maintenance of any such properties if such discontinuance is, in the judgment of the Parent Guarantor,desirable in the conduct of the business of the Issuers, the Parent Guarantor and the Restricted Subsidiaries as a whole andnot disadvantageous in any material respect to the Holders.
SECTION 4.04. Insurance. The Parent Guarantor shall maintain, and shall cause the Restricted Subsidiaries tomaintain, insurance with carriers believed by the Parent Guarantor to be responsible, against such risks and in such amounts,and with such deductibles, retentions, self-insured amounts and coinsurance provisions, as the Parent Guarantor believes arecustomarily carried by businesses similarly situated and owning like properties, including as appropriate general liability,property and casualty loss and interruption of business insurance.
SECTION 4.05. Statement as to Compliance.
(a) The Parent Guarantor shall deliver to the Trustee, within 120 days after the end of each fiscal year or within14 days of written request by the Trustee, an Officer’s Certificate stating that in the course of the performance by the signerof its duties as an officer of the Parent Guarantor he would normally have knowledge of any Default and whether or not thesigner knows of any Default that occurred during such period and if any specifying such Default, its status and what actionthe Parent Guarantor is taking or proposed to take with respect thereto. For purposes of this Section 4.05(a), suchcompliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
(b) If the Parent Guarantor or the Issuers shall become aware that (i) any Default or Event of Default hasoccurred and is continuing or (ii) any Holder seeks to exercise any remedy hereunder with respect to a claimed Defaultunder this Indenture or the Notes, the Parent Guarantor or the Issuers, as the case may be, shall immediately deliver to theTrustee an Officer’s Certificate specifying such event, notice or other action (including any action the Parent Guarantor orthe Issuers are taking or propose to take in respect thereof).
SECTION 4.06. Limitation on Debt.
(a) The Parent Guarantor shall not, and shall not permit any Restricted Subsidiary to, create, issue, incur,assume, guarantee or in any manner become directly or indirectly liable with respect to or otherwise become responsible for,contingently or otherwise, the payment of (individually and collectively, to “incur” or, as appropriate, an “incurrence”), anyDebt (including any Acquired Debt); provided that the
-46-
Parent Guarantor, each Issuer and any Restricted Subsidiary shall be permitted to incur Debt (including Acquired Debt) if ineach case (i) after giving effect to the incurrence of such Debt and the application of the proceeds thereof, on a pro formabasis, no Default or Event of Default would occur or be continuing and (ii) at the time of such incurrence and after givingeffect to the incurrence of such Debt and the application of the proceeds thereof, on a pro forma basis, the ConsolidatedFixed Charge Coverage Ratio for the four full fiscal quarters for which financial statements are available immediatelypreceding the incurrence of such Debt, taken as one period, would be greater than 2.0 to 1.0.
(b) Section 4.06(a) shall not, however, prohibit the following (collectively, “Permitted Debt”):
(i) the August 2019 Notes issued on the August 2019 Issue Date;
(ii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under Credit Facilities inan aggregate principal amount not to exceed the greater of (i) (x) at any time prior to the completion of the Disposition,$850,000,000 or (y) at any time after the completion of the Disposition, $700,000,000 and (ii) an amount equal to (I) 85.0%of Total Receivables plus 70.0% of Total Inventories less (II) $275,000,000;
(iii) any Existing Debt of the Parent Guarantor or any Restricted Subsidiary (other than Debt described inclauses (i) and (ii) of this Section 4.06(b));
(iv) the incurrence by the Parent Guarantor or any Restricted Subsidiary of intercompany Debt between theParent Guarantor and any Restricted Subsidiary or between or among Restricted Subsidiaries; provided that:
(A) if an Issuer or a Guarantor is the obligor on any such Debt, unless required by a CreditFacility and only to the extent legally permitted, such Debt must be unsecured (except in respect of theintercompany current liabilities incurred in the ordinary course of business in connection with cashmanagement, cash pooling, tax and accounting operations of the Parent Guarantor and its RestrictedSubsidiaries); and
(B) (x) any disposition, pledge or transfer of any such Debt to a Person (other than a disposition,pledge or transfer to the Parent Guarantor or a Restricted Subsidiary) and (y) any transaction pursuant towhich any Restricted Subsidiary that has Debt owing by the Parent Guarantor or another RestrictedSubsidiary ceases to be a Restricted Subsidiary, will, in each case, be deemed to be an incurrence of suchDebt not permitted by this clause (iv);
(v) guarantees of the Parent Guarantor or any Restricted Subsidiary of Debt of the Parent Guarantor or anyRestricted Subsidiary to the extent that the guaranteed Debt was permitted to be incurred by another provision of thisSection 4.06;
(vi) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt represented by CapitalizedLease Obligations, mortgage financings, purchase money obligations or other Debt incurred or assumed in connection withthe acquisition or development of real or personal, movable or immovable, property or assets, in each case, incurred for thepurpose of financing or refinancing all or any part of the purchase price, lease expense or cost of construction orimprovement of property, plant, equipment or other assets used in the Parent Guarantor’s or any Restricted Subsidiary’sbusiness (including any reasonable related fees or expenses incurred in connection with such acquisition or development);provided that the principal amount of such Debt so incurred when aggregated with other Debt previously incurred in relianceon this clause (vi) and
-47-
still outstanding shall not in the aggregate exceed the greater of $510,000,000 and 6.0% of Total Assets; andprovided, further, that the total principal amount of any Debt incurred in connection with an acquisition or developmentpermitted under this clause (vi) did not in each case at the time of incurrence exceed (A) the Fair Market Value of theacquired or constructed asset or improvement so financed or (B) in the case of an uncompleted constructed asset, the amountof the asset to be constructed, as determined on the date the contract for construction of such asset was entered into by theParent Guarantor or the relevant Restricted Subsidiary (including, in each case, any reasonable related fees and expensesincurred in connection with such acquisition, construction or development);
(vii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt arising from agreementsproviding for guarantees, indemnities or obligations in respect of purchase price adjustments in connection with theacquisition or disposition of assets, including, without limitation, shares of Capital Stock (other than guarantees or similarcredit support given by the Parent Guarantor or any Restricted Subsidiary of Debt incurred by any Person acquiring all orany portion of such assets for the purpose of financing such acquisition); provided that the maximum aggregate liability inrespect of all such Debt permitted pursuant to this clause (vii) shall at no time exceed the net proceeds, including non-cashproceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect toany subsequent changes in value) actually received from the sale of such assets;
(viii) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under CommodityHedging Agreements not for speculative purposes;
(ix) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under CurrencyAgreements not for speculative purposes;
(x) the incurrence by the Parent Guarantor or any Restricted Subsidiary of Debt under Interest RateAgreements not for speculative purposes;
(xi) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary of Debt in respect ofworkers’ compensation and claims arising under similar legislation, or pursuant to self-insurance obligations and not inconnection with the borrowing of money or the obtaining of advances or credit;
(xii) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary arising from (A) thehonoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case ofdaylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided that such Debt isextinguished within five Business Days of incurrence, (B) bankers’ acceptances, performance, surety, judgment, completion,payment, appeal or similar bonds, instruments or obligations, (C) completion guarantees, advance payment, customs, VATor other tax guarantees or similar instruments provided or letters of credit obtained by the Parent Guarantor or any RestrictedSubsidiary in the ordinary course of business, and (D) the financing of insurance premiums in the ordinary course ofbusiness;
(xiii) any Debt of the Parent Guarantor or any Restricted Subsidiary incurred pursuant to anyPermitted Receivables Financing;
(xiv) the incurrence by a Person of Permitted Refinancing Debt in exchange for or the net proceeds of whichare used to refund, replace or refinance Debt incurred by it pursuant to, or
-48-
described in, Section 4.06(a), sub clauses (i) and (iii), this sub-clause (xiv) and sub-clauses (xviii), (xix) and (xx) ofthis Section 4.06(b), as the case may be;
(xv) guarantees by the Parent Guarantor or a Restricted Subsidiary of Debt incurred by Permitted JointVentures in an aggregate principal amount at any one time outstanding not to exceed an amount equal to the greater of$150,000,000 and 2.0% of Total Assets;
(xvi) cash management obligations and Debt in respect of netting services, pooling arrangements or similararrangements in connection with cash management in the ordinary course of business consistent with past practice;
(xvii) (i) take-or-pay obligations in the ordinary course of business, (ii) customer deposits andadvance payments in the ordinary course of business received from customers for goods or services purchased in theordinary course of business and (iii) manufacturer, vendor financing, customer and supply arrangements in the ordinarycourse of business;
(xviii) the incurrence of Debt by the Parent Guarantor or any Restricted Subsidiary (other than and inaddition to Debt permitted under clauses (i) through (xvii) above and clauses (xix) and (xx) below) in an aggregate principalamount at any one time outstanding not to exceed, together with any Permitted Refinancing Debt in respect thereof, thegreater of $350,000,000 and 5.0% of Total Assets;
(xix) Debt of any Person (x) incurred and outstanding on the date on which such Person becomes a RestrictedSubsidiary of the Parent Guarantor or another Restricted Subsidiary of the Parent Guarantor or is merged, consolidated,amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of relatedliabilities) the Parent Guarantor or any Restricted Subsidiary or (y) incurred to provide all or any portion of the fundsutilized to consummate the transaction or series of related transactions pursuant to which such Person became a RestrictedSubsidiary or was otherwise acquired by the Parent Guarantor or a Restricted Subsidiary; provided, however, with respect toeach of sub-clause (x) and (y) of this Section 4.06(b)(xix), that at the time of such acquisition or other transaction (1) theParent Guarantor would have been able to incur $1.00 of additional Debt pursuant to Section 4.06(a) after giving effect tothe incurrence of such Debt pursuant to this Section 4.06(b)(xix) or (2) the Fixed Charge Coverage Ratio of the ParentGuarantor and its Restricted Subsidiaries would not be less than it was immediately prior to giving pro forma effect to suchacquisition or other transaction;
(xx) Contribution Debt; and
(xxi) Debt consisting of local lines of credit, overdraft facilities or local working capital facilities in anaggregate outstanding principal amount at any one time not to exceed the greater of $75,000,000 and 1.0% of Total Assets.
(c) Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of originalissue discount and the payment of interest or dividends in the form of additional Debt of the same class will not be deemedto be an incurrence of Debt for purposes of this Section 4.06.
(d) For purposes of determining compliance with any restriction on the incurrence of Debt in U.S. dollars whereDebt is denominated in a different currency, the amount of such Debt will be the Dollar Equivalent determined on the dateof such determination; provided that if any such Debt denominated in a different currency is subject to a CurrencyAgreement (with respect to U.S. dollars) covering principal amounts payable on such Debt, the amount of such Debtexpressed in U.S. dollars shall be adjusted to take
-49-
into account the effect of such agreement. The principal amount of any Permitted Refinancing Debt incurred in the samecurrency as the Debt being refinanced shall be the Dollar Equivalent of the Debt refinanced determined on the date suchDebt being refinanced was initially incurred. Notwithstanding any other provision of this Section 4.06, for purposes ofdetermining compliance with this Section 4.06, increases in Debt solely due to fluctuations in the exchange rates ofcurrencies will not be deemed to exceed the maximum amount that an Issuer, the Parent Guarantor or a SubsidiaryGuarantor may incur under this Section 4.06.
(e) For purposes of determining any particular amount of Debt under this Section 4.06:
(i) obligations with respect to letters of credit, guarantees or Liens, in each case supporting Debt otherwiseincluded in the determination of such particular amount shall not be included;
(ii) any Liens granted pursuant to the equal and ratable provisions referred to in Section 4.07 shall not betreated as Debt;
(iii) accrual of interest, accrual of dividends, the accretion of accreted value, the obligation to paycommitment fees and the payment of interest in the form of additional preferred stock or Debt shall not be treated as Debt;and
(iv) the reclassification of preferred stock as Debt due to a change in accounting principles shall not betreated as Debt.
(f) In the event that an item of Debt meets the criteria of more than one of the types of Debt described in thisSection 4.06, the Parent Guarantor, in its sole discretion, shall classify items of Debt and shall only be required to includethe amount and type of such Debt in one of such clauses and the Parent Guarantor shall be entitled to divide and classify anitem of Debt in more than one of the types of Debt described in this Section 4.06, and may change the classification of anitem of Debt (or any portion thereof) to any other type of Debt described in this Section 4.06 at any time.
(g) The amount of any Debt outstanding as of any date will be:
(i) in the case of any Debt issued with original issue discount, the amount of the liability in respect thereofdetermined in accordance with IFRS;
(ii) the principal amount of the Debt, in the case of any other Debt; and
(iii) in respect of Debt of another Person secured by a Lien on the assets of the specified Person, the lesserof:
(A) the Fair Market Value of such assets at the date of determination; and
(B) the amount of the Debt of the other Person.
SECTION 4.07. Limitation on Liens. The Parent Guarantor shall not, and shall not permit any RestrictedSubsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind securing any Debt or assignor otherwise convey any right to receive any income, profits or proceeds on or with respect to any of the Parent Guarantor’sor any Restricted Subsidiary’s property or assets, constituting Collateral, whether owned at or acquired after the August2019 Issue Date, or any income, profits or proceeds therefrom other than Permitted Collateral Liens.
