Ortho Clinical Diagnostics Holdings plc (Form: S-1, Received: 01/04/2021 16:29:43)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

As filed with the Securities and Exchange Commission on January 4, 2021.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

Ortho Clinical Diagnostics Holdings plc

(Exact name of registrant as specified in its charter)


England and Wales	2835	98-1574150
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1001 Route 202

Raritan, New Jersey 08869

908-218-8000

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

Michael A. Schlesinger

Executive Vice President, General Counsel and Secretary

Ortho Clinical Diagnostics Holdings plc

1001 Route 202

Raritan, New Jersey 08869

908-218-8000

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

With copies to:

Patrick H. Shannon

Jason M. Licht

Latham & Watkins LLP

555 Eleventh Street, NW—Suite 1000

Washington, D.C. 20004

Tel: (202) 637-2200

Fax: (202) 637-2201

William J. Miller

Noah B. Newitz

Cahill Gordon & Reindel LLP

32 Old Slip

New York, New York 10005

Tel: (212) 701-3000

Fax: (212) 269-5420

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

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Proposed maximum aggregate offering price (1)(2)	Amount of registration fee
Ordinary shares, $0.00001 par value per ordinary share	$100,000,000	$10,910

(1)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)

Includes the aggregate offering price of ordinary shares that the underwriters have the option to purchase from the registrant to cover over-allotments.

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

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy the securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated , 2021

Prospectus

Ordinary shares

Ortho Clinical Diagnostics Holdings plc

Ordinary shares

This is Ortho Clinical Diagnostics Holdings plc’s initial public offering. We are selling of our ordinary shares.

We expect the initial public offering price of our ordinary shares to be between $ and $ per ordinary share. Prior to this offering, no public market existed for our ordinary shares. After pricing of the offering, we expect that our ordinary shares will trade on the NASDAQ Stock Market (“Nasdaq”) under the symbol “OCDx.”

Investing in our ordinary shares involves risks that are described in the “Risk Factors” section beginning on page 21 of this prospectus.



	Per share	Total

Public offering price	$	$

Underwriting discount(1)	$	$

Proceeds, before expenses, to us	$	$

(1)

See “Underwriting (Conflicts of Interest)” for a description of the compensation payable to the underwriters.

The underwriters may also exercise their option to purchase up to an additional shares from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus to cover over-allotments.

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

The ordinary shares will be ready for delivery on or about , 2021.



J.P. Morgan	BofA Securities	Goldman Sachs & Co. LLC

Barclays		Morgan Stanley

Citigroup	Credit Suisse	UBS Investment Bank

Evercore ISI		Piper Sandler


ING	Macquarie Capital	Nomura	TCG Capital Markets L.L.C.

Drexel Hamilton	H.C. Wainwright & Co.	Ramirez & Co., Inc.	Siebert Williams Shank

The date of this prospectus is , 2021.

Table of contents


	Page

Prospectus summary		1

Risk factors		21

Special note regarding forward-looking statements		63

Use of proceeds		66

Dividend policy		67

Capitalization		68

Dilution		70

Selected consolidated financial data		72

Management’s discussion and analysis of financial condition and results of operations		75

Business		114

Management		142

Executive compensation		150

Certain relationships and related party transactions		170

Principal shareholders		173

Description of share capital and articles of association		175

Shares eligible for future sale		193

Material tax considerations		195

Underwriting (Conflicts of Interest)		203

Legal matters		212

Experts		212

Where you can find additional information		213

Enforcement of judgments		213

Index to consolidated financial statements		F-1

Through and including , 2021 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses that we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the ordinary shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ordinary shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

For investors outside the United States: We and the underwriters have not done anything that would permit a public offering of our ordinary shares or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the ordinary shares and the distribution of this prospectus outside of the United States.

Basis of presentation

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

•

the term “2025 Notes” refers to the $400.0 million in aggregate principal amount of 7.375% Senior Notes due 2025 issued by the Lux Co-Issuer and the U.S. Co-Issuer;

•

the term “2025 Notes Indenture” refers to the indenture governing the 2025 Notes, as amended, supplemented or otherwise modified from time to time;

•

the term “2028 Notes” refers to the $675.0 million in aggregate principal amount of 7.250% Senior Notes due 2028 issued by the Lux Co-Issuer and the U.S. Co-Issuer;

•

the term “2028 Notes Indenture” refers to the indenture governing the 2028 Notes, as amended, supplemented or otherwise modified from time to time;

•

the term “Acquisition” refers to the acquisition by Bermuda Holdco pursuant to a stock and asset purchase agreement, dated January 16, 2014 (the “Acquisition Agreement”), of (i) certain assets and liabilities and (ii) all of the equity interests and substantially all of the assets and liabilities of certain entities which, together with their subsidiaries, comprised the Ortho Clinical Diagnostics business from Johnson & Johnson;

•

the term “assay” refers to an investigative (analytic) procedure in laboratory medicine, pharmacology, environmental biology and molecular biology for qualitatively assessing or quantitatively measuring the presence or amount or the functional activity of a target entity (the analyte), which can be a drug or biochemical substance or a cell in an organism or organic sample;

•

the term “Bermuda Holdco” refers to Ortho-Clinical Diagnostics Bermuda Co. Ltd., a Bermuda exempted limited liability company. As part of the Reorganization Transactions, the existing common shares of Bermuda Holdco will be contributed to UK Holdco in exchange for ordinary shares of UK Holdco, following which we expect that Bermuda Holdco will be dissolved;

•

the term “consumables” refers to miscellaneous items such as calibrators, pipettes and controls, which are run on our instruments in conjunction with and in support of assays and reagents;

•

the term “Credit Agreement” refers to that certain credit agreement governing our Senior Secured Credit Facilities;

•

the term “emerging markets” refers to all countries where we operate other than Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States and certain other developed countries;

•

the term “GAAP” refers to the generally accepted accounting principles in the United States of America;

•

the term “Holdings” refers to Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., a société à responsabilité limitée organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 89C, rue Pafebruch, L-8308 Capellen, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register (Registre de Commerce et des Sociétés de Luxembourg) under number B185679 and, following the Reorganization Transactions, a direct, wholly owned subsidiary of UK Holdco;

•

the term “Joint Business” refers to a long-term collaboration agreement with Grifols Diagnostic Solutions, Inc. that encompasses certain Clinical Laboratories and Donor Screening products;

•

the term “laboratories,” when we refer to our customers, refers to testing sites that process and provide results for in vitro diagnostic tests within hospitals, independent reference labs, physician office labs or physician clinics;

•

the term “Lux Co-Issuer” refers to Ortho-Clinical Diagnostics S.A., a société anonyme organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 89C, rue Pafebruch, L-8308 Capellen Luxembourg and registered with the Luxembourg trade and companies register (Registre de Commerce et des Sociétés de Luxembourg) under number B 185693 and, following the Reorganization Transactions, an indirect, wholly owned subsidiary of UK Holdco;

•

the terms “Principal Shareholder” and “Carlyle” refer to The Carlyle Group Inc. and its affiliates;

•

the term “reagent” refers to a substance that is added during a test in order to bring about a reaction. The resulting reaction is used to confirm the presence of another substance. Our reagents are used to identify different properties of blood;

•

the term “Reorganization Transactions” refers to the transactions described under “—Reorganization transactions”;

•

the term “Senior Notes” refers, collectively, to the 2025 Notes and the 2028 Notes;

•

the term “Senior Secured Credit Facilities” refers to (a) the senior secured term loan facility in an original amount of $2,175.0 million, as increased by the incremental term loan (the “Incremental Term Loan”) of $200 million (collectively, the “Dollar Term Loan Facility”), (b) the euro-denominated senior secured term loan facility in an amount equal to €337.4 million (the “Euro Term Loan Facility” and, together with the Dollar Term Loan Facility, the “Term Loan Facilities”), and (c) the multi-currency senior secured revolving facility with commitments of $350.0 million (the “Revolving Credit Facility”);

•

the term “throughput” refers to the number of tests performed during a certain time period;

•

the term “UK Holdco” refers to Ortho Clinical Diagnostics Holdings plc, a public limited company incorporated under the laws of England and Wales. As part of the Reorganization Transactions, the existing common shares of Bermuda Holdco will be contributed to UK Holdco in exchange for ordinary shares of UK Holdco, following which we expect that Bermuda Holdco will be dissolved;

•

the term “U.S. Co-Issuer” refers to Ortho-Clinical Diagnostics, Inc., a corporation incorporated under the laws of the State of New York and, following the Reorganization Transactions, an indirect, wholly owned subsidiary of UK Holdco;

•

the terms “we,” “us,” “our,” “its,” our “Company” and “Ortho” refer to UK Holdco and its consolidated subsidiaries after giving effect to the Reorganization Transactions.

iii

References to a year refer to our fiscal years ended on the Sunday nearest December 31 of the specified year and consist of 52 weeks (for example, the terms “2019” and “fiscal 2019” refer to our fiscal year ended December 29, 2019, the terms “2018” and “fiscal 2018” refer to our fiscal year ended December 30, 2018 and the terms “2017” and “fiscal 2017” refer to our fiscal year ended December 31, 2017).

References to our customers mean those customers we directly sell our products and services to, such as hospitals, clinics and our distributors. References to our end-customers mean customers who use our products, which include hospitals and clinics.

Reorganization transactions

UK Holdco is a public limited company incorporated under the laws of England and Wales for purposes of becoming the new holding company of Bermuda Holdco and its subsidiaries and has an initial share capital of one ordinary share and 50,000 preferred redeemable shares (“Incorporation Shares”). Prior to the consummation of the Reorganization Transactions, UK Holdco will have no subsidiaries or operations. In connection with the consummation of the offering and prior to effectiveness of the Registration Statement of which this prospectus forms a part, Carlyle and all other shareholders of Bermuda Holdco will contribute all of their outstanding equity interests in Bermuda Holdco to UK Holdco in exchange for ordinary shares of UK Holdco on a 1-for-1 basis (the “Reorganization Transactions”). Following the Reorganization Transactions, the Incorporation Shares held by Carlyle will be deferred, with no economic or voting rights attributable to such shares.

Following the consummation of this offering, we expect that Bermuda Holdco will be dissolved and UK Holdco will directly own all outstanding equity interests of Holdings and will indirectly own all outstanding equity interests of Holdings’ subsidiaries. Prior to the Reorganization Transactions, UK Holdco will have no operations and no material assets or liabilities. As a result of the Reorganization Transactions, UK Holdco will supersede Bermuda Holdco as the ultimate parent of Ortho and succeed to the business and operations of Bermuda Holdco. UK Holdco’s historical financial statements will be substantially identical to those of Bermuda Holdco and this change will not have any effect on the presentation of the financial statements and does not constitute a business combination under ASC 805. Accordingly, the historical financial information presented in this prospectus is that of Bermuda Holdco.

Trademarks and service marks

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are our service marks or trademarks. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. The trademarks we own or have the right to use include, among others, ORTHO^®, ORTHO CLINICAL DIAGNOSTICS^®, ORTHO VISION^™, BIOVUE^® and VITROS^®. Solely for convenience, in some cases, the trademarks, service marks and trade names referred to in this prospectus are listed without the applicable ^® and ^™ symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names.

Market, industry and other data

Throughout this prospectus, we refer to our market position or market share in various markets or regions. These references represent our best estimates of our market share at the time of this prospectus and are based

on management’s knowledge of the industry and the market data and other statistical information obtained from independent industry publications, reports by market research firms or other published independent sources. We confirm that such information has been accurately reproduced and that, so far as we are aware, and are able to ascertain from information published by publicly available sources and other publications, no facts have been omitted which would render the reproduced information inaccurate or misleading. Industry publications, reports and other published data generally state that the information contained therein has been obtained from sources believed to be reliable. Certain other market and industry data included in this prospectus, including the size of certain markets, are based on estimates of our management. These estimates have been derived from our management’s knowledge and experience in the markets in which we operate, as well as information obtained from surveys, reports by market research firms, our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate.

Unless specifically noted otherwise, information presented in this prospectus with respect to our position relative to other industry participants is based on information or sources for the year ended December 31, 2019. Market size and market growth information presented in this prospectus reflects estimates of market sizes and growth in such markets for the year ended December 31, 2020 and for the years ended December 31, 2020 through 2024, respectively. In each such case, management believes such information presented represents the most recent data available to the Company.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables and charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

Use of non-GAAP financial measures

Adjusted EBITDA, Management EBITDA, Adjusted Net Income and Core revenue constant currency growth rate are our key non-GAAP financial measures. For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures and a reconciliation of these measures to the most directly comparable GAAP measures, see “Prospectus summary—Summary consolidated financial data.” Adjusted EBITDA consists of net loss before interest expense, net, provision for (benefit from) income taxes and depreciation and amortization and eliminates (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net loss that we do not consider indicative of our ongoing operating performance. Management EBITDA consists of Adjusted EBITDA plus certain other management adjustments. Adjusted Net Income consists of net loss before amortization and the elimination of (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net loss that we do not consider indicative of our ongoing operating performance. Core revenue constant currency growth rate refers to the growth rate of revenue generated in our Clinical Laboratories and our Transfusion Medicine lines of business, which historically make up more than 95% of our net revenue, with any local currency revenue for all reporting periods translated into U.S. dollars using the same comparable foreign currency exchange rates.

We use these financial measures in the analysis of our financial and operating performance because they assist in the evaluation of underlying trends in our business. Additionally, Management EBITDA is the basis we use for assessing the profitability of our geographic-based reportable segments and is also utilized as a basis for calculating certain management incentive compensation programs. In the case of Adjusted EBITDA and Adjusted Net Income, we believe that making such adjustments provides management and investors meaningful information to understand our operating performance and ability to analyze financial and business trends on a

period-to-period basis. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We use certain of these financial measures for business planning purposes and measuring our performance relative to that of our competitors.

Other companies in our industry may calculate Adjusted EBITDA, Management EBITDA, Adjusted Net Income and Core revenue constant currency growth rate differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these items in isolation, or as a substitute for analysis of our results as reported under GAAP. Adjusted EBITDA, Management EBITDA and Adjusted Net Income should not be considered as measures of discretionary cash available to us to invest in the growth of our business. In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to have been inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in the presentation of these metrics included in this prospectus. Our presentation of Adjusted EBITDA, Management EBITDA and Adjusted Net Income should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Adjusted EBITDA, Management EBITDA, Adjusted Net Income and Core revenue constant currency growth rate have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include the fact that:

•

Adjusted EBITDA and Management EBITDA:

•

do not reflect the significant interest expense on our debt, including the Senior Secured Credit Facilities, the 2025 Notes and the 2028 Notes;

•

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

•

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

•

Adjusted Net Income eliminates the effects of amortization related to purchased intangibles; and

•

Core revenue constant currency growth rate eliminates the effects of foreign currency exchange rate fluctuations.

We compensate for these limitations by relying primarily on our GAAP results and using these financial measures only as a supplement to our GAAP results. For an explanation of the components of Core revenue constant currency growth rate, see footnotes (2) and (3) in “Prospectus summary—Summary consolidated financial data,” and for an explanation of the components of Adjusted EBITDA, Management EBITDA and Adjusted Net Income, see footnotes (4) and (5) in “Prospectus summary—Summary consolidated financial data.”

In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to have been inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of these metrics should not be construed as an inference that our future results will not be affected by unusual or non-recurring items or changes in our customer base. Additionally, our presentation of Adjusted EBITDA may differ from that included in the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture for purposes of covenant calculation.

Prospectus summary

This summary highlights information contained in greater detail elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our ordinary shares, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus, and the information set forth under “Risk factors” and “Management’s discussion and analysis of financial condition and results of operations.”

Unless otherwise indicated in this prospectus, references to the “Company,” “we,” “us” and “our” refer to UK Holdco and its consolidated subsidiaries after giving effect to the Reorganization Transactions. References to “underwriters” refer to the firms listed on the cover page of this prospectus.

Our company

We are a pure-play in vitro diagnostics (“IVD”) business driven by our credo, “Because Every Test is A Life.” This guiding principle reflects the crucial role diagnostics play in global health and guides our priorities as an organization. As a leader in IVD, we impact approximately 800,000 patients every day. We are dedicated to improving outcomes for these patients and saving lives through providing innovative and reliable diagnostic testing solutions to the clinical laboratory and transfusion medicine communities. Our global infrastructure and commercial reach allow us to serve these markets with significant scale. We have an intense focus on the customer. We support our customers with high quality diagnostic instrumentation, a broad test portfolio and market leading service. Our products deliver consistently fast, accurate and reliable results that allow clinicians to make better-informed treatment decisions. Our business model generates significant recurring revenues and strong cash flow streams from ongoing sales of high margin consumables. In 2019, these consumables contributed more than 90% of our total revenue and approximately 93% of our core revenue. We maintain close connectivity with our customers through our global presence, with more than 4,500 employees, including approximately 2,200 commercial sales, service and marketing teammates. This global organization allows us to support our customers across more than 130 countries and territories.

We have been pioneering life-impacting advances in diagnostics for over 80 years, from our earliest work in blood typing, to our innovation in infectious diseases and our latest developments in laboratory solutions. In 2014, we were acquired by The Carlyle Group from Johnson & Johnson and became an independent organization, solely focused on delivering high quality IVD products and service to our diagnostic customer base. At the time of the separation, our business had global scale, a reputation for high quality products, a strong quality management system and a research and development team with extensive scientific expertise. Over the past six years, we have significantly invested in our business with the objective of creating a highly efficient, innovative and lean organization capable of scaling to meet our customers’ needs. These investments included the following focus areas:

•

Infrastructure: We invested over $500 million in IT, finance, supply chain and other support functions to build out our infrastructure and capabilities as a standalone business and drive long-term, profitable growth.

•

Research and development: We increased our focus on innovation by investing approximately $550 million in research and development to enhance our existing capabilities and develop new instruments and assays to supplement our portfolio.

•

Commercial: We redesigned our go-to-market strategy across all key regions, expanded our sales force, implemented new customer information systems and launched ORTHOCARE to enhance our service capabilities.

•

Operations: We consolidated and streamlined our manufacturing capabilities and other global functions to improve profitability and cash flow, achieving more than $200 million in savings since our acquisition by Carlyle.

•

Leadership: To capitalize on these investments, we recruited a highly qualified management team of experienced diagnostic and healthcare leaders focused on our customers and accelerated growth.

With these investments, we have reinvigorated our portfolio, transformed our commercial model and emerged as a focused leader in the IVD market, which we believe positions our business for future growth.

IVD testing is a critical tool in evaluating health in many different settings around the world. IVD is a core component of routine health care check-ups for those who are presenting with symptoms or require procedures, and it influences up to 70% of critical healthcare clinical decision-making. Consequently, our IVD solutions have a profound impact on the assessment of health and the delivery of care. IVD is also critical in monitoring the transmission and spread of infectious disease outbreaks, where Ortho’s longstanding excellence in infectious disease testing is particularly relevant. Our solutions are central to the operations of hospitals, clinics, blood banks and donor centers around the world, where they are used to help diagnose certain conditions, such as cancer or heart attacks, and infectious diseases, such as hepatitis, HIV, and most recently, COVID-19, where we have launched two antibody tests and an antigen test, and we are actively expanding our menu of tests to address the global pandemic.

We operate in an approximately $26 billion addressable market, which is expected to grow at a compound annual growth rate (“CAGR”) of approximately 5% from 2020 to 2024. We compete in the two largest IVD markets, Immunoassay and Clinical Chemistry, which together comprise our Clinical Laboratories business and represent approximately $24 billion of our current addressable market. We expect our Clinical Laboratories business will be favorably impacted by an aging population, an increased need for testing of chronic conditions, the expansion of access to healthcare services, the emergence of new disease states and other macro trends. We are also the global leader in Transfusion Medicine, which includes hospital-based Immunohematology and Donor Screening for blood and plasma at hospitals and other donation centers. Transfusion Medicine represents approximately $2 billion of our current addressable market. We expect our Transfusion Medicine business will be favorably impacted by increases in the number and type of surgical procedures, an aging population and other macro trends. There is significant overlap in our customer base given we currently sell to about 70% of the hospitals in the United States, and we are often able to leverage our leadership within Transfusion Medicine to cross-sell our Clinical Laboratories solutions. Because we focus primarily on acute or critical care diagnostics that are core to therapeutic decisions in hospitals, our markets are relatively resilient across business cycles. We offer our products and services globally, with distinct offerings targeted to the needs of customers in developed and emerging markets.

Today, we operate two lines of business, Clinical Laboratories and Transfusion Medicine, which together generate our core revenue:

•

Clinical Laboratories: Comprised of Clinical Chemistry, which is the measurement of target chemicals in bodily fluids for the evaluation of health and the clinical management of patients, and Immunoassay, which is the measurement of proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health.

•

Transfusion Medicine: Comprised of Donor Screening, where blood and plasma is screened at donation for blood type and target diseases, and Immunohematology, where blood is typed and screened at the hospital blood bank before being transfused into the patient.

approach as focusing on Lifetime Customer Value (“LCV”). Our focus on LCV underpins everything we do, from the design and execution of our commercial and service model, to our instrument and assay innovation, to the composition of our global footprint. Our approach has informed our choice to focus on medium- to high-volume laboratories, which in turn has helped us become a focused leader in our selected markets and transformed our financial profile. We intend to continue to invest in and evolve our LCV framework to best support our customers and maximize our financial results.

As an example, we may begin a Clinical Laboratories customer relationship by providing a standalone instrument (often a clinical chemistry analyzer) and a set of assays that are relevant to that customer’s specific testing needs. As the customer and its testing needs grow, we look to migrate the customer, where appropriate, to an integrated analyzer that performs both clinical chemistry and immunoassay testing. This migration helps us increase our customers’ testing capabilities as well as the revenue we generate from customers. For our larger customers, we ultimately may expand their testing throughput by installing automation tracks that connect multiple analyzers along the automation track, while providing the full suite of our ever-expanding assay menu. As we have significantly expanded our test menu offering, our integrated analyzers are now more often where our Clinical Laboratories relationship starts. In Transfusion Medicine, the life cycle is similar, as customers graduate from manual testing processes to semi-automated capabilities to fully-automated blood and plasma screening instrumentation as their testing volumes and technical competencies grow over time. We focus on building long-term customer relationships and continuing to enhance both our offering and the customer’s ability to care for their patients—ultimately deepening our commercial relationship and driving our financial model.

We believe that the strong clinical performance of our assays, our instruments’ ease-of-use and reliability, our best-in-class customer service and low total cost of ownership contribute to our high revenue retention rate of approximately 99% in 2019. We have longstanding relationships with customers, with an average Clinical Laboratories customer relationship of almost 13 years and an average Transfusion Medicine customer relationship of almost 15 years. Our customer relationships are particularly strong in the medium- to high-volume laboratories (our “Focus Markets”), which compares to the broader market that includes low- and ultra high-volume laboratories. In addition, our dry slide technology has an environmentally friendly profile as it doesn’t require water system plumbing, it reduces hazardous waste and it requires less space for liquid storage. All of these attributes resonate particularly well with customers who are pursuing environmental goals or customers who operate in regions with scarce water supply.

Our revenue is driven by a “razor-razor blade” business model. Through this model, we generally sell or place instruments under long-term contracts, which support the ongoing sale of our assays, reagents and consumables. Our instruments are closed systems, requiring customers to purchase the assays, reagents and consumables from us. These sales generate a high proportion of recurring revenues. As of September 27, 2020, we had an installed base of approximately 20,000 instruments, which increased approximately 5% since September 2019. We also generate non-core revenue, including through our contract manufacturing business and certain business collaborations, which accounted for approximately 3% of our net revenue during the fiscal year ended December 29, 2019. During the fiscal year ended December 29, 2019, we recorded net revenue of $1.8 billion, net loss of $157 million and Adjusted EBITDA of $478 million. During the fiscal nine months ended September 27, 2020, we recorded net revenue of $1,250 million, net loss of $171 million and Adjusted EBITDA of $322 million. As of September 27, 2020, we had total indebtedness of $3,713.7 million, and for the fiscal nine months ended September 27, 2020, our interest expense was $148.6 million. We note that our net revenue for the fiscal nine months ended September 27, 2020 was approximately 5.9% lower as compared to the prior year period, primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic. However, during the three months ended September 27, 2020, we began to experience a rebound towards the positive quarterly trajectory we saw prior to the beginning of the pandemic. As an example of such quarterly

trajectory, during the four quarters prior to the second fiscal quarter of 2020, our quarterly core revenue (excluding local HCV) was growing in the range of approximately 3.8% to 5.8% on a constant currency basis as compared to the relevant prior year period. As a result of the COVID-19 pandemic, during the fiscal three months ended June 28, 2020, we experienced significantly reduced testing volumes and a 12.2% decline in core revenue (excluding local HCV) on a constant currency basis as compared to the fiscal three months ended June 30, 2019. However, for the fiscal three months ended September 27, 2020, our core revenue (excluding local HCV) increased approximately 3.7% on a constant currency basis as compared to the fiscal three months ended September 29, 2019, which growth rate is more consistent with the trend we experienced prior to the COVID-19 pandemic. For example, during the three months ended September 27, 2020, our core recurring revenue in North America increased by approximately 11.1% and our core revenue in Greater China increased by approximately 7.9%, in each case, as compared to the prior year period.

Our competitive strengths

We believe we are well-positioned to drive sustained and profitable growth through our relentless focus on LCV. This customer-centric approach informs the execution of our commercial and service model and underpins our go-to-market strategy. Our customer focus allows us to retain and grow our customers by providing a superior customer experience driven by unparalleled quality of service, continuous innovation and access to a diverse product portfolio. We are able to leverage our global footprint to gain differentiated and leading positions across our Focus Markets. This intense focus on our customers has resulted in an attractive business model with high recurring revenues that allows us to continue to invest to reinforce our competitive strengths, which include:

•

Intense customer focus enabled by our broad portfolio and market leading positions

•

Superior customer experience and brand loyalty resulting in high customer retention and win rates

•

Highly compelling solutions supported by our leading and innovative research and development capabilities

•

Extensive and balanced global commercial footprint with reinvigorated focus on growth

•

Disciplined approach to streamline operations and optimize our cost structure

•

Deeply committed leadership team with broad experience in healthcare and diagnostics.

Our growth strategy

Our heritage and strength lie in our long-term customer relationships and trusted brand, which create a steady base of recurring revenue and a foundation for future growth. By focusing on LCV, we identify ways in which we can utilize product innovation and impactful customer service and solutions to deepen these partnerships and add value over time. We plan to grow our business by broadening our existing relationships, winning new customers and targeting high-growth end markets and adjacencies. We are focused on sustainable long-term growth through commercial excellence that maximizes LCV, strengthens existing relationships through superior service and delivers innovative products for our customers and their patients. The key elements of our strategy to accelerate and sustain revenue growth and operating leverage include:

•

Focusing relentlessly on maximizing LCV, which is designed to produce and maintain a growing and recurring, high margin, durable financial profile and contributes to growth

•

Providing an unparalleled customer experience to retain and attract existing and new customers

•

Leveraging our global footprint to deliver innovative solutions to meet our customers’ needs in both developed and emerging markets

•

Creating meaningful product innovation through menu expansion, development of novel instruments and enhancement of automation and informatics

•

Continuing to identify operating efficiencies to allow for reinvestment in growth and improve margins

•

Pursuing business development opportunities, partnerships and strategic acquisitions to enter adjacencies or expand our current business units.

Our products and services

Clinical Laboratories

Our Clinical Laboratories business focuses on clinical chemistry and immunoassay instruments and tests to detect and monitor disease progression across a broad spectrum of therapeutic areas. Our flagship Clinical Laboratories platform is the VITROS family of instruments, which includes a series of clinical chemistry, immunoassay, integrated (combined chemistry and immunoassay) systems and automation and middleware solutions. VITROS instruments are placed in centralized, higher-throughput testing sites (hospitals and laboratories) and decentralized, lower-throughput sites (physician offices, clinics and specialty settings).

LOGO

Transfusion Medicine

Immunohematology

Within Transfusion Medicine, our Immunohematology business is focused on immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions. Our flagship Immunohematology analyzers are the ORTHO VISION and ORTHO VISION Max systems that automate blood typing and serology disease screening for blood banks. In addition, we sell the semi-automated ORTHO Workstation for blood bank customers that have lower volumes or need for test automation.

LOGO

Donor Screening

Our services

In addition to the products we provide, ORTHOCARE Services are a critical element of how we deliver value to our customers. As of September 2020, we have approximately 900 service teammates globally. We employ highly trained service professionals including over 340 laboratory specialists with advanced qualifications. For example, more than 95% of our U.S. laboratory specialists have medical technician degrees.

Estimated preliminary results

Set forth below are certain preliminary results for the fiscal year ended January 3, 2021. We have provided ranges, rather than specific amounts, because these results are preliminary and subject to change. These ranges are based on the information currently available to us as of the date of this prospectus. Our actual financial results for the fiscal year ended January 3, 2021 are not yet available, and our closing procedures for the fiscal year ended January 3, 2021 are not yet completed. Our actual results may vary from the estimated preliminary results and other data presented here and will not be finalized until after the completion of this offering.

These are forward-looking statements and are not guarantees of future performance and may differ from actual results. The estimated preliminary results below should not be viewed as a substitute for our full annual financial statements prepared in accordance with GAAP. There can be no assurance that the estimated preliminary results or other data will be realized, and estimates are subject to risks and uncertainties. Please refer to “Risk factors” and “Special note regarding forward-looking statements.” The estimated preliminary results below should be read in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements included elsewhere in this prospectus.

The preliminary financial results included in this prospectus have been prepared by, and are the responsibility of, our management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial results. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.


	Fiscal year ended
($ in millions)	January 3, 2021		December 29, 2019
	Low	High
Selected financial data
Net revenue	$	$	$	1,801.5
Core revenue				1,740.3
Income from operations				85.5
Adjusted EBITDA				477.5

Consolidated balance sheet data:
Cash and cash equivalents	$	$	$	72.0
Total debt				3,599.1

The following table reconciles Income from operations (the most directly comparable GAAP measure reasonably available to us at this time) to Adjusted EBITDA for the periods presented:


	Fiscal year ended
	January 3, 2021		December 29, 2019
($ in millions)	Low	High
Income from operations	$	$	$	85.5
Depreciation and amortization				327.5
Restructuring and severance related costs(a)				36.0
Stock-based compensation(b)				18.6
Other adjustments(c)				9.9

Adjusted EBITDA	$	$	$	477.5

(a)

Represents restructuring and severance costs related to several discrete initiatives intended to strengthen operational performance and to support building our commercial capabilities.

(b)

Represents stock-based compensation expense including the $14.7 million modification impact of a 2019 amendment to our stock option agreement, where performance-based options that did not previously vest based on applicable minimum earnings targets have vested or will vest over a specified future period of time.

(c)

Represents miscellaneous other adjustments related to unusual items impacting our results including the .

For the fiscal year ended January 3, 2021, we expect to report net revenue in the range of $ million to $ million, representing an increase of % to % compared to the fiscal year ended

December 29, 2019. For the fiscal year ended January 3, 2021, we expect to report core revenue in the range of $ million to $ million, representing an increase of % to % compared to the fiscal year ended December 29, 2019. The increase in net and core revenue, which includes a negative impact of approximately % from foreign currency fluctuations, was primarily driven by during the fiscal three months ended January 3, 2021 as compared to the fiscal three months ended December 29, 2019, for the low and high estimated preliminary results, respectively.

For the fiscal year ended January 3, 2021, we expect Adjusted EBITDA in the range of $ million to $ million, representing an increase of % to % compared to the fiscal year ended December 29, 2019. The increase in Adjusted EBITDA was primarily driven by during the fiscal three months ended January 3, 2021 as compared to the fiscal three months ended December 29, 2019 for the low and high estimated preliminary results, respectively.

Risks related to our business

Investing in our ordinary shares involves a high degree of risk. You should carefully consider these risks before investing in our ordinary shares, including the risks related to our business and industry described under “Risk factors” elsewhere in this prospectus. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our ordinary shares and result in a loss of all or a portion of your investment:

•

the ongoing global coronavirus (COVID-19) pandemic;

•

increased competition;

•

manufacturing problems or delays or failure to develop and market new or enhanced products or services;

•

adverse developments in global market, economic and political conditions;

•

our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent;

•

our inability to implement our strategies for improving growth or to realize the anticipated benefits of any acquisitions and divestitures, including as a result of difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations;

•

a need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets;

•

our ability to operate according to our business strategy should our collaboration partners fail to fulfill their obligations;

•

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

•

product recalls or negative publicity may harm our reputation or market acceptance of our products;

•

decreases in the number of surgical procedures performed, and the resulting decrease in blood demand;

•

fluctuations in our cash flows as a result of our reagent rental model;

•

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

•

the outcome of legal proceedings instituted against us and/or others;

•

risks associated with our non-U.S. operations, including currency translation risks, the impact of possible new tariffs and compliance with applicable trade embargoes;

•

the effect of the United Kingdom’s withdrawal from the European Union;

•

our inability to deliver products and services that meet customers’ needs and expectations;

•

failure to maintain a high level of confidence in our products;

•

significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs;

•

reductions in government funding and reimbursement to our customers;

•

price increases or interruptions in the supply of raw materials, components for our products, and products and services provided to us by certain key suppliers and manufacturers;

•

our ability to recruit and retain the experienced and skilled personnel we need to compete;

•

work stoppages, union negotiations, labor disputes and other matters associated with our labor force;

•

consolidation of our customer base and the formation of group purchasing organizations;

•

unexpected payments to any pension plans applicable to our employees;

•

our inability to obtain required clearances or approvals for our products;

•

failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals;

•

the inability of government agencies to hire, retain or deploy personnel or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner;

•

disruptions resulting from President Trump’s invocation of the Defense Production Act;

•

our inability to maintain our data management and information technology systems;

•

data corruption, cyber-based attacks, security breaches and privacy violations;

•

our inability to protect and enforce our intellectual property rights or defend against intellectual property infringement suits against us by third parties;

•

risks related to changes in income tax laws and regulations;

•

risks related to our substantial indebtedness, which includes $2,200.0 million outstanding under our Dollar Term Loan Facility, $390.4 million outstanding under our Euro Term Loan Facility, $400.0 million aggregate principal amount of 2025 Notes outstanding and $675.0 million aggregate principal amount of 2028 Notes outstanding, in each case, as of September 27, 2020;

•

our ability to generate cash flow to service our substantial debt obligations;

•

risks related to this offering and ownership of our ordinary shares, including the fact that, after completion of this offering, we are expected to be a “controlled company” within the meaning of the corporate governance standards of Nasdaq; and

•

other factors set forth under “Risk factors” in this prospectus.

Reorganization Transactions

UK Holdco is a public limited company incorporated under the laws of England and Wales for purposes of becoming the new holding company of Bermuda Holdco and its subsidiaries and has an initial share capital of one ordinary share and 50,000 preferred redeemable shares. Prior to the consummation of the Reorganization Transactions, UK Holdco will have no subsidiaries or operations. In connection with the consummation of the offering and prior to effectiveness of the Registration Statement of which this prospectus forms a part, Carlyle and all other shareholders of Bermuda Holdco will contribute all of their outstanding equity interests in Bermuda Holdco to UK Holdco in exchange for ordinary shares of UK Holdco on a 1-for-1 basis. Following the Reorganization Transactions, the Incorporation Shares held by Carlyle will be deferred, with no economic or voting rights attributable to such shares.

Corporate structure

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

LOGO

(1)

After completion of the offering, Carlyle is expected to own approximately % of our outstanding ordinary shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. As a result, we may elect not to comply with certain corporate governance requirements. See “Risk factors—Risk related to this offering and ownership of our ordinary shares—We will be a “controlled company” within the meaning of Nasdaq rules and the rules of the SEC. As a result, we will qualify for exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.”

(2)

The Lux Co-Issuer and the U.S. Co-Issuer are co-borrowers under our Senior Secured Credit Facilities as well as co-issuers of $400.0 million in aggregate principal amount of 2025 Notes and $675.0 million in aggregate principal amount of 2028 Notes. Our Senior Secured Credit Facilities consist of (a) our $2,375.0 million Dollar Term Loan Facility, (b) our €337.4 million Euro Term Loan Facility and (c) our $350.0 million Revolving Credit Facility. The restrictions imposed by the terms of our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our indebtedness. See “Risk factors—Risks associated with our indebtedness.”

Our Principal Shareholder

Our Principal Shareholder is an investment fund affiliated with Carlyle. Carlyle acquired us from Johnson & Johnson in 2014 for aggregate consideration of $3,893.1 million, including debt financing consisting of $2,175.0 million of term loans pursuant to the Credit Agreement and $1,300.0 million of senior unsecured notes, all of which has since been refinanced. Affiliates of Carlyle currently hold approximately $93.1 million of indebtedness under the Dollar Term Loan Facility and approximately $53.2 million of indebtedness under the Euro Term Loan Facility. We intend to use the proceeds from this offering to, among other things, repay a portion of our indebtedness under the Dollar Term Loan Facility. See “Use of proceeds.” In connection with the Reorganization Transactions, we expect to enter into the Shareholders Agreement with Carlyle, pursuant to which Carlyle will have the right to designate nominees to our board of directors and to cause us to file registration statements under the Securities Act covering resales of our ordinary shares held by Carlyle, subject to certain exceptions. See “Certain relationships and related party transactions—Shareholders agreement.”

Founded in 1987, Carlyle is a global investment firm and one of the world’s largest global private equity firms with approximately $230 billion of assets under management across 397 investment vehicles as of September 30, 2020. Carlyle invests across four segments—Corporate Private Equity, Real Assets, Global Credit, and Investment Solutions—in North America, South America, Europe, the Middle East, Africa, Asia and Australia. Carlyle has expertise in various industries, including aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrials & transportation, technology & business services and telecommunications & media. Carlyle employs more than 1,800 employees, including more than 675 investment professionals, in 30 offices across six continents.

Carlyle is one of the leading private equity investors in the healthcare sector, having completed 73 total healthcare transactions representing approximately $16 billion in equity invested since inception. Recent transactions include Grand Rounds (tech-enabled expert medical opinion and healthcare quality and clinical navigation provider), TriNetX (a global health research network optimizing clinical research), Sedgwick (a global multiline claims management firm), One Medical (technology-enabled primary care provider), CorroHealth (a business service provider for healthcare companies), Millicent (a pharmaceutical company), MedRisk (a physical therapy-focused workers’ compensation solutions company), Albany Molecular Research (a pharmaceutical contract development and manufacturing organization), WellDyneRx (an independent pharmacy benefit manager), Rede D’Or São Luiz S.A. (a leading hospital provider in Brazil) and Pharmaceutical Product Development (a global contract research organization).

Corporate information

UK Holdco is a public limited company incorporated under the laws of England and Wales with the legal name Ortho Clinical Diagnostics Holdings plc and with the company number 13084624 for purposes of becoming the new holding company of Bermuda Holdco and its subsidiaries. Our principal executive offices are located at 1001 Route 202, Raritan, New Jersey 08869. Our telephone number at this address is 908-218-8000. UK Holdco’s registered address is 11-12 St. James’s Square, Suite 1, 3rd Floor, London, United Kingdom SW1Y 4LB. Our website address is www.orthoclinicaldiagnostics.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus, and inclusions of our website address in this prospectus are inactive textual references only. You should rely only on the information contained in this prospectus when making a decision as to whether to invest in the ordinary shares.

The offering

Ordinary shares offered by us

shares.

Ordinary shares to be outstanding immediately after this offering

shares.

Option to purchase additional ordinary shares

The underwriters have been granted an option to purchase up to additional ordinary shares from us at any time within 30 days from the date of this prospectus to cover over-allotments.

Use of proceeds

A $1.00 increase (decrease) in the assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ million, assuming the number of ordinary shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 ordinary shares from the expected number of ordinary shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) our net proceeds from this offering by $ million. Such increase (decrease) in net proceeds will correspondingly increase (decrease) the amount of borrowings under our Dollar Term Loan Facility we intend to repay and/or the amount used for working capital and general corporate purposes, which may include an increase (decrease) in the repayment of other indebtedness under the Credit Agreement.

Conflicts of Interest

Affiliates of Carlyle beneficially own in excess of 10% of our issued and outstanding common stock. Because TCG Capital Markets L.L.C., an affiliate of Carlyle, is an underwriter, this offering is being made in compliance with the requirements of Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as TCG Capital Markets L.L.C. is not primarily responsible for managing this offering. TCG Capital Markets L.L.C. will not confirm sales of the securities to any account over which it exercises discretionary authority without the specific written approval of the account holder. See “Underwriting (Conflicts of Interest).”

Risk factors

See “Risk factors” and the other information included in this prospectus for a discussion of the factors you should consider carefully before deciding to invest in our ordinary shares.

Dividend policy

We currently do not intend to declare any dividends on our ordinary shares in the foreseeable future. Our ability to pay dividends on our ordinary shares may be limited by the covenants contained in the agreements governing the Senior Notes and the Senior Secured Credit Facilities. See “Dividend policy.”

Proposed stock exchange symbol

“OCDx.”

Except as otherwise indicated, all information in this prospectus:

•

assumes the effectiveness, at the time of this offering, of our articles of association, the form of which is filed as an exhibit to the Registration Statement of which this prospectus is a part;

•

assumes the consummation of the Reorganization Transactions;

•

assumes no exercise by the underwriters of their option to purchase up to additional ordinary shares from us;

•

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

•

does not reflect ordinary shares issuable upon the exercise of options outstanding as of , 2021 with a weighted average exercise price of $ per ordinary share; and

•

does not reflect ordinary shares available for future issuance under our new Incentive Award Plan (the “2021 Incentive Award Plan”), which we intend to adopt in connection with this offering.

Summary consolidated financial data

The following tables summarize the consolidated financial data of Bermuda Holdco for the periods and dates indicated. The summary historical consolidated financial data as of and for each of the fiscal years ended December 29, 2019, December 30, 2018, December 31, 2017, January 1, 2017 and January 3, 2016 have been prepared in accordance with GAAP. The balance sheet data as of September 27, 2020 and the statement of operations and cash flow data for the nine months ended September 27, 2020 and September 29, 2019 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The statement of operations and cash flow data for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The statement of operations and cash flow data for the years ended January 1, 2017 and January 3, 2016 have been derived from our audited consolidated financial statements not included in this prospectus. In the opinion of management, the unaudited financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of such financial data.

Our historical financial data is not necessarily indicative of our future performance. The summary consolidated financial data set forth below should be read in conjunction with “Risk factors,” “Capitalization,” “Dilution,” “Selected consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our unaudited consolidated financial statements and audited consolidated financial statements included elsewhere in this prospectus.



	Fiscal nine months ended				Fiscal year ended
($ in millions, except per share data)	September 27, 2020		September 29, 2019		December 29, 2019		December 30, 2018		December 31, 2017		January 1, 2017		January 3, 2016
	(Unaudited)

Statement of operations data:
Net revenue	$	1,249.6	$	1,327.8	$	1,801.5	$	1,787.3	$	1,781.7	$	1,695.6	$	1,543.4
Cost of revenue, excluding amortization of intangible assets		650.2		684.0		922.4		930.5		897.7		906.3		842.2

Gross profit		599.4		643.8		879.1		856.8		884.0		789.3		701.2


Operating expenses:
Selling, marketing and administrative expenses		347.9		379.5		515.1		491.6		499.8		531.5		484.7
Research and development expense		82.1		73.7		98.0		98.7		96.4		99.9		107.1
Amortization of intangible assets		98.7		98.7		131.7		128.8		162.0		159.6		154.5
Intangible asset impairment charge		—		—		—		—		11.0		—		—
Gain on bargain purchase of Day 2 Countries		—		—		—		—		—		1.0		(32.5	)
Other operating expense, net		22.8		36.7		48.8		71.2		79.5		53.3		33.7

Total operating expenses		551.5		588.6		793.6		790.3		848.7		845.3		747.5



	Fiscal nine months ended						Fiscal year ended
($ in millions, except per share data)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017			January 3, 2016
	(Unaudited)
Income (loss) from operations		47.9			55.2			85.5			66.5			35.3			(56.0	)		(46.3	)

Other expense (income):
Interest expense, net		148.6			177.7			231.4			235.6			239.8			216.9			210.8
Tax indemnification expense (income)		11.6			31.4			29.2			(13.1	)		(124.1	)		5.5			(1.3	)
Other expense (income), net		61.1			34.5			5.7			61.6			(66.1	)		109.3			61.1

Total other expense		221.3			243.6			266.3			284.1			49.6			331.7			270.6

Loss before (benefit from) provision for income taxes		(173.4	)		(188.4	)		(180.8	)		(217.6	)		(14.3	)		(387.7	)		(316.9	)
(Benefit from) provision for income taxes		(2.4	)		(29.9	)		(23.9	)		31.2			102.0			3.0			13.7

Net loss	$	(171.0	)	$	(158.5	)	$	(156.9	)	$	(248.8	)	$	(116.3	)	$	(390.7	)	$	(330.6	)


Per share data:
Basic and diluted net loss per share attributable to common stockholders	$	(1.86	)	$	(1.73	)	$	(1.72	)	$	(2.73	)	$	(1.28	)	$	(4.31	)	$	(3.65	)
Basic and diluted weighted-average common shares outstanding		91.9			91.4			91.3			91.0			90.9			90.6			90.5



	Fiscal nine months ended						Fiscal year ended
($ in millions)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017			January 3, 2016
	(Unaudited)

Cash flow data:

Net cash (used in) provided by:
Operating activities	$	(48.6	)	$	97.0		$	143.0		$	69.6		$	68.0		$	(59.9	)	$	(46.5	)
Investing activities		(27.5	)		(47.5	)		(68.5	)		(87.1	)		(118.0	)		(187.4	)		(31.4	)
Financing activities		71.3			(51.9	)		(64.4	)		(8.2	)		84.9			159.0			0.9
Cash paid for interest		155.5			120.0			189.7			218.8			222.3			201.8			211.3
Cash paid for income taxes, net		13.7			6.0			8.4			13.4			9.1			20.6			15.9



	As of
($ in millions)	September 27, 2020			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017			January 3, 2016
	(Unaudited)

Consolidated balance sheet data:
Cash and cash equivalents	$	68.6		$	72.0		$	56.4		$	93.3		$	60.8		$	152.7
Total assets		3,334.6			3,589.2			3,687.4			3,936.8			3,865.7			4,230.8
Working capital(1)		234.7			138.7			188.8			234.0			79.0			278.0
Total liabilities		4,361.6			4,402.0			4,342.1			4,353.5			4,195.4			4,169.3
Accumulated deficit		(1,876.6	)		(1,705.6	)		(1,548.9	)		(1,312.0	)		(1,195.7	)		(805.0	)
Total stockholders’ (deficit) equity		(1,027.0	)		(812.8	)		(654.7	)		(416.7	)		(329.7	)		61.5



	Fiscal nine months ended				Fiscal year ended
($ in millions)	September 27, 2020		September 29, 2019		December 29, 2019		December 30, 2018		December 31, 2017		January 1, 2017
	(Unaudited)

Other financial and operating data
Net revenue—Clinical Laboratories	$	819.2	$	845.5	$	1,142.3	$	1,102.5	$	1,097.9	$	1,008.5
Net revenue—Transfusion Medicine		414.5		439.6		598.0		616.1		598.7		611.0
Core revenue(2)		1,233.7		1,285.1		1,740.3		1,718.6		1,696.6		1,619.5
Core revenue growth rate(2)		(4.0)%		0.8%		1.3%		1.3%		4.8%		10.7%
Core revenue constant currency growth rate(2)(3)		(2.7)%		2.9%		2.9%		1.0%		4.8%		N/A
Adjusted EBITDA(4)(5)		322.4		348.4		477.5		467.8		477.6		445.5
Adjusted EBITDA margin(4)(5)(6)		25.8%		26.2%		26.5%		26.2%		26.8%		26.3%
Adjusted Net Income(4)(5)		22.1		12.6		32.7		6.7		39.9		N/A

(1)

We define working capital as current assets less current liabilities. Refer to our consolidated financial statements included elsewhere in this prospectus for further details regarding our current assets and current liabilities.

(2)

Core revenue refers collectively to revenue generated in our Clinical Laboratories and our Transfusion Medicine lines of business which historically make up more than 95% of our net revenue.

(3)

When we use the term “constant currency,” it means that we have translated local currency revenues for all reporting periods into U.S. dollars using the same comparable foreign currency exchange rates. This additional non-GAAP financial information is not meant to be considered in isolation from or as substitute for financial information prepared in accordance with GAAP. The following table reconciles core revenue to core revenue constant currency growth rate for the periods presented:



	Fiscal nine months ended				Fiscal year ended
($ in millions)	September 27, 2020(b)		September 29, 2019(b)		December 29, 2019(b)		December 30, 2018			December 31, 2017(a)
	(Unaudited)
Core revenue		1,233.7		1,285.1		1,740.3		1,718.6			1,696.6
Foreign currency translation		14.9		(1.7)		0.2		(27.2	)		(21.7)

Core revenue constant currency		1,248.6		1,283.4		1,740.5		1,691.4			1,674.9
Core revenue constant currency growth rate		(2.7)%		2.9%		2.9%		1.0%			4.8%

(a)

Core revenue and Core revenue constant currency does not include revenue from Day 2 Countries (as defined herein) prior to their respective acquisition dates.

(b)

Core revenue constant currency by quarter for fiscal 2019 and 2020 is as follows:



	Fiscal three months ended
($ in millions)	September 27, 2020		June 28, 2020		March 29, 2020		December 29, 2019		September 29, 2019		June 30, 2019		March 31, 2019(i)
	(Unaudited)
Core revenue constant currency	$	446.7	$	393.4	$	408.5	$	457.1	$	437.5	$	440.9	$	405.0
Less: Local HCV		3.3		14.4		2.7		5.9		9.8		9.4		17.8
Core revenue constant currency (excl. local HCV)		443.4		379.0		405.8		451.2		427.7		431.5		387.2
Core revenue constant currency annual growth rate		2.1%		(10.8)%		0.9%		2.9%		5.5%		3.7%		(0.5)%
Core revenue constant currency annual growth rate (excl. local HCV)		3.7%		(12.2)%		4.8%		4.3%		5.8%		3.8%		(3.0)%

(i)

During the fiscal three months ended March 31, 2019 we signed a new supply agreement in Japan related to our HCV business. As a result of the new supply agreement, we recognized increased revenue during the fiscal three months ended March 31, 2019 and September 29, 2019. Revenue recognition is based on the timing of periodic shipments which may create unusual year-over-year variances in certain quarters.

(4)

Adjusted EBITDA consists of net loss before interest expense, net, provision for (benefit from) income taxes and depreciation and amortization and eliminates (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net loss that we do not consider indicative of our ongoing operating performance. Management EBITDA consists of Adjusted EBITDA plus certain other management adjustments and is the basis we use for assessing the profitability of our geographic-based reportable segments. Additionally, Management EBITDA is utilized as a basis for calculating certain management incentive compensation programs. Adjusted Net Income consists of net loss before amortization and the elimination of (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net loss that we do not consider indicative of our ongoing operating performance. In the case of Adjusted EBITDA and Adjusted Net Income, we believe that making such adjustments provides management and investors meaningful information to understand our operating performance and ability to analyze financial and business trends on a period-to-period basis.

(5)

Adjusted EBITDA, Management EBITDA, Adjusted Net Income and Core revenue constant currency growth rate are not calculated or presented in accordance with GAAP and other companies in our industry may calculate Adjusted EBITDA, Management EBITDA, Adjusted Net Income and Core revenue constant currency growth rate differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these items in isolation, or as a substitute for analysis of our results as reported under GAAP. Adjusted EBITDA, Management EBITDA and Adjusted Net Income should not be considered as measures of discretionary cash available to us to invest in the growth of our business. In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to have been inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of Adjusted EBITDA, Management EBITDA and Adjusted Net Income should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. For additional information regarding, Adjusted EBITDA, Management EBITDA, Adjusted Net Income and Core revenue constant currency growth rate and our use and presentation of those measures and the related risks, see “Use of non-GAAP financial measures.” For more information about Management EBITDA, see “Management’s discussion and analysis of financial condition and results of operations.”

Adjusted Net Income is not available for the fiscal year ended January 1, 2017.

The following tables reconcile net loss to Adjusted EBITDA, Management EBITDA and Adjusted Net Income for the periods presented:



	Fiscal nine months ended						Fiscal year ended
($ in millions)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017
Net loss	$	(171.0	)	$	(158.5	)	$	(156.9	)	$	(248.8	)	$	(116.3	)	$	(390.7	)
Interest expense, net		148.6			177.7			231.4			235.6			239.8			216.9
Provision for (benefit from) income taxes		(2.4	)		(29.9	)		(23.9	)		31.2			102.0			3.0
Depreciation and amortization		239.6			245.2			327.5			332.2			333.3			302.4
Unrealized foreign currency exchange losses (gains)(a)		46.0			15.3			(19.6	)		46.5			(58.8	)		116.1
Restructuring and severance-related costs(b)		9.3			23.5			36.0			38.3			51.5			148.0
Debt refinancing costs and loss on extinguishment of debt		12.6			—			—			20.6			2.0			—
Stock-based compensation(c)		6.2			16.2			18.6			5.9			4.4			5.1
Tax indemnification expense (income), net(d)		11.6			31.4			29.2			(13.1	)		(124.1	)		5.5
Quotient upfront payment(e)		7.5			—			—			—			—			—
Impairment of equity investment		—			—			—			—			20.2			—
Intangible asset impairment charge		—			—			—			—			11.0			—
Impact of acquisition accounting and acquisition-related costs		—			—			—			—			2.4			14.1
Other adjustments(f)		14.4			27.5			35.2			19.4			10.2			25.1

Adjusted EBITDA		322.4			348.4			477.5			467.8			477.6			445.5
Management adjustments and realized foreign exchange losses (gains)(g)		44.3			13.2			25.1			17.7			9.4			(13.5)
Management EBITDA	$	366.7		$	361.6		$	502.6		$	485.5		$	487.0		$	432.0


	Fiscal nine months ended						Fiscal year ended
($ in millions)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017
Net loss	$	(171.0	)	$	(158.5	)	$	(156.9	)	$	(248.8	)	$	(116.3	)
Intangible amortization		98.7			98.7			131.7			128.8			162.0
Unrealized foreign currency exchange losses (gains)(a)		46.0			15.3			(19.6	)		46.5			(58.8	)
Restructuring and severance-related costs(b)		9.3			23.5			36.0			38.3			51.5
Debt refinancing costs and loss on extinguishment of debt		12.6			—			—			20.6			2.0
Stock-based compensation(c)		6.2			16.2			18.6			5.9			4.4
Impairment of equity investment		—			—			—			—			20.2
Intangible asset impairment charge		—			—			—			—			11.0
Quotient upfront payment(e)		7.5			—			—			—			—
Impact of acquisition accounting and acquisition-related costs		—			—			—			—			2.4
Other adjustments(f)		14.4			27.5			35.2			19.4			10.2

Total adjustments		194.7			181.2			201.9			259.5			204.9
Tax effect of reconciling items(h)		(6.3)			(6.2)			(10.2)			(9.0)			(14.2)
Discrete tax items (i)		4.7			(3.9)			(2.1)			5.0			(34.5)

Adjusted Net Income	$	22.1		$	12.6		$	32.7		$	6.7		$	39.9

(a)

Represents noncash unrealized gains and losses resulting from the remeasurement of transactions denominated in foreign currencies primarily related to intercompany loans.

(b)

Represents restructuring and severance costs related to several discrete initiatives intended to strengthen operational performance and to support building our commercial capabilities including a project announced in fiscal year ended January 3, 2016 to outsource equipment manufacturing operations in Rochester, New York and a project announced in fiscal year ended December 30, 2018 to transfer certain production lines among facilities.

(c)

Represents stock based compensation expense including the $14.7 million modification impact of a 2019 amendment to our stock option agreement, where performance-based options that did not previously vest based on applicable minimum earnings targets will vest over a specified future period of time.

(d)

Represents the reversal of the impact of tax indemnification income with Johnson & Johnson, primarily related to certain state tax matters, for which we recorded a tax reserve and indemnification. These state tax matters primarily include the taxability of the sale of our assets on the Acquisition date from Johnson & Johnson. Additionally, during the second quarter ended June 30, 2019, we recorded indemnification expense related to the release of certain tax reserves upon the settlement of certain state tax matters that were settled for an amount lower than what we had estimated.

(e)

Represents an initial, non-refundable upfront payment made to Quotient Ltd. (“Quotient”), one of our partners and suppliers. See note 11 to our unaudited consolidated financial statements and note 14 to our audited consolidated financial statements for further discussion of the Quotient relationship.

(f)

Represents miscellaneous other adjustments related to unusual items impacting our results including the elimination of management fees, non-cash derivative mark-to-market (gain) loss and certain asset write-downs. See information below:



	Fiscal nine months ended					Fiscal year ended
($ in millions)	September 27, 2020			September 29, 2019		December 29, 2019		December 30, 2018		December 31, 2017		January 1, 2017
Principal Shareholder management fee	$	2.3		$	2.3	$	3.1	$	3.0	$	3.1	$	3.2
Noncash losses on property, plant and equipment disposals		0.5			0.9		2.5		2.9		2.1		3.7
EU Medical device regulation transition costs		3.3			2.1		3.2		0.6		—		—
Derivative mark-to-market (gain) loss		(0.7	)		14.8		16.0		2.7		—		—
Other		9.0			7.4		10.4		10.2		5.0		18.2

Total Other Adjustments	$	14.4		$	27.5	$	35.2	$	19.4	$	10.2	$	25.1

(g)

Represents realized foreign currency losses (gains), impact from adoption of accounting standards, costs in connection with COVID-19 and other immaterial management adjustments.

(h)

Non-GAAP adjustments were tax effected based on the nature of the expense and related jurisdiction, many of which are impacted by valuation allowances resulting in little to no tax impact.

(i)

We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, and other unusual items not related to current operating results.

(6)

Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net revenue.

Risk factors

Investing in our ordinary shares involves a high degree of risk. You should carefully consider the following risk factors together with other information in this prospectus, including our consolidated financial statements and related notes included elsewhere in this prospectus, before deciding whether to invest in our ordinary shares. The occurrence of any of the events described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the trading price of our ordinary shares may decline and you may lose all or part of your investment.

Risks related to our business, operations and growth strategies

We have significant international sales and operations and face risks related to health epidemics, including the ongoing global pandemic related to a novel coronavirus (“COVID-19”). The COVID-19 pandemic has significantly and adversely affected our consolidated results of operations, financial position and cash flows, and may continue to do so.

Any significant outbreak of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse effect on our business, financial condition and results of operations. For example, in March 2020, the World Health Organization characterized a novel strain of coronavirus (COVID-19) as a pandemic amidst a rising number of confirmed cases and thousands of deaths worldwide. Many countries, including the United States, have taken steps to restrict travel and temporarily close businesses, schools and other public gathering spaces, and almost all states in the United States have previously or currently issued orders and directives requiring residents to stay in their homes. It remains unclear how long such measures will remain in place and when the COVID-19 pandemic will abate. The global COVID-19 pandemic has resulted in significant governmental measures being implemented to control the spread of the virus, including restrictions on manufacturing, shipping and the movement of employees. As a result of such restrictions, we have experienced some supply-chain disruptions and some restrictions on our ability to efficiently distribute products in the regions affected. In addition, we have seen a decline in overall testing volume and shipments to our customers, which has adversely impacted our revenues. We have also seen an increase in idle facility costs and freight and distribution costs. Any prolonged and significant supply-chain disruptions or inability to provide products in countries adversely impacted by the COVID-19 pandemic would continue to impact our revenues in the affected region, increase our costs and negatively affect our business relationships and reputation, as well as our operating results. Although we started to ship COVID-19 antibody tests during the fiscal second quarter of 2020, the duration and level of the demand for COVID-19 antibody tests is uncertain. It is also possible that we will experience an adverse impact on collections and timing of cash receipts as a result of the impact of the COVID-19 pandemic. We could experience significant fluctuations in our cash flows from period to period during the pandemic and in the periods that follow the end of the COVID-19 pandemic.

We maintain a commercial presence in more than 130 countries and territories, with a direct presence in 35 countries, including in countries that have been severely impacted by the COVID-19 pandemic. Government imposed travel restrictions and local statutory quarantines, as well as potential impact to personnel, to the extent our employees become ill, may result in direct operational and administrative disruptions. We may also face increased risks of disputes with our business partners, litigation and governmental and regulatory scrutiny as a result of the effects of COVID-19. The COVID-19 pandemic has resulted, and future significant outbreaks of contagious diseases in the human population could result, in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and services and likely impact our operating results.

Health regulatory agencies globally may also experience disruptions in their operations as a result of the COVID-19 pandemic. The U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies may have slower response times or be under-resourced and, as a result, review and approval of product registrations may be materially delayed. For example, as health authorities have redeployed resources to focus on the management of the pandemic, there is a reduction in available capacity for the review and approval of other less-critical product submissions. As a result, manufacturers may incur a delay in obtaining product registrations.

The extent to which the COVID-19 pandemic, in particular, impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity and duration of the COVID-19 pandemic and the actions to contain it or treat its impact, among others.

To the extent the COVID-19 pandemic adversely affects our business and financial results or those of our customers, it may also have the effect of heightening many of the other risks described in this “Risk factors” section. The ultimate impact of the COVID-19 outbreak on our business, financial condition and results of operations depends on many factors, including those discussed above, that are not within our control.

We face significant competition, and our failure to compete effectively could adversely affect our sales and results of operations.

The markets in which we and our competitors operate are rapidly evolving, and developments are expected to continue at a rapid pace. Competition in these markets is intense and expected to increase as new products, services and technologies become available and as new competitors enter the market. We face competition from diagnostics divisions of large multinational healthcare companies and conglomerates. Some of our existing or potential competitors have substantially greater research and development capabilities, clinical, manufacturing, regulatory and marketing experience and financial and managerial resources than we do. Some of these competitors are divisions or subsidiaries of corporations with substantial resources. Our sales and results of operations may be adversely affected by:

•

customers’ perceptions of the comparative quality of our competitors’ products or services;

•

our ability to manufacture, in a cost-effective way, sufficient quantities of our products to meet customer demand;

•

the ability of our competitors to develop products, services and technologies that are more effective than ours or that render ours obsolete;

•

our competitors’ ability to obtain patent protection or other intellectual property rights that would prevent us from offering competing products or services;

•

the ability of our competitors to obtain regulatory approval for the commercialization of products or services more rapidly or effectively than we do; and

•

competitive pricing by our competitors.

We expect competition to intensify in the future as more companies enter our markets. Increased competition and potential new entrants in these industries may result in lower prices and volumes, higher costs for resources and lower profitability for us. Moreover, competitive and regulatory conditions in many markets in which we and our competitors operate restrict our ability to fully recover through price increases, higher costs of acquired goods and services resulting from inflation and other drivers of cost increases. We may not be able to supply customers with products and services that they deem superior and at competitive prices, and we may

lose business to our competitors. We also face risks related to customers finding alternative methods for testing, which could result in lower demand for our products. If we are unable to compete successfully in these highly competitive industries, it could have a material effect on our business, financial condition and results of operations.

We may experience difficulties that delay or prevent our development, introduction or marketing of new or enhanced products or services.

Our success depends on our ability to effectively introduce new and competitive products and services. The development of new or enhanced products or services is a complex, costly and uncertain process and is becoming increasingly complex and uncertain in the United States. Furthermore, developing and manufacturing new products and services requires us to anticipate customers’ and patients’ needs and emerging technology trends accurately. We may experience research and development, manufacturing, regulatory, marketing and other difficulties that could delay or prevent our introduction of new or enhanced products and services, including the timelines for the introduction of new products as described in this prospectus. The research and development process in the healthcare industry generally takes a significant amount of time from design stage to product launch. This process is conducted in various stages, and each stage presents the risk that we will not achieve our goals. In addition, innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursements. In the event of such failure, we may have to abandon a product in which we have invested substantial resources. We cannot be certain that:

•

any of our products or services under development will prove to be safe and effective in clinical trials;

•

we will be able to obtain, in a timely manner or at all, necessary regulatory approvals;

•

the products and services we develop can be manufactured or provided at acceptable cost and with appropriate quality; or

•

these products and services, if and when approved, can be successfully marketed.

These factors, as well as manufacturing or distribution problems or other factors beyond our control, could delay the launch of new products or services. Any delay in the development, approval, production, marketing or distribution of a new product or service could materially and adversely affect our competitive position, our branding and our results of operations. Additionally, customers could adopt alternative technologies, instead of our technology, which could result in lower demand for our products.

Global market, economic and political conditions may adversely affect our operations and performance.

The growth of our business and demand for our products is affected by changes in the health of the overall global economy and, in particular, of the healthcare industry. Demand for our products and services could change more dramatically than in previous years based on activity, funding reimbursement constraints and support levels from governments, universities, hospitals and the private industry, including laboratories. Our global business is adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending, increases in unemployment rates and budgeting constraints of governmental entities. Disruptions in the United States, Europe or in other economies, or weakening of emerging markets, including China, could adversely affect our sales, profitability and/or liquidity.

We cannot assure you that there will not be a future deterioration in financial markets or confidence in major economies. These economic developments affect businesses such as ours in a number of ways. A tightening of credit in financial markets could adversely affect the ability of our customers and suppliers to obtain financing for significant purchases and operations, could result in a decrease in or cancellation of orders for our products

and services and could impact the ability of our customers to make payments. Similarly, a tightening of credit may adversely affect our supplier base and increase the potential for one or more of our suppliers to experience financial distress or bankruptcy.

Our financial position, results of operations and cash flows could be materially adversely affected by difficult conditions and volatility in the capital, credit and commodities markets. Difficult conditions in these markets or in the overall economy could affect our business in a number of ways. For example:

•

under such conditions, we cannot assure you that borrowings under our Revolving Credit Facility will be available or sufficient, and in such a case, we may not be able to obtain additional financing on reasonable terms or at all; and

•

in order to respond to market conditions, we may need to seek waivers of various provisions in our Credit Agreement, and we might not be able to obtain such waivers on reasonable terms, if at all.

Our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent.

Although we believe our cash, cash equivalents and short-term investments, as well as future cash generated from operations and availability under our Revolving Credit Facility, provide adequate resources to fund ongoing debt service and working capital requirements, capital expenditures and transition costs for the foreseeable future, we may need to seek additional financing to compete effectively.

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

•

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

•

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

•

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

•

place us at a competitive disadvantage.

We may engage in acquisitions and divestitures, and may encounter difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations; therefore, we may not realize the anticipated benefits of these acquisitions and divestitures.

We may seek to grow through strategic acquisitions. Our due diligence reviews of our acquisition targets may not identify all of the material issues necessary to accurately estimate the cost or potential loss contingencies with respect to a particular transaction, including potential exposure to regulatory sanctions resulting from an acquisition target’s previous activities as well as potential vulnerability to cybersecurity risks. We may incur unanticipated costs or expenses, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, litigation and other liabilities. We also may encounter difficulties in integrating acquisitions with our operations, applying our internal controls processes to these acquisitions, retaining key technical and management personnel, complying with regulatory requirements or in managing strategic investments. Additionally, we may not achieve the benefits we anticipate when we first enter into a transaction in the amount or timeframe anticipated. Any of the foregoing could adversely affect our business and results of operations. In addition, accounting requirements relating to business combinations, including the requirement to expense certain acquisition costs as incurred, may cause us to experience greater earnings volatility and generally lower earnings during periods in which we acquire new businesses. Furthermore, we may make strategic divestitures from time to time. These divestitures may result in continued financial involvement in the divested businesses, such as through guarantees, indemnity obligations or other financial arrangements,

following those transactions. Under these arrangements, nonperformance by those divested businesses could result in financial obligations imposed upon us and could affect our future financial results.

It may be difficult for us to implement our strategies for improving growth.

We plan to continue expanding our commercial capabilities and scope of our business, both domestically and internationally, while maintaining our commercial operations and administrative activities. For example, we intend to pursue the following growth strategies: (i) maximize LCV to produce and maintain a growing and recurring, high margin, durable financial profile; (ii) provide an unparalleled customer experience to retain and attract existing and new customers; (iii) leverage our global footprint to deliver innovative solutions to meet our customers’ needs in both developed and emerging markets; (iv) create meaningful product innovation through menu expansion, development of novel instruments and enhancement of automation and informatics; (v) continue to identify operating efficiencies to allow for reinvestment in growth and improve margins; and (vi) pursue business development opportunities, partnerships and strategic acquisitions to enter adjacencies or expand our current business units. However, our ability to manage our business and conduct our global operations while also pursuing the aforementioned growth strategies requires considerable management attention and resources. Furthermore, it is subject to the challenges of supporting a growing business on a global basis.

Our failure to implement these strategies in a cost-effective and timely manner could have an adverse effect on our business, results of operations and financial condition.

We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.

Under the acquisition method of accounting for business combinations, the net assets acquired are recorded at their fair value as of the date of the acquisition, with any excess purchase price recorded as goodwill. The Acquisition resulted in significant balances of goodwill and identified intangible assets. As of December 29, 2019, the balance of goodwill and identified intangible assets was $567.3 million and $1,134.5 million, respectively. We are required to test goodwill and any other intangible asset with an indefinite life for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment. We are also required to evaluate amortizable intangible assets and fixed assets for impairment if there are indicators of a possible impairment.

There is significant judgment required in the analysis of a potential impairment of goodwill, identified intangible assets and fixed assets. If, as a result of a general economic slowdown, deterioration in one or more of the markets in which we operate or impairment in our financial performance and/or future outlook, the estimated fair value of our long-lived assets decreases, we may determine that one or more of our long-lived assets is impaired. An impairment charge would be determined based on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on our results of operations and financial position.

We may be unable to achieve some or all of the operational cost improvements and other benefits that we expect to realize.

We estimate that we will be able to achieve approximately $45 million of aggregate cost savings in fiscal years 2020 and 2021 as a result of certain initiatives, particularly by pursuing a number of operational cost improvements associated with procurement, manufacturing, a field service organization, distribution and logistics, quality and regulatory and other general and administrative, not including certain related one-time costs necessary to achieve such operational cost improvements, which may be material. We have announced several initiatives to strengthen our operational performance and have begun to execute certain of these

initiatives. However, we cannot be certain that we will be able to successfully realize all the expected benefits of these initiatives. A variety of risks could cause us not to realize some or all of the expected benefits. These risks include, among others, higher than expected standalone overhead expenses, delays in the anticipated timing of activities related to such initiatives, increased difficulty and cost in establishing ourselves as a standalone business and the incurrence of other unexpected costs associated with operating the business. Moreover, our continued implementation of these initiatives may disrupt our operations and performance and our estimated cost savings from these initiatives are based on several assumptions that may prove to be inaccurate and, as a result, we cannot assure you that we will realize these cost savings. If, for any reason, the benefits we realize are less than our estimates or our improvement initiatives adversely affect our operations or cost more or take longer to implement than we project, or if our assumptions prove inaccurate, our results of operations may be materially adversely affected.

Our collaboration arrangements may not operate according to our business strategy if our collaboration arrangement partners fail to fulfill their obligations.

As part of our business, we have entered into collaboration arrangements with other companies, including the Joint Business with Grifols, which is structured as a license, research and supply agreement, and we may enter into additional collaboration arrangements in the future.

The nature of a collaboration arrangement requires us to share control over significant decisions with unaffiliated third parties. Since we may not exercise exclusive control over our current or future collaboration arrangements, we may not be able to require our collaboration arrangement partners to take actions that we believe are necessary to implement our business strategy. Additionally, differences in views among collaboration arrangement partners may result in delayed decisions or failures to agree on major issues. Disputes between us and our collaboration arrangement partners could also result in litigation, which can be expensive and time-consuming. If these differences cause our collaboration arrangements to deviate from our business strategy, our results of operations could be materially adversely affected.

If we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market acceptance of our products may decrease and we may be exposed to liability.

The manufacturing and marketing of professional and consumer diagnostics involve an inherent risk of product liability claims. For example, a defect in one of our diagnostic products could lead to a false positive or false negative result, affecting the eventual diagnosis. Our product development and production are extremely complex and could expose our products to defects. Our Immunohematology business in particular is subject to the risk of product liability claims, as even the slightest inaccuracies in a specimen’s analysis can lead to critical outcomes in the life of a patient, thereby leaving little to no room for error in the precision and accuracy of such testing. Manufacturing and design defects could lead to recalls (either voluntary or required by the FDA or other government authorities) and could result in the removal of a product from the market. Depending on the corrective action we take to redress a product’s deficiencies, we may be required to obtain new clearances or approvals before we may market or distribute the corrected device. Defects in our products could also harm our reputation, lead to negative publicity and decrease sales of our products, and we could also face additional regulatory enforcement action, including FDA warning letters, untitled letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.

In addition, our marketing of monitoring services may cause us to be subjected to various product liability or other claims, including, among others, claims that inaccurate monitoring results lead to injury or death, or, in the case of our toxicology monitoring services, the imposition of criminal sanctions. Any product liability or other claim brought against us, regardless of merit, could be costly to defend and could result in an increase to our insurance premiums. If we are held liable for a claim, that claim could materially affect our business and financial condition.

A decrease in the number of surgical procedures performed, and the resulting decrease in blood demand, could negatively impact our financial results.

Our Immunohematology and Donor Screening products are frequently used in connection with the testing of blood prior to transfusion, which is typically associated with surgical procedures. A decrease in the number of surgeries being performed in the markets in which we operate could result in decreased demand for blood for transfusions, which would in turn result in lower testing volumes and, therefore, decreased sales of our products. For example, we believe the market in developed countries has, at times, seen a decrease in the number of surgical procedures and lower demand for blood in recent years. A decrease in the number of surgical procedures performed could result from a variety of factors, such as fewer elective procedures and the improved efficacy and popularity of non-surgical treatments. In addition to lower surgical volumes, blood demand could also be negatively affected by more efficient blood utilization by hospitals. Blood is a large expense for hospital laboratories and pressure on hospital budgets due to macroeconomic factors and healthcare reform could force changes in the ways in which blood is used. Fewer surgeries and lower blood demand could negatively impact our revenue, profitability and cash flows.

Our reagent rental model reduces our cash flows during the initial part of the applicable contract, which causes our cash flows to fluctuate from quarter to quarter.

Leases, rather than sales, of instruments under our reagent rental model have the effect of reducing cash flows during the initial part of the applicable contract as we support those commercial transactions until we are able to recover our investment over the life of the contract. The use of cash in connection with this model causes our cash flows to fluctuate from quarter to quarter and may have a negative effect on our financial condition.

Johnson & Johnson’s historical and future actions, or failure to comply with its indemnification obligations, may materially affect our business and operating results.

Although we are an independent company as a result of the Acquisition, Johnson & Johnson’s historical and future actions may still have a material impact on our business and operating results. In connection with the Acquisition, we entered into certain agreements with Johnson & Johnson, including the Acquisition Agreement and certain other transitional services agreements. In addition, Johnson & Johnson has, subject to certain exceptions and exclusions, agreed to indemnify us under the Acquisition Agreement for certain liabilities relating to historical litigation matters and divestiture agreements, tax liabilities existing at the date of the Acquisition and certain employee-related liabilities. We could incur material additional costs if Johnson & Johnson fails to meet its obligations or if we otherwise are unable to recover costs associated with such liabilities.

Risks related to our international operations

As a global business, we are subject to risks associated with our non-U.S. operations where such risks are not present in the United States.

We conduct our business on a global basis, with sales outside the United States constituting approximately 52% of our total revenue for the fiscal year ended December 29, 2019 and a significant number of employees and contractors located in foreign countries. We anticipate that international sales will continue to represent a substantial portion of our revenue and that our strategy for continued growth and profitability will entail further international expansion, particularly in emerging markets. Conducting business outside the United States subjects us to numerous risks, including:

•

lost revenue as a result of macroeconomic developments;

•

decreased liquidity resulting from longer accounts receivable collection cycles typical of foreign countries;

•

lower productivity resulting from difficulties we encounter in staffing and managing sales, support and research and development operations across many countries;

•

difficulties associated with enforcing agreements and collecting receivables through foreign legal systems;

•

disputes with third-party distributors of our products or from third parties claiming distribution rights to our products;

•

difficulties associated with navigating foreign laws and legal systems;

•

difficulties in identifying potential third-party distributors or distribution channels;

•

the imposition by foreign governments of trade barriers such as tariffs, quotas, preferential bidding and import restrictions;

•

import or export licensing requirements, both by the United States and foreign countries;

•

acts of war, terrorism, theft or other lawless conduct or other economic, social or political instability in or affecting foreign countries in which we sell our products or operate;

•

international sanctions regimes;

•

adverse effects resulting from changes in foreign regulations, rules, policies or other laws affecting sales of our products or our foreign operations;

•

tax liability resulting from international tax laws;

•

increased financial accounting and reporting burdens and complexities;

•

increased costs to comply with changes in legislative or regulatory requirements;

•

failure of laws to protect our intellectual property rights; and

•

delays in obtaining import or export licenses, transportation difficulties and delays resulting from inadequate local infrastructure.

The occurrence of any of these, or other factors over which we do not have control, could lead to reduced revenue and profitability.

Currency translation risk and currency transaction risk may adversely affect our financial condition, results of operations and cash flows.

We derive a significant portion of our revenue from outside the United States (approximately 52% for the fiscal year ended December 29, 2019), and we conduct our business and incur costs in the local currency of most countries in which we operate. Because our financial statements are presented in U.S. dollars, we must translate earnings as well as assets and liabilities into U.S. dollars at exchange rates in effect during or at the end of each reporting period, as applicable. Therefore, increases or decreases in the value of the U.S. dollar against other currencies in countries where we operate will affect our results of operations and the value of balance sheet items denominated in foreign currencies. Furthermore, many of our local businesses generate revenues and incur costs in a currency other than their functional currency, which can impact the operating results for these operations if we are unable to mitigate the impact of foreign currency fluctuations. Additionally, in order to fund the purchase price for certain assets of Ortho and the capital stock of certain other non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries. In many instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries. Where intercompany loans are not a

component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies will affect our results of operations. We cannot accurately predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates. Accordingly, our profitability could be affected by fluctuations in foreign exchange rates. Given the volatility of exchange rates, we may not be able to effectively manage our currency transaction and/or translation risks, and any volatility in currency exchange rates may have an adverse effect on our financial condition, results of operations and cash flows. We have entered into hedging agreements to address certain of our currency risks and intend to utilize local currency funding of expansions when appropriate. We do not intend to hold financial instruments for trading or speculative purposes.

New tariffs and other trade measures could adversely affect our business and financial results.

Governments sometimes impose additional taxes on certain imported products. Any such new import tariffs or restrictions, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries. For instance, the United States and China have announced import tariffs and retaliatory tariffs on certain categories of goods, including from time to time some of our reagent products sold in China. These tariffs, depending upon their ultimate scope, how they are implemented and if and when they are declared effective, could negatively impact our business by increasing our costs and by making our products less cost competitive in China. While it is not possible to predict whether or when any additional changes will occur or what form they may take, the imposition of additional tariffs by the United States could result in the adoption of additional tariffs by China and other countries, as well as further retaliatory actions by any affected country, which could negatively impact our financial performance.

The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business, which could reduce the price of our ordinary shares.

We are a multinational company with worldwide operations, including significant business operations in Europe. Following a national referendum in which a majority of voters in the United Kingdom elected to withdraw from the European Union and the enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020. On 24 December 2020, the United Kingdom and the European Commission reached an agreement on the terms of its future cooperation with the European Union (the “UK-EU Trade and Cooperation Agreement”). On 30 December 2020, the UK Parliament provided its approval of the European Union (Future Relationship) Bill. Significant political and economic uncertainty remains about whether the terms of the relationship will differ materially in practice from the terms before withdrawal.

These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings have been and may continue to be subject to increased market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which European Union laws to replace or replicate could depress economic activity and restrict our access to capital. The tax implications of the United Kingdom’s departure from the European Union are not certain as of the date of this prospectus.

Any of these factors could have a material adverse effect on our business, financial condition and results of operations and reduce the price of our ordinary shares.

Risks related to our employees, customers and suppliers

We must deliver products and services that meet customers’ needs and expectations or our business and results of operations will be adversely impacted.

Our ability to retain customers, attract new customers, grow our business and enhance our brand depends on our success in delivering products and services that meet our customers’ needs and expectations. If we are unable to deliver reliable products in a timely manner, promptly respond to and address quality issues, provide expected levels of customer service, develop and maintain cross-functional communication within our company and comply with applicable regulations and rules, our ability to deliver products that meet our customers’ needs and expectations, our competitive position, our branding and our results of operations may be adversely and materially affected. Furthermore, any improvement in the perception of the quality of our competitors’ products or services relative to the quality of our products and services could adversely and materially affect our ability to retain our customers and attract new customers. Additionally, the introduction of counterfeit products into the markets we serve may have the effect of eroding confidence in our products or in our industry as a whole.

The success of many of our products depends heavily on acceptance by directors of clinical laboratories, blood banks and hospitals, and our failure to maintain a high level of confidence in our products could adversely affect our business.

We maintain customer relationships with numerous directors of clinical laboratories, blood banks and hospitals. We believe that sales of our products depend significantly on our customers’ confidence in, and recommendations of, our products. In addition, our success depends on technicians’ acceptance and confidence in the effectiveness and ease-of-use of our products, including our new products. In order to achieve acceptance by healthcare professionals, we seek to educate the healthcare community as to the distinctive characteristics, perceived benefits, clinical efficacy and cost-effectiveness of our products compared to alternative products, including the products offered by our competitors. Acceptance of our products also requires effective training of healthcare professionals in the proper use and application of our products. Failure to effectively educate and train our technician end-users and failure to continue to develop relationships with leading healthcare professionals could result in less frequent recommendations of our products, which may adversely affect our sales and profitability.

The healthcare industry and related industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, which could adversely affect our business, financial condition and results of operations.

The healthcare industry and related industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, including the following:

•

Many of our customers, and the end-customers to whom our customers supply products, rely on government funding of and reimbursement for healthcare products and services and research activities. The PPACA, healthcare austerity measures in Europe and other potential healthcare reform changes and government austerity measures may reduce the amount of government funding or reimbursement available to customers or end-customers of our products and services and/or the volume of medical procedures using our products and services. Global economic uncertainty or deterioration can also adversely impact government funding and reimbursement.

•

The PPACA imposed a 2.3% excise tax on any entity that manufactures or imports medical devices offered for sale in the United States as well as reporting and disclosure requirements on medical device manufacturers, the impact of which is reflected in our audited financial statements included elsewhere in this prospectus.

Under the Consolidated Appropriations Act of 2016 and subsequent legislation, the excise tax was suspended as of January 1, 2016, and repealed altogether on December 20, 2019.

•

Governmental and private healthcare providers and payors around the world are increasingly utilizing managed care for the delivery of healthcare services, forming group purchasing organizations to improve their purchasing leverage and using competitive bid processes to procure healthcare products and services.

•

Health insurance premiums, co-payments and deductibles have generally increased in recent years. These increases may cause individuals to forgo health insurance, as well as medical attention. This behavior may reduce the number of lives managed by our health information solutions, including our health improvement programs.

These changes have increased tax costs and may cause participants in the healthcare industry to purchase fewer of our products and services, reduce the prices they are willing to pay for our products or services, reduce the amounts of reimbursement and funding available for our products or services from governmental agencies or third-party payors, reduce the volume of medical procedures that use our products and services and increase our compliance and other costs. In addition, we may be unable to enter into contracts with group purchasing organizations and integrated health networks on terms acceptable to us, and even if we do enter into such contracts, they may be on terms that negatively affect our current or future profitability. All of the factors described above could adversely affect our business, financial condition and results of operations.

Reductions in government funding and reimbursement to our customers could negatively impact our sales and results of operations.

Many of our customers rely on government funding and on prompt and full reimbursement by Medicare and Medicaid and equivalent programs outside of the United States. Global economic uncertainty can result in lower levels of government funding or reimbursement. A reduction in the amount or types of government funding or reimbursement that affect our customers could have a negative impact on our sales. Additionally, the PPACA, which was enacted in 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States and expanded Medicaid program eligibility and access to commercial health insurance coverage. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the PPACA, as well as efforts by the current administration to repeal or replace certain aspects of the PPACA or otherwise circumvent some of the requirements for health insurance mandated by the PPACA. Most recently, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was enacted, which, among other things, removes the penalties for not complying with the PPACA’s individual mandate to carry health insurance. On December 14, 2018, a U.S. district court judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the PPACA, and therefore, because it was repealed as part of the TCJA, the remaining provisions of the PPACA are invalid as well. This decision was subsequently appealed, and on December 18, 2019, the U.S. Court of Appeals for the Fifth Circuit affirmed the decision of the district court that the individual mandate, as amended by the TCJA, was unconstitutional. The Fifth Circuit remanded the case to the district court to consider a remedy, including to consider and explain which provisions of the PPACA are inseverable and invalid. On March 2, 2020, the U.S. Supreme Court granted the petitions for writ of certiorari to review this case. It is unclear how this litigation or other efforts to challenge, repeal or replace the PPACA will impact the PPACA and our business. There may be additional challenges and amendments to the PPACA in the future. In addition, Congress could consider subsequent legislation to replace repealed elements of the PPACA. At this time, the full effect of the PPACA and any future litigation, subsequent legislation or related regulatory actions on our business remains unclear.

Some of our customers receive Medicare reimbursement for our products under the Medicare Physician Fee Schedule, which is updated on an annual basis. The Medicare Access and CHIP Reauthorization Act of 2015

(“MACRA”) repealed the formula by which Medicare made annual physician payment adjustments and replaced the former formula with a long-term schedule of Medicare payment adjustments for physicians. MACRA extended existing payment rates under the Physician Fee Schedule through June 30, 2015, with a 0.5% payment increase for the period between July 1, 2015 and December 31, 2015, and for each calendar year thereafter through 2019. The Bipartisan Budget Act of 2018 subsequently reduced this increase in 2019 to 0.25%. After 2019, there will be a 0% annual update each year through 2025. In addition, MACRA established the Merit-Based Incentive System (“MIPS”), under which physicians may receive performance-based payment incentives and reductions, effective beginning in 2019, that are based on physicians’ performance with respect to clinical quality, resource use, clinical improvement activities and meaningful use of electronic health records. MACRA also requires CMS to provide incentive payments to physicians and other eligible professionals that participate in alternative payment models, such as accountable care organizations, that emphasize quality and value over the traditional fee-for-service model.

On January 1, 2018, CMS implemented certain provisions of the Protecting Access to Medicare Act of 2014 (“PAMA”), which made substantial changes to the way in which clinical laboratory services are paid under Medicare. Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule are required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostics laboratory tests”), private payer payment rates and volumes for their tests. Laboratories that fail to report the required payment information may be subject to substantial civil monetary penalties. CMS uses the data to calculate a weighted median payment rate for each test, which is used to establish a revised Medicare reimbursement rate. Under PAMA, the revised Medicare reimbursement rates were scheduled to apply to clinical diagnostic laboratory tests furnished on or after January 1, 2018. The revised reimbursement methodology is expected to generally result in relatively lower reimbursement under Medicare for clinical diagnostic lab tests that has been historically available. Any reduction to payment rates resulting from the new methodology is limited to 10% per test per year in 2018 through 2020, and to 15% per test per year in 2021 through 2023. For clinical diagnostic laboratory tests that are assigned a new or substantially revised Healthcare Common Procedure Coding System (“HCPCS”) code, initial payment rates for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests will be assigned by the cross-walk or gap-fill methodology. Initial payment rates for new advanced diagnostic laboratory tests will be based on the actual list charge for the laboratory test. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, amended the timeline for reporting private payer payment rates and delayed by one year the payment reductions scheduled for 2021.

In addition to the CARES Act, Congress has enacted other laws in response to the COVID-19 pandemic to provide financial relief to healthcare providers and suppliers, including diagnostic laboratories, and encourage implementation of diagnostic testing and treatment for COVID-19. For instance, the Families First Coronavirus Response Act (“FFCRA”), enacted on March 18, 2020, requires certain governmental and commercial insurance plans to provide coverage of COVID-19 diagnostic testing services without imposing cost-sharing (e.g., copays, deductibles or coinsurance) or other utilization management requirements. The CARES Act and the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCEA”), enacted on April 24, 2020, each appropriated approximately $100 billion to provide financial relief for certain healthcare providers and to expand treatment and diagnostic testing capacity for COVID-19. The CARES Act also suspended, for the period from May 1, 2020 to December 31, 2020, the 2% payment reduction created under the sequestration required by the Budget Control Act of 2011 (as amended by the American Taxpayer Relief Act of 2012), and extended the sequester by one year, through 2030.

It is unclear what impact new quality and payment programs, such as MACRA, or new pricing structures, such as those adopted under PAMA, the CARES Act, the FFCRA or the PPPHCEA, may have on our business, financial condition, results of operations or cash flows.

We rely on certain suppliers and manufacturers for raw materials, components for our products and services, and fluctuations in the availability and price of such materials, products and services may interfere with our ability to meet our customers’ needs.

For certain of our products, including finished products, we are dependent on a small number of key suppliers and manufacturers. We also depend on key suppliers for critical raw materials and components. As a result, our ability to obtain, enter into and maintain contracts with these manufacturers and suppliers is important to our business. We cannot assure you that we will be able to obtain, enter into or maintain all such contracts in the future, and difficulty in obtaining such products or raw materials could affect our ability to achieve anticipated production levels. On occasion, we have been forced to revalidate the raw materials and components of products when a supplier of critical raw materials or components terminated its contract or no longer made the materials or components available to us. Stringent requirements of the FDA and other regulatory authorities regarding the manufacture of our products may prevent us from quickly establishing additional or replacement sources for the raw materials, products, components or manufacturing services that we use, or from doing so without excessive cost. Further, our suppliers may be subject to regulation by the FDA and other regulatory authorities that could hinder their ability to produce necessary raw materials, products and components. As a result, a reduction or interruption in supply or an inability to secure alternative sources of raw materials, products, components or manufacturing services could have a material adverse effect on our business, result of operations, financial condition and cash flows. If we are unable to achieve anticipated production levels and meet our customers’ needs, our operating results could be adversely affected. In addition, our results of operations may be significantly impacted by unanticipated increases in the cost of labor, raw materials, freight, utilities and other items needed to develop, manufacture and maintain our products and operate our business. For example, we may be disadvantaged when negotiating contract terms with our suppliers, which could increase costs and reduce our margins. Suppliers may also deliver products, components or materials that do not meet specifications, preventing us from manufacturing or supplying products that meet our design specifications or customer needs.

We may not be able to recruit and retain the experienced and skilled personnel we need to compete.

Our future success depends on our ability to attract, retain, develop and motivate highly skilled personnel. We must have talented personnel to succeed and competition for senior management in our industry is intense. Our ability to meet our performance goals depends upon the personal efforts and abilities of the principal members of our senior management who provide strategic direction, develop our business, manage our operations and maintain a cohesive and stable work environment and upon their ability to work effectively as a team. We cannot assure you that we will retain or successfully recruit senior executives, or that their services will remain available to us.

Additionally, as part of their ongoing effort to maximize our performance, Carlyle and our board of directors regularly evaluate our senior management capabilities in light of, among other things, our business strategy, changes to our capital structure, developments in our industry and markets and our ongoing financial performance, and will consider, where appropriate, supplementing, changing or otherwise enhancing our senior management team and operational and financial management capabilities in order to maximize our performance. Accordingly, our organizational structure and senior management team may change in the future, which could result in a material business interruption and the incurrence of material costs, including as a result of severance or other termination payments.

We rely on qualified managers and skilled employees, such as scientists, engineers and laboratory technicians, with technical expertise in operations, scientific knowledge, engineering and quality management experience in order to operate our business successfully. From time to time, there may be a shortage of skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees. If we are unable to

attract and retain sufficient numbers of qualified individuals or our costs to do so increase significantly, our operations could be materially adversely affected. Additionally, if we were to lose a sufficient number of our research and development scientists and were unable to replace them or satisfy our needs for research and development through outsourcing, it could adversely affect our business.

Consolidation of our customer base and the formation of group purchasing organizations could materially adversely affect our sales and results of operations.

Consolidation among healthcare providers and the formation of buying groups and, with respect to our international operations, government-sponsored tendering processes, have put pressure on pricing and sales of our products, and in some instances, required payment of fees to group purchasing organizations or providing lower pricing in the tendering process. Our success in these areas depends partly on our ability to enter into contracts with integrated health networks and group purchasing organizations. If we are unable to enter into contracts with these group purchasing organizations and integrated health networks on terms acceptable to us or fail to have our pricing terms accepted in the tendering process, our sales and results of operations may be adversely affected. Even if we are able to enter into these contracts, or have our pricing terms accepted in the tendering process, they may be on terms that negatively affect our current or future profitability. Furthermore, given the average industry contract length of 5 to 7 years, if we are unable to enter into a contract with a new customer or renew a given contract with an existing customer, it may be several years before we have an opportunity to acquire or reacquire, as applicable, such customer’s business, which may have a material adverse effect on our results of operations in the interim period.

We may experience manufacturing or warehousing problems or delays due to, among other reasons, our volume and specialized processes, and any interruption in supply from certain of our contract manufacturers, suppliers of raw materials and other third party vendors, which could result in decreased revenue or increased costs.

The global supply of our products depends on the uninterrupted efficient operation of our manufacturing facilities, and the continued performance of our contract manufacturers, suppliers of raw materials and other third party vendors under our contractual arrangements. Many of our manufacturing processes are complex and involve sensitive scientific processes involving the use of unique and often proprietary antibodies and other raw materials that cannot be replicated or acquired through alternative sources without undue delay or expense. Other processes present difficult technical challenges to obtain the manufacturing yields necessary to operate profitably. In addition, our manufacturing processes may require complex and specialized equipment, which can be expensive to repair or replace with required lead times of up to a year.

The manufacturing of certain of our products is concentrated in one or more of our plants, with limited alternate facilities. Any event that negatively impacts our manufacturing facilities, our manufacturing systems or equipment, or the facilities, systems or equipment of our contract manufacturers or suppliers, could delay or suspend shipments of products or the release of new products or could result in the delivery of inferior products. Our revenue from the affected products would decline and we could incur losses until such time as we or our contract manufacturers are able to restore our or their production processes or we are able to put in place alternative contract manufacturers or suppliers. Similarly, given the specialized storage requirements for our supplies and our products, any disruption to one of our two primary warehouse facilities in Memphis, Tennessee and Strasbourg, France could result in decreased revenue or increased costs given the challenge in finding suitable alternative facilities.

We also rely on contract manufacturers to manufacture certain of our products, such as the instruments for our Transfusion Medicine and Clinical Laboratories businesses, as well as suppliers of raw materials and other third party vendors. Any change in our relationship with our contract manufacturers, suppliers of raw materials and

other third party vendors or changes to contractual terms of our agreements with any of them could adversely affect our financial condition and results of operations. Our reliance on a small number of contract manufacturers and a large number of single and sole source suppliers makes us vulnerable to possible capacity constraints, reduced control over product availability, delivery schedules and costs and reduced ability to monitor compliance with our product manufacturing specifications.

If our current contract manufacturers, suppliers of raw materials and other third party vendors were unable or unwilling to manufacture or supply our products or requirements for raw materials in required volumes and at required quality levels or renew existing terms under supply agreements, we may be required to replace such manufacturers, suppliers and vendors and we may be unable to do so in a timely or cost-effective manner, or at all. Any interruption of supply or any increase in price of the instruments or raw materials and other key products produced by such contract manufacturers or raw materials supplied by such suppliers and vendors could adversely affect our profitability.

Risks related to government regulation

If we are unable to obtain required clearances or approvals for the commercialization of our products in the United States, we would not be able to sell those products in the United States.

Our future performance depends on, among other matters, the timely receipt of necessary regulatory clearances and approvals for our products. Regulatory clearance and approval can be a lengthy, expensive and uncertain process. In addition, regulatory processes are subject to change, and new or changed regulations can result in increased costs and unanticipated delays.

In the United States, clearance or approval to commercially distribute new medical devices is received from the FDA through clearance of a Premarket Notification under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (a “510(k)”), or through approval of a Premarket Approval application (a “PMA”). Approval to commercially distribute biologics is received from the FDA through approval of a Biologics License Application (a “BLA”) and may also require state licensing for the movement of biologics products in interstate commerce. The FDA may deny 510(k) clearance because, among other reasons, it determines that our product is not substantially equivalent to another U.S. legally marketed device. The FDA may deny approval of a PMA or BLA because, among other reasons, it determines that our product is not sufficiently safe or effective. Failure to obtain FDA clearance or approval would preclude commercialization in the United States, which could materially and adversely affect our future results of operations.

Modifications or enhancements to a cleared or approved product that could significantly affect safety or effectiveness, or that constitute a major change in the intended use of the product, could require new 510(k) clearances or possibly approval of a new PMA or BLA, or a supplement to those applications. The FDA requires every manufacturer to make the determination regarding the need for a new 510(k) submission in the first instance, but the FDA may review a manufacturer’s decision not to seek a new 510(k). We have made modifications to some of our products since receipt of initial 510(k) clearance. With respect to several of these modifications, we filed new 510(k)s or PMAs; however, we determined that submission was not necessary for all of the modifications. The FDA may not agree with any of our determinations not to submit a new 510(k), PMA or PMA supplement, or BLA or BLA supplement for any modifications made to our products. If the FDA requires us to submit a new 510(k), PMA or PMA supplement, or BLA or BLA supplement for any product modification, we may be prohibited from marketing the modified products until the new submission is cleared or approved by the FDA. In that case, we may be required to recall and stop marketing our products as modified, which could require us to redesign our products, conduct clinical studies to support any modifications, and we could be subject to enforcement action.

If the results of clinical studies required to gain regulatory approval to sell our products are not available when expected, or do not demonstrate the safety and effectiveness of those products, we may be unable to sell those products.

Before we can sell certain of our products, we must conduct clinical studies intended to demonstrate that those products are safe and effective and perform as expected. The results of these clinical studies (which are experiments involving human patients having the diseases or medical conditions that the product is trying to evaluate or diagnose) are used to obtain regulatory clearance or approval from government authorities, such as the FDA. Conducting clinical studies is a complex, time-consuming and expensive process. In some cases, we may spend several years completing the necessary clinical studies.

If we fail to adequately manage our clinical studies, those clinical studies and corresponding regulatory clearances or approvals may be delayed or we may fail to gain clearance or approval for our products altogether. Even if we successfully manage our clinical studies, we may not obtain favorable results and may not obtain regulatory clearance or approval. If we are unable to market and sell our new products or are unable to obtain clearances or approvals in the timeframe needed to execute our product strategies, our business and results of operations would be materially and adversely affected.

We are subject to the regulatory approval requirements of the foreign countries in which we sell our products, and these requirements may prevent or delay us from marketing our products in those countries.

We are subject to the regulatory approval requirements for each foreign country in which we sell our products. The process for complying with these approval requirements can be lengthy and expensive. Any changes in foreign approval requirements and processes may cause us to incur additional costs or lengthen review times of our products. We may not be able to obtain foreign regulatory approvals on a timely basis, if at all, and any failure to do so may cause us to incur additional costs or prevent us from marketing our products in foreign countries, which may have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to substantial regulatory oversight, and our failure to comply with applicable regulations may result in significant costs or, in certain circumstances, the suspension or withdrawal of previously obtained clearances or approvals.

Our businesses are extensively regulated by the FDA and other federal, state and foreign regulatory agencies. These regulations impact many aspects of our operations, including development, manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, physician interaction and record-keeping.

The FDA and corresponding foreign regulatory agencies may require post-market testing and surveillance to monitor the performance of cleared or approved products or may place conditions on any product clearances or approvals that could restrict the commercial applications of those products. The discovery of problems with a product may result in restrictions on the product, including withdrawal of the product from the market. In addition, in some cases we may sell products or provide services which are reliant on the use or commercial availability of products of third parties, including medical devices or equipment, and regulatory restrictions placed upon any such third-party products could have a material adverse impact on the sales or commercial viability of our related products or services.

We are subject to routine inspection by the FDA and other agencies for compliance with the FDA’s requirements applicable to our products, including, without limitation, the Quality System Regulation and Medical Device Reporting requirements in the United States, and other applicable regulations worldwide. Our manufacturing facilities and those of our suppliers and distributors also are, or can be, subject to periodic regulatory inspections.

We are also subject to laws relating to matters such as privacy, safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with these laws and regulations. If we fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products or injunctions against our distribution of products, termination of our service agreements by our customers, disgorgement of money, operating restrictions and criminal prosecution.

Changes in applicable laws, changes in the interpretation or application of such laws, or any failure to comply with existing or future laws, regulations or standards could have a material adverse effect on our results of operations, financial condition, business and prospects. Moreover, new laws may be enacted, or regulatory agencies may impose new or enhanced standards, that would increase our costs, as well as expose us to risks associated with non-compliance. Over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products. For example, in November 2018, FDA officials announced forthcoming steps that the FDA intends to take to modernize the premarket notification pathway under Section 510(k) of the Federal Food, Drug, and Cosmetic Act. Among other things, the FDA announced that it plans to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals include plans to potentially sunset certain older devices that were used as predicates under the 510(k) clearance pathway, and to potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old. In May 2019, the FDA solicited public feedback on these proposals. These proposals have not yet been finalized or adopted, and the FDA may work with Congress to implement such proposals through legislation. Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, restrict our ability to maintain our current clearances, or otherwise create competition that may negatively affect our business.

More recently, in September 2019, the FDA finalized guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process. The FDA intends to develop and maintain a list of device types appropriate for the “safety and performance based” pathway and will continue to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as the testing methods recommended in the guidance documents, where feasible. The FDA may establish performance criteria for classes of devices for which we or our competitors seek or currently have received clearance, and it is unclear the extent to which such performance standards, if established, could impact our ability to obtain new 510(k) clearances or otherwise create competition that may negatively affect our business.

In addition, certain policies of the current administration may impact our business and industry. Namely, the current administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance and review and approval of marketing applications. If the implementation of executive actions imposes constraints on the FDA’s ability to engage in oversight and day-to-day regulatory activities in the normal course, our business may be negatively impacted.

We are subject to extensive regulatory requirements in connection with the EUAs that we have received from the FDA for our COVID-19 antibody tests. If we fail to comply with these requirements, or if the FDA otherwise determines that the conditions no longer warrant such authorization, we will be unable to market our products pursuant to this authorization and our business may be harmed.

We have received emergency use authorizations (“EUAs”) from the FDA authorizing us to market our Anti-SARS-CoV-2 IgG Antibody test, Anti-SARS-CoV-2 Total Antibody test and related calibrators and controls on our VITROS analyzers. These EUAs allow us to market and sell these products to health care professionals for the detection of certain SARS-CoV-2 antibodies to aid in identifying individuals with an adaptive immune response to SARS-CoV-2, without the need to obtain premarket clearance or approval under the FDA’s standard review pathways, for the duration of the COVID-19 public health emergency. The FDA has also established certain conditions which must be met in order to maintain authorization under these EUAs. The requirements that apply to the manufacture and sale of these products may be unclear and are subject to change.

The FDA has the authority to issue an EUA during a public health emergency if it determines that based on the totality of the scientific evidence that it is reasonable to believe that the product may be effective, that the known and potential benefits of a product outweigh the known and potential risks, that there is no adequate, approved and available alternative and if other regulatory criteria are met. These standards for marketing authorization are lower than if the FDA had reviewed our test under its traditional marketing authorization pathways, and we cannot assure you that our test would be cleared or approved under those more onerous clearance and approval standards. Moreover, the FDA’s policies regarding EUAs can change unexpectedly, and the FDA may revoke an EUA where it determines that the underlying health emergency no longer exists or warrants such authorization or if problems are identified with the authorized product. We cannot predict how long our authorization will remain in place. FDA policies regarding diagnostic tests, therapies and other products used to diagnose, treat or mitigate COVID-19 remain in flux as the FDA responds to new and evolving public health information and clinical evidence. Changes to FDA regulations or requirements could require changes to our authorized tests, necessitate additional measures or make it impractical or impossible for us to market our test. The termination of an EUA for our products could adversely impact our business, financial condition and results of operations.

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner or at all, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new medical devices and biologics or modifications to approved or cleared medical devices and biologics to be reviewed and/or cleared or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities.

Separately, in response to the COVID-19 pandemic, on March 10, 2020, the FDA announced its intention to postpone most inspections of foreign manufacturing facilities and products, and on March 18, 2020, the FDA temporarily postponed routine surveillance inspections of domestic manufacturing facilities. Subsequently, on

July 10, 2020, the FDA announced its intention to resume certain on-site inspections of domestic manufacturing facilities subject to a risk-based prioritization system. The FDA intends to use this risk-based assessment system to identify the categories of regulatory activity that can occur within a given geographic area, ranging from mission critical inspections to resumption of all regulatory activities. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

We may face business disruption and related risks resulting from President Trump’s invocation of the Defense Production Act, which could have a material adverse effect on our business.

In response to the COVID-19 pandemic, President Trump invoked the Defense Production Act, codified at 50 U.S.C. §§ 4501 et seq. (the “Defense Production Act”). Pursuant to the Defense Production Act, the federal government may, among other things, require domestic industries to provide essential goods and services needed for the national defense. While we have not experienced any impact on our business as a result of such actions, we continue to assess the potential impact that the invocation of the Defense Production Act may have on our ability to effectively conduct our business operations as planned, either as a result of becoming directly subject to the requirements of the Defense Production Act, our suppliers becoming so subject and diverting deliveries of raw materials elsewhere, or otherwise. There can be no assurance that we will not be impacted by any action taken by the federal government under the Defense Production Act, and any resulting disruption on our ability to conduct business could have a material adverse effect on our financial condition and results or operations.

We could incur costs complying with environmental and health and safety requirements, or as a result of liability for contamination or other potential environmental harm or liability caused by our operations.

Our operations and facilities are subject to various foreign, federal, state and local environmental, health and safety laws, rules, regulations and other requirements, including those governing the generation, use, manufacture, handling, transport, storage, treatment and disposal of, or exposure to, regulated materials, discharges and emissions to air and water, the cleanup of contamination and occupational health and safety matters. Noncompliance with these laws, rules, regulations and other requirements can result in fines or penalties or limitations on our operations or liability for remediation costs, as well as claims alleging personal injury, property, natural resource or environmental damages. We believe that our operations and facilities are operated in compliance in all material respects with existing environmental, health and safety requirements, including the operating permits required thereunder.

Our research and development and manufacturing processes involve the use of regulated materials subject to environmental, health and safety regulations. We may incur liability as a result of any contamination or injury arising from a release of or exposure to such regulated materials. Under some environmental laws and regulations, we could also be held responsible for costs relating to any contamination at our past or present facilities and at third-party disposal sites where we have sent wastes for treatment or disposal. Liability for contamination at contaminated sites may be imposed without regard to whether we knew of, or caused, the release or disposal of such regulated substances and, in some cases, liability may be joint or several. Any such future expenses or liability could have a negative impact on our financial condition and results of operations. The enactment of stricter laws or regulations, the stricter interpretation of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at our current or former facilities or at third-party sites where we have sent waste for treatment or disposal may require us to make additional expenditures or subject us to additional liability or claims.

In addition, our workers, properties and equipment may be exposed to potential operational hazards such as fires, process safety incidents, releases of regulated materials, malfunction of equipment, accidents and natural disasters, which could result in personal injury or loss of life, damage to or destruction of property and equipment or environmental damage, and could potentially result in a suspension of operations, harm to our reputation and the imposition of civil or criminal fines or penalties, all of which could adversely affect our business. See “Business–Health, safety and environmental.”

We are subject to healthcare regulations that could result in liability, require us to change our business practices and restrict our operations in the future.

We are subject to healthcare fraud and abuse regulation and enforcement by both the federal government and the governments of states and foreign countries in which we conduct our business. In the United States, these healthcare laws and regulations include, for example:

•

the federal Anti-Kickback Law, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. Violations of the federal Anti-Kickback Statute may result in civil monetary penalties up to $100,000 for each violation, plus up to three times the remuneration involved. Civil penalties for such conduct can further be assessed under the federal False Claims Act. Violations can also result in criminal penalties, including criminal fines of up to $100,000 and imprisonment of up to ten years. Similarly, violations can result in exclusion from participation in government healthcare programs, including Medicare and Medicaid;

•

federal false claims laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to entities like us to the extent that our interactions with customers may affect their billing or coding practices. When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; and

•

state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

If our operations are found to be in violation of any of the laws described above, similar laws of the international jurisdictions in which we operate or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs, corporate integrity agreements and the curtailment or restructuring of our operations. Any penalties, damages, fines, exclusions, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. The risk of our being found in violation of these laws is increased by the fact that many of these laws are broad and their provisions are open to a variety of interpretations. Further, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. In addition, the government or an individual acting on behalf of the government through a qui tam action may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Further, the PPACA included provisions known as the Physician Payment Sunshine Act, which require certain applicable manufacturers of drugs, biologics, devices and medical supplies for which payment is available under a federal healthcare program such as Medicare, Medicaid or the Children’s Health Insurance Program to record and annually report to the Centers for Medicare and Medicaid Services (“CMS”) any transfers of value to U.S. physicians, certain other healthcare providers and U.S. teaching hospitals (or entities or individuals at the request of, or designated by U.S. physicians or teaching hospitals). Applicable manufacturers must also disclose ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers will be required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives. Failure to submit the required information may result in civil monetary penalties for any payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission, and may result in liability under other federal laws or regulations. Manufacturers are required to collect and report data annually to CMS by the ninetieth day of each calendar year. Several states in the United States have implemented similar reporting requirements, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with healthcare professionals. These laws have imposed administrative costs and compliance burdens on us. If we are found to be in violation of any of these laws and other applicable state and country laws, we may be subject to penalties, including fines.

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

Doing business on a worldwide basis requires us to comply with the laws and regulations of the U.S. government and those of various international and sub-national jurisdictions, and our failure to successfully comply with these rules and regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (the “FCPA”), as well as anti-corruption laws of the various jurisdictions in which we operate. The FCPA and other laws prohibit us, and our officers, directors, employees and agents acting on our behalf, from corruptly offering, promising, authorizing or providing anything of value to foreign officials or entities for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. As part of our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. We are subject to the jurisdiction of various governments and regulatory agencies outside of the United States, which may bring our personnel into contact with foreign officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption. Our global operations expose us to the risk of violating, or being accused of violating, the foregoing or other anti-corruption laws, including similar anti-corruption laws, rules and regulations of the various jurisdictions in which we operate. Such violations could be punishable by criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be very expensive and disruptive. Additionally, we face a risk that our distributors and manufacturers may potentially violate the FCPA or similar laws, rules or regulations of the various jurisdictions in which we operate. Though these distributors and manufacturers are not our affiliated legal entities, such violations could expose us to FCPA liability or liabilities under similar laws of the various jurisdictions in which we operate and/or our reputation may potentially be harmed by the distributors and manufacturers’ violations and resulting sanctions and fines.

Our international operations require us to comply with anti-terrorism laws and regulations and applicable trade embargoes.

We are subject to trade and economic sanctions laws and other restrictions on international trade. The United States and other governments and their agencies impose sanctions and embargoes on certain countries, their governments and designated parties. In the United States, the economic and trade sanctions programs are principally administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). Currently, OFAC maintains comprehensive trade and economic sanctions against the following countries and territories: Cuba, Iran, Syria, North Korea and the Crimea region of Ukraine. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, which could adversely affect our business, financial condition and results of operations.

We cannot predict the nature, scope or effect of future regulatory requirements to which our international sales and manufacturing operations might be subject or the manner in which existing laws might be administered or interpreted. Future regulations could limit the countries in which some of our products may be manufactured or sold, or could restrict our access to, or increase the cost of obtaining, products from foreign sources. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

Our collection, use and disclosure of personal information, including health information, is subject to federal and state privacy and security regulations, as well as data privacy and security laws outside the United States, including in the European Economic Area (the “EEA”) and the United Kingdom, and our failure to comply with those laws and regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations (collectively referred to as “HIPAA”) as well as numerous other federal and state laws and regulations, govern the collection, dissemination, use, privacy, security, confidentiality, integrity and availability of personally identifiable information (“PII”), including protected health information (“PHI”). HIPAA applies national privacy and security standards for PHI to covered entities, including certain types of health care entities and their service providers that access PHI, known as business associates. HIPAA requires covered entities and business associates to maintain policies and procedures governing PHI that is used or disclosed, and to implement administrative, physical and technical safeguards to protect PHI, including PHI maintained, used and disclosed in electronic form. These safeguards include employee training, identifying business associates with whom covered entities need to enter into HIPAA-compliant contractual arrangements and various other measures. While we undertake substantial efforts to secure the PHI we maintain, use and disclose in electronic form, a cyber-attack or other intrusion that bypasses our information security systems causing an information security breach, loss of PHI, PII or other data subject to privacy laws or a material disruption of our operational systems could result in a material adverse impact on our business, along with potentially substantial fines and penalties. Ongoing implementation and oversight of these security measures involves significant time, effort and expense.

HIPAA requires covered entities and their business associates to report breaches of unsecured PHI to affected individuals without unreasonable delay and in no case later than 60 days after the discovery of the breach by the covered entity or its agents. Notification must also be made to the U.S. Department of Health and Human Services (“HHS”) and, in certain situations involving large breaches, to the media. The HIPAA rules created a presumption that all non-permitted uses or disclosures of unsecured PHI are breaches unless the covered entity establishes that there is a low probability the information has been compromised. A data breach affecting sensitive personal information, including health information, also could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.

HIPAA also authorizes state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA’s requirements, its standards have been used as a basis for the duty of care in state civil suits, such as those for negligence or recklessness in the handling of PHI. In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of covered entities and business associates.

In addition, many states in which we operate may impose laws that are more protective of the privacy and security of PII than HIPAA. Where these state laws are more protective than HIPAA, we may have to comply with their stricter provisions. Not only may some of these state laws impose fines and penalties upon violators, but some may afford private rights of action to individuals who believe their PII has been misused.

Both state and federal laws and regulations are subject to modification or enhancement of privacy and security protections at any time. Our business will continue to remain subject to any federal and state privacy-related laws and regulations that are more restrictive than the privacy regulations issued under HIPAA. Sweeping privacy measures in certain states such as the California Consumer Privacy Act impose European-like standards for the protection of personal data and allow for a private right of action. These statutes vary and could impose additional requirements on us and more severe penalties for disclosures of confidential health information. New health and consumer information standards could have a significant effect on the manner in which we do business, and the cost of complying with new standards could be significant. We may not remain in compliance with the diverse privacy and security requirements in all of the jurisdictions in which we do business. If we fail to comply with such state laws, we could incur substantial civil monetary or criminal penalties.

We are also subject to data privacy and security laws in jurisdictions outside of the United States. For example, in the EEA and the United Kingdom, we are subject to the General Data Protection Regulation 2016/679 (the “GDPR”), which could limit our ability to collect, control, process, share, disclose and otherwise use personal data (including health and medical information which are subject to strict requirements). Complying with the GDPR could cause our compliance costs to increase, ultimately having an adverse impact on our business. We are implementing measures to comply with these laws as part of our comprehensive compliance program with input from external advisors to address our compliance with these obligations under GDPR. Failure to comply with the GDPR may result in fines up to the greater of €20 million or 4% of total annual revenue. In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease or change our processing of our data, enforcement notices or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources and reputational harm. In addition, beginning in 2021 when the transitional period following Brexit expires, we will be required to comply with both the GDPR and the U.K. GDPR, with each regime having the ability to fine up to the greater of €20 million (in the case of the GDPR) or £17 million (in the case of the U.K. GDPR) and 4% of total annual revenue. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear including, for example, how data transfers between EU member states and the United Kingdom will be treated and the role of the Information Commissioner’s Office following the end of the transitional period. These changes could lead to additional costs and increase our overall risk exposure.

We are also subject to European Union rules with respect to cross-border transfers of personal data out of the EEA and the United Kingdom. Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States. For instance, on July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-U.S. Privacy Shield Framework (the “Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme.

While the CJEU did not invalidate standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. We currently rely on the standard contractual clauses among other data transfer mechanisms allowed pursuant to the GDPR to transfer personal data outside the EEA or the United Kingdom, including to the United States. These recent developments will require us to review and consider amending the legal mechanisms by which we make and receive personal data transfers to the United States. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints, regulatory investigations or fines, and if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and the geographical location or segregation of our relevant systems and operations, which could adversely affect our financial results.

We depend on a number of third parties in relation to the operation of our business, a number of which process personal data on our behalf. With each such third party, we attempt to mitigate the associated risks of using third parties by performing applicable security assessments and detailed due diligence, entering into contractual arrangements to require that providers only process personal data according to our instructions, and that they have sufficient technical and organizational security measures in place. Where we transfer personal data outside the EEA or the United Kingdom to such third parties, we do so in compliance with the relevant data export requirements, as described above. There is no assurance that these contractual measures and our own privacy and security-related safeguards will fully protect us from the risks associated with the third-party processing. Any violation of data or security laws by our third party processors could have a material adverse effect on our business and result in the fines and penalties outlined below.

We are also subject to evolving privacy laws on cookies and e-marketing. In the European Union, regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive will be replaced by an EU regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance. While the text of the ePrivacy Regulation is still under development, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. In the United States, the Federal Trade Commission and many state laws have increasingly focused on the collection and use of behavioral data including geolocation and biometric information. As regulators start to enforce a strict approach (which has already started in Germany), this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.

Recently many countries have enacted legislation to strengthen privacy laws to protect their residents’ personal data. Some countries’ laws have been modeled on GDPR, including fines and penalties such as Brazil’s enacted data protection law and similar pending legislation in Chile. We are currently monitoring the evolving data protection landscape so that we can comply with the requirements in the countries in which we do business.

Data compliance in other countries outside EEA, the United Kingdom and the United States are even more complex and varied making it difficult to comply with them all. China’s legislation and regulation of the health care industry involves multiple pieces of legislation prescribing complex regulatory requirements governing different types of data across a continuum of care, and various supervisory authorities frequently conduct inspections and investigations. Any collection, use, transfer and storage of personal information of a Chinese citizen should be based on the three principles of China’s Cybersecurity Law (legitimacy, justification and necessity) and requires the consent of the data subject. The rules, purposes, methods and ranges of such collection should also be disclosed to the data subject. China’s data localization requirements are expensive for

multinational companies as they have strict requirements regarding storage of health care data including big data and human genetic information in local, secured and trusted servers.

Risks related to our information technology and intellectual property

Our data management and information technology systems are critical to maintaining and growing our business.

Our business is dependent on the effective use of information technology and, consequently, technology failure or obsolescence may negatively impact our business. In addition, data acquisition, data quality control, data privacy, data security and data analysis are intense and complex processes subject to error. Untimely, incomplete or inaccurate data, flawed analysis of data or our inability to properly integrate, implement, protect and update systems could have a material adverse impact on our business and results of operations. We expect that we will need to continue to improve and further integrate our information technology systems on an ongoing basis in order to effectively run our business. If we fail to successfully manage our information technology systems, our business and operating results could be adversely affected.

Our ability to protect our information systems and electronic transmissions of sensitive data from data corruption, cyber-based attacks, security breaches or privacy violations is critical to the success of our business.

We are highly dependent on information technology networks and systems, including our office networks, operational environment, special purpose networks, systems and software used to operate our instruments and devices and those networks and systems managed by vendors or third parties, to securely process, transmit and store electronic information (including sensitive data such as trade secrets, confidential business information and personally identifiable data relating to employees, customers and business partners). Like any large corporation, from time to time the information systems on which we rely, including those controlled and managed by third-parties, may be subject to computer viruses, malicious software, attacks by hackers and other forms of cyber intrusions or unauthorized access, any of which can create system disruptions, shutdowns or unauthorized disclosure of sensitive data. In addition, a security breach that leads to disclosure of information protected by privacy laws (including PII or PHI) could compel us to comply with breach notification requirements under U.S. state laws and HIPAA regulations or other local country government requirements outside the United States, potentially resulting in litigation or regulatory action, or otherwise subjecting us to liability under laws that protect personal data.

If we experience a significant technology incident, such as a serious product vulnerability, security breach or a failure of a system that is critical for the operations of our business, it could impair our ability to operate our business, including our ability to provide maintenance and support services to our customers. If this happens, our revenues could decline and our business could suffer, and we may need to make significant further investments to protect data and infrastructure. An actual or perceived vulnerability, failure, disruption or breach of our network or privileged account security in our systems also could adversely affect the market perception of our products and services, as well as our perception among new and existing customers. Additionally, a significant security breach could subject us to potential liability, litigation and regulatory or other government action. If any of the foregoing were to occur, our business may suffer.

We attempt to mitigate the above risks by employing a number of measures, including monitoring and testing of our security controls, employee training and maintenance of protective systems and contingency plans. Further, our contractual arrangements with service providers aim to ensure that third-party cybersecurity risks are appropriately mitigated. We also maintain insurance relating to cybersecurity incidents, which we cannot guarantee will be adequate. It is impossible to eliminate all cybersecurity risk and thus our systems, products and services, as well as those of our service providers, remain potentially vulnerable to known or unknown

threats. Additionally, our information technology systems may also be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, power outages and system failures. Any system outages or security breaches, whether caused intentionally or unintentionally, can interrupt our operations, delay production and shipments, result in theft of trade secrets and intellectual property, damage our reputation, result in defective products or services, give rise to legal proceedings, liabilities and penalties, and cause us to incur increased costs for insurance premiums, security, remediation, and regulatory compliance.

Information security risks have generally increased in recent years because of the increased proliferation, sophistication and availability of complex malware and hacking tools to carry out cyber-attacks. As cyber threats continue to evolve, we may be required to expend additional resources to mitigate new and emerging threats while continuing to enhance our information security capabilities or to investigate and remediate security vulnerabilities.

In addition, the interpretation and application of data protection and security laws in the United States, Europe and elsewhere are often uncertain, contradictory and in flux. For instance, California enacted the California Consumer Privacy Act (“CCPA”) on June 28, 2018, which went into effect on January 1, 2020. The CCPA, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA also creates a private right of action with statutory damages of up to $7,500 per person for certain data breaches which is expected to increase data breach litigation as well as the privacy and security obligations of entities handling certain personal data. The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states. Further, the European Union enacted stricter data protection laws under the GDPR, which took effect in May 2018 and replaced Directive 95/46/EC. The obligations under the GDPR may conflict with the requirements of privacy laws and regulations in other jurisdictions and our practices relating to personal data may differ globally in response to local requirements. This may result in government-imposed fines or orders requiring that we change our data practices, which could have an adverse effect on our business. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

Our inability to protect and enforce our intellectual property rights could adversely affect our financial results.

Intellectual property rights both in the United States and in foreign countries, including patents, trade secrets, proprietary information, trademarks and trade names, are important to our business and will be critical to our ability to grow and succeed in the future. We make strategic decisions on whether to apply for intellectual property protection and what kind of protection to pursue based on a cost-benefit analysis. While we endeavor to protect our intellectual property rights in certain jurisdictions in which our products are produced or used and in jurisdictions into which our products are imported, the decision to file for intellectual property protection is made on a case-by-case basis. Because of the differences in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States. Additionally, certain of our intellectual property rights are held through our license agreements and collaboration arrangements with third parties. Because of the nature of these licenses and arrangements, we cannot assure you that we would be able to retain all of these intellectual property rights upon termination of such licenses and collaboration arrangements. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition.

We have applied for patent protection relating to certain existing and proposed products, processes and services in certain jurisdictions. While we generally consider applying for patents in those countries where we intend to make, have made, use or sell patented products, we may not accurately assess all of the countries

where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. Furthermore, we cannot assure you that our pending patent applications will not be challenged by third parties or that such applications will eventually be issued by the applicable patent offices as patents. We also cannot assure you that the patents issued as a result of our foreign patent applications will have the same scope of coverage as our U.S. patents. It is possible that only a limited number of the pending patent applications will result in issued patents, which may have a materially adverse effect on our business and results of operations.

The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Furthermore, our existing patents are subject to challenges from third parties which may result in invalidations and will all eventually expire, after which we will not be able to prevent our competitors from using our previously patented technologies, which could materially adversely affect our competitive advantage stemming from those products and technologies. We also cannot assure you that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents.

We also license third parties to use our patents and know-how. In an effort to preserve our intellectual property rights, we enter into license agreements with these third parties, which govern the use of our patents, know-how and other confidential, proprietary information. Although we make efforts to police the use of our intellectual property by our licensees, we cannot assure you that these efforts will be sufficient to ensure that our licensees abide by the terms of their licenses. In the event that our licensees fail to do so, our intellectual rights could be impaired.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require certain employees, consultants, advisors and collaborators to enter into confidentiality agreements as we deem appropriate. We cannot assure you that we will be able to enter into these confidentiality agreements or that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.

We rely on our trademarks, trade names and brand names to distinguish our products from the products of our competitors, and have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

Risks related to taxation

Legislative or taxation changes or HMRC enforcement actions may have a material adverse impact on our business, results of operations and financial condition.

We are subject to the laws of England and Wales and the taxation rules administered by HM Revenue & Customs (“HMRC”) and we are required to certify to HMRC that we have appropriate tax accounting arrangements in place. Changes in legislation or regulations and actions by regulators, including changes in administration and enforcement policies, could from time to time require operational improvements or modifications, the conduct

of reviews and audits or the cessation of certain business practices or income streams that could result in higher costs or restrict our ability to operate our business and, as a result, have a material adverse effect on our business, results of operations and financial condition. HMRC may also take enforcement actions against us which may result in fines, penalties and/or interest charges being imposed on us which may have a material adverse effect on our business, results of operations and financial condition.

If we are classified as a passive foreign investment company for U.S. federal income tax purposes, U.S. Holders may incur adverse tax consequences.

Based on the nature and composition of our income, assets and operations and the income, assets and operations of our subsidiaries, we do not believe that we are currently a passive foreign investment company for U.S. federal income tax purposes (a “PFIC”), and we do not expect to be a PFIC in the foreseeable future. However, this is a factual determination that depends on, among other things, the nature and composition of our income and assets, and the market value of our shares and assets, including the nature and composition of income and assets and the market value of shares and assets of our subsidiaries, from time to time, and thus the determination can only be made annually after the close of each taxable year. Therefore, no assurance can be given that we will not be classified as a PFIC for the current taxable year or any future taxable year.

If we are considered a PFIC at any time that a U.S. Holder (as defined under “Material tax considerations—Material U.S. federal income tax considerations”) holds the ordinary shares, U.S. Holders may suffer material adverse tax consequences, including with respect to any “excess distribution” received from us and any gain from a sale or other taxable disposition of the ordinary shares.

Certain elections may be available that would result in alternative treatments (such as qualified electing fund treatment or mark-to-market treatment) of our ordinary shares if we are considered a PFIC. We do not intend to provide the information necessary for U.S. Holders of our ordinary shares to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for an investment in a PFIC described above. If we are treated as a PFIC with respect to a U.S. Holder for any taxable year, the U.S. Holder will be deemed to own shares in any of our subsidiaries that are also PFICs. However, an election for mark-to-market treatment would likely not be available with respect to any such subsidiaries.

U.S. Holders should consult their tax advisors about the potential application of the PFIC rules to an investment in the ordinary shares and the potential consequences related thereto. See “Material tax considerations—Material U.S. federal income tax considerations—Taxation of disposition of the ordinary shares—Passive foreign investment company rules.”

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

If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group. Because our group includes U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether or not UK Holdco is treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s

U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether we are or any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A U.S. investor should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares.

Changes in our tax rates or exposure to additional tax liabilities or assessments could affect our profitability, and audits by tax authorities could result in additional tax payments for prior periods.

We are affected by various U.S. and non-U.S. taxes, including direct and indirect taxes imposed on our global activities, such as corporate income, withholding, customs, excise, value-added, sales and other taxes. Significant judgment is required in determining our provisions for taxes, and there are many transactions and calculations where the ultimate tax determination is uncertain.

The amount of income tax we pay is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If audits result in payments or assessments different from our reserves, our future results may include unfavorable adjustments to our tax liabilities, and our financial statements could be adversely affected. Any significant changes to the tax system in the United States or in other jurisdictions could adversely affect our business, financial condition and results of operations.

Our ability to use our net operating loss carry forwards to offset future taxable income may be subject to certain limitations and we could be subject to tax audits or examinations that could result in a loss of our net operating losses and/or cash tax exposures.

As of December 29, 2019, we had net operating loss carryforwards (“NOLs”) of approximately $740 million in the United States (this amount has been adjusted to include the impact of the Coronavirus, Aid, Relief and Security Act (“CARES Act”), which was enacted on March 27, 2020) and approximately $445 million in Luxembourg due to prior period losses. In addition, we had approximately $404 million of U.S. carryforward interest expense as of December 29, 2019. Certain of these carryforwards, if not utilized, will begin to expire through 2037. Realization of these carryforwards depends on future income, and there is a risk that our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our cash flows.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs to offset future taxable income. This offering, as well as future changes in our stock ownership, could result in an ownership change under Section 382 of the Code. Our NOLs may also be impaired under state laws. There is also a risk that due to regulatory changes, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Furthermore, any available NOLs would have value only to the extent there is income in the future against which such NOLs may be offset. For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, whether or not we attain profitability.

We are periodically subject to audits or examinations by taxing authorities, and are currently in the early stages of responding to an inquiry from taxing authorities in Luxembourg relating to certain intercompany transactions. If any such audits or examinations are resolved in a manner that is unfavorable to us, it could potentially result in a loss of NOLs and/or cash tax exposures, which could adversely affect our cash flows.

Risks associated with our indebtedness

Our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our indebtedness.

We have a significant amount of indebtedness. As a result of our substantial indebtedness, a significant amount of our cash flows will be required to pay interest and principal on our outstanding indebtedness, and we may not generate sufficient cash flows from operations, or have future borrowings available under the Revolving Credit Facility, to enable us to repay our indebtedness or to fund our other liquidity needs. As of September 27, 2020, we had total indebtedness of $3,713.7 million and we had availability under our Revolving Credit Facility of $314.4 million (net of $35.6 million of outstanding letters of credit) and no availability under our three-year accounts receivable program (the “Financing Program”).

Subject to the limits contained in the Credit Agreement, the 2028 Notes Indenture, the 2025 Notes Indenture, the Financing Program and our other debt instruments, we may incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt would increase. Specifically, our high level of debt could have important consequences to you, including:

•

making it more difficult for us to satisfy our obligations with respect to our debt, and if we fail to comply with these obligations, an event of default could result;

•

limiting our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions or other general corporate requirements;

•

requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes;

•

increasing our vulnerability to general adverse economic and industry conditions;

•

exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Senior Secured Credit Facilities, are at variable rates of interest;

•

limiting our flexibility in planning for and reacting to changes in the industry in which we compete and to changing business and economic conditions;

•

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

•

impairing our ability to obtain additional financing in the future;

•

preventing us from raising the funds necessary to repurchase all Senior Notes tendered to us upon the occurrence of certain changes of control, which failure to repurchase would constitute an event of default under the 2025 Notes Indenture or the 2028 Notes Indenture;

•

placing us at a disadvantage compared to other, less leveraged competitors and affecting our ability to compete; and

•

increasing our cost of borrowing.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations and ability to satisfy our obligations in respect of our outstanding debt.

Furthermore, borrowings under our Senior Secured Credit Facilities are at variable rates of interest and expose us to interest rate risk. Recent interest rates have been at historically low levels. If interest rates increase, our

debt service obligations on the variable rate indebtedness will increase even though the amount borrowed may remain the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. As of September 27, 2020, $2,200.0 million in aggregate principal amount of indebtedness under our Term Loan Facilities is subject to variable interest rates subject to the London interbank offered rate (“LIBOR”). Assuming no prepayments of our Term Loan Facilities and that our Revolving Credit Facility is fully drawn (and to the extent that the LIBOR is in excess of the 0.00% floor rate applicable to our Senior Secured Credit Facilities), each one-eighth percent change in interest rates, prior to the impact of derivative instruments, would result in a $3.7 million change in annual interest expense on the indebtedness under our Senior Secured Credit Facilities. In addition, certain of our variable rate indebtedness uses LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness. We have entered into a series of interest rate cap and interest rate swap agreements to hedge our interest rate exposures related to our variable rate borrowings under the Senior Secured Credit Facilities. However, it is possible that these interest rate cap and interest rate swap agreements or any future interest rate cap agreements or swaps we enter into may not fully or effectively mitigate our interest rate risk and we may decide not to maintain interest rate swaps in the future.

In addition, amounts drawn under our Senior Secured Credit Facilities may bear interest rates in relation to LIBOR, depending on our selection of repayment options. On July 27, 2017, the Financial Conduct Authority in the U.K. announced that it would phase out LIBOR as a benchmark by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve is considering replacing U.S. dollar LIBOR with a newly created index called the Broad Treasury Financing Rate, calculated with a broad set of short-term repurchase agreements backed by treasury securities. If LIBOR ceases to exist, we may need to renegotiate certain provisions of our Senior Secured Credit Facilities and may not be able to do so with terms that are favorable to us. The overall financing market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market or the inability to renegotiate our Senior Secured Credit Facilities with favorable terms could have a material adverse effect on our business, financial position, operating results and cash flows.

We may not be able to generate sufficient cash flows from operating activities to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our business, financial position and results of operations and our ability to satisfy our debt obligations.

Additionally, if we cannot make scheduled payments on our debt we will be in default, and holders of the Senior Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Senior Secured Credit Facilities could terminate their commitments to loan additional money to us, the lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. All of these events could result in your losing all or a part of your investment.

Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control. We might not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. In addition, our cash flows may be negatively impacted if we are required to pay back borrowing under the Financing Program sooner than anticipated if there is a reduction in the borrowing base. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture restrict our ability to dispose of assets and use the proceeds from such dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. Because of these restrictions, we may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

In addition, we conduct substantially all of our operations through our subsidiaries, some of which are not guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flows by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

The terms of the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture impose restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests and may limit our ability to make payments on our indebtedness.

The Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability, and the ability of our subsidiaries, to:

•

incur additional indebtedness and guarantee indebtedness;

•

pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

•

prepay, redeem or repurchase certain indebtedness;

•

make loans and investments;

•

sell, transfer or otherwise dispose of assets;

•

incur liens;

•

enter into transactions with affiliates;

•

enter into new lines of business or alter the businesses we conduct;

•

designate any of our subsidiaries as unrestricted subsidiaries;

•

enter into agreements restricting our subsidiaries’ ability to pay dividends; and

•

consolidate, merge, transfer or sell all or substantially all of our assets or the assets of our subsidiaries.

As a result of all of these restrictions, we may be:

•

limited in how we conduct our business;

•

unable to raise additional debt or equity financing to operate during general economic or business downturns; or

•

unable to compete effectively or to take advantage of new business opportunities.

These restrictions might hinder our ability to grow in accordance with our strategy.

While we believe that they have not historically done so, these covenants could materially and adversely affect our ability to finance our future operations or capital needs. Furthermore, they may restrict our ability to expand, pursue our business strategies and otherwise conduct our business. Our ability to comply with these covenants may be affected by circumstances and events beyond our control, such as prevailing economic conditions and changes in regulations, and we cannot assure you that we will be able to comply with such covenants. These restrictions also limit our ability to obtain future financings to withstand a future downturn in our business or the economy in general. In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of our ordinary shares and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

In addition, the financial covenant in the Credit Agreement requires the maintenance of a maximum first lien leverage ratio, which ratio will be tested at the end of any quarter when borrowings under the Revolving Credit Facility (including swingline loans and any unreimbursed drawings under any letters of credit to the extent not cash-collateralized but excluding any guarantees and performance or similar bonds issued under our Revolving Credit Facility) exceed $105 million at such date. As of September 27, 2020, we had no borrowings outstanding under the Revolving Credit Facility and were therefore not subject to the financial covenant. Due to the current economic and business uncertainty resulting from the ongoing COVID-19 pandemic, we anticipate that we will maintain increased cash on hand in order to preserve financial flexibility and that, as a result, we may continue to borrow from our Revolving Credit Facility, if needed, for the remainder of fiscal year 2020. Our ability to meet the financial covenant could be affected by events beyond our control.

A breach of the covenants under the Credit Agreement, the 2025 Notes Indenture or the 2028 Notes Indenture could result in an event of default under the applicable indebtedness. Such a default, if not cured or waived, may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision. In addition, an event of default under the Credit Agreement would permit the lenders under our Senior Secured Credit Facilities to terminate all commitments to extend further credit under the facilities. Furthermore, if we were unable to repay the amounts due and payable under our Senior Secured Credit Facilities, those lenders could proceed against the collateral securing such indebtedness. In the event our lenders or holders of the Senior Notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

Despite our level of indebtedness, we and our subsidiaries may still incur substantially more debt. This could further exacerbate the risks to our financial condition described above and impair our ability to operate our business.

We and our subsidiaries may incur significant additional indebtedness in the future. Although the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture contain restrictions on the incurrence of

additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, including with respect to our ability to incur additional senior secured debt. The additional indebtedness we may incur in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. In addition, as of September 27, 2020, our Revolving Credit Facility provides for unused commitments of $314.4 million (net of $35.6 million of outstanding letters of credit). Additionally, our Senior Secured Credit Facilities may be increased by an amount equal to (x) a dollar amount of $375.0 million (which amount was utilized in connection with our incurrence of the Euro Term Loan Facility), plus (y) an unlimited amount so long as on a pro forma basis our consolidated first lien total debt ratio (as set forth in the Credit Agreement) does not exceed 4.00 to 1.00 plus (z) an amount equal to all voluntary prepayments of term loans borrowed under the Credit Agreement and revolving loans under the Credit Agreement to the extent accompanied by a permanent reduction in the commitments therefor, subject to certain conditions. If new debt is added to our current debt levels, the related risks that we now face would increase.

Risks related to this offering and ownership of our ordinary shares

No market currently exists for our ordinary shares, and an active, liquid trading market for our ordinary shares may not develop, which may cause our ordinary shares to trade at a discount from the initial offering price and make it difficult for you to sell the ordinary shares you purchase.

Prior to this offering, there has not been a public market for our ordinary shares. We cannot predict the extent to which investor interest in us will lead to the development of a trading market on Nasdaq or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling any our ordinary shares that you purchase. The initial public offering price for the ordinary shares has been determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our ordinary shares may decline below the initial offering price, and you may not be able to sell your our ordinary shares at or above the price you paid in this offering, or at all.

You will incur immediate dilution in the net tangible book value of the ordinary shares you purchase in this offering.

The initial public offering price of our ordinary shares is higher than the net tangible book value per ordinary share of outstanding ordinary shares prior to completion of this offering. Based on our net tangible book deficit as of September 27, 2020 and upon the issuance and sale of ordinary shares by us at an assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, if you purchase our ordinary shares in this offering, you will suffer immediate dilution of approximately $ per ordinary share in net tangible book value. Dilution is the amount by which the offering price paid by purchasers of our ordinary shares in this offering will exceed the net tangible book value per ordinary share of our ordinary shares upon completion of this offering. If the underwriters exercise their option to purchase additional ordinary shares, you will experience further dilution. A total of ordinary shares have been reserved for future issuance under the 2021 Incentive Award Plan. You may experience additional dilution upon future equity issuances or the exercise of stock options to purchase ordinary shares granted to our directors, officers and employees under our current and future stock incentive plans, including the 2021 Incentive Award Plan. See “Dilution.”

Our share price may change significantly following this offering, and you may not be able to resell our ordinary shares at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The trading price of our ordinary shares is likely to be volatile. The stock market has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of

particular companies. We and the underwriters have negotiated to determine the initial public offering price. You may not be able to resell your ordinary shares at or above the initial public offering price due to a number of factors such as those listed in other portions of this “Risk factors” section and the following:

•

results of operations that vary from the expectations of securities analysts and investors;

•

results of operations that vary from those of our competitors;

•

changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

•

declines in the market prices of stocks generally;

•

strategic actions by us or our competitors;

•

announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

•

changes in general economic or market conditions or trends in our industry or markets;

•

changes in business or regulatory conditions;

•

additions or departures of key management personnel;

•

future sales of our ordinary shares or other securities by us or our existing shareholders, or the perception of such future sales;

•

investor perceptions of the investment opportunity associated with our ordinary shares relative to other investment alternatives;

•

the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

•

announcements relating to litigation;

•

guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

•

the development and sustainability of an active trading market for our ordinary shares;

•

changes in accounting principles; and

•

other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.

These broad market and industry fluctuations may materially adversely affect the market price of our ordinary shares, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our ordinary shares are low.

In the past, following periods of market volatility, shareholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors, which could materially adversely affect the price of our ordinary shares.

Our operating results have fluctuated from quarter to quarter at points in the past, and they may do so in the future. Therefore, results of any one fiscal quarter are not a reliable indication of results to be expected for any

other fiscal quarter or for any year. If we fail to increase our results over prior periods, to achieve our projected results or to meet the expectations of securities analysts or investors, the price of our ordinary shares may decline, and the decrease in the price of our ordinary shares may be disproportionate to the shortfall in our financial performance. Results may be affected by various factors, including those described in these risk factors. We maintain a forecasting process that seeks to align expenses to backlog conversion. If we do not control costs or appropriately adjust costs to actual results, or if actual results differ significantly from our forecast, our financial performance could be materially adversely affected.

We are a holding company with no operations and may not have access to sufficient cash to meet our financial obligations.

We are a holding company and have limited direct operations. Our most significant assets are the equity interests we directly and indirectly hold in our subsidiaries. As a result, we are dependent upon dividends and other payments from our subsidiaries to generate the funds necessary to meet our outstanding debt service and other obligations and such dividends may be restricted by law or the instruments governing our indebtedness, including the Credit Agreement, the 2028 Notes Indenture, the 2025 Notes Indenture or other agreements of our subsidiaries. Our subsidiaries may not generate sufficient cash from operations to enable us to meet our financial obligations. In addition, our subsidiaries are separate and distinct legal entities and may be legally or contractually prohibited or restricted from paying dividends or otherwise making funds available to us. In addition, payments to us by our subsidiaries will be contingent upon our subsidiaries’ earnings. Additionally, we may be limited in our ability to cause any future collaborative arrangements under which our subsidiaries distribute their earnings to us. Subject to certain qualifications, our subsidiaries are permitted, under the terms of our indebtedness, to incur additional indebtedness that may restrict payments from those subsidiaries to us. We cannot assure you that agreements governing the current and future indebtedness of our subsidiaries will permit those subsidiaries to provide us with sufficient cash to fund our financial obligations.

We currently do not intend to declare dividends on our ordinary shares in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our ordinary shares appreciates.

We currently do not expect to declare any dividends on our ordinary shares in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used to provide working capital, to support our operations and to finance the growth and development of our business. Any determination to declare or pay dividends in the future will be at the discretion of our board of directors, subject to applicable laws and dependent upon a number of factors, including our earnings, capital requirements and overall financial conditions. In addition, because we are a holding company, our ability to pay dividends on our ordinary shares may be limited by restrictions on our ability to obtain sufficient funds through dividends from subsidiaries, including restrictions under the covenants of the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture, and may be further restricted by the terms of any future debt or preferred securities. Accordingly, your only opportunity to achieve a return on your investment in our company may be if the market price of our ordinary shares appreciates and you sell your ordinary shares at a profit. The market price for our ordinary shares may never exceed, and may fall below, the price that you pay for such ordinary shares.

Future sales, or the perception of future sales, by us or our existing shareholders in the public market following this offering could cause the market price for our ordinary shares to decline.

After this offering, the sale of our ordinary shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of our ordinary shares. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of this offering, we will have a total of ordinary shares outstanding. All shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933 (the “Securities Act”), except for any ordinary shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including certain of our directors, executive officers and other affiliates (including the Principal Shareholder), which may be sold only in compliance with the limitations described in “Shares eligible for future sale.”

The ordinary shares held by the Principal Shareholder and certain of our directors, officers and employees immediately following the consummation of this offering will represent approximately % of our total outstanding ordinary shares following this offering, based on the number of ordinary shares outstanding as of September 27, 2020 (after giving effect to the Reorganization Transactions). Such ordinary shares will be “restricted securities” within the meaning of Rule 144 and subject to certain restrictions on resale following the consummation of this offering. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares eligible for future sale.”

In connection with this offering, we, our directors and executive officers, and holders of substantially all of our ordinary shares prior to this offering have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their ordinary shares or securities convertible into or exchangeable for ordinary shares during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of certain representatives of the underwriters. See “Underwriting (Conflicts of Interest)” for a description of these lock-up agreements.

Upon the expiration of the contractual lock-up agreements pertaining to this offering, up to an additional ordinary shares will be eligible for sale in the public market, of which are held by directors, executive officers and other affiliates and will be subject to volume, manner of sale and other limitations under Rule 144. Following completion of this offering, ordinary shares covered by registration rights would represent approximately % of our outstanding ordinary shares (or %, if the underwriters exercise in full their option to purchase additional ordinary shares). Registration of any of these outstanding ordinary shares would result in such ordinary shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares eligible for future sale.”

As restrictions on resale end or if these shareholders exercise their registration rights, the market price of our ordinary shares could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our ordinary shares or other securities.

In addition, our ordinary shares reserved for future issuance under the 2021 Incentive Award Plan will become eligible for sale in the public market once those ordinary shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable. A total of ordinary shares have been reserved for future issuance under the 2021 Incentive Award Plan.

In the future, we may also issue our securities in connection with investments or acquisitions. The amount of our ordinary shares issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding ordinary shares. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our articles of association and shareholders agreement may have the effect of delaying or preventing a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a

shareholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our ordinary shares.

Subject to the provisions of the U.K. Companies Act 2006, these provisions provide for, among other things:

•

the division of our board of directors into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year;

•

the reappointment of any member of our board of directors initially appointed by the Principal Shareholder in the event such director is removed in accordance with our articles of association and pursuant to the UK Companies Act 2006;

•

the ability of our board of directors to issue one or more series of preferred shares with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change of control;

•

advance notice for nominations of directors by shareholders and for shareholders to include matters to be considered at shareholder meetings;

•

the right of the Principal Shareholder and certain of its respective affiliates to appoint the majority of the members of our board of directors for so long as the Principal Shareholder beneficially owns at least % of our ordinary shares, and such appointed members will serve as directors without standing for election by our shareholders;

•

certain limitations on convening special shareholder meetings; and

•

that certain provisions of our articles of association may be amended only with the consent of the Principal Shareholder for so long as the Principal Shareholder beneficially owns at least % of our ordinary shares.

These provisions could make it more difficult for a third party to acquire us, even if the third-party’s offer may be considered beneficial by many of our shareholders. As a result, our shareholders may be limited in their ability to obtain a premium for their ordinary shares. See “Description of share capital and articles of association.”

Private equity investment funds affiliated with the Principal Shareholder own substantially all of our equity and their interests may not be aligned with yours.

After giving effect to the Reorganization Transactions, the Principal Shareholder will own substantially all of the fully diluted equity of UK Holdco, and, therefore, has the power to control our affairs and policies. The Principal Shareholder also controls, to a large degree, the election of directors, the appointment of management, the entry into mergers, sales of substantially all of our assets and other extraordinary transactions. The directors so elected have authority to issue additional shares, implement stock repurchase programs, declare interim dividends and recommend final dividends, and make other decisions. The interests of the Principal Shareholder could conflict with your interests. For example, the Principal Shareholder may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investments. Additionally, the Principal Shareholder is in the business of making investments in companies, and may from time to time acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours.

We will be a “controlled company” within the meaning of Nasdaq rules and the rules of the SEC. As a result, we will qualify for exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

After completion of this offering, the Principal Shareholder will continue to own a majority of our outstanding ordinary shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

•

the requirement that a majority of our board of directors consist of “independent directors” as defined under the rules of Nasdaq;

•

the requirement that we have a compensation committee that is composed entirely of directors who meet the Nasdaq independence standards for compensation committee members; and

•

the requirement that our director nominations be made, or recommended to our full board of directors, by our independent directors or by a nominations committee that consists entirely of independent directors.

Following this offering, we intend to utilize certain of these exemptions. As a result, we may not have a majority of independent directors, our nominations committee and compensation committee will not consist entirely of independent directors and such committees may not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and the price of our ordinary shares.

As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act of 2002 (“Section 404” and the “Sarbanes-Oxley Act,” respectively). As a public company, we will have significant requirements for enhanced financial reporting and internal controls. Our internal control over financial reporting is currently managed by a third party service provider. The process of designing and implementing effective internal controls that we will manage is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal controls over financial reporting in the second annual report following the completion of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal controls over financial reporting. The rules governing the standards that must be met for our management to assess our internal controls over financial reporting are complex and require significant documentation, testing and possible remediation. Testing internal controls may divert our management’s attention from other matters that are important to our business. Our independent registered public accounting firm may be required to issue an attestation report on effectiveness of our internal controls following the completion of this offering.

In connection with the implementation of the necessary procedures and practices related to internal controls over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the

deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report.

Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. A material weakness in internal controls could result in our failure to detect a material misstatement of our annual or quarterly consolidated financial statements or disclosures. We may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. If we are unable to conclude that we have effective internal controls over financial reporting, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our ordinary shares.

Our board of directors will be authorized to issue and designate preferred shares in additional series without shareholder approval.

Our articles of association will authorize our board of directors, without the approval of our shareholders, to issue preferred shares, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our articles of association, as preferred shares in series, to establish from time to time the number of preferred shares to be included in each such series and to fix the designation, powers, preferences and rights of the preferred shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred shares may be senior to or on parity with our ordinary shares, which may reduce their value.

General risk factors

The insurance we maintain may not fully cover all potential exposures.

Our product liability, property, business interruption, cybersecurity, casualty and other insurance may not cover all risks associated with the operation of our business and may not be sufficient to offset the costs of any losses, lost sales or increased costs experienced during business interruptions. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive related to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Losses and liabilities from uninsured or underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations.

Terrorist acts, conflicts, wars and natural disasters may materially adversely affect our business, financial condition and results of operations.

As a multinational company with a large international footprint, we are subject to increased risk of damage or disruption to us, our employees, facilities, partners, suppliers, distributors, resellers or customers due to terrorist acts, conflicts, wars, adverse weather conditions, natural disasters, power outages, pandemics or other public health crises and environmental incidents, wherever located around the world. The potential for future terrorist attacks and natural disasters, the national and international responses to such attacks and natural disasters or perceived threats to national security and other actual or potential conflicts or wars may create economic and political uncertainties. In addition, as a multinational company with headquarters and significant operations located in the United States, actions against or by the United States could result in a decrease in

demand for our products, make it difficult or impossible to deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain and pose risks to our employees, resulting in the need to impose travel restrictions. Any interruption in production capability could require us to make substantial capital expenditures to remedy the situation, which could negatively affect our profitability and financial condition.

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

We have more than 4,500 employees located around the world consisting of commercial, supply chain, quality, regulatory and compliance, research and development and general administrative personnel. Approximately 20% of our associates globally participate in a union or works council. Historically we have not experienced work stoppages; however, in the future, we may be subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes. Additionally, future negotiations with unions or works councils in connection with existing labor agreements may (i) result in significant increases in our cost of labor, (ii) divert management’s attention away from operating our business or (iii) break down and result in the disruption of our operations. The occurrence of any of the preceding outcomes could impair our ability to manufacture our products and result in increased costs and/or decreased operating results. Further, we may be subject to work stoppages at our suppliers or customers that are beyond our control.

If we are required to make unexpected payments to any pension plans applicable to our employees, our financial condition may be adversely affected.

Some of our current and former employees participate or participated in defined benefit pension plans and we assumed certain foreign underfunded and unfunded pension liabilities in relation to these plans. Several of these plans are unfunded and, while we do not believe the liabilities in relation to these plans are significant, they will need to be satisfied as they mature from our cash provided by operating activities. In jurisdictions where the defined benefit pension plans are intended to be funded with assets in a trust or other funding vehicle, we expect that, while not significant, the liabilities will exceed the corresponding assets in each of the plans. Various factors, such as changes in actuarial estimates and assumptions (including in relation to life expectancy, discount rates and rate of return on assets), as well as actual return on assets, can increase the expenses and liabilities of the defined benefit pension plans. The assets and liabilities of the plans must be valued from time to time under applicable funding rules and as a result we may be required to increase the cash payments we make in relation to these defined benefit pension plans.

We could also be required in some jurisdictions to make accelerated payments up to the full buy-out deficit in our defined benefit pension plans, which would likely be far higher than the normal ongoing funding cost of the plans. Our operations and financial condition may be adversely affected to the extent that we are required to (i) make any additional payments to any relevant defined benefit pension plans in excess of the amounts assumed in our current projections and assumptions or (ii) report higher pension plan expenses under relevant accounting rules.

If we are sued for infringing intellectual property rights of third parties, it will be costly and time-consuming, and an unfavorable outcome in any litigation would harm our business.

We cannot assure you that our activities will not, unintentionally or otherwise, infringe on the patents or other intellectual property rights owned by others. Significant litigation regarding patent rights exists in our industry. Our competitors in both the United States and foreign countries, many of which have substantially greater resources and have made substantial investments in competing technologies, may have applied for or obtained, or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make and sell our products. We may spend significant time and effort and incur significant litigation costs if

we are required to defend ourselves against intellectual property rights claims brought against us, regardless of whether the claims have merit. If we are found to have infringed on the patents or other intellectual property rights of others, we may be subject to substantial claims for damages, which could materially impact our cash flow, business, financial condition and results of operations. We may also be required to cease development, use or sale of the relevant products or processes, or we may be required to obtain a license on the disputed rights, which may not be available on commercially reasonable terms, if at all, or may require us to re-design our products or processes.

If securities analysts do not publish research or reports about our business or if they downgrade our ordinary shares or our sector, the price of our ordinary shares and trading volume could decline.

The trading market for our ordinary shares will rely in part on the research and reports that industry or financial analysts publish about us or our business or industry. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our ordinary shares or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our ordinary shares could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause the price of our ordinary shares or trading volume to decline.

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

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

Special note regarding forward-looking statements

Statements made in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and other similar expressions. These forward-looking statements are contained throughout this prospectus, including the sections entitled “Prospectus summary,” “Risk factors,” “Capitalization,” “Management’s discussion and analysis of financial condition and results of operations” and “Business.”

We base these forward-looking statements or projections on our current expectations, plans and assumptions, which we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at this time. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections contained herein are subject to and involve risks, uncertainties and assumptions, and therefore you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results, and therefore actual results might differ materially from those expressed in the forward-looking statements and projections. Factors that might materially affect such forward-looking statements and projections include:

•

the ongoing global coronavirus (COVID-19) pandemic;

•

increased competition;

•

failure to develop and market new or enhanced products or services;

•

adverse developments in global market, economic and political conditions;

•

our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent;

•

our inability to realize the anticipated benefits of any acquisitions and divestitures, including as a result of difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations;

•

our ability to implement our strategies for improving growth;

•

a need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets;

•

our inability to achieve some or all of the operational cost improvements and other benefits that we expect to realize;

•

our ability to operate according to our business strategy should our collaboration partners fail to fulfill their obligations;

•

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

•

product recalls or negative publicity may harm our reputation or market acceptance of our products;

•

decreases in the number of surgical procedures performed, and the resulting decrease in blood demand;

•

fluctuations in our cash flows as a result of our reagent rental model;

•

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

•

the outcome of legal proceedings instituted against us and/or others;

•

risks associated with our non-U.S. operations that are not present in the United States;

•

currency translation risk and currency transaction risk;

•

the impact of possible new tariffs;

•

the effect of the United Kingdom’s withdrawal from the European Union;

•

our inability to deliver products and services that meet customers’ needs and expectations;

•

failure to maintain a high level of confidence in our products;

•

significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs;

•

reductions in government funding and reimbursement to our customers;

•

price increases or interruptions in the supply of raw materials, components for our products, and products and services provided to us by certain key suppliers and manufacturers;

•

our ability to recruit and retain the experienced and skilled personnel we need to compete;

•

work stoppages, union negotiations, labor disputes and other matters associated with our labor force;

•

consolidation of our customer base and the formation of group purchasing organizations;

•

manufacturing problems or delays;

•

unexpected payments to any pension plans applicable to our employees;

•

our inability to obtain required clearances or approvals for our products;

•

results of clinical studies, which may be delayed or fail to demonstrate the safety and effectiveness of our products;

•

failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals;

•

the inability of government agencies to hire, retain or deploy personnel or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner;

•

disruptions resulting from President Trump’s invocation of the Defense Production Act;

•

costs to comply with environmental and health and safety requirements, or costs related to liability for contamination or other potential environmental harm;

•

healthcare fraud and abuse regulations that could result in liability, require us to change our business practices and restrict our operations in the future;

•

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

•

failure to comply with anti-terrorism laws and regulations and applicable trade embargoes;

•

failure to comply with the requirements of federal and state laws pertaining to the privacy and security of health information;

•

our inability to maintain our data management and information technology systems;

•

data corruption, cyber-based attacks, security breaches and privacy violations;

•

our inability to protect and enforce our intellectual property rights;

•

intellectual property infringement suits against us by third parties;

•

risks related to changes in income tax laws and regulations;

•

risks related to our substantial indebtedness;

•

risks related to this offering and ownership of our ordinary shares;

•

other factors disclosed in this prospectus; and

•

other factors beyond our control.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Other sections of this prospectus may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Before investing in our ordinary shares, investors should be aware that the occurrence of the events described under the caption “Risk factors” and elsewhere in this prospectus could have a material adverse effect on our business, results of operations and future financial performance.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million, based on the assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus. If the underwriters’ over-allotment option to purchase additional ordinary shares in this offering is exercised in full, we estimate that our net proceeds will be approximately $ million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering (i) to redeem $160.0 million in aggregate principal amount of 2025 Notes, (ii) to redeem $270.0 million in aggregate principal amount of 2028 Notes, (iii) to repay $ million in aggregate principal amount of borrowings under our Dollar Term Loan Facility, (iv) to pay offering fees and expenses as well as accrued and unpaid interest on indebtedness to be repaid and related premiums in an aggregate amount of approximately $ million and (v) for working capital and general corporate purposes, which may include further repayment of indebtedness under the Credit Agreement. As of September 27, 2020, $400.0 million in aggregate principal amount of the 2025 Notes, $675.0 million in aggregate principal amount of the 2028 Notes and $2,200.0 million in aggregate principal amount under the Dollar Term Loan Facility was outstanding. The 2025 Notes were issued on June 11, 2020 and the net proceeds of such issuance were used (i) to redeem all of the $300.0 million in aggregate principal amount of 6.625% Senior Notes due 2022 (the “2022 Notes”) issued by the Lux Co-Issuer and U.S. Co-Issuer, (ii) to pay related fees and expenses and (iii) for general corporate purposes. The 2025 Notes mature on June 1, 2025 and bear interest at a rate of 7.375% per annum. The 2028 Notes mature on February 1, 2028 and bear interest at a rate of 7.250% per annum. Our Dollar Term Loan Facility matures on June 30, 2025 and, for the fiscal nine months ended September 27, 2020, borrowings thereunder bore interest at a variable rate that averaged 4.02% for the period. For further description of our indebtedness, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Debt capitalization.” Affiliates of Carlyle currently hold approximately $93.1 million of indebtedness under the Dollar Term Loan Facility and, as a result, may receive a portion of the proceeds from this offering. In addition, certain of the underwriters and/or certain of their affiliates may hold a position in the 2025 Notes, the 2028 Notes or the Dollar Term Loan Facility and, as a result, may receive a portion of the net proceeds from this offering.

Dividend policy

We currently do not expect to declare any dividends on our ordinary shares in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used to provide working capital, support our operations, finance the growth and development of our business and reduce our net debt. Any determination to declare dividends in the future will be at the discretion of our board of directors, subject to applicable laws, and will be dependent on a number of factors, including our earnings, capital requirements and overall financial condition. Upon completion of the offering, we will be controlled by the Principal Shareholder, who will have the ability to appoint a majority of the members of our board of directors and therefore control the payment of dividends. See “Risk factors—Risks related to this offering and ownership of our ordinary shares—Private equity investment funds affiliated with the Principal Shareholder own substantially all of our equity and their interests may not be aligned with yours.” In addition, because we are a holding company, our ability to pay dividends on our ordinary shares may be limited by restrictions on our ability to obtain sufficient funds through dividends from subsidiaries, including restrictions under the covenants of the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture, and may be further restricted by the terms of any future debt or preferred securities. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Debt capitalization” for more information about our Senior Secured Credit Facilities and our Senior Notes.

Capitalization

The following table sets forth the cash and restricted cash and total capitalization as of September 27, 2020:

•

of Ortho-Clinical Diagnostics Bermuda Co. Ltd. on an actual basis;

•

of Ortho Clinical Diagnostics Holdings plc on an as adjusted basis, giving effect to the Reorganization Transactions, this offering and the use of proceeds therefrom as set forth under the heading “Use of proceeds.”

You should read this table together with “Use of proceeds,” “Selected consolidated financial data” and “Management’s discussion and analysis of financial condition and results of operations” and our unaudited consolidated financial statements and the related notes included elsewhere in this prospectus.



	As of September 27, 2020
($ in millions)	Ortho-Clinical Diagnostics Bermuda Co. Ltd. actual			Ortho Clinical Diagnostics Holdings plc as adjusted(1)
Cash and cash equivalents	$	68.6		$

Debt:
Senior Secured Credit Facilities, consisting of the following(2):
Dollar Term Loan Facility	$	2,200.0		$
Euro Term Loan Facility(3)		390.4
Revolving Credit Facility(4)		—
Finance Leases and Other		7.3
Accounts Receivable Financing		75.0
Sale & Leaseback Financing and Other		20.5
2028 Notes		675.0
2025 Notes		400.0

Total debt	$	3,768.2		$


Pre-IPO Ortho-Clinical Diagnostics Bermuda Co. Ltd. stockholders’ deficit:
Common stock, $0.00001 par value per common share, 1,000,000,000 shares authorized, 91,994,814 shares issued and outstanding, actual		—
Additional paid-in capital		971.1
Accumulated deficit		(1,876.6	)
Accumulated other comprehensive loss		(121.5	)

Total pre-IPO shareholders’ deficit	$	(1,027.0	)


Post-IPO Ortho Clinical Diagnostics Holdings plc shareholders’ deficit:
Ordinary shares, $0.00001 par value per ordinary share, shares authorized, as adjusted, shares issued and outstanding, as adjusted
Preferred redeemable shares, £1.00 par value per preferred redeemable share, shares authorized, as adjusted, shares issued and outstanding, as adjusted
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss

Total post-IPO shareholders’ deficit				$

Total capitalization	$	2,741.2		$

(1)

the number of ordinary shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 ordinary shares from the expected number of ordinary shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) our net proceeds from this offering by $ million. Such increase (decrease) in net proceeds will correspondingly increase (decrease) the amount of borrowings under our Dollar Term Loan Facility we intend to repay and/or the amount used for working capital and general corporate purposes, which may include an increase (decrease) in the repayment of other indebtedness under the Credit Agreement.

(2)

The Senior Secured Credit Facilities consist of (a) the $350 million Revolving Credit Facility maturing on June 30, 2023, (b) the $2,375.0 million Dollar Term Loan Facility maturing on June 30, 2025 and (c) the €337.4 million Euro Term Loan Facility maturing on June 30, 2025.

(3)

Represents the aggregate dollar equivalent of our Euro Term Loan Facility as of September 27, 2020.

(4)

As of September 27, 2020, we would have had $314.4 million of capacity under the Revolving Credit Facility, net of $35.6 million of outstanding letters of credit.

The number of our ordinary shares to be outstanding immediately after this offering is based on ordinary shares outstanding as of September 27, 2020 and excludes:

•

ordinary shares issuable upon the exercise of options outstanding as of , 2021 with a weighted average exercise price of $ per ordinary share; and

•

ordinary shares available for future issuance under our 2021 Incentive Award Plan, which we intend to adopt in connection with this offering.

Dilution

If you invest in our ordinary shares in this offering, your ownership interest in us will be diluted to the extent of the difference between the initial public offering price per ordinary share and the net tangible book value per ordinary share of our ordinary shares as adjusted to give effect to this offering. Dilution results from the fact that the per ordinary share offering price of the ordinary shares is substantially in excess of the book value per ordinary share attributable to the ordinary shares held by existing shareholders.

Our net tangible book deficit as of September 27, 2020 was approximately $ million or $ per ordinary share. We calculate net tangible book value per ordinary share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of ordinary shares outstanding.

After giving effect to our sale of the ordinary shares in this offering at an assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and after giving effect to the application of the net proceeds from this offering as described under “Use of Proceeds,” our as adjusted net tangible book deficit as of September 27, 2020, after giving effect to this offering, would have been $ million, or $ per ordinary share. This amount represents an immediate increase in net tangible book value of $ per ordinary share to existing shareholders and an immediate dilution in net tangible book deficit of $ per ordinary share to new investors purchasing ordinary shares in this offering at the initial public offering price.

The following table illustrates this dilution on a per ordinary share basis:



Initial public offering price per ordinary share		$
Historical net tangible book deficit per ordinary share as of September 27, 2020	$
Increase in net tangible book value per ordinary share attributable to new investors purchasing ordinary shares in this offering

Net tangible book value (deficit) per ordinary share as adjusted to give effect to this offering

Dilution per ordinary share to new investors in this offering		$

Dilution is determined by subtracting as adjusted net tangible book value per ordinary share after giving effect to this offering, from the initial public offering price per ordinary share.

The following table summarizes, as of September 27, 2020, the differences between the number of ordinary shares purchased from us, the total consideration paid to us, and the average price per ordinary share paid by existing shareholders and by new investors. As the table shows, new investors purchasing ordinary shares in this offering will pay an average price per ordinary share substantially higher than our existing shareholders paid. The table below is based on ordinary shares outstanding immediately after the consummation of this offering and does not give effect to ordinary shares issuable upon exercise of outstanding options to purchase our ordinary shares outstanding as of September 27, 2020 or the ordinary shares reserved for future issuance under the 2021 Incentive Award Plan. A total of ordinary shares have been issued under our existing 2014 Equity Incentive Plan. A total of ordinary shares have been reserved for future issuance under the 2021 Incentive Award Plan. The table below is based on an assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this

prospectus, for ordinary shares purchased in this offering and excludes underwriting discounts and commissions and estimated offering expenses payable by us:

Ordinary shares
purchased

Total
consideration(1)

Average

Number

Percent

Amount

Percent

Price per
ordinary
share(1)

(thousands)

Existing shareholders

New investors

Total

100.0%

If the underwriters were to fully exercise the underwriters’ option to purchase additional ordinary shares, the percentage of ordinary shares held by existing shareholders would be % and the percentage of ordinary shares held by new investors would be %.

Assuming the number of ordinary shares offered by us, as set forth on the front cover of this prospectus, remains the same, excluding assumed underwriting discounts and estimated commissions and offering expenses payable by us, a $1.00 increase (decrease) in the assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) total consideration paid by new investors and total consideration paid by all shareholders by approximately $ million.

Selected consolidated financial data

The following tables set forth the selected consolidated financial data of Bermuda Holdco for the periods and dates indicated. The selected historical consolidated financial data as of and for each of the fiscal years ended December 29, 2019, December 30, 2018, December 31, 2017, January 1, 2017 and January 3, 2016 have been prepared in accordance with GAAP. The balance sheet data as of September 27, 2020 and the statement of operations and cash flow data as of September 27, 2020 and September 29, 2019 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of September 29, 2019 have been derived from our unaudited consolidated financial statements not included in this prospectus. The balance sheet data as of December 29, 2019 and December 30, 2018 and the statement of operations and cash flow for the years ended December 31, 2017, December 30, 2018 and December 29, 2019 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2017, January 1, 2017 and January 3, 2016 and the statement of operations and cash flow data for the years ended January 1, 2017 and January 3, 2016 have been derived from our audited consolidated financial statements not included in this prospectus. In the opinion of management, the unaudited financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of such financial data.

Our historical financial data is not necessarily indicative of our future performance. The selected consolidated financial data set forth below should be read in conjunction with “Risk factors,” “Capitalization,” “Dilution,” “Management’s discussion and analysis of financial condition and results of operations” and our unaudited consolidated financial statements and audited consolidated financial statements included elsewhere in this prospectus.



	Fiscal nine months ended				Fiscal year ended
($ in millions, except per share data)	September 27, 2020		September 29, 2019		December 29, 2019		December 30, 2018		December 31, 2017		January 1, 2017		January 3, 2016
	(Unaudited)

Statement of operations data:
Net revenue	$	1,249.6	$	1,327.8	$	1,801.5	$	1,787.3	$	1,781.7	$	1,695.6	$	1,543.4
Cost of revenue, excluding amortization of intangible assets		650.2		684.0		922.4		930.5		897.7		906.3		842.2

Gross profit		599.4		643.8		879.1		856.8		884.0		789.3		701.2


Operating expenses:
Selling, marketing and administrative expenses		347.9		379.5		515.1		491.6		499.8		531.5		484.7
Research and development expense		82.1		73.7		98.0		98.7		96.4		99.9		107.1
Amortization of intangible assets		98.7		98.7		131.7		128.8		162.0		159.6		154.5
Intangible asset impairment charge		—		—		—		—		11.0		—		—
Gain on bargain purchase of Day 2 Countries		—		—		—		—		—		1.0		(32.5	)
Other operating expense, net		22.8		36.7		48.8		71.2		79.5		53.3		33.7

Total operating expenses		551.5		588.6		793.6		790.3		848.7		845.3		747.5



	Fiscal nine months ended						Fiscal year ended
($ in millions, except per share data)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017			January 3, 2016
	(Unaudited)
Income (loss) from operations		47.9			55.2			85.5			66.5			35.3			(56.0	)		(46.3	)

Other expense (income):
Interest expense, net		148.6			177.7			231.4			235.6			239.8			216.9			210.8
Tax indemnification expense (income)		11.6			31.4			29.2			(13.1	)		(124.1	)		5.5			(1.3	)
Other expense (income), net		61.1			34.5			5.7			61.6			(66.1	)		109.3			61.1

Total other expense		221.3			243.6			266.3			284.1			49.6			331.7			270.6

Loss before (benefit from) provision for income taxes		(173.4	)		(188.4	)		(180.8	)		(217.6	)		(14.3	)		(387.7	)		(316.9	)
(Benefit from) provision for income taxes		(2.4	)		(29.9	)		(23.9	)		31.2			102.0			3.0			13.7

Net loss	$	(171.0	)	$	(158.5	)	$	(156.9	)	$	(248.8	)	$	(116.3	)	$	(390.7	)	$	(330.6	)


Per share data:
Basic and diluted net loss per share attributable to common stockholders	$	(1.86	)	$	(1.73	)	$	(1.72	)	$	(2.73	)	$	(1.28	)	$	(4.31	)	$	(3.65	)
Basic and diluted weighted-average common shares outstanding		91.9			91.4			91.3			91.0			90.9			90.6			90.5



	Fiscal nine months ended						Fiscal year ended
($ in millions)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017			January 3, 2016
	(Unaudited)

Cash flow data:

Net cash (used in) provided by:
Operating activities	$	(48.6	)	$	97.0		$	143.0		$	69.6		$	68.0		$	(59.9	)	$	(46.5	)
Investing activities		(27.5	)		(47.5	)		(68.5	)		(87.1	)		(118.0	)		(187.4	)		(31.4	)
Financing activities		71.3			(51.9	)		(64.4	)		(8.2	)		84.9			159.0			0.9



	As of
	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017			January 1, 2017			January 3, 2016
($ in millions)	(Unaudited)

Consolidated balance sheet data:
Cash, cash equivalents and marketable securities	$	68.6		$	54.2		$	72.0		$	56.4		$	93.3		$	60.8		$	152.7
Total assets		3,334.6			3,558.4			3,589.2			3,687.4			3,936.8			3,865.7			4,230.8
Total liabilities		4,361.6			4,383.6			4,402.0			4,342.1			4,353.5			4,195.4			4,169.3
Accumulated deficit		(1,876.6	)		(1,707.2	)		(1,705.6	)		(1,548.9	)		(1,312.0	)		(1,195.7	)		(805.0	)
Total stockholders’ (deficit) equity		(1,027.0	)		(825.2	)		(812.8	)		(654.7	)		(416.7	)		(329.7	)		61.5

Management’s discussion and analysis

of financial condition and results of operations

You should read the following discussion and analysis of our financial condition and results of operations together with the “Selected consolidated financial data” section of this prospectus, our consolidated financial statements and the related notes thereto and our consolidated financial statements and the related notes thereto appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Risk factors” and “Special note regarding forward-looking statements” sections of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a pure-play in IVD business driven by our credo, “Because Every Test is A Life.” This guiding principle reflects the crucial role diagnostics play in global health and guides our priorities as an organization. As a leader in IVD, we impact approximately 800,000 patients every day. We are dedicated to improving outcomes for these patients and saving lives through providing innovative and reliable diagnostic testing solutions to the clinical laboratory and transfusion medicine communities. Our global infrastructure and commercial reach allow us to serve these markets with significant scale. We have an intense focus on the customer. We support our customers with high quality diagnostic instrumentation, a broad test portfolio and market leading service. Our products deliver consistently fast, accurate and reliable results that allow clinicians to make better-informed treatment decisions. Our business model generates significant recurring revenues and strong cash flow streams from ongoing sales of high margin consumables. These consumables contribute more than 90% of our total revenue. We maintain close connectivity with our customers through our global presence, with more than 4,500 employees, including approximately 2,200 commercial sales, service and marketing teammates. This global organization allows us to support our customers across more than 130 countries and territories.

Key components of results of operations

Net revenue

We operate on a “razor/razor blade” model whereby we offer our customers a selection of automated instruments under long-term contracts along with the assays, reagents and other consumables that are used by these instruments to generate test results. This business model allows us to generate predictable recurring revenue and strong cash flow streams from ongoing sales of high-margin assays, reagents and other consumables and services, sales of which represented greater than 90% of our core revenue during the fiscal year ended December 29, 2019. We also employ a “closed system” strategy with our instruments, which allows only our assays, reagents and other consumables to be used by our instruments and further strengthens the predictability of our revenue. Finally, our typical customer contract length is approximately five years and we have benefitted from a good customer retention rate in recent years.

We manage our business geographically to better align with the market dynamics of the specific geographic region with our reportable segments being North America, EMEA and Greater China. We generate revenue primarily in the following lines of business:

Core:

•

Clinical Laboratories—Focused on clinical chemistry and immunoassay instruments and tests to detect and monitor disease progression across a broad spectrum of therapeutic areas, including grant revenue related to development of our COVID-19 antibody and antigen tests.

•

Transfusion Medicine—Focused on (i) immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions and (ii) donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the United States.

Non-core:

•

Other Product Revenue—Our other product revenue includes revenues primarily from contract manufacturing.

•

Collaboration and Other Revenue—We have entered into collaboration and license agreements pursuant to which we derive collaboration and royalty revenues.

All non-core revenue is recorded in the North America segment for all periods presented.

Cost of revenue, excluding amortization of intangible assets and gross profit

The primary components of our cost of revenue are purchased materials, the overhead costs related to our manufacturing operations and direct labor associated with the manufacture of our instruments, assays, reagents and other consumables and depreciation of customer leased instruments.

Selling, marketing and administrative expenses

The primary components of our selling, marketing and administrative expenses are employee-related costs in our sales, marketing and administrative and support functions, marketing costs, distribution costs and an allocation of facility and information technology costs and other overhead costs. Employee-related costs include compensation and benefits, including stock-based compensation expense and commissions, employee recruiting and relocation expenses, employee training costs, travel and entertainment costs.

Research and development expense

The primary components of our research and development expense are costs related to clinical trials and regulatory-related spending, as well as employee-related costs in these functions, and an allocation of facility and information technology costs and other overhead costs.

Amortization of intangible assets

Amortization of intangible assets consists solely of the amortization of intangible assets related to the Acquisition.

Other operating expense, net

The primary components of other operating expense, net, are profit share expense related to our Joint Business and restructuring charges.

Interest expense, net

The primary components of interest expense, net are interest charges and amortization of deferred financing charges related to our borrowings.

Tax indemnification expense (income), net

The primary components of tax indemnification expense (income), net are gains and losses related to certain federal, state and foreign tax matters that relate to the period prior to the Acquisition and for which we have

indemnification agreements. We are subject to income tax in approximately 34 jurisdictions outside the United States. Our most significant operations outside the United States are located in China, France, Japan and the United Kingdom. For these jurisdictions for which we have significant operations, the statute of limitations varies by jurisdiction, with 2010 being the oldest tax year still open. We are currently under audit in certain jurisdictions for tax years under the responsibility of Johnson & Johnson. Pursuant to the Acquisition Agreement, all tax liabilities related to these tax years will be indemnified by Johnson & Johnson.

Other expense (income), net

The primary components of other expense (income), net are foreign currency related gains and losses, including unrealized gains and losses on intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries, and losses related to early extinguishment of certain borrowings.

Day 1 / Day 2 presentation

The Acquisition Agreement whereby the Principal Shareholder acquired the Ortho business from Johnson & Johnson provided for an initial closing with respect to certain assets, liabilities and equity interests of certain target entities located in certain jurisdictions (the “Day 1 Countries) that were acquired from Johnson & Johnson on June 30, 2014 (the “Day 1 Closing Date”) and, subject to receipt of appropriate regulatory approvals and certain other conditions discussed below, closings on the remaining assets, liabilities and equity interests of certain target entities located in certain jurisdictions (the “Day 2 Countries”). On various dates from 2015 through July 3, 2017, we completed the acquisition of all Day 2 Countries. The results of operations for these Day 2 Countries are included in the consolidated financial statements from the respective acquisition dates (each such date, a “Day 2 Closing Date”).

The consideration for the purchase of all of the Day 1 Countries and the Day 2 Countries was paid on the Day 1 Closing Date. As a result of the Acquisition and the accounting for the Acquisition, our assets and liabilities were adjusted to their estimated fair values as of the Day 1 Closing Date, with respect to the assets and liabilities of the Day 1 Countries, and as of the applicable Day 2 Closing Date, with respect to the Day 2 Countries. The fair value adjustments resulted in a decrease in service revenue resulting from the decrease in deferred service revenue and an increase in our operating expenses, cost of revenue and amortization expense related to the increase in value of our fixed assets, inventory and identifiable intangible assets. Additionally, the excess of the total purchase consideration with respect to the Day 1 Countries and the Day 2 Countries over the estimated fair value of our assets and liabilities as of the Day 1 Closing Date, with respect to the assets and liabilities of the Day 1 Countries, and as of the applicable Day 2 Closing Date, with respect to the Day 2 Countries, was recorded as goodwill.

Following the Day 1 Closing Date, the operating results of each Day 2 Country were not included within our results of operations until the applicable Day 2 Closing Date for each Day 2 Country. Accordingly, we agreed to implement an arrangement with Johnson & Johnson on the Day 1 Closing Date whereby we received from Johnson & Johnson EBITDA less local income taxes, if such amount was positive, or we paid to Johnson & Johnson EBITDA less local income taxes, if such amount was negative, for each Day 2 Country between the Day 1 Closing Date until the applicable Day 2 Closing Date (such payment, a “Day 2 Country Payment”). For additional information regarding Day 2 Country Payments for the fiscal year ended December 31, 2017 see footnote (7) under “Prospectus summary—Summary consolidated financial data.” There were no Day 2 Country Payments during the fiscal years ended December 29, 2019 and December 30, 2018.

The initial allocation of consideration transferred included an amount which was reflected as prepaid consideration on the audited consolidated balance sheet related to the value of the Day 2 Countries that did not

close on the Day 1 Closing Date. The Day 2 Country Payments were accounted for financial reporting purposes as a decrease in the prepaid consideration asset. At the time of the closing of each Day 2 Country, any remaining prepaid consideration asset was included in the calculation of consideration paid in the application of acquisition accounting for the Day 2 Countries. The change in consideration resulting from the Day 2 Country Payments resulted in a change to goodwill at the time of any or all Day 2 Closing Dates. See note 4 to our audited consolidated financial statements included elsewhere in this prospectus for further details related to the accounting for these Day 2 Country acquisitions.

Impact of the initial public offering

Impact of debt extinguishment

Assuming net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, of approximately $ , based on an assumed initial public offering price of $ per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, we plan to repay $ of our outstanding indebtedness. See “Use of proceeds.”

Incremental public company expenses

Following our initial public offering, we will incur significant expenses on an ongoing basis that we did not incur as a private company, including increased director and officer liability insurance expense, as well as third-party and internal resources related to accounting, auditing, Sarbanes-Oxley Act compliance, legal and investor and public relations expenses. These costs will generally be included in selling, marketing and administrative expenses.

Stock-based compensation expense

In connection with this offering, we expect to incur a one-time stock-based compensation expense related to liquidity/realization event-based options held by certain members of management.

In connection with this offering, we expect to implement a new long-term equity incentive plan during 2021 to align our equity compensation program with public company plans and practices.

Impact of COVID-19 pandemic

During the fiscal first quarter ended March 29, 2020, as the global COVID-19 pandemic began to affect certain countries, we began to see a decrease in the number of tests run in China in February, which spread to certain countries in Europe, the Middle East and Africa (“EMEA”) and Asia Pacific (“ASPAC”) in early March and resulted in a worldwide decrease in the number of tests run globally by the end of March. In many countries, we experienced a lag between the timing of the decrease in number of tests run and the decrease in shipments of additional products to our customers. The decrease in shipments to our customers began to occur during the fiscal second quarter ended June 28, 2020 in many countries, including the United States, and as a result we have experienced decreased revenues, incurred idle or underutilized facilities costs, higher freight and higher distribution costs compared to the prior year for the fiscal nine months ended September 27, 2020. During the fiscal third quarter ended September 27, 2020, we did experience some recovery in the base business of our core revenue, further supplemented with sales of our COVID-19 antibody tests, mainly in the North America region. We believe that the decrease in the number of tests run by medical institutions is a result of government-imposed lockdown or stay at home orders and delays in elective medical procedures and we expect this will continue to negatively impact our revenues and Adjusted EBITDA during the remainder of fiscal year 2020. We believe that once these government measures are lifted or relaxed, demand will begin to slowly return.

In response to the global COVID-19 pandemic, we mobilized our research and development teams in order to bring to market COVID-19 antibody and antigen tests. We have received a combination of Emergency Use Authorization (“EUA”) from the FDA, authority to affix a CE Mark for sale in the European Union and various other regulatory approvals globally for our COVID-19 antibody tests. We have also received authority to affix a CE Mark for sale in the European Union and the FDA accepted the Company’s Emergency Use Notification for our COVID-19 antigen test. We continue to work on gaining further regulatory approvals to sell the tests in other markets worldwide. Our COVID-19 antibody tests detect whether a patient has been previously infected by COVID-19 and our COVID-19 antigen test detects whether a patient is currently infected by COVID-19. All three of our COVID-19 antibody and antigen tests run on our existing instruments.

We are continually monitoring our business continuity plans due to the global COVID-19 pandemic. Due to the fact that our products and services are considered to be medically critical, our manufacturing and research and development sites are generally exempt from governmental orders in the United States and other countries requiring businesses to cease operations. For these sites, we have taken steps to protect our employees, and the majority of our office-based work is being conducted remotely. We have also implemented strict travel restrictions, which has reduced our travel-related operating expenses.

As the global COVID-19 pandemic is an ongoing matter, our future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to our consolidated financial statements in future reporting periods.

Results of operations

The following discussion should be read in conjunction with the information contained in the accompanying consolidated financial statements included elsewhere in this prospectus. Our historical results of operations may not necessarily reflect what will occur in the future.

Fiscal nine months ended September 27, 2020 compared with fiscal nine months ended September 29, 2019

Overview of results

During the fiscal nine months ended September 27, 2020, reported net loss of $171.0 million increased by $12.5 million compared with the fiscal nine months ended September 29, 2019. Our results were materially impacted by the global COVID-19 pandemic, as net revenue for fiscal nine months ended September 27, 2020 decreased by $78.2 million compared with the fiscal nine months ended September 29, 2019. This decrease included operational net revenue declines of 4.6% and a negative impact of 1.3% from foreign currency fluctuations. We also incurred higher idle or underutilized facilities costs, higher freight costs and higher distribution costs, which were partially offset by cost containment measures to incur lower employee-related costs and lower travel-related costs. Our results were also affected by a research and development upfront payment of $7.5 million, higher foreign currency losses, primarily unrealized, and losses on early extinguishment of our 2022 Notes, partially offset by lower interest expense.

Net revenue

Net revenue for the fiscal nine months ended September 27, 2020 decreased by $78.2 million, or 5.9%, compared with the fiscal nine months ended September 29, 2019. Revenues for the fiscal nine months ended September 27, 2020 included operational net revenue declines of 4.6% and a negative impact of 1.3% from foreign currency fluctuations, which was primarily driven by the strengthening of the U.S. Dollar against a variety of currencies. The decrease in revenues for the fiscal nine months ended September 27, 2020, excluding the impact of foreign currency exchange, was mainly driven by lower revenues in our Clinical Laboratories

business in the EMEA, Greater China, Japan, Latin America (“LATAM”) and ASPAC regions, lower revenues in our Transfusion Medicine business in all regions due primarily to decreased shipments to customers as a result of the global COVID-19 pandemic, and lower Other Product revenues due to the reduction and timing of certain performance obligations in a contract manufacturing arrangement. These decreases in revenues were partially offset by increases in our Clinical Laboratories business in the North America region related to sales of our COVID-19 antibody tests, instrument sales and grant revenue related to development of our COVID-19 antibody and antigen tests.

The following table shows total net revenue by line of business:

Fiscal nine months ended

($ in millions)

September 27, 2020

September 29, 2019

% Change

Clinical Laboratories

819.2

845.5

(3.1)%

Transfusion Medicine

414.5

439.6

(5.7)%

Core Revenue

1,233.7

1,285.1

(4.0)%

Other Product Revenue

3.7

26.6

(86.1)%

Collaboration and Other Revenue

12.2

16.1

(24.2)%

Non-Core Revenue

15.9

42.7

(62.8)%

Net Revenue

1,249.6

1,327.8

(5.9)%

Core revenue

Clinical Laboratories revenue for the fiscal nine months ended September 27, 2020 decreased by $26.3 million, or 3.1%, compared with the fiscal nine months ended September 29, 2019. This decrease included operational net revenue declines of 1.4% and a negative impact of 1.7% from foreign currency fluctuations. Clinical Laboratories revenue decreased in the EMEA, Greater China, Japan, LATAM and ASPAC regions due to decreased shipments to customers primarily as a result of the global COVID-19 pandemic as well as a decline in revenues of $15.8 million in our HCV business to $20.4 million, primarily related to a supply agreement in Japan, as compared to $36.2 million of HCV revenues for the fiscal nine months ended September 29, 2019. These decreases were partially offset by increases in North America related to reagent sales of our COVID-19 antibody tests, instrument sales and grant revenue related to development of our COVID-19 antibody and antigen tests.

Transfusion Medicine revenue for the fiscal nine months ended September 27, 2020 decreased by $25.1 million, or 5.7%, compared with the fiscal nine months ended September 29, 2019. This decrease included operational net revenue declines of 5.0% and a negative impact of 0.7% from foreign currency fluctuations. The decrease in Transfusion Medicine revenue was primarily driven by decreased shipments to customers in all regions as a result of the global COVID-19 pandemic.

Non-core revenue

Other product revenue, related to our contract manufacturing business, decreased by $22.9 million, or 86.1%, for the fiscal nine months ended September 27, 2020 compared with the fiscal nine months ended September 29, 2019, due to the reduction and timing of certain performance obligations in a contract manufacturing arrangement.

Collaboration and other revenue for the fiscal nine months ended September 27, 2020 decreased by $3.9 million, or 24.2%, compared with the fiscal nine months ended September 29, 2019. The decrease was primarily due to lower revenues related to our HCV/HIV license agreements.

Cost of revenue, excluding amortization of intangible assets and gross profit



	Fiscal nine months ended
($ in millions)	September 27, 2020		% of net revenue		September 29, 2019		% of net revenue
Cost of revenue, excluding amortization of intangible assets	$	650.2		52.0%	$	684.0		51.5%
Gross profit	$	599.4		48.0%	$	643.8		48.5%

The increase in cost of revenue and decrease in gross profit as a percentage of net revenue for the fiscal nine months ended September 27, 2020 compared with the fiscal nine months ended September 29, 2019 was primarily due to idle or underutilized facility costs of $10.6 million and freight costs of $5.0 million incurred as a result of the global COVID-19 pandemic. This increase was partially offset by $9.8 million of lower restructuring costs in the fiscal nine months ended September 27, 2020 compared with the fiscal nine months ended September 29, 2019, which were primarily related to depreciation related charges incurred in fiscal nine months ended September 29, 2019 related to assets no longer in use due to the transfer of certain production lines. See “—Restructuring activities.”

Operating expenses

The following table provides a summary of certain operating expenses:



	Fiscal nine months ended
($ in millions)	September 27, 2020		% of net revenue		September 29, 2019		% of net revenue
Selling, marketing and administrative expenses	$	347.9		27.8%	$	379.5		28.6%
Research and development expense		82.1		6.6%		73.7		5.6%
Amortization of intangible assets		98.7		7.9%		98.7		7.4%
Other operating expense, net		22.8		1.8%		36.7		2.8%

Selling, marketing and administrative expenses

Selling, marketing and administrative expenses were $347.9 million for the fiscal nine months ended September 27, 2020, or 27.8% of net revenue, as compared with $379.5 million for the fiscal nine months ended September 29, 2019, or 28.6% of net revenue, a decrease of $31.6 million. The decrease in selling, marketing and administrative expenses was primarily due to decreased employee-related costs, including stock-based compensation and severance expense, and decreased travel-related costs, partially offset by increased distribution costs and increased third-party costs.

Research and development expense

Research and development expense was $82.1 million for the fiscal nine months ended September 27, 2020, or 6.6% of net revenue, as compared with research and development expense of $73.7 million for the fiscal nine months ended September 29, 2019, or 5.6% of net revenue, an increase of $8.4 million. The increase was primarily due to a research and development upfront payment of $7.5 million made to Quotient upon the signing of a binding letter agreement and costs incurred to perform research and development activities related to developing our COVID-19 antibody and antigen tests.

Amortization of intangible assets

Amortization of intangible assets was $98.7 million for the fiscal nine months ended September 27, 2020 as compared with $98.7 million for the fiscal nine months ended September 29, 2019. There were no major changes in the composition of our intangible assets in the fiscal nine months ended September 27, 2020 compared to the fiscal nine months ended September 29, 2019.

Other operating expense, net

Other operating expense, net, was $22.8 million, or 1.8% of net revenue, for the fiscal nine months ended September 27, 2020, as compared with $36.7 million, or 2.8% of net revenue, for the fiscal nine months ended September 29, 2019, a decrease of $13.9 million. The decrease was primarily due to lower profit share expense in the current year from lower revenue related to our Joint Business.

Non-operating items

Interest expense, net

Interest expense was $148.6 million for the fiscal nine months ended September 27, 2020, compared with $177.7 million for the fiscal nine months ended September 29, 2019. The decrease of $29.1 million primarily related to lower interest rates on the Dollar Term Loan Facility.

Tax indemnification expense, net

Tax indemnification expense was $11.6 million for the fiscal nine months ended September 27, 2020, and was primarily related to the release of certain tax reserves upon the settlement of certain state tax matters, with an offsetting benefit recorded to income tax expense. Tax indemnification expense was $31.4 million for the fiscal nine months ended September 29, 2019, and was primarily related to the release of certain tax reserves upon the settlement of certain state tax matters, with an offsetting benefit recorded to income tax expense.

Other expense, net

Other expense, net was $61.1 million for the fiscal nine months ended September 27, 2020 and was comprised primarily of $49.4 million of net foreign currency losses, of which $51.1 million was unrealized, mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries, and loss on early extinguishment of the 2022 Notes of $12.6 million.

Other expense, net was $34.5 million for the fiscal nine months ended September 29, 2019 and was comprised primarily of fair value losses of $20.2 million of net foreign currency losses, of which $16.9 million was unrealized, mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries, and fair value losses of $14.8 million from our interest rate caps.

Provision from income taxes

During the fiscal nine months ended September 27, 2020, we incurred a loss before provision from income taxes of $173.4 million and recognized a benefit from income taxes of $2.4 million resulting in an effective tax rate of 1.4%. The effective tax rate differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance (2) a decrease in our pre-Acquisition state reserves for uncertain tax positions due to the settlement of certain tax matters, (3) an increase in our interest expense on prior year reserves for uncertain tax positions, (4) the

tax expense associated with the revaluation of certain deferred tax liabilities in connection with changes in foreign tax rates due to enactment of tax legislation, and (5) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

During the fiscal nine months ended September 29, 2019, we incurred a loss before provision from income taxes of $188.4 million and recognized a benefit from income taxes of $29.9 million resulting in an effective tax rate of 15.9%. The effective tax rate for each period differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance, (2) a decrease in our pre-Acquisition state and non-U.S. reserves for uncertain tax positions due to the settlement of certain tax matters, (3) an increase in our interest expense on prior year reserves for uncertain tax positions and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

Segment Results

The key indicators that we monitor are as follows:

•

Net revenue - This measure is discussed in the section entitled “Results of operations;”

•

Management EBITDA — Management EBITDA by reportable segment is used by our management to measure and evaluate the internal operating performance of our segments. It is also the basis for calculating certain management incentive compensation programs. Management EBITDA is our Adjusted EBITDA further adjusted for other items including realized foreign currency gains and losses, impact from adoption of accounting standards, costs in connection with COVID-19 and other immaterial management adjustments. We believe that this measurement is useful to investors as a way to analyze the underlying trends in our core business, including at the segment level, consistently across the periods presented and also to evaluate performance under management incentive compensation programs.



	Fiscal nine months ended
(Dollars in millions)	September 27, 2020		September 29, 2019		% Change
Segment net revenue
North America	$	668.8	$	662.6		0.9%
EMEA		168.2		178.5		(5.8)%
Greater China		162.3		179.8		(9.7)%
Other		250.3		306.9		(18.4)%

Net revenue		1,249.6		1,327.8		(5.9)%



	Fiscal nine months ended
(Dollars in millions)	September 27, 2020			September 29, 2019			% Change
Management EBITDA
North America	$	321.6		$	284.3			13.1%
EMEA		36.7			38.8			(5.4)%
Greater China		79.3			88.3			(10.2)%
Other		77.5			94.7			(18.2)%
Corporate		(148.4	)		(144.5	)		(2.7)%

Total Management EBITDA		366.7			361.6			1.4%

North America

Net revenue was $668.8 million for the fiscal nine months ended September 27, 2020 compared to net revenue of $662.6 million for the fiscal nine months ended September 29, 2019. The increase of $6.2 million, or 0.9%, was primarily due to reagent sales of our COVID-19 antibody tests, higher instrument sales and grant revenue related to development of our COVID-19 antibody and antigen tests.

Management EBITDA was $321.6 million for the fiscal nine months ended September 29, 2020 compared to management EBITDA of $284.3 million for the fiscal nine months ended September 29, 2019. The increase of $37.3 million, or 13.1%, was primarily due to higher revenues, partially offset by lower employee-related costs and lower travel-related costs.

EMEA

Net revenue was $168.2 million for the fiscal nine months ended September 27, 2020 compared to net revenue of $178.5 million for the fiscal nine months ended September 29, 2019. The decrease of $10.3 million, or 5.8%, which included operational net revenue declines of 5.6% and a negative impact of 0.2% from foreign currency fluctuations, was primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic.

Management EBITDA was $36.7 million for the fiscal nine months ended September 27, 2020 compared to management EBITDA of $38.8 million for the fiscal nine months ended September 29, 2019. The decrease of $2.1 million, or 5.4%, was primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic, partially offset by lower employee-related costs and lower travel-related costs.

Greater China

Net revenue was $162.3 million for the fiscal nine months ended September 27, 2020 compared to net revenue of $179.8 million for the fiscal nine months ended September 29, 2019. The decrease of $17.5 million, or 9.7%, which included operational net revenue declines of 8.5% and a negative impact of 1.2% from foreign currency fluctuations, was primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic.

Management EBITDA was $79.3 million for the fiscal nine months ended September 29, 2020 compared to management EBITDA of $88.3 million for the fiscal nine months ended September 29, 2019. The decrease of $9.0 million, or 10.2%, was primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic, partially offset by lower travel-related costs.

Other

Net revenue was $250.3 million for the fiscal nine months ended September 27, 2020 compared to net revenue of $306.9 million for the fiscal nine months ended September 29, 2019. The decrease of $56.6 million, or 18.4%, which included operational net revenue declines of 14.3% and a negative impact of 4.1% from foreign currency fluctuations, was primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic as well as the timing of shipments related to a supply agreement in our HCV business in the Japan region.

Management EBITDA was $77.5 million for the fiscal nine months ended September 27, 2020 compared to management EBITDA of $94.7 million for the fiscal nine months ended September 29, 2019. The decrease of $17.2 million, or 18.2%, was primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic as well as the timing of shipments related to a supply agreement in our HCV business in the Japan region, partially offset by lower employee-related costs.

Fiscal year ended December 29, 2019 compared with fiscal year ended December 30, 2018

Overview of results

Reported net loss of $156.9 million decreased $91.9 million during fiscal year 2019 compared with fiscal year 2018. The decrease in net loss during fiscal year 2019 was primarily due to higher revenues, lower cost of revenue, primarily due to lower restructuring-related costs, lower debt refinancing costs and lower foreign exchange related losses. These items were offset by higher selling, marketing and administrative costs, primarily driven by increased stock-based compensation expense.

Net revenue

Net revenue for the fiscal year ended December 29, 2019 increased by $14.2 million, or 0.8%, compared with the fiscal year ended December 30, 2018. Revenues for the fiscal year ended December 29, 2019 included the impact of unfavorable foreign currency exchange of approximately $29 million, primarily driven by changes in the Chinese Yuan/Renminbi, Euro, British Pound and Brazilian Real. Excluding the impact of foreign currency exchange, the increase in revenues for the fiscal year ended December 29, 2019 was driven primarily by increased revenues in Japan, primarily as a result of a supply agreement related to our HCV business, the impact of which is included in our Clinical Laboratories business, as well as increased revenues in China, North America, LATAM, and ASPAC, primarily related to our Clinical Laboratories business. These increases were partially offset by lower revenues related to our Donor Screening business within Transfusion Medicine in Japan and other product and collaboration revenues, which are included in our U.S. results.

The following table shows net revenues by line of business:



	Fiscal year ended
($ in millions)	December 29, 2019		December 29, 2018		% Change
Clinical Laboratories	$	1,142.3	$	1,102.5		3.6%
Transfusion Medicine		598.0		616.1		(2.9)%


Core Revenue		1,740.3		1,718.6		1.3%
Other Product Revenue		37.3		36.0		3.6%
Collaboration and Other Revenue		23.9		32.7		(26.9)%


Non-Core Revenue		61.2		68.7		(10.9)%


Net Revenue	$	1,801.5	$	1,787.3		0.8%

Core revenue

Clinical Laboratories revenue increased $39.8 million, or 3.6%, during the fiscal year ended December 29, 2019 compared with the fiscal year ended December 30, 2018. Excluding the unfavorable impact of foreign currency exchange of approximately $22 million, the increase in Clinical Laboratories revenue was primarily driven by reagent sales in Japan, primarily as a result of a supply agreement related to our HCV business, China, North America, LATAM, and ASPAC, and instrument sales in China. These increases were partially offset by lower instrument sales in North America.

Transfusion Medicine revenue decreased $18.1 million, or 2.9%, during the fiscal year ended December 29, 2019 compared with the fiscal year ended December 30, 2018. Excluding the unfavorable impact of foreign currency exchange of approximately $9 million, the decrease in Transfusion Medicine revenue was primarily driven by decreased reagent sales in Japan in the Donor Screening business, partially offset by increased reagent sales in the Immunohematology business.

Non-core revenue

Other product revenue, related to our contract manufacturing business, increased $1.3 million, or 3.6%, during the fiscal year ended December 29, 2019 compared with the fiscal year ended December 30, 2018 primarily due to the timing of completion of certain performance obligations.

Collaboration and other revenue during the fiscal year ended December 29, 2019 decreased $8.8 million compared with the fiscal year ended December 30, 2018, primarily due to lower revenues recorded related to our HCV/HIV license agreements.

Cost of revenue, excluding amortization of intangible assets and gross profit



	Fiscal year ended
($ in millions)	December 29, 2019		% of total revenue		December 30, 2018		% of total revenue
Cost of revenue, excluding amortization of intangible assets	$	922.4		51.2%	$	930.5		52.1%
Gross profit	$	879.1		48.8%	$	856.8		47.9%

The decrease in cost of revenue and increase in gross profit as a percentage of net revenue in the fiscal year ended December 29, 2019 compared with the fiscal year ended December 30, 2018 was primarily due to $20.8 million of lower restructuring costs in the fiscal year ended December 29, 2019 compared with the fiscal year ended December 30, 2018. This was partially offset by higher revenues primarily due to an increase in volume of reagent sales in our core business in the fiscal year ended December 29, 2019. See “—Restructuring activities.”

Operating expenses

The following table provides a summary of certain operating expenses:



	Fiscal year ended
($ in millions)	December 29, 2019		% of net revenue		December 30, 2018		% of net revenue
Selling, marketing and administrative expenses	$	515.1		28.6%	$	491.6		27.5%
Research and development expense		98.0		5.4%		98.7		5.5%
Amortization of intangible assets		131.7		7.3%		128.8		7.2%
Other operating expense, net		48.8		2.7%		71.2		4.0%

Selling, marketing and administrative expenses

Selling, marketing and administrative expenses were $515.1 million for the fiscal year ended December 29, 2019 as compared with $491.6 million for the fiscal year ended December 30, 2018, an increase of $23.5 million, or 4.8%. As a percentage of net revenue, selling, marketing and administrative expenses was 28.6% for the fiscal year ended December 29, 2019 as compared with 27.5% for the fiscal year ended December 30, 2018. The increase in selling, marketing and administrative expenses was primarily due to increased stock-based compensation expense of $11.4 million and other employee-related costs, including the strategic investments in our sales force in key markets, during the fiscal year ended December 29, 2019, partially offset by lower consulting-related expenses.

Research and development expense

Research and development expense was $98.0 million for the fiscal year ended December 29, 2019 as compared with $98.7 million for the fiscal year ended December 30, 2018, a decrease of $0.7 million, or 0.7%. As a percentage of net revenue, research and development expense was 5.4% for the fiscal year ended December 29, 2019 as compared with 5.5% for the fiscal year ended December 30, 2018. The decrease in research and development spending was primarily due to the timing of certain clinical trials and regulatory-related spending.

Amortization of intangible assets

Amortization of intangible assets was $131.7 million and $128.8 million for the fiscal year ended December 29, 2019 and December 30, 2018, respectively. The increase in amortization of intangible assets was due to the reclassification of our in-process research and development intangible to developed technology and the commencement of amortization during the third quarter of fiscal year 2018 upon receipt of CE Mark on the related instrument.

Other operating expense, net

Other operating expense, net, of $48.8 million for the fiscal year ended December 29, 2019 decreased by $22.4 million compared with the fiscal year ended December 30, 2018. The decrease was primarily driven by $18.5 million of debt refinancing costs incurred during the fiscal year ended December 30, 2018 relating to the second amendment to our Senior Secured Credit Facilities on June 8, 2018, as well as higher restructuring costs of $3.6 million in fiscal year 2018.

Non-operating items

Interest expense, net

Interest expense was $231.4 million for the fiscal year ended December 29, 2019, compared with $235.6 million during the fiscal year ended December 30, 2018. The decrease of $4.2 million primarily resulted from lower amortization of deferred financing costs and original issue discounts.

Tax indemnification (income) expense

Tax indemnification expense was $29.2 million for the fiscal year ended December 29, 2019 and was primarily related to indemnification expense related to the release of certain tax reserves upon the settlement of certain state tax matters, with an offsetting benefit recorded to income tax expense. Tax indemnification income was $13.1 million for the fiscal year ended December 30, 2018 and was primarily related to interest on our indemnification receivables related to certain state tax matters included in our pre-Acquisition audit reserves.

Other expense (income), net

Other expense, net for the fiscal year ended December 29, 2019 was $5.7 million and primarily related to $16.0 million of fair value losses on interest rate caps that did not qualify for hedge accounting, partially offset by $10.5 million of net foreign currency gains, of which $18.1 million was unrealized. The unrealized foreign currency gains are mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries.

Other expense, net for the fiscal year ended December 30, 2018 was $61.6 million and primarily related to $53.0 million of net foreign currency losses, of which $43.3 million was unrealized and fair value losses of

$2.7 million on interest rate caps that did not qualify for hedge accounting. The unrealized foreign currency losses are mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries.

Provision for income taxes

We recorded a benefit from income taxes of $23.9 million for the fiscal year ended December 29, 2019, which represents a 13.3% effective tax rate in relation to the loss before provision for taxes of $180.8 million. The effective tax rate for the fiscal year ended December 29, 2019 differs from the U.S. federal statutory tax rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance, (2) a decrease in our pre-Acquisition state and non-U.S. reserves for uncertain tax positions due to the settlement of certain tax matters, (3) an increase in our interest expense on prior year reserves for uncertain tax positions and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate. Deferred tax assets are reduced by valuation allowances when, based on available evidence, it is more likely than not that the tax benefit of loss carryforwards (or other deferred tax assets) will not be realized in the future. In periods when entities subject to a valuation allowance generate pre-tax earnings or losses, the corresponding increase or decrease in the valuation allowance has an overall impact on the effective tax rate.

We recorded a provision for income taxes of $31.2 million for the fiscal year ended December 30, 2018, which represents a negative 14.3% effective tax rate in relation to the loss before provision for taxes of $217.6 million. The effective tax rate for the fiscal year ended December 30, 2018 differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance, (2) an increase in our reserves for uncertain tax positions, (3) an increase in our interest expense on prior year reserves for uncertain tax positions and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

Segment Results

The key indicators that we monitor are as follows:

•

Net revenue - This measure is discussed in the section entitled “Results of operations;”

•

Management EBITDA – Management EBITDA by reportable segment is used by our management to measure and evaluate the internal operating performance of our segments. It is also the basis for calculating certain management incentive compensation programs. Management EBITDA is our Adjusted EBITDA further adjusted for other items including realized foreign currency gains and losses, impact from adoption of accounting standards, costs in connection with COVID-19 and other immaterial management adjustments. We believe that this measurement is useful to investors as a way to analyze the underlying trends in our core business, including at the segment level, consistently across the periods presented and also to evaluate performance under management incentive compensation programs.



	Fiscal year ended
(Dollars in millions)	December 29, 2019		December 30, 2018		% Change
Segment net revenue
North America	$	896.6	$	901.3		(0.5)%
EMEA		251.5		263.6		(4.6)%
Greater China		242.5		224.3		8.1%
Other		410.9		398.1		3.2%

Net revenue		1,801.5		1,787.3		0.8%



	Fiscal year ended
(Dollars in millions)	December 29, 2019			December 30, 2018			% Change
Management EBITDA
North America	$	367.9		$	379.9			(3.2)%
EMEA		44.1			40.9			7.8%
Greater China		116.3			102.3			13.7%
Other		113.6			102.2			11.2%
Corporate		(139.3	)		(139.8	)		0.4%

Total Management EBITDA		502.6			485.5			3.5%

North America

Net revenue was $896.6 million for the fiscal year ended December 29, 2019 compared to net revenue of $901.3 million for the fiscal year ended December 30, 2018. The decrease of $4.7 million, or 0.5%, was due to lower non-core collaboration and other revenue of $8.8 million and lower instrument sales in our Donor Screening business, partially offset by increased reagent sales in our Clinical Laboratories business.

Management EBITDA was $367.9 million for the fiscal year ended December 29, 2019 compared to management EBITDA of $379.9 million for the fiscal year ended December 30, 2018. The decrease of $12.0 million, or 3.2%, was due to strategic investments in our sales force in the region and higher customer service costs.

EMEA

Net revenue was $251.5 million for the fiscal year ended December 29, 2019 compared to net revenue of $263.6 million for the fiscal year ended December 30, 2018. The decrease of $12.1 million, or 4.6%, was primarily due to negative impact of foreign currency of approximately $10 million.

Management EBITDA was $44.1 million for the fiscal year ended December 29, 2019 compared to management EBITDA of $40.9 million for the fiscal year ended December 30, 2018. The increase of $3.2 million, or 7.8%, was due to lower operating costs.

Greater China

Net revenue was $242.5 million for the fiscal year ended December 29, 2019 compared to net revenue of $224.3 million for the fiscal year ended December 30, 2018. The increase of $18.2 million, or 8.1%, was primarily due to higher reagent and instrument sales in our Clinical Laboratories business, partially offset by negative impact of foreign currency of approximately $10 million.

Management EBITDA was $116.3 million for the fiscal year ended December 29, 2019 compared to management EBITDA of $102.3 million for the fiscal year ended December 30, 2018. The increase of $14.0 million, or 13.7%, was primarily due to the increases in revenue described above, partially offset by strategic investments in the region.

Other

Net revenue was $410.9 million for the fiscal year ended December 29, 2019 compared to net revenue of $398.1 million for the fiscal year ended December 30, 2018. The increase of $12.8 million, or 3.2%, was due to strong growth in the LATAM and ASPAC regions, partially offset by negative impact of foreign currency of approximately $8 million.

Management EBITDA was $113.6 million for the fiscal year ended December 29, 2019 compared to management EBITDA of $102.2 million for the fiscal year ended December 30, 2018. The increase of $11.4 million, or 11.2%, was due to higher volumes, favorable product mix and lower operating expenses.

Fiscal year December 30, 2018 compared with fiscal year ended December 31, 2017

Overview of results

Reported net loss of $248.8 million increased $132.5 million during fiscal year 2018 compared with fiscal year 2017. The increase in net loss during fiscal year 2018 was primarily due to unrealized foreign exchange losses fiscal year 2018 compared with unrealized gains in the prior fiscal year resulting from the revaluation of intercompany loans included in other non-operating expense (income), net. We also incurred $18.5 million of debt refinancing costs during the fiscal year ended December 30, 2018. These increases to net loss were partially offset by increased revenues and lower operating expenses, including lower transition costs, and impairment charges of $20.2 million and $11.0 million related to an investment and an intangible asset, respectively, which were recorded during the fiscal year ended December 31, 2017.

Net revenue

Net revenue increased by $5.6 million, or 0.3%, mainly due to increased revenues in LATAM, driven by the inclusion of the results of the operations in Brazil, one of the Day 2 Countries, for the full year in fiscal 2018, China and ASPAC, as well as the favorable impact of foreign exchange, partially offset by lower revenues in EMEA and related to collaborations.

The following table shows net revenues by line of business:



	Fiscal year ended
($ in millions)	December 30, 2018		December 31, 2017		% Change
Clinical Laboratories	$	1,102.5	$	1,097.9		0.4%
Transfusion Medicine		616.1		598.7		2.9%


Core Revenue		1,718.6		1,696.6		1.3%
Other Product Revenue		36.0		46.0		(21.7)%
Collaboration and Other Revenue		32.7		39.1		(16.4)%


Non-Core Revenue		68.7		85.1		(19.3)%


Net Revenue⁽¹⁾	$	1,787.3	$	1,781.7		0.3%

(1)

During the fiscal year ended December 31, 2017, net revenue does not include a $17 million net impact of revenue from the Day 2 Countries.

Core revenue

Clinical Laboratories revenue increased $4.6 million, or 0.4%, during the fiscal year ended December 30, 2018 compared with the fiscal year ended December 31, 2017 due to the inclusion of Brazil, one of the Day 2 Countries, in our financial results for the full fiscal year in fiscal 2018, higher reagent sales in China and increased volume of our veterinary-related assays. These increases were partially offset by lower sales of reagents in EMEA and Japan.

Transfusion Medicine revenue increased by $17.4 million, or 2.9%, during the fiscal year ended December 30, 2018 compared with the fiscal year ended December 31, 2017 primarily due to increased sales in the Donor Screening business in North America for both reagents and instruments. In the Immunohematology business, we had increased sales in China and ASPAC, in addition to the favorable impact of foreign exchange of approximately $7.0 million, partially offset by lower sales in North America and EMEA.

Non-core revenue

Other product revenue, related to our contract manufacturing business, decreased by $10.0 million, or 21.7%, during the fiscal year ended December 30, 2018 compared with the fiscal year ended December 31, 2017 primarily due to the timing of shipments.

Collaboration and other revenue during the fiscal year ended December 30, 2018 decreased $6.4 million compared with the fiscal year ended December 31, 2017, primarily due to revised product pricing terms in connection with the revised Abbott supply agreement signed during fiscal year 2015 and lower revenues related to our HIV/HCV license agreements.

During the fiscal year ended December 31, 2017, we completed the acquisition of operations in Brazil, the last of the Day 2 Countries. If that entity had been included for the entire fiscal year, revenues for the fiscal year ended December 31, 2017 would have been higher by $17.0 million.

Cost of revenue, excluding amortization of intangible assets and gross profit



	Fiscal year ended
($ in millions)	December 30, 2018		% of net revenue		December 31, 2017		% of net revenue
Cost of revenue, excluding amortization of intangible assets	$	930.5		52.1%	$	897.7		50.4%
Gross profit	$	856.8		47.9%	$	884.0		49.6%

The increase in cost of revenue and decrease in gross profit as a percent of net revenue in the fiscal year ended December 30, 2018 compared to the fiscal year ended December 31, 2017 was primarily due to product mix and $19.1 million of higher restructuring costs in the fiscal year ended December 30, 2018 compared with the fiscal year ended December 31, 2017. See“—Restructuring activities.”

Operating expenses

The following table provides a summary of certain operating expenses:



	Fiscal year ended
($ in millions)	December 30, 2018		% of net revenue		December 31, 2017		% of net revenue
Selling, marketing and administrative expenses	$	491.6		27.5%	$	499.8		28.1%
Research and development expense		98.7		5.5%		96.4		5.4%
Amortization expense		128.8		7.2%		162.0		9.1%
Intangible asset impairment charge		—		0.0%		11.0		0.6%
Other operating expense, net	$	71.2		4.0%	$	79.5		4.5%

Selling, marketing and administrative expenses

Selling, marketing and administrative expenses were $491.6 million for the fiscal year ended December 30, 2018 as compared with $499.8 million for the fiscal year ended December 31, 2017 a decrease of $8.2 million, or 1.6%. The decrease in selling, marketing and administrative expenses was primarily due to $33.4 million of costs to transition to a standalone company during fiscal year 2017 and lower commissions during fiscal year 2018, partially offset by the inclusion of Brazil in our financial results for the full fiscal year in fiscal 2018, as well as higher professional fees and employee-related costs.

Research and development expense

Research and development expense was $98.7 million for the fiscal year ended December 30, 2018 as compared with $96.4 million for the fiscal year ended December 31, 2017, an increase of $2.3 million, or 2.4%. As a percentage of net revenue, research and development expense was 5.5% for the fiscal year ended December 30, 2018 as compared with 5.4% for the fiscal year ended December 31, 2017. The increase in research and development spending was primarily related to the timing of research and development projects.

Amortization of intangible assets

Amortization of intangible assets was $128.8 million and $162.0 million for the fiscal year ended December 30, 2018 and December 31, 2017, respectively. The decrease in amortization of intangible assets is due to the full amortization of certain intangible assets as of the end of fiscal year 2017.

Intangible asset impairment charge

During the fiscal year ended December 31, 2017, we recorded a noncash impairment charge of $11.0 million to write down the in-process research and development intangible asset to its estimated fair value.

Other operating expense, net

Other operating expense, net of $71.2 million for the fiscal year ended December 30, 2018 decreased by $8.3 million compared with the fiscal year ended December 31, 2017. The decrease was primarily due to a noncash impairment charge of $20.2 million to write down the carrying value of our equity investment in Astute Medical, Inc. to its estimated fair value during the fiscal year ended December 31, 2017, as well as lower profit-sharing expenses related to the Joint Business during the fiscal year ended December 30, 2018. These decreases were partially offset by $18.5 million of debt refinancing costs incurred during the fiscal year ended December 30, 2018 relating to the second amendment to our Senior Secured Credit Facilities on June 8, 2018, as well as higher restructuring costs in fiscal year 2018.

Non-operating items

Interest expense, net

Interest expense was $235.6 million for the fiscal year ended December 30, 2018, compared with $239.8 million during the fiscal year ended December 31, 2017. The decrease of $4.2 million primarily resulted from a $5.3 million fair value gain related to our interest rate caps during the fiscal year ended December 30, 2018, partially offset by higher interest expense related to our Term Loan Facilities as a result of increased outstanding borrowings following a refinancing of the Senior Secured Credit Facilities on June 6, 2017.

Tax indemnification (income) expense

Tax indemnification income was $13.1 million for the fiscal year ended December 30, 2018 compared with $124.1 million for the fiscal year ended December 31, 2017. The decrease of $111.0 million was primarily related to the recordation of a state tax reserve in the fiscal year ended December 31, 2017. This state tax reserve primarily relates to the taxability of the sale of the Company’s assets on the Acquisition date from Johnson & Johnson to the Company and the calculation of the resulting state tax due.

Other (income) expense, net

Other income, net for the fiscal year ended December 30, 2018 of $61.6 million consisted primarily related to foreign currency losses of $53.0 million, of which $43.3 million was unrealized, and fair value losses of $2.7 million on interest rate caps. Other income, net for the fiscal year ended December 31, 2017 of $66.1 million and primarily related to $69.2 million of foreign currency gains of which $66.9 million was unrealized. The unrealized foreign currency gains/losses in each period are related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries.

Provision for income taxes

We recorded a provision for income taxes of $31.2 million for the fiscal year ended December 30, 2018, which represents a negative 14.3% effective tax rate in relation to the loss before provision for taxes of $217.6 million. The effective tax rate for the fiscal year ended December 30, 2018 differs from the U.S. federal statutory tax rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance, (2) an increase in our reserves for uncertain tax positions, (3) an increase in our interest expense on prior year reserves for uncertain tax positions and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

We recorded a provision for income taxes of $102.0 million for the fiscal year ended December 31, 2017, which represents a negative 713.3% effective tax rate in relation to the loss before provision for taxes of $14.3 million. The effective tax rate for the fiscal year ended December 31, 2017 differs from the U.S. federal statutory tax rate primarily due to (1) the recordation of certain tax reserves in connection with the pre-Acquisition state tax gain on the sale of assets, (2) the tax benefit associated with the revaluation of certain deferred tax liabilities in connection with the rate reduction and revision of net operating loss and interest expense limitation rules promulgated in the TCJA, (3) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

Segment Results

The key indicators that we monitor are as follows:

•

Net revenue - This measure is discussed in the section entitled “Results of operations;”

•



	Fiscal year ended
(Dollars in millions)	December 30, 2018		December 31, 2017		% Change
Segment net revenue
North America	$	901.3	$	915.2		(1.5)%
EMEA		263.6		286.6		(8.0)%
Greater China		224.3		205.7		9.0%
Other		398.1		374.2		6.4%

Net revenue		1,787.3		1,781.7		0.3%



	Fiscal year ended
(Dollars in millions)	December 30, 2018			December 31, 2017			% Change
Management EBITDA
North America	$	379.9		$	391.7			(3.0)%
EMEA		40.9			61.3			(33.3)%
Greater China		102.3			93.1			9.9%
Other		102.2			94.1			8.6%
Corporate		(139.8	)		(153.2	)		8.7%

Total Management EBITDA		485.5			487.0			(0.3)%

North America

Net revenue was $901.3 million for the fiscal year ended December 30, 2018 compared to net revenue of $915.2 million for the fiscal year ended December 31, 2017. The decrease of $13.9 million, or 1.5%, was primarily due to the decrease in non-core revenue of $16.4 million.

Management EBITDA was $379.9 million for the fiscal year ended December 30, 2018 compared to management EBITDA of $391.7 million for the fiscal year ended December 31, 2017. The decrease of $11.8 million, or 3.0%, was primarily due to lower volumes, partially offset by operating expense control.

EMEA

Net revenue was $263.6 million for the fiscal year ended December 30, 2018 compared to net revenue of $286.6 million for the fiscal year ended December 31, 2017. The decrease of $23.0 million, or 8.0%, was primarily due to lower reagent sales in our Clinical Laboratories business.

Management EBITDA was $40.9 million for the fiscal year ended December 30, 2018 compared to management EBITDA of $61.3 million for the fiscal year ended December 31, 2017. The decrease of $20.4 million, or 33.3%, was primarily due to the decrease in sales described above.

Greater China

Net revenue was $224.3 million for the fiscal year ended December 30, 2018 compared to net revenue of $205.7 million for the fiscal year ended December 31, 2017. The increase of $18.6 million, or 9.0%, was primarily due to increased reagent sales in our Clinical Laboratories and Immunohematology businesses.

Management EBITDA was $102.3 million for the fiscal year ended December 30, 2018 compared to management EBITDA of $93.1 million for the fiscal year ended December 31, 2017. The increase of $9.2 million, or 9.9%, was primarily due to the increase in sales described above.

Other

Net revenues were $398.1 million for the fiscal year ended December 30, 2018 compared to net revenues of $374.2 million for the fiscal year ended December 31, 2017. The increase of $23.9 million, or 6.4%, was primarily due to the inclusion of Brazil, one of the Day 2 Countries, in our financial results for the full fiscal year ended December 30, 2018 and growth in the ASPAC region.

Management EBITDA was $102.2 million for the fiscal year ended December 30, 2018 compared to management EBITDA of $94.1 million for the fiscal year ended December 31, 2017. The increase of $8.1 million, or 8.6%, was due to the increase in sales in the ASPAC and LATAM regions.

Liquidity and capital resources

During January 2020, we amended our Revolving Credit Facility, entered into the Euro Term Loan Facility and issued the 2028 Notes. Concurrently with the issuance of the 2028 Notes, we entered into a $350 million U.S. dollar-equivalent swap to Japanese Yen-denominated interest at a weighted average rate of 5.56% with a five-year term. During June 2020, we issued the 2025 Notes. During the fiscal years ended December 30, 2018 and December 31, 2017, we amended our Dollar Term Loan Facility and Revolving Credit Facility. See “—Debt capitalization” for additional details.

As of September 27, 2020 and December 29, 2019, we have no outstanding borrowings under the Revolving Credit Facility. Letters of credit issued under the Revolving Credit Facility totaled $35.6 million and

$34.6 million as of September 27, 2020 and December 29, 2019, respectively. Our availability under the Revolving Credit Facility was $314.4 million and $315.4 million as of September 27, 2020 and December 29, 2019, respectively.

In fiscal year 2016, we entered into the Financing Program with Wells Fargo Bank, N.A. The Financing Program is secured by receivables from the Ortho U.S. business that are sold or contributed to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary’s sole business consists of the purchase or receipt of the receivables and subsequent granting of a security interest to the financial institution under the program, and its assets are available first to satisfy obligations and are not available to pay creditors of our other legal entities. Under the Financing Program, we may borrow up to the lower of $75 million or 85% of the eligible accounts receivable borrowing base. At September 27, 2020 and December 29, 2019, the eligible accounts receivable borrowing base was $73.7 million and $90.7 million, respectively. Interest on outstanding borrowing under the Financing Program is charged based on a per annum rate equal to LIBOR Rate (with a floor of zero percent and as defined in the agreement) plus the LIBOR Rate Margin (2.25 percentage points) if the related loan is a LIBOR Rate Loan. Otherwise, the per annum rate is equal to a Base Rate (as defined in the agreement) plus the Base Rate Margin (1.25 percentage points). Interest is due and payable, in arrears, on the first day of each month. The Financing Program is also subject to termination under standard events of default as defined. Costs related to the Financing Program of $1.0 million were recorded as a reduction of the principal amount of the borrowings and are amortized using the effective interest method as a component of interest expense over the life of the Financing Program. As of September 27, 2020 and December 29, 2019, the remaining unamortized balance was $0.2 million and $0.3 million, respectively. On January 24, 2019, we extended the maturity of our Financing Program from September 23, 2019 to January 24, 2022. In addition, we amended our Financing Program terms to increase availability under the terms of the program within the existing $75 million limit of the agreement.

In fiscal year 2016, we entered into a sale-leaseback financing arrangement with a third-party financing company (the “Buyer-lessor”) related to specific property and equipment of the Company. The property and equipment were sold for $36.3 million and leased back over an initial term of two years. The monthly lease payments are $1.5 million until the equipment is repurchased or the lease is terminated. At the end of the initial term, we had the option to repurchase the property and equipment at a price to be negotiated with the Buyer-lessor or terminate the lease arrangement, return the property and (possibly) enter into a new lease agreement. During the fiscal second quarter ended July 1, 2018, we gave notice to the Buyer-lessor that we intended to negotiate with the Buyer-lessor the purchase of the property and equipment at the end of the initial term and have had discussions negotiating the repurchase price for the property and equipment. We and the Buyer-lessor were unable to agree on a repurchase price for the property and equipment and are currently involved in legal proceedings with respect to the lease arrangement. According to the agreement and subject to certain legal interpretations, if the parties do not reach an agreement to purchase the property and equipment at the end of the initial term, the lease will automatically renew for another year, after which the lease will automatically be renewed for successive 6-month periods, provided that each of the Company and the Buyer-lessor have a right to terminate the lease 30 days prior to the end of each 6-month renewal period. A security deposit for the leaseback was retained by the third-party financing company and will be refunded to us at the end of the lease term. The balance of the security deposit was $9.1 million as of September 27, 2020 and December 29, 2019, and was included in other current assets in the consolidated balance sheet. The transaction did not meet the criteria for sale-leaseback accounting as the security deposit constitutes a continuing involvement. Therefore, we are accounting for this arrangement as a financing and recorded a financing obligation amounting to $36.3 million at inception.

Historical cash flows

The following table presents a summary of our net cash inflows (outflows) for the periods shown



	Fiscal nine months ended						Fiscal year ended
($ in millions)	September 27, 2020			September 29, 2019			December 29, 2019			December 30, 2018			December 31, 2017
Net cash (used in) provided by operating activities	$	(48.6	)	$	97.0		$	143.0		$	69.6		$	68.0
Net cash (used in) investing activities		(27.5	)		(47.5	)		(68.5	)		(87.1	)		(118.0	)
Net cash provided by (used in) financing activities		71.3			(51.9	)		(64.4	)		(8.2	)		84.9

Fiscal nine months ended September 27, 2020

Net cash flows used in operating activities

Net cash used in operating activities was $48.6 million for the fiscal nine months ended September 27, 2020. Factors resulting in cash used in operating activities included payment of interest on borrowings of $155.5 million, settlement of accounts payable and an increased investment in inventories of $126.9 million, which includes $91.5 million of instrument inventories that were transferred from “Inventories” to “Property, plant and equipment, net,” related to customer leased instruments as well as an increase in other current and non-current assets of $27.6 million. These cash outflows were offset by cash inflows from earnings before interest, taxes, depreciation and amortization expense and other non-cash items, as well as net collections of accounts receivable of $34.5 million.

Net cash flows used in investing activities

Purchases of property, plant and equipment during the fiscal nine months ended September 27, 2020 were $28.4 million. In addition, we made noncash transfers of $91.5 million of instrument inventories from “Inventories” to “Property, plant and equipment, net,” further increasing our investment in property, plant and equipment.

Net cash flows provided by financing activities

During the fiscal nine months ended September 27, 2020, net proceeds from the issuance of the 2025 Notes, 2028 Notes and Euro Term Loan Facility of $1,421.0 million were offset by payments on the 2022 Notes of $1,347.7 million. Net payments on short-term borrowings were $2.2 million.

Fiscal nine months ended September 29, 2019

Net cash flows provided by operating activities

Net cash provided by operating activities was $97.0 million for the fiscal nine months ended September 29, 2019. Factors resulting in cash provided by operating activities included cash inflows from earnings before interest, taxes, depreciation and amortization expense and other non-cash items, as well as higher accounts payable and accrued liabilities. These increases to cash provided by operating activities were partially offset by interest paid on borrowings of $120.0 million and an increased investment in inventories of $85.7 million, which includes $82.7 million of instrument inventories that were transferred from “Inventories” to “Property, plant and equipment, net.”

Net cash flows used in investing activities

Purchases of property, plant and equipment during the fiscal nine months ended September 29, 2019 were $45.2 million. In addition, we made noncash transfers of $82.7 million of instrument inventories from “Inventories” to “Property, plant and equipment, net,” further increasing our investment in property, plant and equipment.

Net cash flows used in financing activities

During the fiscal nine months ended September 29, 2019, net short-term borrowings were $16.2 million and payments on long-term debt were $37.3 million.

Fiscal year ended December 29, 2019

Net cash flows provided by operating activities

Net cash provided by operating activities was $143.0 million for the fiscal year ended December 29, 2019. Factors resulting in cash provided by operating activities included cash inflows from earnings before interest, taxes, depreciation and amortization expense and other noncash items and higher accounts payable and accrued liabilities of $83.6 million , partially offset by interest paid on borrowings of $189.7 million, net investment in inventories of $108.6 million, which includes $118.6 million of instrument inventories that were transferred from “Inventories” to “Property, plant and equipment, net”.

Net cash flows used in investing activities

Purchases of property, plant and equipment during the fiscal year ended December 29, 2019 were $66.2 million. As of December 29, 2019 and December 30, 2018, accounts payable and accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs, which totaled $14.1 million and $17.2 million, respectively. In addition to the capital expenditures of $66.2 million, we made noncash transfers of $118.6 million of instrument inventories from “Inventories” to “Property, plant and equipment, net” further increasing our investment in property, plant and equipment.

Net cash flows used in financing activities

Net cash used in financing activities was $64.4 million for the fiscal year ended December 29, 2019 and was primarily related to net short-term borrowings payments of $17.2 million and payments on long-term debt of $49.7 million.

Fiscal year ended December 30, 2018

Net cash flows provided by operating activities

Net cash provided by operating activities was $69.6 million for the fiscal year ended December 30, 2018. Factors resulting in cash provided by operating activities included cash inflows from earnings before interest, taxes, depreciation and amortization expense and other noncash items, partially offset by interest paid on borrowings of $218.8 million, net investment in inventories of $83.3 million, which includes $93.0 million of instrument inventories that were transferred from “Inventories” to “Property, plant and equipment, net,” and lower accounts payable and accrued liabilities of $22.4 million.

Net cash flows used in investing activities

Purchases of property, plant and equipment during the fiscal year ended December 30, 2018 were $79.2 million. As of December 30, 2018 and December 31, 2017, accounts payable and accrued liabilities

included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs, which totaled $17.2 million and $13.0 million, respectively. In addition to the capital expenditures of $79.2 million, we made noncash transfers of $93.0 million of instrument inventories from “Inventories” to “Property, plant and equipment, net” further increasing our investment in property, plant and equipment. We also paid working capital and fixed assets adjustments of $8.1 million related primarily to the Day 2 Country closing in Brazil.

Net cash flows used in financing activities

During the fiscal year ended December 30, 2018, we entered into a second amendment to our Senior Secured Credit Facilities, to, among other things, refinance a U.S. dollar-denominated term loan facility, with net proceeds of $101.3 million related to the new Dollar Term Loan Facility, of which $72.8 million was used to pay off the previous U.S. dollar-denominated term loan facility and $21.2 million was used to pay interest and third party fees, which were included in other operating expense. The remaining proceeds of $7.3 million were used for general corporate purposes. Net short-term borrowings were $15.2 million and payments on long-term debt were $125.5 million, which included $72.8 million related to the previous U.S. dollar-denominated term loan facility.

Fiscal year ended December 31, 2017

Net cash flows provided by operating activities

Net cash provided by operating activities was $68.0 million for the fiscal year ended December 31, 2017. Factors resulting in cash provided by operating activities included cash inflows from earnings before interest, taxes, depreciation and amortization expense and other noncash items, partially offset by interest paid on borrowings of $222.3 million, an increased investment in inventories of $114.3 million, which includes $101.5 million of instrument inventories that were transferred from “Inventories” to “Property, plant and equipment, net,” and increased accounts receivable of $29.1 million.

Net cash flows used in investing activities

Purchases of property, plant and equipment during the fiscal year ended December 31, 2017 were $91.6 million. As of December 31, 2017 and January 1, 2017, accounts payable and accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs totaled $13.0 million and $39.4 million, respectively. In addition to the capital expenditures of $91.6 million, we made noncash transfers of $101.5 million of instrument inventories from “Inventories” to “Property, plant and equipment, net” further increasing our investment in property, plant and equipment. We also paid working capital and fixed assets adjustments related to certain Day 2 Countries acquired through December 31, 2017 of $21.0 million, as we finalized the acquisitions of these countries.

Net cash flows provided by financing activities

During the fiscal year ended December 31, 2017, we entered into an amendment to our Senior Secured Credit Facilities, which included the Incremental Term Loan, with net proceeds of $197.6 million. The proceeds of the Incremental Term Loan were used to pay down the outstanding balance on the Revolving Credit Facility and for general corporate purposes. Net payments made on short-term borrowings were $85.0 million and payments on long-term debt were $33.3 million. We also had cash inflows of $3.2 million and $2.4 million related to proceeds received in conjunction with the exercise of stock options and other long-term borrowings, respectively.

Debt capitalization

As of September 27, 2020 and December 29, 2019, we had $68.6 million and $72.0 million of cash and cash equivalents, respectively. As of September 27, 2020 and December 29, 2019, $49.2 million and $58.4 million, respectively, of these cash and cash equivalents were maintained in non-U.S. jurisdictions in foreign currencies. We believe our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs.

The following table details our debt outstanding as of September 27, 2020 and December 29, 2019:



($ in millions)	September 27, 2020			December 29, 2019

Senior Secured Credit Facilities
Dollar Term Loan Facility	$	2,200.0		$	2,243.6
Euro Term Loan Facility		390.4			—
Revolving Credit Facility		—			—
2028 Notes		675.0			—
2025 Notes		400.0			—
2022 Notes		—			1,300.0
Accounts Receivable Financing		75.0			75.0
Sale and Leaseback Financing		20.5			20.5
Capital lease obligation		1.0			2.6
Other short-term borrowings		2.1			1.0
Other long-term borrowings		4.2			4.6
Unamortized deferred financing costs		(42.7	)		(34.6	)
Unamortized original issue discount		(11.8	)		(13.6	)

Total borrowings		3,713.7			3,599.1
Less: Current portion		(161.0	)		(156.7	)

Long-term borrowings	$	3,552.7		$	3,442.4

As of September 27, 2020 and December 29, 2019, there were no outstanding borrowings under the Revolving Credit Facility. As of September 27, 2020 and December 29, 2019, letters of credit issued under the Revolving Credit Facility totaled $35.6 million and $34.6 million, respectively, which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was $314.4 million and $315.4 million as of September 27, 2020 and December 29, 2019, respectively. Our debt agreements contain various covenants that may restrict our ability to borrow on available credit facilities and future financing arrangements or require us to remain below a specific credit coverage threshold. We believe that we are and will continue to be in compliance with these covenants.

On June 6, 2017, we amended the Credit Agreement governing our Senior Secured Credit Facilities to, among other amendments, provide for the Incremental Term Loan of $200.0 million. The net proceeds of approximately $197.6 million were used primarily to reduce the outstanding borrowings on our existing Revolving Credit Facility and for general corporate purposes.

On June 8, 2018, we entered into a second amendment to our Senior Secured Credit Facilities, pursuant to which we refinanced our Dollar Term Loan Facility and Revolving Credit Facility. The net proceeds of approximately $101.3 million were used to repay outstanding borrowings under our existing Dollar Term Loan Facility and general corporate purposes. As part of the refinancing, we extended the maturity dates of our Dollar Term Loan Facility and Revolving Credit Facility to June 30, 2025 and June 30, 2023, respectively, subject to certain other limitations.

100

We accounted for the portion of lenders whose participation in the Senior Secured Credit Facilities terminated on June 8, 2018 as an extinguishment of debt. The remaining lenders that continued their participation in the Dollar Term Loan Facility and the extension of the Revolving Credit Facility were accounted for as a modification of our existing indebtedness. During the fiscal second quarter ended July 1, 2018, we recorded a $2.1 million loss on extinguishment of debt included as a component of “Other expense (income), net”, primarily related to unamortized debt issuance costs and investor discount costs. We incurred original issue discount costs of $5.8 million related to the Dollar Term Loan Facility, which was capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the Dollar Term Loan Facility. We also incurred lender fees and third party fees of $5.0 million related to the Revolving Credit Facility, which was included in other assets and is being amortized on a straight-line basis over the term of the amended Revolving Credit Facility. As of December 29, 2019 and December 30, 2018, the remaining balance of deferred financing costs related to the Dollar Term Loan Facility was $20.9 million and $24.4 million, respectively. As of December 29, 2019 and December 30, 2018, the remaining unamortized balance related to the Revolving Credit Facility was $4.8 million and $6.1 million, respectively. The effective interest rate of the Dollar Term Loan Facility as of December 29, 2019 is 5.65%. During the fiscal year ended December 30, 2018, we expensed $18.5 million of debt refinancing costs, included in “Other operating expense, net” in the consolidated statement of operations.

On January 7, 2020, we entered into a third amendment to the Credit Agreement, which amended the financial covenant contained therein. After giving effect to the amendment, the financial covenant is tested when borrowings under the Revolving Credit Facility exceed $105 million at any period end reporting date and provides that Holdings will not permit the first lien net leverage ratio as of the end of such fiscal quarter of the Lux Co-Issuer and its restricted subsidiaries to be greater than (i) 6.00:1.00 for each fiscal quarter ending after January 7, 2020 and on or prior to June 30, 2021, (ii) 5.50:1.00 for each fiscal quarter ending after June 30, 2021 and on or prior to September 30, 2022 and (iii) 5.00:1:00 for each fiscal quarter ending thereafter.

On January 27, 2020, we entered into a fourth amendment of our Senior Secured Credit Facilities, where we entered into the Euro Term Loan Facility in an amount equal to the Euro-equivalent of $375 million, which bears interest at a rate of Euribor + 350 basis points per annum. The Euro Term Loan Facility will mature on June 30, 2025. The Euro Term Loan Facility is expected to amortize in equal quarterly installments in an amount equal to 1.00% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity. We incurred deferred financing costs of $5.4 million related to the Euro Term Loan Facility, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the Euro Term Loan Facility.

On January 27, 2020, we issued $675 million aggregate principal amount of the 2028 Notes, which bear interest at a rate of 7.250% per annum payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 2020. The 2028 Notes will mature on February 1, 2028. The 2028 Notes are our senior unsecured obligations and the 2028 Notes and the guarantees rank equally in right of payment with all of the Lux Co-Issuer’s and U.S. Co-Issuer’s (together, the “Issuers”) and guarantors’ existing and future senior debt, including the 2025 Notes. The 2028 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities and the Financing Program, to the extent of the value of the assets securing such debt. In addition, the 2028 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of our non-guarantor subsidiaries. We incurred deferred financing costs of $12.9 million related to the 2028 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2028 Notes. Concurrent with the issuance of the $675 million aggregate principal amount of 2028 Notes, we entered into a $350 million U.S. dollar equivalent swap to Japanese Yen-denominated interest at a weighted average rate of 5.56%, for a five-year term.

101

On June 11, 2020, we issued $400 million aggregate principal amount of the 2025 Notes, which bear interest at a rate of 7.375% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2020. The 2025 Notes will mature on June 1, 2025. The 2025 Notes are our unsecured obligations and the 2025 Notes and the guarantees thereof rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2028 Notes. The 2025 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities and the Financing Program, to the extent of the value of the assets securing such debt. In addition, the 2025 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Issuers’ non-guarantor subsidiaries. We incurred deferred financing costs of $7.5 million related to the 2025 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2025 Notes.

Our debt agreements contain certain financial reporting covenants that require us to present periodic financial metrics to our lenders. One such financial reporting metric is Adjusted EBITDA. The definition of Adjusted EBITDA utilized for these debt reporting covenants differs from the Adjusted EBITDA presented in this prospectus in that it allows for limited additional items including realized foreign currency translation, impact from adoption of accounting standards, costs in connection with COVID-19 and other immaterial management adjustments to be considered to be added to or subtracted from such amount. The table below highlights the differences between Adjusted EBITDA presented in this prospectus and that presented to our creditors:



($ in millions)	Amount
Nine months ended September 27, 2020	$	30.6
Nine months ended September 29, 2019	$	14.5
Fiscal year ended December 29, 2019	$	24.1
Fiscal year ended December 30, 2018	$	31.4
Fiscal year ended December 31, 2017	$	17.9

We or our affiliates, including investment funds affiliated with Carlyle, at any time and from time to time, may purchase Senior Notes or other indebtedness of the Company. Any such purchases may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine. Such purchases could result in a change to the allocation between the Issuers of the indebtedness represented by the Senior Notes and could have important tax consequences for holders of the Senior Notes.

Restructuring activities

We have previously undertaken several initiatives intended to strengthen operational performance and to support building our capabilities to enable us to win in the marketplace. These activities to improve operational performance are primarily cost reduction and productivity improvement initiatives in procurement, manufacturing, supply chain and logistics. We expect these activities and other cost reduction and productivity improvement initiatives that we will implement to reduce pre-tax operating expenses and result in aggregate cost savings of approximately $45 million in fiscal years 2020 and 2021.

During the fiscal year ended January 3, 2016, we announced that we will outsource our equipment manufacturing operations in Rochester, New York and refurbishment operations in Neckargemund, Germany to a third-party contract manufacturing company. As a result of these initiatives, we had a reduction of

102

approximately 110 positions worldwide from 2015 through 2018. These initiatives were substantially completed during fiscal year 2019, with total charges incurred of $75.4 million. We made cash payments of $6.4 million during the fiscal nine months ended September 27, 2020 and have made cumulative cash payments of $70.9 million to date, respectively, related to these initiatives. The majority of the remaining cash payments are expected to be made during fiscal year 2020.

During the fiscal year ended December 30, 2018, we announced that we will transfer certain production lines among facilities in order to achieve operational and cost efficiencies. We estimate that the implementation of these initiatives will result in pre-tax charges of approximately $22 million, comprised of approximately $12 million in accelerated depreciation, $5 million in severance charges and $5 million in other facility-related costs. These initiatives are expected to be substantially completed during fiscal 2021. We incurred net charges of $0.0 million and incurred charges of $18.9 million during the fiscal nine months ended September 27, 2020 and cumulative to date, respectively, related to these initiatives. We made cash payments of $1.5 million during the fiscal nine months ended September 27, 2020 and we have made cumulative cash payments of $5.5 million, respectively, related to these initiatives. The majority of the remaining cash payments are expected to be made during fiscal year 2021.

We also expect to incur approximately $9 million of capital expenditures related to the transferred production lines. We made cash payments of $8.8 million cumulative to date for capital expenditures related to these initiatives.

For additional information on our restructuring activities, see note 13 to our audited consolidated financial statements included elsewhere in this registration statement.

Outlook

Short-term liquidity outlook

We expect that our cash and cash equivalents, cash flows from operations and amounts available under the Revolving Credit Facility will be sufficient to meet debt service requirements, working capital requirements, and capital expenditures through the end of 2021. Our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We are focused on expanding the number of instruments placed in the field and solidifying long-term contractual relationships with customers. In order to achieve this goal, in certain jurisdictions where it is permitted, we have leveraged a reagent rental model that has been recognized as more attractive to certain customers. In this model, we lease, rather than sell, instruments to our customers. Over the term of the contract, the purchase price of the instrument is embedded in the price of the assays and reagents. Going forward, we intend to increase the number of reagent rental placements in developed markets, a strategy that we believe is beneficial to our commercial goals because it lowers our customers’ upfront capital costs and therefore allows purchasing decisions to be made at the lab manager level. For these same reasons, the reagent rental model also benefits our commercial strategy in emerging markets. We believe that the shift in our sales strategy will grow our installed base, thereby increasing sales of higher-margin assays, reagents and other consumables over the life of the customer contracts and enhancing our recurring revenue and cash flows. During the fiscal nine months ended September 27, 2020, we transferred $91.5 million of instrument inventories from “Inventories” to “Property, plant and equipment,” further increasing our investment in property, plant and equipment. We currently estimate that we will transfer additional instrument inventories of approximately $41 million during the remainder of fiscal 2020.

103

In addition to the aforementioned capital expenditures, we capitalized $73.1 million related to accounting and information system development costs to transition off of Johnson & Johnson’s information systems during the fiscal year ended January 1, 2017. We paid $2.2 million and $24.3 million during the fiscal year ended December 30, 2018 and December 31, 2017, respectively, related to these costs. No payments were made during the fiscal year ended December 29, 2019 or the fiscal nine months ended September 27, 2020.

Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our Revolving Credit Facility will be sufficient to fund continuing operations for the next twelve months. Our debt agreements contain various covenants that may restrict our ability to borrow on available credit facilities and future financing arrangements and require us to remain below a specific credit coverage threshold. Our credit agreement has a financial covenant (ratio of Net First Lien Secured Debt to Adjusted EBITDA not to exceed 6-to-1, subject to two 50 basis point step-downs on June 30, 2021 and September 30, 2022) that is tested when borrowings under the Revolving Credit Facility exceed $105 million at any period end reporting date. As of September 27, 2020, we had no outstanding borrowings under our Revolving Credit Facility. Due to the current economic and business uncertainty resulting from the ongoing COVID-19 pandemic, from time to time we may borrow from our Revolving Credit Facility, if needed, for the remainder of fiscal year 2020. We believe that we will continue to comply with the financial covenant for the next 12 months. In the event we do not comply with the financial covenant of the Revolving Credit Facility, the lenders will have the right to call on all of the borrowings under the revolving facility. If the lenders on the revolving facility terminate their commitments and accelerate the loans, this would become a cross default to other material indebtedness. We believe that we will continue to be in compliance with these covenants. However, should it become necessary, we may seek to raise additional capital within the next 12 months through borrowings on credit facilities, other financing activities and/or the private sale of equity securities.

Long-term liquidity outlook

UK Holdco will be a holding company with no business operations or assets other than the capital stock of its direct and indirect subsidiaries and intercompany loan receivables. Consequently, UK Holdco will be dependent on loans, dividends, interest and other payments from its subsidiaries to make principal and interest payments on our indebtedness, meet working capital requirements and make capital expenditures. As presently structured, its operating subsidiaries would be the sole source of cash for such payments and there is no assurance that the cash for those interest payments will be available. We believe our organizational structure will allow the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs. In the future, the Issuers and borrowers under our Senior Secured Credit Facilities may also need to refinance all or a portion of the borrowings under the Senior Notes and the Senior Secured Credit Facilities on or prior to maturity. If refinancing is necessary, there can be no assurance that we will be able to secure such financing on acceptable terms, or at all.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control as well as the factors described in “Risk factors” and “Special note regarding forward-looking statements.”

Recent accounting pronouncements

Information regarding new accounting pronouncements is included in note 3 to the consolidated financial statements.

104

Quantitative and qualitative disclosures about market risk

Our business and financial results are affected by fluctuations in world financial markets, including interest rates and currency exchange rates. We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We have policies governing our use of derivative instruments, and we do not enter into financial instruments for trading or speculative purposes.

Interest rate risk

We are subject to interest rate market risk in connection with our long-term debt. Our principal interest exposure will relate to outstanding amounts under our Senior Secured Credit Facilities. Our Senior Secured Credit Facilities provide for variable rate borrowings of up to $2,940.5 million, including up to $350.0 million under our Revolving Credit Facility. Assuming our Senior Secured Credit Facilities are fully drawn (and to the extent that LIBOR is in excess of the 0.00% floor rate of our Senior Secured Credit Facilities), each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense on our Senior Secured Credit Facilities by approximately $3.7 million per year before considering the impact of derivative instruments. For further discussion of the risks related to our Senior Secured Credit Facilities, see “Risk factors—Risks related with our indebtedness—Our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our indebtedness.”

We selectively use derivative instruments to reduce market risk associated with changes in interest rates. The use of derivatives is intended for hedging purposes only and we do not enter into derivative instruments for speculative purposes. As of September 27, 2020 and December 29, 2019, we have entered into various interest rate cap agreements to hedge our interest rate exposures related to our variable rate borrowings under the Senior Secured Credit Facilities. The interest rate cap amounts of these interest rate cap agreements range from 1.8% to 3.5%, with caplets that mature through December 31, 2023.

On July 19, 2019, we entered into an interest rate swap agreement, which fixed a portion of the variable interest due on our variable rate debt on September 27, 2019. Under the terms of the agreement, we will pay a fixed rate of 1.635% and receive a variable rate of interest based on one-month LIBOR (as defined) from the counterparty which is reset every month starting September 27, 2019, ending December 31, 2023. As of December 29, 2019, the notional amount of the interest rate swap was $700.0 million. The notional value of this instrument is expected to be $1,500 million in fiscal 2021, $1,000 million in fiscal 2022 and $500 million in fiscal 2023.

Foreign exchange rates risk

We are exposed to foreign currency risk by virtue of our international operations. We derived approximately 52% of our revenue for the fiscal year ended December 29, 2019 outside the United States. As discussed previously, we completed the acquisition of certain Day 2 Countries during fiscal year 2017. For translation of operations in non-U.S. dollar currencies, the local currency of most entities is the functional currency. Our foreign assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rate for each relevant period. Foreign exchange effects from the translation of our balance sheet resulted in a comprehensive gain of $1.7 million for the fiscal nine months ended September 27, 2020. Foreign exchange effects from the translation of our balance sheet resulted in a comprehensive loss of $7.0 million for the fiscal nine months ended September 29, 2019. Foreign exchange effects from the translation of our balance sheet

105

resulted in a comprehensive loss of $0.9 million for the fiscal year ended December 29, 2019, a comprehensive loss of $21.2 million for the fiscal year ended December 30, 2018 and a comprehensive gain of $25.3 million for the fiscal year ended December 31, 2017. Adjustments resulting from the re-measurement of transactions denominated in foreign currencies other than the functional currency of our subsidiaries are expensed as incurred.

In the majority of our jurisdictions, we earn revenue and incur costs in the currency used in such jurisdiction. We incur significant costs in foreign currencies including Brazilian Real, British Pound, Chinese Yuan/Renminbi, Euro, Indian Rupee, Japanese Yen, Mexican Peso, and the Swiss Franc. As a result, movements in exchange rates cause our revenue and expenses to fluctuate, impacting our profitability and cash flows. Future business operations and opportunities, including the continued expansion of our business outside North America, may further increase the risk that cash flows resulting from these activities may be adversely affected by changes in currency exchange rates.

Like many multi-national companies, we have exposure to the British Pound. We are negatively impacted by a lower British Pound exchange rate from translation impact when compared to the U.S. dollar, but we also benefit from expenses denominated in British Pound, as well as some cross-border transactions at a lower exchange rate. The magnitude of the impact is dependent on our business volumes in the UK, forward contract hedge positions, cross currency volume and the exchange rate.

Additionally, in order to fund the purchase price for the assets and capital stock of certain non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries. In many instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries. Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies will affect our results of operations. During the fiscal nine months ended September 27, 2020 and September 29, 2019, we record net foreign currency exchange losses of $49.4 million and $20.2 million, respectively. During the fiscal year ended December 29, 2019 we recorded net foreign currency exchange gains of $10.5 million. During the fiscal years ended December 30, 2018 and December 31, 2017, we recorded net foreign exchange losses of $53.0 million and gains of $69.2 million, respectively. The foreign currency gains/losses in each period primarily consist of unrealized gains/losses related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries. We may enter into derivative instruments to manage our foreign currency exposure on these intercompany loans in the future.

We have entered into foreign-currency forward contracts to manage our foreign currency exposures on foreign currency denominated firm commitments and forecasted foreign currency denominated intercompany and third-party transactions. We had forward, option and cross currency swap contracts outstanding with total notional amount of $595.2 million as of September 27, 2020, with maturity dates through February 2025. We had forward and option contracts outstanding with total notional amount of $295.4 million as of December 29, 2019, with maturity dates through December 2020. We had forward contracts of $331.9 million as of December 30, 2018, with maturity dates through December 2019. Foreign-currency forward contracts that qualified and were designated for hedge accounting, these contracts are recorded at their fair value as of September 27, 2020 and the unrealized gain of $0.4 million is reported as a component of other comprehensive loss, all of which is expected to be reclassified to earnings in the next 12 months. Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions are incurred. Actual gains upon settlement of $4.5 million and $1.1 million were recognized in earnings during the fiscal nine months ended September 27, 2020 and September 29, 2019, respectively. Foreign-currency forward contracts that qualified and were designated for hedge accounting were recorded at their fair values as of December 29, 2019, with the unrealized gain of $2.7 million reported as a component of

106

other comprehensive income (loss), all of which is expected to be reclassified to earnings in the next 12 months. Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions are incurred. Actual gains upon settlement of $1.0 million for the fiscal year ended December 29, 2019, and losses upon settlement of $0.6 million and $5.9 million for the fiscal years ended, December 30, 2018 and December 31, 2017, respectively, were recognized in earnings.

Contractual obligations

The following table summarizes our contractual obligations as of September 27, 2020:



	Obligations due in:
($ in millions)	Total		2020		2021-2022		2023-2024		Thereafter
Debt, including current provision(1)
Dollar Term Loan	$	2,200.0	$	14.6	$	116.2	$	116.2	$	1,953.0
Euro Term Loan		390.4		0.9		7.4		7.4		374.7
Accounts Receivable Financing		75.0		75.0		—		—		—
2028 Notes		675.0		—		—		—		675.0
2025 Notes		400.0		—		—		—		400.0
Other borrowing		27.8		23.3		2.9		1.6		—
Interest payments(1)		1,071.2		41.4		379.2		338.0		312.6
Operating leases		31.8		4.8		21.6		3.4		2.0
Pension contributions(2)		0.4		0.4		—		—		—
Purchase obligations(3)		131.4		32.8		98.6
Uncertain tax positions, including interest and penalties		—		—		—		—		—
Principal Shareholder management fee(4)		11.3		0.8		6.0		4.5		—

Total	$	5,014.3	$	194.0	$	631.9	$	471.1	$	3,717.3

(1)

The contractual obligations table assumes that the Senior Secured Credit Facilities are repaid upon maturity, and there are no further drawdowns from the Revolving Credit Facility, which may or may not reflect future events. Future interest payments include commitment fees on the unused portion of the Revolving Credit Facility, and reflect the interest payments on our Term Loan Facilities and Senior Notes. Future interest payments assume September 27, 2020 interest rates will prevail throughout all periods. Actual interest payments and repayment amounts may change. See “Use of proceeds.”

(2)

We expect to make contributions to our defined benefit plans beyond 2020; however, the amount of any contributions is dependent on the future economic environment and investment returns, and we are unable to reasonably estimate pension contributions beyond 2020.

(3)

Purchase obligations includes agreements to purchase goods or services that is enforceable and legally binding, and that specifies all significant terms, including (i) fixed or minimum quantities to be purchased, (ii) fixed, minimum or variable price provisions and (iii) the approximate timing of the transaction.

(4)

We entered into a consulting services agreement with an affiliate of Carlyle in connection with the Acquisition, which agreement was amended on October 15, 2020. For a description of the agreement, see “Certain relationships and related party transactions—Consulting services agreement.”

Excluded from the above table are milestone payment obligations to partners and suppliers which are contingent on regulatory approval. Future launch-related milestone payments of up to $67.5 million may be owed to Quotient for MosaiQ, with the first such milestone payment having been made on September 4, 2020 in the amount of $7.5 million, however the future timing of when such payments would be made, if ever, is unclear at this time. See note 14 to the audited consolidated financial statements for further discussion of the Quotient relationship.

As of September 27, 2020, we had approximately $43.1 million of uncertain tax positions, not including interest and penalties. Due to the high degree of uncertainty regarding future timing of cash flows associated with these liabilities, we are unable to estimate the years in which settlement will occur with the respective taxing authorities. These amounts have been excluded from the above table.

107

Critical accounting estimates and summary of significant accounting policies

The preparation of the audited consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the applicable reporting period. Actual results could differ from these estimates. Management believes the accounting estimates discussed below represent those accounting estimates requiring the exercise of judgment where a different set of judgments could result in the greatest changes to our reported results.

Revenue recognition

In May 2014, the FASB issued an accounting standards update, as amended, on revenue from contracts with customers. The new guidance outlined a single comprehensive model for entities to use in accounting for revenue from contracts with customers. We adopted ASC 606 on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption.

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of our goods or services. We consider revenue to be earned when all of the following criteria are met: we have a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or consideration we expect to receive for transferring the goods or providing services, is determinable; and we have transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

A portion of our revenue relates to equipment lease transactions with our customers. We evaluate these leases to determine proper classification, which involves specific determinations and judgment. Revenue earned from operating leases is generally recognized on a straight-line basis over the lease term, which is normally five to seven years. Revenue earned from sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. We may also enter into transactions that involve multiple performance obligations, such as the sale of products and related services. In accounting for these transactions, we allocate the consideration to the deliverables by use of the relative standalone selling price method.

A portion of our product revenue includes revenue earned under reagent rental programs which provide customers the right to use instruments at no separate cost to the customer in consideration for a multi-year agreement to purchase reagents, assays and consumables. We allocate a portion of the revenue from the future consumable sale to the instrument based on the customers’ minimum volume commitment and recognize revenue at the time of the future sale of reagents, assays and consumables. The cost of the instrument is capitalized within property and equipment, and is charged to cost of product revenue on a straight-line basis over the term of the minimum purchase agreement. Revenue earned from operating leases is recognized over

108

the lease term, which is normally five to seven years. Revenue earned under sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease. Revenue is recognized when control has transferred for the reagents, assays and consumables. Costs related to product sales are recognized at time of delivery.

We recognize product revenues at the net sales price, which includes estimates of variable consideration related to rebates and volume discounts. Rights of return are generally not included in our arrangements with customers. Our estimates of rebates and discounts are determined using the expected value method and take into consideration historical experience, contractual and statutory requirements, and other relevant information such as forecasted activity. These reserves reflect our best estimate of the amount of consideration to which it is entitled. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant future reversal of cumulative revenue under the contract.

We enter into collaboration arrangements that generate collaboration revenue and royalty revenue from license agreements. Revenue from collaborations is presented “gross” where we are deemed the principal in the arrangement and “net” where we are deemed the agent in the arrangement.

Following the Day 1 Closing Date, for product sales from Day 1 Countries to Day 2 Countries prior to the respective Day 2 Acquisition, revenue was recognized only upon sell-through by the Day 2 Countries to their third party end customers, provided all other revenue recognition criteria had been met. The amount of revenue recognized was equal to the amount of the sale to the Day 2 Countries, and not the amount of the ultimate sale to the Day 2 Country’s customer. Products sold to Day 2 Countries that had not met the sell-through criteria were recorded as deferred revenue.

Inventories

Inventories are stated at the lower of cost and net realizable value on a first-in, first-out method. Elements of cost include raw materials, direct labor and manufacturing overhead.

We periodically review inventory for both potential obsolescence and potential declines in anticipated selling prices. In this review, we make assumptions about the future demand for and market value of the inventory and based upon these assumptions estimate the amount of any obsolete, unmarketable, slow moving or overvalued inventory. We write down the value of our inventories by an amount equal to the difference between the cost of the inventory and the net realizable value. Historically, such write-downs have not been significant. If actual market conditions are less favorable than those projected by management at the time of the assessment, however, additional inventory write-downs may be required, which could reduce our gross profit and earnings.

Customer leased instruments

Determining the economic life of our leased instruments requires significant accounting estimates and judgment. These estimates are based on our historical experience and existing contractual terms. Our estimate for depreciable life is five to eight years. We believe these lives represent the periods during which the instruments are expected to be usable, with normal repairs and maintenance, for the purposes for which they are intended. Our estimate for the economic life of our instruments is generally 10 years. We regularly evaluate the economic life of existing and new products for purposes of this determination.

109

Goodwill and other intangible assets

Goodwill

Goodwill represents costs in excess of fair values assigned to underlying net assets of acquired companies. We evaluate goodwill for impairment on an annual basis in our fiscal fourth quarter, unless conditions exist that would require a more frequent evaluation.

When testing goodwill for impairment, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the fair value of a reporting unit is less than its carrying amount. Such qualitative factors may include the following: macroeconomic conditions; industry and market considerations; cost factors; overall financial performance; and other relevant entity-specific events.

If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing two-step quantitative impairment test, otherwise no further analysis is required. An entity may also elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test, under which the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether an entity chooses to perform the qualitative assessment or proceeds directly to the two-step quantitative impairment test.

If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then individual assets (including identifiable intangible assets) and liabilities of the reporting unit are estimated at fair value. The excess of the estimated fair value of the reporting unit over the estimated fair value of net assets would establish the implied value of goodwill. The excess of the recorded amount of goodwill over the implied value is then charged to earnings as an impairment loss.

There are several methods of estimating a reporting unit’s fair value, including market quotations, underlying asset and liability fair value determinations, and other valuation techniques, such as discounted projected future net earnings or net cash flows and multiples of earnings. We use a combination of discounted projected future earnings or cash flow methods and multiples of earnings in estimating a reporting unit’s fair value. The inputs utilized in these analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, Fair Value Measurement.

The process of evaluating the potential impairment of goodwill is subjective because it requires the use of estimates and assumptions as to our future cash flows, discount rates commensurate with the risks involved in the assets, future economic and market conditions, competition, customer relations, pricing, raw material costs, production costs, selling, general and administrative expenses, and income and other taxes. Although we base cash flow forecasts on assumptions that are consistent with plans and estimates we use to manage our Company, there is significant judgment in determining the cash flows. Due to the inherent uncertainty in forecasting cash flows and earnings, actual future results may vary significantly from the forecasts. Based on the degree of uncertainty, we cannot quantify the potential effect of the change in estimate on our results of operations and financial position.

Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. Based upon our qualitative impairment test for the fiscal year ended December 29, 2019, the fair value of our reporting unit is in excess of its carrying value.

110

Other intangible assets

In-process research and development projects acquired in a business combination are recorded as intangible assets at their fair value as of the acquisition date. Subsequent costs related to acquired in-process research and development projects are expensed as incurred. The in-process research and development projects we acquired are considered indefinite-lived intangible assets until the completion or abandonment of the associated research and development efforts. Upon completion of the research and development process, the carrying value of acquired in- process research and development projects is reclassified as a definite-lived asset and is amortized over its useful life. If the project is abandoned, we record the write off as an impairment loss in the statement of operations.

In-process research and development indefinite-lived intangible assets are tested for impairment on an annual basis in our fiscal fourth quarter, unless conditions arise that would require a more frequent evaluation. We conduct our annual indefinite-lived intangible assets impairment assessment on an annual basis in our fiscal fourth quarter, unless conditions exist that would require a more frequent evaluation. In assessing the recoverability of indefinite-lived intangible assets, projections regarding estimated discounted future cash flows and other factors are made to determine if impairment has occurred. If we conclude that there has been impairment, we will write down the carrying value of the asset to its fair value. Each year, we evaluate those intangible assets with indefinite lives to determine whether events and circumstances continue to support the indefinite useful lives.

When testing indefinite-lived intangible assets for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the fair value of an indefinite-lived intangible asset is less than its carrying amount. Such qualitative factors may include the following: macroeconomic conditions; industry and market considerations; cost factors; overall financial performance; and other relevant entity-specific events.

During the fiscal second quarter ended July 2, 2017, we revised the scope of an ongoing program to develop our next generation of dry slide technology and related instrument platforms in order to prioritize certain project deliverables and deprioritize other items. We also increased the estimated costs to obtain certain regulatory approvals in international markets for the next generation of dry slide technology. As a result, we performed an impairment test of our in-process research and development project during the fiscal second quarter ended July 2, 2017 based on the discounted estimated future cash flows using the relief from royalty method, which includes management’s estimates of future growth rates and discount rates. Based on the assessment, a noncash impairment charge of $11.0 million was recorded to write down the in-process research and development intangible asset to its estimated fair value. This charge is included in other operating expenses, net, in the consolidated statement of operations for the fiscal year ended December 31, 2017. We performed our annual indefinite-lived intangible assets impairment assessment during the fiscal fourth quarter ended December 31, 2017 and determined that there was no impairment. In July 2018, the in-process research and development project was completed upon the receipt of CE Mark on the related instrument. We performed a qualitative impairment assessment at the date of completion and determined there was no impairment. Accordingly, the carrying amount of the in-process research and development intangible asset was reclassified to developed technology and is subsequently being amortized over its estimated useful life of 15 years.

Definite-lived intangible assets, such as technology, tradenames and customer relationships are amortized over their estimated useful lives, generally for periods ranging from 4 to 20 years. The reasonableness of the useful lives of these assets is continually evaluated.

111

Impairment of long-lived assets

The process of evaluating the potential impairment of other long-lived assets, such as our property, plant and equipment and definite-lived intangible assets, is subjective and requires judgment. We review long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. This impairment test may be triggered by a decrease in the market price of a long-lived asset, an adverse change in the extent or manner in which the asset is being used, or a forecast of continuing losses associated with the use of the asset. If the fair value is less than the asset’s carrying amount, we recognize a loss for the difference. The fair value methodology used is an estimate of fair market value and is based on the discounted future cash flows of the asset or quoted market prices of similar assets. Based on these assumptions and estimates, we determine whether we need an impairment charge to reduce the value of the asset stated on our balance sheet to reflect its estimated fair value.

Income taxes

The provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the period. Deferred taxes result from differences between the financial and tax basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Deferred tax assets are also recognized for operating losses and tax credit carryforwards. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date.

We do not intend to permanently reinvest earnings of foreign subsidiaries at this time. As such, we provide for income taxes and foreign withholding taxes, where applicable, on undistributed earnings. Any repatriation of undistributed earnings would be done at little or no tax cost.

The breadth of our operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes we will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. A liability for uncertain tax positions is recorded when management concludes that the likelihood of sustaining such positions upon examination by taxing authorities is less than “more likely than not.” Interest and penalties accrued related to unrecognized tax benefits are included in the provision for taxes on income.

Stock-based compensation

Stock-based compensation, comprised of Bermuda Holdco stock options and restricted shares, is measured at fair value on the grant date or date of modification, as applicable. Determining the amount of stock-based compensation expense to be recorded requires us to develop estimates to be used in calculating the grant-date fair value of stock options. Our valuation model requires us to make estimates of the following assumptions:

Fair value of our common stock—The valuation of our common stock was determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. We considered numerous objective and

112

subjective factors to determine our best estimate of the fair value of our common stock, including but not limited to, the following factors:

•

the fact that we are a private company with illiquid securities;

•

historical operating results;

•

discounted future cash flows, based on projected operating results;

•

financial information of comparable public companies; and

•

the risk involved in the investment, as related to earnings stability, capital structure, competition and market potential.

Expected volatility—We are responsible for estimating volatility and have considered a number of factors, including third-party estimates and comparable companies, when estimating volatility.

Expected term—We estimate the remaining expected life of options as the mid-point between the expected time to vest and the maturity of the options.

Risk-free interest rate—The yield interpolated from U.S. Constant Maturity Treasury rates for a period commensurate with the expected term assumption is used as the risk-free interest rate.

Off balance sheet arrangements

We do not have any significant off-balance sheet arrangements.

113

Business

Our company

We are a pure-play IVD business driven by our credo, “Because Every Test is A Life.” This guiding principle reflects the crucial role diagnostics play in global health and guides our priorities as an organization. As a leader in IVD, we impact approximately 800,000 patients every day. We are dedicated to improving outcomes for these patients and saving lives through providing innovative and reliable diagnostic testing solutions to the clinical laboratory and transfusion medicine communities. Our global infrastructure and commercial reach allow us to serve these markets with significant scale. We have an intense focus on the customer. We support our customers with high quality diagnostic instrumentation, a broad test portfolio and market leading service. Our products deliver consistently fast, accurate and reliable results that allow clinicians to make better-informed treatment decisions. Our business model generates significant recurring revenues and strong cash flow streams from ongoing sales of high margin consumables. In 2019, these consumables contributed more than 90% of our total revenue and approximately 93% of our core revenue. We maintain close connectivity with our customers through our global presence, with more than 4,500 employees, including approximately 2,200 commercial sales, service and marketing teammates. This global organization allows us to support our customers across more than 130 countries and territories.

•

Research and Development: We increased our focus on innovation by investing approximately $550 million in research and development to enhance our existing capabilities and develop new instruments and assays to supplement our portfolio.

•

Leadership: To capitalize on these investments, we recruited a highly qualified management team of experienced diagnostic and healthcare leaders focused on our customers and accelerated growth.

114

procedures, and it influences up to 70% of critical healthcare clinical decision-making. Consequently, our IVD solutions have a profound impact on the assessment of health and the delivery of care. IVD is also critical in monitoring the transmission and spread of infectious disease outbreaks, where Ortho’s longstanding excellence in infectious disease testing is particularly relevant. Our solutions are central to the operations of hospitals, clinics, blood banks and donor centers around the world, where they are used to help diagnose certain conditions, such as cancer or heart attacks, and infectious diseases, such as hepatitis, HIV, and most recently, COVID-19, where we have launched two antibody tests and an antigen test, and we are actively expanding our menu of tests to address the global pandemic.

We operate in an approximately $26 billion addressable market, which is expected to grow at a CAGR of approximately 5% from 2020 to 2024. We compete in the two largest IVD markets, Immunoassay and Clinical Chemistry, which together comprise our Clinical Laboratories business and represent approximately $24 billion of our current addressable market. We expect our Clinical Laboratories business will be favorably impacted by an aging population, an increased need for testing of chronic conditions, the expansion of access to healthcare services, the emergence of new disease states and other macro trends. We are also the global leader in Transfusion Medicine, which includes hospital-based Immunohematology and Donor Screening for blood and plasma at hospitals and other donation centers. Transfusion Medicine represents approximately $2 billion of our current addressable market. We expect our Transfusion Medicine business will be favorably impacted by increases in the number and type of surgical procedures, an aging population and other macro trends. There is significant overlap in our customer base given we currently sell to about 70% of the hospitals in the United States, and we are often able to leverage our leadership within Transfusion Medicine to cross-sell our Clinical Laboratories solutions. Because we focus primarily on acute or critical care diagnostics that are core to therapeutic decisions in hospitals, our markets are relatively resilient across business cycles. We offer our products and services globally, with distinct offerings targeted to the needs of customers in developed and emerging markets.

Today, we operate two lines of business, Clinical Laboratories and Transfusion Medicine, which together generate our core revenue:

•

Our broad offerings allow us to support our customer base and maximize the opportunity to provide each of our customers with a comprehensive array of products and services over time. We refer to this mutually beneficial approach as focusing on Lifetime Customer Value (“LCV”). Our focus on LCV underpins everything we do, from the design and execution of our commercial and service model, to our instrument and assay innovation, to the composition of our global footprint. Our approach has informed our choice to focus on medium- to high-volume laboratories, which in turn has helped us become a leader in our Focus Markets and transformed our financial profile. We intend to continue to invest in and evolve our LCV framework to best support our customers and maximize our financial results.

As an example, we may begin a Clinical Laboratories customer relationship by providing a standalone instrument (often a clinical chemistry analyzer) and a set of assays that are relevant to that customer’s specific testing needs. In 2019, approximately 75% of our Clinical Laboratories installed base was comprised of

115

standalone instruments. As the customer and its testing needs grow, we look to migrate the customer, where appropriate, to an integrated analyzer that performs both clinical chemistry and immunoassay testing. This migration helps us increase our customers’ testing capabilities as well as the revenue we generate from customers. Building on our differentiation in dry chemistry, we grew our integrated instrument installed base at a CAGR of approximately 14% from 2015 to 2019, and in 2019, approximately 24% of our Clinical Laboratories installed base was comprised of integrated instruments. For our larger customers, we ultimately may expand their testing throughput by installing automation tracks that connect multiple analyzers along the automation track, while providing the full suite of our ever-expanding assay menu. In 2019, approximately 1% of our Clinical Laboratories installed base was comprised of automated systems. As we have significantly expanded our test menu offering, our integrated analyzers are now more often where our Clinical Laboratories relationship starts. In Transfusion Medicine, the life cycle is similar, as customers graduate from manual testing processes to semi-automated capabilities to fully-automated blood and plasma screening instrumentation as their testing volumes and technical competencies grow over time. In 2019, our installed base of Immunohematology instruments grew approximately 6%. We focus on building long-term customer relationships and continuing to enhance both our offering and the customer’s ability to care for their patients—ultimately deepening our commercial relationship and driving our financial model.

We believe that the strong clinical performance of our assays, our instruments’ ease-of-use and reliability, our best-in-class customer service and low total cost of ownership contribute to our high revenue retention rate of approximately 99% in 2019. We have longstanding relationships with our customers, with an average Clinical Laboratories customer relationship of almost 13 years and an average Transfusion Medicine customer relationship of almost 15 years. Our customer relationships are particularly strong in the medium- to high-volume laboratories (our “Focus Markets”), which compares to the broader market that includes low- and ultra high-volume laboratories. Our Focus Markets comprise approximately 70% of the total Clinical Laboratories market, and we believe that our Focus Markets will grow at a CAGR of approximately 5% from 2020 to 2024. In addition, our dry slide technology has an environmentally friendly profile as it doesn’t require water system plumbing, it reduces hazardous waste and it requires less space for liquid storage. All of these attributes resonate particularly well with customers who are pursuing environmental goals or customers who operate in regions with scarce water supply.

116

experienced significantly reduced testing volumes and a 12.2% decline in core revenue (excluding local HCV) on a constant currency basis as compared to the fiscal three months ended June 30, 2019. However, for the fiscal three months ended September 27, 2020, our core revenue (excluding local HCV) increased approximately 3.7% on a constant currency basis as compared to the fiscal three months ended September 29, 2019, which growth rate is more consistent with the trend we experienced prior to the COVID-19 pandemic. For example, during the three months ended September 27, 2020, our core recurring revenue in North America increased by approximately 11.1% and our core revenue in Greater China increased by approximately 7.9%, in each case, as compared to the prior year period.

Our competitive strengths

Intense customer focus enabled by our broad portfolio and market leading positions

Our broad portfolio of Clinical Laboratories and Transfusion Medicine instruments covering the full spectrum of manual to fully automated systems allows us to effectively target our Focus Markets. In addition to our instrument portfolio, we offer a diverse menu of assays for the most commonly tested items, including infectious diseases, sepsis, cardiovascular conditions and both blood and plasma typing and screening. Our ability to respond to the full spectrum of our customers’ needs allows us to focus on and enhance LCV. We supplement our instrument and assay offerings with our leading service, commercial, and operational excellence, which we believe improves our customer retention, sales growth and profitability.

We are a leader in our Focus Markets with leading positions in Clinical Laboratories and #1 or #2 market positions globally in Transfusion Medicine, based on revenue. The market opportunities for our Clinical Laboratories and Transfusion Medicine businesses are largely connected and, in both Clinical Laboratories and Transfusion Medicine, we can adapt and grow with our customers as they move from lower throughput to more automated solutions. In addition, we have developed a strategy for new product introductions in order to enhance LCV. For example, in our Transfusion Medicine business, we introduced semi-automated capabilities to increase our participation in certain emerging markets, such as China, Asia Pacific and Latin America, and continue the shift of certain customers from manual to semi-automated testing.

In Donor Screening, we have a #2 market position and we recently won a 5-year contract with a 5-year extension option with Creative Testing Solutions, the largest U.S. blood donation testing organization, which provides testing for approximately 70% of the U.S. blood supply and is jointly owned by three of the leading U.S. blood service providers: the American Red Cross, OneBlood and Vitalant. Pursuant to this contract, we are Creative Testing Solutions’ sole supplier of serology Donor Screening testing in the United States. We expect this contract will start contributing revenues in the first quarter of 2021 and provides for collaborative research and development on our next generation Donor Screening instrument. With renewed commitment to the Donor Screening market and joint innovation with this new customer, we believe this relationship has the potential to support further share capture in other international Donor Screening markets over time.

Our business model and customer-centric approach results in strong customer loyalty and a compelling financial profile with greater than 90% recurring revenue during 2019. The combination of our revenue growth

117

and leading margin profile allows us to reinvest in innovation and commercial opportunities. In addition, we believe our broad portfolio and diversified end markets provide a resilient growth profile. For instance, our strength in acute care and infectious disease testing is durable as it requires on-demand testing. Most of these tests are conducted in in-patient laboratories and demand tends to be insulated from economic downturns. In addition, we believe the on-site laboratory contributes meaningfully to many of our hospital customers’ earnings and that our core market is relatively insulated from outsourcing to reference laboratories. We believe this combination of product and end market diversification allowed us to generally outperform the market on a core revenue growth basis during the recent COVID-19 pandemic and we believe this resiliency will continue into the future.

Superior customer experience and brand loyalty resulting in high customer retention and win rates

We deliver industry-leading test performance in a way that is easy for laboratory directors and technical staff to manage their operations on a daily basis, which leads to excellent customer appeal and loyalty. In 2015, we launched ORTHOCARE with the goal of providing best-in-class service and support program for hospitals, hospital networks, blood banks and laboratories. Our ORTHOCARE service program is a critical element of the superior customer experience that we deliver to our customers. Since forming ORTHOCARE, we were the highest recommended manufacturer for the last five consecutive years (2016 through 2020) in a survey of clinical laboratory professionals in U.S. hospitals conducted by ServiceTrak. In the same survey in 2020, we were ranked #1 in seven out of eight categories relating to our manufacturing, system and service performance.

In our Focus Markets, the simplicity and reliability of our instruments and tests often reduces the need for staff hands-on time, producing a lower total cost of ownership for our customers. We believe that after instrument cost, the quality of service is the largest driver of customer choice when selecting a Clinical Laboratories vendor. Our superior service and customer performance contribute to our revenue retention rate of approximately 99% in 2019 and our average Clinical Laboratories and Transfusion Medicine customer relationships of almost 13 years and 15 years, respectively.

In Clinical Laboratories, beyond the simplicity of dry chemistry slides, we offer instrument e-connectivity, customizable automation tracks, a suite of upgraded quality control reagents and market-leading calibration stability, producing higher efficiency and lower total cost of ownership. In Transfusion Medicine, our ORTHO VISION platform has expanded our leadership position because it automated and simplified the test workflow for time-strained blood bank staff, increasing throughput and efficiency.

Highly compelling solutions supported by our leading and innovative research and development capabilities

We have a rich history of innovation spanning over eight decades and now have a portfolio of 17 instruments and over 240 assays across Clinical Laboratories and Transfusion Medicine. Our unique dry slide technology for clinical chemistry delivers accurate results, stability and reliability in challenging laboratory environments, an environmentally friendly profile and superior ease-of-use. Our recently launched XT Slides provide the ability to perform two tests on one slide, resulting in 40% greater VITROS throughput with 96% first-pass yield. Combined with our robust instrument design and development capabilities, we engineer laboratory testing solutions for our customers that offer industry leading cost effectiveness for medium- and high-throughput testing applications, particularly where space is constrained. We have partnered with Quotient to commercialize the next generation product in IH that enables a high level of multiplexing and addresses the ultra-high throughput market. In the last five years, we have engineered and delivered six new instrument platforms to market and expanded our assay offering by over 75 new or improved assays, which has increased our product vitality, market share and revenue growth.

118

Extensive and balanced global commercial footprint with reinvigorated focus on growth

We sell our products and services in more than 130 countries worldwide and have a direct presence in 35 countries. We support these commercial operations with approximately 2,200 commercial sales, service and regional marketing teammates and a network of more than 300 distributors globally. We also have an extensive global network of manufacturing and distribution centers that allows us to be closer and more responsive to our customers while managing and optimizing our cost structure. Our global footprint allows us to effectively launch our new product innovations, including instrument platform developments and new assays, across the globe. Our geographic balance also provides revenue diversification, which helps us to hedge against currency fluctuations and potential regional economic downturns.

We believe that opportunities in emerging markets represent a strong area of growth and profitability for our business. We are using targeted commercial activities to expand in these attractive end markets. In addition, we are developing lower cost instruments and market-specific assays to compete directly with low cost local players in certain regions.

Disciplined approach to streamline operations and optimize our cost structure

We have taken a rigorous approach to continuously improve our operational and administrative resources and cost structure. We have an efficient network of manufacturing, distribution and support centers to support worldwide product availability, with assay manufacturing in the United States and Wales, partner instrument manufacturing in Switzerland and Mexico, product distribution centers in multiple locations across the globe, shared service centers in the United States and Prague and certain operations in India. This not only brings us closer to our customers, but consolidates manufacturing and several other support functions to lower-cost geographies. We have seen margin expansion over the last two years and hope to continue capitalizing on operational efficiencies going forward.

Deeply committed leadership team with broad experience in healthcare and diagnostics

Our dedicated and highly respected Global Leadership Team (“GLT”) is comprised of 16 members with significant experience in the IVD and healthcare industries. For instance, our Chairman and Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Innovation Officer, General Counsel, and Executive Vice President of Strategy and Commercial Excellence each have more than 25 years of experience in their respective fields of expertise and together have more than 125 years of experience with IVD or commercial healthcare companies. These individuals are supported by their GLT colleagues with extensive industry knowledge and long-term experience leading at Ortho or other multinational companies in the IVD industry. Under their leadership we have transformed our mindset from standing up the business to executing on our growth strategies by increasing our customer focus and our emphasis on innovation and operational efficiency. We believe that the industry knowledge and dedication of our GLT members, combined with their long-term experience profitably growing multinational companies, are instrumental for the successful execution of our growth strategy going forward.

Our growth strategy

119

growth through commercial excellence that maximizes LCV, strengthens existing relationships through superior service and delivers innovative products for our customers and their patients. The key elements of our strategy to accelerate and sustain revenue growth and operating leverage include:

Focusing relentlessly on maximizing LCV, which is designed to produce and maintain a growing and recurring, high margin, durable financial profile and contributes to growth

Over our more than 80 years supporting the IVD testing needs of our customers, we have developed deep and enduring relationships with our customers. We seek to expand our relationship with both new and existing customers by offering them higher throughput integrated instrumentation, automation, and an expanding assay menu that grows with them as their needs evolve. On average globally, when one of our Clinical Laboratories customers upgrades from a standalone instrument to an integrated instrument, we typically see an increase in annual consumable revenues of approximately 65%. After this initial increase in utilization, we typically see that customer’s recurring revenues increase by approximately 3% to 7% on an annual basis. In our experience, by the time a customer is running sufficient volumes of tests to consider automation, annual reagent purchases have roughly doubled, and upgrading to an automated instrument increases this average by an additional 27%. This combined effect leads to an average increase of approximately 300% in annual revenues as a customer upgrades from an initial integrated placement to automation installation. In Transfusion Medicine, the pattern is even more striking. When a customer moves from manual testing to a semi-automated solution, the customer typically experiences an approximately 70% increase in workflow efficiency, and we see an average 600% increase in revenues. When they graduate to our fully automated ORTHO VISION instruments, these customers typically experience a 90% improvement in workflow efficiency and we see an additional increase of approximately 90% on average in recurring revenue.

LCV is both a critical measure of our customer relationships and a way to target increased value-add over time. Our focus on LCV contributes to our revenue retention rate of approximately 99% and our average Clinical Laboratories and Transfusion Medicine customer relationships of almost 13 years and 15 years, respectively. A significant number of our customers have long-term contracts with us and, combined with our greater than 90% recurring revenue profile, we believe our financial profile enables us to continue to invest in our market leadership positions and drive future growth.

Providing an unparalleled customer experience to retain and attract our existing and new customers

We continue to invest in both technology and business model innovation to expand our service advantages. For instance, improvements in instrument and assay reliability have reduced our service intervention rate by more than 30 percent since mid-2014. In addition to our core product innovations that continuously improve instrument reliability and ease-of-use—for instance, e-connectivity, improved controls, e-calibration and laboratory informatics—we are implementing exciting technology applications to support our award-winning service team. From smart mobile applications that enable service alerts and remote monitoring to merged reality on mobile devices, including smart glasses that support field engineers and customers in service calls, we continue to improve the efficiency and effectiveness of our service offerings. Over time, we will also seek to increase our ability to monetize our service differentiation beyond simply enhancing customer retention and contract wins.

Leveraging our global footprint to deliver innovative solutions to meet our customers’ needs in both developed and emerging markets

Our global commercial organization is comprised of approximately 2,200 commercial sales, service and regional marketing teammates. We recently invested in expanding and improving our commercial capabilities in our two most critical markets—North America and China—adding sales and regional marketing personnel,

120

strengthening our distributor networks, increasing sales analytics and targeting support though our customer relationship management system. We focused our commercial teams more squarely on our Focus Markets, which increased our win rate and allowed our team to allocate resources and focus on relationship management, menu utilization and new assay adoption, helping drive our recent revenue growth in these markets. Since the execution of our U.S. commercial excellence program, we have enjoyed seven consecutive quarters of North America core recurring revenue growth and, up until the COVID-19 pandemic, we experienced similar results following implementation of our China program.

LOGO

We are also focused on high growth emerging markets including China, Asia Pacific, the Middle East, Africa, Eastern Europe and Latin America, where we experienced double-digit growth from 2018 to 2019. We are targeting increased investment in market-appropriate products and local capabilities in order to gain market share in these emerging markets and enhance our overall growth profile. For instance, we are planning the development of lower cost instruments and assays that are suitable for these emerging markets. In some countries, the government is playing a significant role in expanding population access to healthcare and diagnostic testing, particularly in more rural populations. The Chinese government, for instance, has dramatically increased the portion of the population with access to healthcare services and is actively pushing diagnostic volumes to tiers of smaller hospitals at the regional and provincial level, hospitals that fit well into our Focus Markets.

Creating meaningful product innovation through menu expansion, development of novel instruments and enhancement of automation and informatics

Since our separation from Johnson & Johnson, we have focused significant investment on improving and expanding our test menu, with the introduction of over 75 new or improved tests in the last five years, which we believe has contributed meaningfully to our accelerating growth. We continue to focus on developing significant new assays that are critical to our Focus Market customers while continuing to build our strength and differentiation in acute and critical care assays. In particular, recent launches in cardiac (hs troponin), HIV (HIV combo), sepsis (PCT) and COVID-19 are generating new growth.

We will continue to invest in the next generation of instruments for Clinical Laboratories and Transfusion Medicine. Given the longer cycle of innovation, it is important that we remain focused on the next platforms to drive customer acquisition and retention. In addition, our team is looking into novel technologies that we can leverage across Clinical Laboratories and Transfusion Medicine. We are also evaluating using our dry technology to increase multiplexing beyond dual slides and extending into dry immunoassay by leveraging patented microfluidics approaches. A completely dry integrated platform would likely reduce our instrument footprint, increase test throughput and reduce user complexity with excellent test reliability and performance.

121

We continue to build on advantages in ease-of-use and test workflow in the laboratory, with a primary focus on the needs of our target customer. We are co-developing improved automation track components and a new quality control menu with one of our partners. ORTHO CONNECT continues to evolve and develop across CL and TM as next generation middleware that enables the customer to track and control data and key performance metrics across their laboratories. Beyond this new platform, we plan to explore and seek to develop new digital solutions, such as laboratory informatics dashboards, to improve customer performance and workflow.

To support menu expansion and development of novel instruments, we are pursuing “Follow the Sun” research and development and manufacturing capabilities and partnerships in targeted locations across the globe that we believe will increase our local market access, tailor products for local market needs, reduce the time and cost required for product launches and accelerate our cadence of assay and instrument launches over time. As an example, we have built up research and development capabilities at our Pencoed, Wales site, which has a lower cost basis and ensures proximity to manufacturing for sustaining engineering of products.

Continuing to identify operating efficiencies to allow for reinvestment in growth and improve margins

Our leadership team has taken a disciplined, continuous improvement approach to streamlining our operational resources and cost structure. Executing on our value capture program over the last several years, our team has identified areas to improve margins and cash flows through consolidation of manufacturing to lower-cost geographies, annual Six Sigma projects in areas such as procurement, and information technology improvements. We opened a shared service center in Prague and have shifted several support functions abroad to manage costs. We continue to reinvest a significant portion of these savings in commercial and research and development projects to spur further growth. We expect to leverage our fixed cost base and the expansion of our diversified product portfolio to drive incremental margin improvement.

Pursuing business development opportunities, partnerships and strategic acquisitions to enter adjacencies or expand our current business units

We have a successful track record of partnering with a range of companies to accelerate research and development, add incremental competencies and/or co-develop products. We believe that our partnerships with Thermo Fisher, IDEXX and Quotient will help expand our capabilities in laboratory automation, veterinary and ultra-high throughput Immunohematology applications, respectively. In addition to these types of opportunities, we plan to explore adjacencies in both Clinical Laboratories and Transfusion Medicine that will leverage our global footprint, hospital and donor center call points and/or technology advantages.

Our management team is focused on mergers and acquisitions, partnerships and business development opportunities that we believe will ultimately enhance LCV and drive incremental top-line growth and profitability. We intend to pursue strategic opportunities that will accelerate our expansion or entry into attractive end-markets and geographies. We plan to maintain a disciplined approach to mergers and acquisitions and are constantly evaluating a wide range of opportunities that are natural adjacencies with the hospital and other call points in our Focus Markets.

Our industry

IVD involves testing of human tissue or fluid samples outside of the body to screen and detect diseases, infections and medical conditions. IVD testing is a core component of routine health care check-ups for those who are presenting with symptoms or require procedures. It influences up to 70% of critical healthcare clinical

122

decision-making and can occur in a range of clinical settings from large reference laboratories and hospitals, to physician offices and retail clinics.

The global IVD market represents approximately $76 billion in global revenue in 2020. IVD is divided among multiple testing disciplines, including Immunoassay, Clinical Chemistry, Molecular Diagnostics, Anatomical Pathology, Microbiology, Hematology and Coagulation, among others. We compete in the two largest markets (excluding the impact of COVID-19), Immunoassay and Clinical Chemistry, which together comprise Clinical Laboratories, and represent approximately $24 billion of our current addressable market in 2020. We are also the global leader in Transfusion Medicine, which includes hospital-based Immunohematology and Donor Screening for blood and plasma at hospitals and other donation centers, and represents approximately $2 billion of our current addressable market. Today, we sell diagnostic instruments and reagents in a global market worth approximately $26 billion that is projected to grow at a CAGR of approximately 5% from 2020 to 2024.

LOGO

Of the approximately $26 billion market where we currently play, approximately 62% resides in the more developed regions of North America, Europe, the Middle East and Africa and Japan, which are projected to grow at a CAGR of approximately 1% to 2% from 2020 to 2024. Approximately 40% is concentrated in the faster-growing regions of China, Asia Pacific and Latin America, which are projected to grow at a CAGR of approximately 8% to 11%. With approximately 33% of our core revenue coming from emerging markets, we have a strong position in these growing markets, which we expect will represent approximately 46% of our served market by 2024. We are focusing increased investment in market-appropriate products and local capabilities in order to gain market share in emerging markets and enhance our overall growth.

We believe there are six key trends affecting our end markets that will drive increasing demand for our products and solutions and offer new opportunities for business expansion:

•

Aging population and increased need for testing of chronic conditions. Populations continue to age, particularly in the developed economies, which is driving increased prevalence of both chronic conditions and the acute diseases of later life, such as cancer, cardiac disease, and neurodegenerative disorders. This demographic trend is leading to an increase in surgical volumes and supports growing demand for diagnostic testing and pre-surgical screening on both an acute and routine health screening basis, and accounts for a significant portion of ongoing test menu expansion.

123

•

Expansion of healthcare, particularly in emerging markets. Continuing economic growth in emerging markets is increasing the size of the middle class and available disposable income, expanding resources available for healthcare. With most health decisions informed by diagnostic testing, economic development is driving instrument purchases and higher test volumes. In some countries, the government is also playing a significant role in expanding population access to healthcare and diagnostic testing, particularly in more rural populations. The Chinese government, for instance, has dramatically increased the portion of the population with access to healthcare and is actively pushing diagnostic volumes to tiers of smaller hospitals at the regional and provincial level.

•

Consolidation and automation. Hospitals and laboratories continue to merge into larger healthcare systems. This trend, combined with a shortage of skilled laboratory technicians, has driven consolidation of testing volumes into medium- to high-volume centralized laboratories with fully automated instruments. These automated instruments offer higher test throughput versus standalone specialty instruments. To enhance productivity, these platforms are also often connected by software and automation tracks to enable more seamless routing and testing of patient samples.

•

Digital solutions and informatics. Diagnostic tests generate information that aids in clinical practice or the study of health and disease. This data, combined with the advancement of internet applications and software, offer new ways to create value for hospital and laboratory customers. Tying test data into laboratory information and electronic medical record systems is only the starting point. Digital solutions can also help laboratories manage test utilization, efficiency and inventory, aid in clinical decision support and pool test data for research purposes.

•

New diagnostic technologies and continued decentralization. Diagnostics continue to advance with new technologies changing and improving test accuracy and operational performance. New modalities have emerged with the advent of molecular and genetic diagnostics, the expansion of proteomics supporting improved and broader immunoassay testing, and technologies like miniaturization, sensors, and microfluidics enabling point-of-care testing. Diagnostic testing at emergency room and intensive care unit bedsides in the hospital, physician offices, urgent care centers, pharmacy minute clinics and at the patient’s home is increasing. These technologies are creating new opportunities within IVD and growth for the broader IVD market overall. As the COVID-19 pandemic has underscored, point-of-care tests typically have lower test accuracy than those performed on central lab instruments, are often more expensive on a per test basis and can struggle with throughput for mass screening.

•

Emergence and identification of new diseases and treatments to include plasma based therapies. The COVID-19 pandemic is the most salient example of the continuing emergence of new infectious diseases on a global scale which highlights the importance of accurate and efficient diagnostic testing. We have witnessed the emergence of HIV, Ebola, Zika, SARS and MERS, and it is estimated that one new infectious disease is emerging every year. New diagnostic tests and test volumes are driven both by the emergence of new diseases and by the discovery of new or improved markers for disease. Beyond infectious diseases, significant assay innovation is occurring in a range of therapy areas, including oncology, neurology and cardiovascular disease.

124

Our products, pipeline and services

Throughout eight decades of innovation, we have been a leader in the diagnostics field and brought multiple innovations to market such as testing for RH phenotyping, HCV, Chagas’ Disease, and most recently COVID-19. In the last five years, we have engineered and delivered six new instrument platforms to market and expanded our assay offering with over 75 new or improved assays, which has increased our product vitality, market share and revenue growth.

Clinical Laboratories

We have been a pioneer of important technological advances in clinical diagnostics, including our unique dry slide technology which offers customers superior test performance with clear ease-of-use advantages and lower total cost of ownership. Dry slide technology combines the spreading, masking, scavenger and reagent layers into one postage-stamp-sized slide that provides clinicians with high-quality results quickly, efficiently and economically. Our slides are very stable. The current approximate 6-month span between calibrations for slides is industry-leading and we expect this to be significantly improved through ongoing research and development. We carry a comprehensive clinical chemistry test menu, and dry slides have long shelf life with lower laboratory shelf space required. Our new XT7600 and XT3400 instruments extend these advantages with digital accuracy and XT multi-test slides, and we have a pipeline opportunity to increase plex further over time. Our dry slide chemistry is well positioned for rising environmental concerns given its eco-friendly profile with no water usage and significantly reduced clinical waste and biohazard.

Our flagship Clinical Laboratories platform is the VITROS family of instruments, which includes a series of clinical chemistry, immunoassay and integrated (combined chemistry and immunoassay) systems and automation and middleware solutions. The VITROS instruments run a wide range of assays, from infectious diseases, sepsis, cardiovascular conditions and anemia, to bone disease, diabetes, drugs of abuse / toxicology, oncology and renal disease. We have six VITROS instrument analyzers that provide standardized performance, and are still sufficiently flexible to meet the needs of our customers across the spectrum of laboratory sizes and volumes. Our VITROS instruments are placed in centralized, higher-throughput testing sites (hospitals and laboratories) and decentralized, lower-throughput sites (physician offices, clinics and specialty settings).

LOGO

We launched the next generation of VITROS instruments—the XT 7600 integrated system and XT 3400 clinical chemistry analyzer—in 2018 and 2019, respectively. Both instruments deploy a new, highly accurate, digital

125

reflectometer that measures test results and takes advantage of new XT chemistry slides, combining two tests that are frequently used together, and improving the economics for us and our customers. Additionally, we believe that digital sensing will enable improved test accuracy through better image processing over time. We believe the XT instruments offer several important advancements over prior generations:

•

40% greater test throughput when using our XT-slides

•

96% first-pass yield on test results

•

Designed to offer high reliability with a 98% up-time guarantee for U.S. customers

Our Clinical Laboratories assay menu is quite broad, covering 24 different therapeutic areas and approximately 90% of a typical laboratory’s testing needs. We are particularly known for the strength of our dry clinical chemistry tests, as well as infectious disease and acute care immunoassays, including our high-performing cardiac markers for heart attack and congestive heart failure. In Greater China, for example, we believe we are the clinical chemistry market leader in separate “STAT” testing laboratories that seek rapid, high-performing assays to drive rapid clinical decisions.

Key products—Clinical Laboratories



Category	Description	Examples

Standalone CC instrument(s)	High efficiency scalable analyzers that run our broad menu of general and special chemistry tests, including our differentiated dry chemistry Microslides, with no external water supply required	• VITROS 350 Chemistry System • VITROS XT3400 Chemistry System • VITROS 4600 Chemistry System

Standalone IA instrument(s)	Random access, scalable throughput analyzers that run our broad immunoassay menu with no external water supply required	• VITROS ECiQ Immunodiagnostic System • VITROS 3600 Immunodiagnostic System

Integrated instruments (CC+IA)	Random access, high throughput analyzers that run our expansive chemistry and immunoassay test menu within the same unit with no external water supply required	• VITROS 5600 Integrated System • VITROS XT7600 Integrated System

Dry chemistry slides & XT multi-slides	Differentiated “dry” Microslide technology avoids the potential variability caused by water impurities and the frequent calibration common in wet chemistry products. XT slides deliver higher efficiency with two tests per slide	• VITROS XT MicroSlide Clinical Chemistry Technology

Acute Care—Cardiac and Sepsis markers for ED/ICU	Critical care assays that help deliver accurate, reliable results in acute care situations	• VITROS Immunodiagnostic Products High-sensitivity Troponin • VITROS Immunodiagnostic Products NT-proBNP II • VITROS Immunodiagnostic Products B•R•A•H•M•S PCT (Procalcitonin)

126



Category	Description	Examples

Infectious Diseases—Assays for patient management and blood donor screening	High performing assays to identify presence of antigen and antibodies across a wide spectrum of infectious diseases	• VITROS HIV Combo Immunodiagnostic Assay • VITROS Anti-HCV Immunodiagnostic Assay • VITROS Anti-SARS IgG Immunodiagnostic Assay⁽¹⁾ • VITROS Anti-SARS-CoV2 Total Immunodiagnostic Assay⁽²⁾ • VITROS SARS Antigen Immunodiagnostic Assay⁽³⁾

Other Key Assays	Microtip assays offer a wide range of special chemistry testing using wet reagents but with no external water supply needed.	• VITROS HbA1c MicroTip Assay

(1)

Marketed pursuant to FDA Emergency Use Authorization granted on April 24, 2020. Ortho’s VITROS Anti-SARS-CoV-2 IgG antibody test has an estimated 100% specificity (95% confidence interval = 99.1-100%). Under the FDA’s Emergency Use Authorization for the use of COVID-19 convalescent plasma, before a plasma donation can be released to hospitals and patients, the donation must be tested in order to confirm the level or amounts of antibodies in such donation. Ortho’s VITROS Anti-SARS-CoV-2 IgG antibody test is currently one of only two tests specified by the FDA as acceptable for use in this manufacturing step to determine whether a donation qualifies as a high or low titer unit of COVID-19 convalescent plasma. If a hospital wishes to use an antibody test other than Ortho’s antibody test for this purpose, such establishment would need to contact the FDA to determine the acceptability of the proposed antibody test and, if such alternative test is accepted by the FDA, an amendment to the FDA’s Emergency Use Authorization for COVID-19 convalescent plasma would be required to allow its use.

(2)

Marketed pursuant to FDA Emergency Use Authorization granted on April 14, 2020.

(3)

Marketed throughout the European Union under CE Mark authority, designed to detect active SARS-CoV-2 (COVID-19) infection in symptomatic and asymptomatic individuals. Current distribution in the United States under FDA Emergency Use Notification filing and further application is pending under an Emergency Use Authorization request to the FDA (product claims and indications for use vary between the European Union and U.S. markets).

Transfusion Medicine

Immunohematology

In Immunohematology, we are the global market leader based on the strength of our instruments and assays. Our flagship IH analyzers are the ORTHO VISION and ORTHO VISION Max systems that automate blood typing and serology disease screening for blood banks. ORTHO VISION was originally launched in 2015, followed by the ORTHO VISION Max and soon, the new ORTHO VISION Swift, which is designed to be faster, quieter and more cyber-secure than previous generations of our products. ORTHO VISION has been extremely successful in driving workflow simplification and automation for the customer. In addition, we sell the semi-automated Ortho Workstation for blood bank customers that have lower volumes or need for test automation.

LOGO

127

In the near-term, pending FDA clearance, we plan to launch the new ORTHO OPTIX reader targeted at blood banks who desire greater precision reading their manual test results. OPTIX is designed to provide improved software and integration with laboratory information systems, improved workflow and 99.9% concordance with ORTHO VISION test results. OPTIX will provide an entry point for customers that want to move from manual to semi-automated testing.

We also have a partnership with Quotient for the Immunohematology application of the MosaiQ analyzer, which is designed to employ a cutting-edge microarray technology to allow advanced multiplexing. MosaiQ multiplexing enables multiple tests to be run simultaneously on a single, low-volume patient sample and therefore drives significantly higher test throughput, strengthening our position in the ultra-high throughput segment of the IH market. It also offers the potential for streamlined inventory management and concordant results across donor screening and pre-transfusion testing and matching.

Our Immunohematology instruments operate with two different modalities of test consumables. In the United States, our automated systems use patented ID-Micro Typing System (“IS-MTS”) gel cards and outside the United States, we sell BIOVUE cassettes that utilize column agglutination technology (“CAT”). Both approaches are designed to provide reliable test results and simplify test workflow. With the 2016 launch of ORTHO SERA reagents, we offer a comprehensive test Immunohematology menu that we believe covers more than 99% of most tested blood antigens and all the diseases regularly required for transfusion screening globally.

Donor Screening

Our Donor Screening business is focused on instruments and tests used for blood and plasma screening for infectious diseases for customers, which include some of the largest donor testing institutions, primarily in the United States. In Donor Screening, our core instrument offering is the ORTHO VERSEIA Integrated Processor (“VIP”)—an automated pipetting and processing system that brings together the ORTHO VERSEIA pipettor and ORTHO Summit Processor to enable end-to-end pipetting and processing. We are currently upgrading the VIP system in collaboration with a key U.S. customer and expect to launch the next generation in 2021. For Donor Screening, our serology test menu covers the full range of blood types and a comprehensive set of infectious disease screens, including important tests for tropical diseases like Chagas’ that are critical for care in emerging markets.

Key products—Transfusion Medicine



Category	Description	Examples

Immunohematology Manual and Semi-automated	The only 2-in-1 blood testing system using reliable Column Agglutination Technology (CAT). The Reader delivers objective grading, results interpretation concordant with the ORTHO VISION Analyzer	• Manual Blood Bank Reagents • ORTHO Workstation • ORTHO OPTIX^™ Reader

Immunohematology Automated	A suite of automated instrument solutions connected with an optional middleware software that bridges the gap between instruments and hospital IT networks	• ORTHO VISION Analyzer • ORTHO VISION Max Analyzer • ORTHO CONNECT Middleware • ORTHO PROVUE • ORTHO AUTOVUE

Immunohematology BIOVUE	Safe, cost-effective test format that can be used manually or with the fully automated analyzers, the ORTHO BIOVUE cassette is easy to use and ideal for both routine and specialized immunohematology testing.	• BIOVUE Cassettes

128



Category	Description	Examples

Immunohematology ID-MTS Gel Cards	Safe, cost-effective test format that can be used manually or with the fully automated analyzers. The ID-MTS Gel card is easy to use and ideal for both routine and specialized immunohematology testing.	• ID-MTS Gel Cards

Immunohematology Key Screening & Typing Assays	BIOVUE and ID-MTS product lines offer comprehensive testing solutions including: Type and screen, Donor confirmation, Antibody screening and identification, Rh phenotype, Rare antigen testing, DAT	• Anti-Fy^a, Anti-Fy^b, Anti-Jk^a, Anti-Jk^b, Anti-S, Anti-s, Anti-K, Anti-D (IAT), Anti-D (DVI), Anti-P1, Anti-Le^a, Anti-Le^b and Anti-N

U.S. Donor Screening	Ultra-high throughput Donor Testing platform capable of 264 tests per hour. Designed to run a comprehensive panel of highly sensitive and specific assays for use in Donor Testing	• ORTHO VERSEIA Integrated Processor • ORTHO HBc ELISA • ORTHO T. cruzi ELISA • ORTHO HCV 3.0 ELISA

Our services

In addition to the products we provide, ORTHOCARE Services are a critical element of how we deliver value to our customers. As of September 2020, we had approximately 900 service teammates globally. We employ highly trained service professionals including over 340 laboratory specialists with advanced qualifications. For example, more than 95% of our U.S. laboratory specialists have medical technician degrees.

Our highly valued suite of ORTHOCARE service offerings includes:

•

Guarantee 98% up-time to our U.S. customers—High instrument reliability and a proactive maintenance program.

•

E-CONNECTIVITY Remote Monitoring Software—More than 80% of our installed base of VITROS 5600, XT 7600 and ORTHO VISION platforms are e-connected, enabling remote monitoring and improved analyzer availability.

•

Laboratory Informatics—Solutions designed to deliver incremental value to the laboratory, including inventory planning, laboratory productivity metrics and technical documentation.

•

ValuMetrix—A highly valued consulting service proven to increase laboratory workflow, productivity and laboratory service levels utilizing Lean principles and process excellence. This service offering provides actionable insights into demand for new products, services and workflow.

•

Global Technical Solution Center—Seven technical solution centers delivering first line support in over 15 languages, meaning we can resolve service issues remotely without an on-site visit approximately two-thirds of the time.

•

Smart Service Mobile App—First in class technology enabled on iPhone and Android devices that allows our service teams to receive up-to-date analyzer health checks, proactive alerts and performance monitoring to ensure the highest level of reliability is achieved.

•

Training and Education—Flexible educational resources for the lifetime of the customer relationship, including virtual technical training, continuing education and professional development.

129

•

Smart Start—Concierge implementation program led by certified project managers. Easier implementation using collaborative software to keep up to date with real- time progress reports, customized dashboards and status updates.

•

Merged Reality—Enables product experts to provide remote ‘side by side’ assistance to field service engineers and customers through mobile devices, including smart glasses. This allows both parties to see the same thing at the same time and provide guided instruction leading to better and faster fix rates.

We are globally recognized for service excellence and continue to invest in people and technology to increase value for our customers.

Sales, marketing and distribution

We use state-of-the-art manufacturing and distribution capabilities to produce and deliver diagnostic instruments and assays for hospitals, laboratories and blood and plasma centers worldwide. Our primary distribution center locations are centrally located in the United States and Europe and have extended hours and efficient transportation processes.

Our sales team is comprised of highly skilled and experienced professionals. In the United States, we use a generalized sales force for Immunohematology and Clinical Laboratories and a separate specialist sales force for Donor Screening. Across this global footprint, we operate a region-specific sales model. Our developed markets, specifically in North America and Western Europe, are served primarily through direct sales; however, we generally utilize third-party distributors in emerging markets, such as China, the Middle East, Africa and Eastern Europe as this model is more commercially effective.

Our global team strives to deliver a differentiated level of customer service and support by surrounding our customers with devoted and experienced professionals. Our network of field engineers is responsible for installing our instruments and providing customer support. In addition, our call center team and laboratory specialists are available to provide customer training and ongoing customer support.

Research and development

Our research and development focus is on designing and developing products while balancing our research and development team’s capacity, development timelines and overall cost. We have been a pioneer of important technological advances in diagnostics, including our unique dry slide technology and our automated and semi-automated blood banking systems. Our research and development team is comprised of a balanced mix of experienced professionals with years of experience in the diagnostics industry and recently trained technologists, and together have the know-how and technical capabilities in information technology, biomedical science and engineering required to continue to innovate. Key strengths include new assay format development, new instrument systems development and the complex integration of the two. In addition, in order to create new opportunities, manage costs and adapt to a rapidly changing industry, we also enter into strategic partnerships as part of our research and development process. Our primary research and development facility is located in Rochester, New York, with certain functions conducted out of Raritan, New Jersey and Pencoed, Wales.

Suppliers and raw materials

We obtain raw materials from reputable outside suppliers and believe our business relationships with them are good. Some of our products are derived from source biologic materials, which are available from a limited number of sources. To date, we have been able to obtain sufficient quantities of required materials for use in

130

manufacturing our products, but there can be no assurance that a sufficient supply of required materials will always be available to us. We employ a number of strategies to mitigate raw material supply risk, including managing safety stock inventories as well as developing second sources for key raw materials.

We source certain instruments from industry specific suppliers. We believe that our business relationships with our instrument suppliers are good. Each instrument supplier is placed under a contract that provides terms and conditions designed to preserve business continuity. In the event either party terminates the agreement, the “out clauses” provide sufficient time to effect a transition to a new supplier and maintain supply continuity. This transition would also be characterized by the build of a strategic inventory to bridge any time period required to initiate supply from an alternate provider.

Manufacturing

Our manufacturing operation benefits from our broad global footprint, scale and workforce capabilities. We believe our plant capacity and available space is sufficient to accommodate growth, maintain quality and ensure continuity. We use state-of-the-art manufacturing capabilities to produce the instruments and assays that we sell. Our manufacturing function has extensive process excellence and high operating standards, which provide us with the capabilities to offset inflation and control costs. Our primary manufacturing facilities are located in Raritan, New Jersey, Rochester, New York and Pencoed, Wales. Each is regulated by the FDA or other international public health and regulatory agencies.

Competition

Clinical Laboratories

The Clinical Laboratories market is fragmented, with the top five players accounting for approximately 70% of the global market in 2019. In addition to Ortho, key players are Roche, Abbott, Siemens Healthineers and Beckman Coulter (part of Danaher). Other key competitors include Thermo Fisher Scientific, DiaSorin, Mindray and bioMerieux. A majority of the key players compete globally and face competition from specialized regional companies focused on particular markets and/or technologies. No one competitor holds more than an approximately 25% share of the CL market.

Transfusion Medicine

The Transfusion Medicine market is comprised of Donor Screening, where blood and plasma is screened at donation for blood type and target diseases, and Immunohematology, where blood is typed and screened at the hospital blood bank before being transfused into the patient. We are the market leader in the Immunohematology market. Key Immunohematology competitors include Bio-Rad, Grifols and Immucor.

We also compete in the serology portion of Donor Screening, which is relatively concentrated with Abbott and Ortho holding the majority share. Other Donor Screening serology competitors include Fujirebio and DiaSorin.

Intellectual property

In the course of our business, we have developed and will continue to develop proprietary products, technologies, software systems, processes and other intellectual property (“IP”). We protect our IP through filing of patents, trademarks and domain names, as may be deemed applicable and appropriate, with appropriate regional coverage. For example, we have applied for and/or obtained and maintain registrations in the United States and other countries numerous trademarks, including ORTHO CLINICAL DIAGNOSTICS, ORTHO, VITROS and ORTHO VISION. We also seek to protect our proprietary and confidential information and trade secrets through confidentiality agreements with employees, customers, vendors and other third parties, as well as administrative and technical safeguards.

131

We also enter into agreements with third parties for the license and use of their intellectual property, although no one such license is material to the business as a whole.

IP is an essential part of our business, and IP assets are, as a whole, material to the performance of our business. No single IP asset, however, whether owned or licensed, is material to our business as a whole.

As of September 30, 2020, we owned approximately 675 patents and 1,120 trademarks and we had an additional approximately 60 trademark applications and more than 100 patent applications pending. The majority of our patents and patent applications are in our Clinical Laboratories line of business.

As of September 30, 2020, we were not subject to any material claim or legal action alleging infringement of third-party owned IP.

Real property

We operate production facilities, distribution warehouses, research and development centers, shared service centers and office buildings globally. As of September 30, 2020, we had 79 office, laboratory, production and other real estate facilities in 35 countries. We own 7 of these facilities and lease the remaining 72.

As of September 30, 2020, our material operating locations, which we define as the facilities we lease with more than 75,000 square feet plus all owned facilities of more than 20,000 square feet, were as follows:



Location	Use(s)	Owned or leased	Approximate square footage	Lease expiration (if applicable)
Raritan, New Jersey	Headquarters, manufacturing, R&D	Owned	569,000	N/A
Rochester, New York (513 Technology Blvd)	Manufacturing	Owned	438,628	N/A
Rochester, New York (100 Indigo Creek)	Office, R&D	Owned	260,221	N/A
Pencoed, Wales	Office, manufacturing	Owned	198,380	N/A
Rochester, New York (130 Indigo Creek)	Office, R&D	Owned	103,138	N/A
Strasbourg, France	Warehouse, service	Owned	96,208	N/A
Ibaraki, Japan	Warehouse	Leased (land), Owned (building)	92,990	March 30, 2038
Rochester, New York (1000 Lee Rd.)	Manufacturing	Leased	92,452	December 31, 2021
Pompano Beach, Florida	Manufacturing	Owned	21,500	N/A

Collaboration arrangements

We have various collaboration arrangements, which provide us with the rights to develop, produce and market products using certain know-how, technology and patent rights maintained by our collaborative partners. These arrangements are often entered into in order to share risks and rewards related to a specific program or product. Our collaborative arrangements include a number of ongoing relationships for test development, instrument development and automation track design and distribution.

132

Our Joint Business is a collaboration with Grifols relating to our Hepatitis and HIV diagnostics business. The arrangement is governed by an agreement originally entered into in 1989 with a 50-year term, which, among other things, provides for a profit sharing arrangement whereby, the profits we generate from our production and sale of Hepatitis and HIV diagnostics products are shared with Grifols, and the profits generated by Grifols from its sale of certain antigens and licensing of certain intellectual property rights are shared with us. The agreement also gives us the right to use such intellectual property. The majority of the patents underlying these intellectual property rights have expired. Grifols also supplies us with a portion of the antigens used in our production of these diagnostics products.

Human capital resources

As of September 2020, we had approximately 4,500 employees. Approximately 51% of our employees are located outside of the United States, primarily in Europe and Asia. We employ approximately 970 manufacturing employees, approximately 2,200 in commercial sales, service and regional marketing positions worldwide including approximately 900 service teammates. Our highly trained service professionals include over 340 laboratory specialists with advanced qualifications. For example, more than 95% of our U.S. laboratory specialists have medical technician degrees, and customer excellence training has been prepared for all teammates. We support unions and/or works councils in Austria, Brazil, France, Germany, Italy, Spain, Sweden and the United Kingdom, with approximately 20% of our associates globally participating in a union, collective bargaining agreement or works council. We believe that our relations with our employees are generally good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our employees. We believe our success depends on our ability to attract, retain, develop and motivate diverse highly skilled personnel. In particular, we depend upon the personal efforts and abilities of the principal members of our senior management to partner effectively as a team, and who provide strategic direction, develop our business, manage our operations and maintain a cohesive and stable work environment. We also rely on qualified managers and skilled employees, such as scientists, engineers and laboratory technicians, with technical expertise in operations, scientific knowledge, engineering and quality management experience in order to operate our business successfully.

Our compensation program is designed to retain, motivate and, as needed, attract highly qualified executives. Accordingly, we use a mix of competitive base salary, cash-based annual incentive compensation, performance-based equity compensation awards and other employee benefits.

We are committed to employee health and safety in the workplace and we have an excellent safety record. In the United States, our manufacturing facilities hold various certifications depending on the site .Our Raritan, NJ and Rochester, NY sites have both received the Gold award for American Heart Association Workplace Solutions for the third year in a row. The Raritan and Rochester sites are also certified as part of the OSHA Voluntary Protection Programs. Our facility in Pencoed, Wales has received recognition by the Welsh Government for facility safety and environmental performance. Additionally, several of our locations across the globe have received accolades for being a great place to work.

Health, safety and environmental

Our operations and facilities are subject to various laws and regulations domestically and around the world governing the protection of the environment and health and safety, including the discharge and emissions of pollutants to air and water and the handling, management and disposal of hazardous substances. We have an excellent safety record. In the United States, our manufacturing facilities hold various certifications depending

133

on the site and our facility in Pencoed, Wales has received recognition by the Welsh Government for facility safety and environmental performance.

We believe that all of our manufacturing and distribution facilities are operated in compliance with existing environmental requirements in all material respects, including the operating permits required thereunder. Although we do not currently expect the costs of compliance with existing environmental requirements to have a material impact on our financial position, we may incur additional costs or obligations to comply with environmental and health and safety requirements as a result of changes in law or customer demands, including those relating to our products. In addition, many of our manufacturing sites have a long history of industrial operations, and remediation is or may be required at a number of these locations. Although we do not currently expect outstanding remediation obligations to have a material impact on our financial position, the ultimate cost of remediation is subject to a number of variables and is difficult to accurately predict. See “Risk factors—Risks related to our business—We could incur costs complying with environmental and health and safety requirements, or as a result of liability for contamination or other potential environmental harm or liability caused by our operations.”

Government regulation

Our products and operations are subject to extensive regulation by the FDA and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. In the United States, our products are regulated as either medical devices under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations, or as biological products under the FDCA and the Public Health Service Act (“PHSA”) and their implementing regulations, each as amended and enforced by the FDA. The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices and biological products to ensure that such products distributed domestically are safe and effective for their intended uses and otherwise meet the applicable requirements of the FDCA and PHSA.

U.S. regulation of medical devices

The majority of our diagnostic products and analyzers are regulated by the FDA as medical devices in the United States. Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, or approval of a premarket approval (“PMA”) application. Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Class I devices are those with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of current good manufacturing practices (“cGMPs”) for medical devices known as the Quality System Regulation (“QSR”) facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents. Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting or some implantable devices, or devices that have a new intended use, or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III.

While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the

134

FDCA requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. Class III devices require approval of a PMA application evidencing safety and effectiveness of the device. We currently market the majority of our diagnostic products in the United States pursuant to 510(k) clearances and PMA approvals.

To obtain 510(k) clearance, a manufacturer must submit a premarket notification demonstrating to the FDA’s satisfaction that the proposed device is “substantially equivalent” to another legally marketed device that itself does not require PMA approval (a predicate device). A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process. The FDA’s 510(k) clearance process usually takes from three to twelve months, but often takes longer. FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. In addition, the FDA collects user fees for certain medical device submissions and annual fees for medical device establishments.

If the FDA agrees that the device is substantially equivalent to a lawfully marketed predicate device, it will grant 510(k) clearance to authorize the device for commercialization. If the FDA determines that the device is “not substantially equivalent,” the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the de novo classification process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval or de novo classification. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo classification request or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination not to seek a new 510(k) or other form of marketing authorization for the modification to the 510(k)-cleared product, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) clearance or PMA approval is obtained or a de novo classification is granted.

The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“IDE”) regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk,” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. In addition, the study must be approved by, and conducted under the oversight of, an Institutional Review Board (“IRB”) for each clinical site. The IRB is responsible for the initial and continuing review of the IDE, and may pose additional requirements for the conduct of the study. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval

135

from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.

In addition to clinical and preclinical data, the PMA must contain a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review. If FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years. An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation. In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ facilities to ensure compliance with the QSR.

The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s). The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement, or in some cases a new PMA.

In addition to the 510(k) clearance, PMA, and de novo classification pathways to market, the Commissioner of the FDA, under delegated authority from the Secretary of Health and Human Services (“HHS”) may, under certain circumstances in connection with a declared public health emergency, allow for the marketing of a product that does not otherwise comply with FDA regulations by issuing an EUA for such product. Before an EUA may be issued by HHS, the Secretary must declare an emergency based a determination that public health emergency exists that effects or has the significant potential to affect, national security, and that involves a specified biological, chemical, radiological, or nuclear agent or agents, or a specified disease or condition that may be attributable to such agent or agents. On February 4, 2020, the HHS Secretary determined that the novel coronavirus presented a public health emergency that has a significant potential to affect national security or the health and security of U.S. citizens living abroad and declared that circumstances existed justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of the novel coronavirus that causes COVID-19.

In order to be the subject of an EUA, the FDA Commissioner must conclude that, based on the totality of scientific evidence available, it is reasonable to believe that the product may be effective in diagnosing, treating, or preventing a disease attributable to the agents described above, that the product’s potential benefits outweigh its potential risks and that there is no adequate, approved alternative to the product. Products subject to an EUA must still comply with the conditions of the EUA, including labeling and marketing requirements. Moreover, the authorization to market products under an EUA is limited to the period of time the public health emergency declaration is in effect. We currently market our Anti-SARS-Cov-2 IgG Antibody test

136

and calibrators and controls and Anti-SARS-CoV-2 Total Antibody test and calibrators and controls pursuant to EUAs granted by the FDA in April 2020, and we intend to seek EUA for our Anti-SARS-CoV-2 Antigen test.

After a device is cleared or approved or otherwise authorized for marketing, numerous pervasive regulatory requirements continue to apply unless explicitly exempt. These include:

•

establishment registration and device listing with the FDA;

•

QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;

•

labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of information and responding to unsolicited requests for information;

•

clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices;

•

medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

•

correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

•

complying with requirements governing Unique Device Identifiers (“UDI”) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database;

•

the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and

•

post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.

U.S. regulation of biological products

Certain of our blood screening products are regulated in by the FDA as biological products, also called biologics. In the United States, biologics are subject to regulation under the FDCA, PHSA, and other federal, state, local and foreign statutes and regulations. The process required by the FDA before biologics may be marketed in the United States generally involves the following:

•

completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s Good Laboratory Practice requirements;

•

submission to the FDA of an Investigational New Drug application (“IND”) which must become effective before clinical trials may begin;

•

approval by an institutional review board (“IRB”) or ethics committee at each clinical site before the trial is commenced;

137

•

performance of adequate and well-controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product candidate for its intended purpose;

•

preparation of and submission to the FDA of a biologics license application (“BLA”) after completion of all pivotal clinical trials;

•

satisfactory completion of an FDA Advisory Committee review, if applicable;

•

a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;

•

satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices (“GCPs”); and

•

FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.

Prior to beginning the first clinical trial of a biologic product candidate in the United States, we must submit an IND to the FDA. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. An IND must become effective before human clinical trials may begin.

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications. The BLA must include all relevant data available from preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things. Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of a use of the product, or from a number of alternative sources, including studies initiated by independent investigators. The submission of a BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.

After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced and of select clinical trial sites, the FDA may issue an approval letter or a Complete Response Letter (“CRL”). An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A CRL will describe all of the deficiencies that the FDA has identified in the BLA, except that where the FDA determines that the data supporting the application are inadequate to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots, and/or reviewing proposed labeling. In issuing the CRL, the FDA may recommend actions that the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification. The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies.

138

Any biologics manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual program fees for any marketed products. Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

FDA enforcement

The FDA may withdraw marketing authorization if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks, or imposition of distribution restrictions or other restrictions. Other potential consequences include, among other things: restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market, product recalls, fines, warning letters, untitled letters, clinical holds on clinical studies, refusal of the FDA to approve pending applications or supplements to approved applications, product seizures or detention, refusal to permit the import or export of products, consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs, the issuance of corrective information, injunctions, or the imposition of civil or criminal penalties.

In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of biologics and medical devices. A company can make only those claims relating to safety and efficacy, purity and potency that are cleared or approved by the FDA and in accordance with the provisions of the authorized label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

U.S. healthcare laws

The costs of healthcare have been and continue to be a subject of study, investigation and regulation by governmental agencies and legislative bodies around the world. In the United States, attention has been focused on programs that encourage doctors to recommend, use or purchase particular medical devices. Payers have become a more potent force in the marketplace and increased attention is being paid to medical device pricing, appropriate medical device utilization and the quality and costs of healthcare generally.

Following the U.S. Supreme Court decision in June 2012 upholding the PPACA, there has been an increase in the pace of regulatory issuances by those U.S. government agencies designated to carry out the extensive requirements of the PPACA. There also have been judicial and Congressional challenges to certain aspects of the PPACA, as well as efforts by the current administration to repeal or replace certain aspects of the PPACA or

139

otherwise circumvent some of the requirements for health insurance mandated by the PPACA. These have both positive and negative impacts on the U.S. healthcare industry with much remaining uncertain as to how various provisions of the PPACA will ultimately affect the industry. For instance, the TCJA removed the penalties for not complying with the PPACA’s individual mandate to carry health insurance. On December 14, 2018, a U.S. district court judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the PPACA, and therefore, because it was repealed as part of the TCJA, the remaining provisions of the PPACA are invalid. The U.S. Court of Appeals for the Fifth Circuit affirmed the decision of the district court that the individual mandate, as amended by the TCJA, was unconstitutional. The Fifth Circuit remanded the case to the district court to consider a remedy, including to consider and explain which provisions of the PPACA are inseverable and invalid. On March 2, 2020, the U.S. Supreme Court granted the petitions for writ of certiorari to review this case. There may be additional challenges and amendments to the PPACA in the future. In addition, Congress could consider subsequent legislation to replace repealed elements of the PPACA.

The MACRA repealed the formula by which Medicare made annual physician payment adjustments and replaced the former formula with a long-term schedule of Medicare payment adjustments for physicians. MACRA extended existing payment rates under the Physician Fee Schedule through June 30, 2015, with a 0.5% payment increase for the period between July 1, 2015 and December 31, 2015, and for each calendar year thereafter through 2019. The Bipartisan Budget Act of 2018 subsequently reduced this increase in 2019 to 0.25%. Effective beginning in 2019 through 2025, there will be a 0% annual update each year . In addition, MACRA established the MIPS, under which physicians may receive performance-based payment incentives and reductions, effective beginning in 2019, that are based on physicians’ performance with respect to clinical quality, resource use, clinical improvement activities, and meaningful use of electronic health records. MACRA also requires CMS to provide incentive payments to physicians and other eligible professionals that participate in alternative payment models, such as accountable care organizations, that emphasize quality and value over the traditional fee-for-service model.

On January 1, 2018, CMS implemented certain provisions of the PAMA, which made substantial changes to the way in which clinical laboratory services are paid under Medicare. Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule are required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostics laboratory tests”), private payer payment rates and volumes for their tests. Laboratories that fail to report the required payment information may be subject to substantial civil monetary penalties. CMS uses the data to calculate a weighted median payment rate for each test, which is used to establish a revised Medicare reimbursement rate. Under PAMA, the revised Medicare reimbursement rates were scheduled to apply to clinical diagnostic laboratory tests furnished on or after January 1, 2018. The revised reimbursement methodology is expected to generally result in relatively lower reimbursement under Medicare for clinical diagnostic lab tests that has been historically available. Any reduction to payment rates resulting from the new methodology is limited to 10% per test per year in 2018 through 2020, and to 15% per test per year in 2021 through 2023. For clinical diagnostic laboratory tests that are assigned a new or substantially revised HCPCS code, initial payment rates for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests will be assigned by the cross-walk or gap-fill methodology. Initial payment rates for new advanced diagnostic laboratory tests will be based on the actual list charge for the laboratory test. The CARES Act, which was signed into law on March 27, 2020, amended the timeline for reporting private payer payment rates and delayed by one year the payment reductions scheduled for 2021.

140

COVID-19 diagnostic testing services without imposing cost-sharing (e.g., copays, deductibles or coinsurance) or other utilization management requirements. The CARES Act and the PPPHCEA, enacted on April 24, 2020, each appropriated approximately $100 billion to provide financial relief for certain healthcare providers and to expand treatment and diagnostic testing capacity for COVID-19. The CARES Act also suspended, for the period from May 1, 2020 to December 31, 2020, the 2% payment reduction created under the sequestration required by the Budget Control Act of 2011 (as amended by the American Taxpayer Relief Act of 2012), and extended the sequester by one year, through 2030.

The regulatory agencies under whose purview we operate have administrative powers that may subject us to actions such as product withdrawals, recalls, seizure of products and other civil and criminal sanctions.

In addition, business practices in the healthcare industry have come under increased scrutiny, particularly in the United States, by government agencies and state attorneys general, and resulting investigations and prosecutions carry the risk of significant civil and criminal penalties under applicable laws. These laws include anti-kickback, false claims laws, civil monetary penalties laws, data privacy and security laws, and physician payment transparency laws. See “Risk factors—Risks related to our business—We are subject to healthcare regulations that could result in liability, require us to change our business practices and restrict our operations in the future.”

Legal proceedings

We are from time to time a party to legal proceedings which arise in the normal course of business. We do not believe any pending litigation to be material, the outcome of which would, in management’s judgment based on information currently available, have a material adverse effect on our results of operations or financial condition.

141

Management

Executive officers and board of directors

The following table sets forth information about our current directors and executive officers as of January 1, 2021:



Name	Age		Position

Chris Smith		58	Chairman and Chief Executive Officer

Joseph M. Busky		53	Chief Financial Officer

Chad Dale		48	Chief Operating Officer

Michael S. Iskra		51	Executive Vice President, Commercial Excellence & Strategy

Chockalingam Palaniappan		56	Chief Innovation Officer

Michael A. Schlesinger		62	Executive Vice President, General Counsel and Secretary

Karen H. Bechtel		71	Director

Allan Holt		68	Director

Carl Hull		63	Director

Ron Labrum		64	Director

Thomas Mac Mahon		74	Director

David Perez		61	Director

Robert R. Schmidt		38	Director

Stephen H. Wise		48	Director

Robert Yates		62	Director

Set forth below is a brief description of the business experience of our directors and executive officers. All of our executive officers serve at the discretion of our board of directors.

Chris Smith. Chris Smith has been our Chief Executive Officer since September 2019 and he serves as a member of our board of directors. Mr. Smith was appointed Chairman in September 2020. From 2015 to 2018, Mr. Smith served as the Chief Executive Officer of Cochlear Limited. Prior to joining Cochlear Limited, he held senior executive roles at Gyrus Group Plc., KCI, Prism and Cardinal Health. Mr. Smith received a B.S. from Texas A&M University. Our board of directors has concluded that Mr. Smith should serve as a director because he brings extensive knowledge of the medical device industry within healthcare, which, together with his experience in leading the Company as our Chief Executive Officer, makes him well qualified to serve as one of our directors.

Joseph M. Busky. Joseph Busky has been our Chief Financial Officer since July 2020. Prior to joining Ortho, Busky served as chief financial officer for global medical device company, Vyaire Medical, Inc., from 2018 through 2020, as chief executive officer of Qualtek from 2017 to 2018, and as chief financial officer of FDH Velocitel from 2015 to 2017. He has also previously held leadership roles at InnerWorkings, Inc. and Siemens Medical Solutions Diagnostics/Dade Behring Holdings, Inc. Mr. Busky holds an MBA with a finance

142

concentration, as well as a BBA in accounting, from Loyola University in Baltimore. He also holds a CPA certification in Maryland from the American Institute of Certified Public Accountants.

Chad Dale. Chad Dale has been our Chief Operating Officer since 2019 and was our Head of Global Functions from 2018 to 2019. From 2016 to 2018, he was Head of Operations and Supply Chain for Alcon’s surgical franchise within Novartis. Prior to that, he held leadership roles at Roche, Tyco International and Abbott Laboratories. Mr. Dale received an M.S. from Texas A&M University, an M.B.A. from the University of South Carolina and a B.S. from Marquette University.

Michael S. Iskra. Michael S. Iskra joined Ortho in 2015 and currently serves as the Executive Vice President of Commercial Excellence & Strategy. Mr. Iskra was the President, North America, for Ortho from 2015 through mid-2020. From 2014 to 2015, he served as Senior Vice President for business development at Healthways. Prior to that, he was Chief Operating Officer, from 2010 to 2012, and Chief Executive Officer, in 2013, for Simplex Healthcare. From 2007 to 2010, he was the Executive Vice President and General Manager at CCS Medical and prior to 2007, he spent 14 years at Bayer/Siemens Diagnostics in various sales and marketing roles. Mr. Iskra received a B.A. from the University of Delaware.

Chockalingam Palaniappan. Chockalingam Palaniappan joined Ortho in February 2020 as Chief Innovation Officer. Prior to joining Ortho, Mr. Palaniappan served as Chief Technology Officer at Epic Sciences from 2019 to 2020 and as a board member and Senior & Executive Vice President for Global Innovation and Development at Terumo BCT from 2013 to 2019. He also serves as a member of the board of directors of NemaMetrix, now renamed as Invivo Biosystems. Mr. Palaniappan received a Ph.D. from Northern Illinois University and was a post-doctoral research fellow with the department of biochemistry and biophysics at the University of Rochester.

Michael A. Schlesinger. Michael A. Schlesinger has been our Executive Vice President, General Counsel and Secretary since 2017 and was previously our Senior Vice President, General Counsel and Secretary from 2014 to 2017. Prior to joining Ortho, Mr. Schlesinger served as a partner and corporate lawyer at Latham & Watkins LLP from 2002 to 2014. From 2000 to 2002, he served as a partner at Venable LLP. Mr. Schlesinger received an LL.M. from Georgetown University Law Center, a J.D. from Boston University School of Law and a B.S. from Lehigh University.

Karen H. Bechtel. Karen H. Bechtel is a member of our board of directors. Ms. Bechtel previously led the Carlyle U.S. Buyout Healthcare team from 2005 to 2016 and continued to serve as a Senior Advisor at Carlyle until her retirement in 2018. She serves as a member of the board of directors of Massachusetts Mutual Life Insurance Company. Prior to joining Carlyle, Ms. Bechtel was at Morgan Stanley & Co., Incorporated (“Morgan Stanley”) for 28 years. As Managing Director of Morgan Stanley’s Private Equity Group, Ms. Bechtel was a member of the investment committee responsible for approving all investments in the Morgan Stanley Capital Partners IV Fund and led all of the healthcare investments. Ms. Bechtel also served as co-head of the Financial Sponsors Group, head of the Corporate Restructuring Group, founder and head of Princes Gate Private Equity Investors and Managing Director in the Mergers and Acquisitions Department at Morgan Stanley. Our board of directors has concluded that Ms. Bechtel should serve as a director because of her extensive background and knowledge across both financial and healthcare industries, as well as her experience on the board of several Carlyle portfolio companies.

Allan Holt. Allan Holt is a member of our board of directors. Mr. Holt is a Senior Partner and Managing Director of The Carlyle Group and Chairman of Carlyle’s U.S. Buyout group, which he joined in 1992. Prior to joining Carlyle, he spent over three years with Avenir Group, Inc., an investment and advisory group. Mr. Holt was also previously with MCI Communications Corporation, where, as Director of Planning and Budgets, he managed a group responsible for the development, review and analysis of MCI’s multibillion-dollar financial operating and capital plans. Mr. Holt is currently a member of the board of directors of Veritas Technologies, the chair of The Smithsonian National Air and Space Museum Board of Directors, Vice Chairman of the Council of the United States Holocaust Memorial Museum, a Member of the Johns Hopkins University Wilmer Eye

143

Institute Board of Governors, and a Member of the George W. Bush Presidential Center’s Human Freedom Advisory Council. Our board of directors has concluded that Mr. Holt should serve as a director because of his deep financial and capital markets background, as well as his significant experience across various company boards, both within the Carlyle portfolio of companies and beyond.

Carl Hull. Carl Hull is a member of our board of directors. Mr. Hull has served as the Chief Executive Officer of Maravai Life Sciences since 2014 and serves as the Chairman of the Board of The Binding Site. He previously served as the Chairman and Chief Executive Officer of Gen-Probe from 2007 to 2013. Prior to joining Gen-Probe, Mr. Hull held executive positions at Applied Biosystems, Applied Imaging, Ventana Medical Systems and Abbott Diagnostics. Our board of directors has concluded that Mr. Hull should serve as a director because of his leadership background across the healthcare industry and specifically his expertise across the clinical diagnostics space.

Ron Labrum. Ron Labrum is a member of our board of directors. Mr. Labrum was an Operating Partner at Linden Capital Partners from 2015 to 2020. Before joining Linden, Mr. Labrum served as Chief Executive Officer of Fenwal, Inc., global leader in transfusion technology, from 2006 to 2012, and as Chairman and Chief Executive Officer of Cardinal Health’s Healthcare Supply Chain Services segment from 2002 to 2005. Mr. Labrum serves on the boards of Vyaire Medical, Flexan and Beaver-Visitec International. Our board of directors has concluded that Mr. Labrum should serve as a director because of his varied experiences and significant leadership positions across the healthcare industry and medical devices.

Thomas Mac Mahon. Thomas Mac Mahon is a member of our board of directors. Mr. Mac Mahon currently serves as Executive Partner at Flare Capital since 2013 and is former Chairman and Chief Executive Officer of Laboratory Corporation of America. Prior to his time at Laboratory Corporation of America, he served in a variety of different positions for 27 years at Hoffmann-La Roche. During the last ten years of his career at Hoffmann-La Roche, he served on the Executive Committee and was President of Roche Diagnostics. Mr. Mac Mahon also served as the Lead Director for Express Scripts. Mr. Mac Mahon serves on the board of NovoPath, St. Peter’s University and the Foundation for Morristown Medical Center. Our board of directors has concluded that Mr. Mac Mahon should serve as a director because of his extensive diagnostics industry expertise and leadership across multiple global organizations, including Laboratory Corporation of America and Hoffman-La Roche.

David Perez. David Perez is a member of our board of directors. Mr. Perez previously served as President and Chief Executive Officer of Terumo BCT from 2000 through 2019, and also served on the Terumo Corporation board of directors from 2014 through 2019. Mr. Perez currently serves as a member of the boards of Laborie, Sarnova, Molnlycke, the Department of Health and Human Services Advisory Committee on Blood & Tissue Safety and Availability, Nurse Family Partnership, Blackstone Entrepreneurs Network, Blood Centers of America, Centura Health St. Anthony Regional, Executives Partnering to Invest in Children (EPIC), Book Trust and Fitzsimons Innovation Community, previously served as a director of Mesa Labs from 2019 to 2020 and is expected to join the board of Advanced Instruments as Chairman in the near future, all of which are owned by Investor AB and Patricia Industries. Mr. Perez received a Bachelor of Arts degree in Political Science from Texas Tech University. Our board of directors has concluded that Mr. Perez should serve as a director because of his extensive experience in the healthcare industry, specifically in leading a blood and cell technology company in Terumo BCT.

Robert R. Schmidt. Robert R. Schmidt is a member of our board of directors. Mr. Schmidt is a Managing Director at Carlyle, where he focuses on investment opportunities in the healthcare sector. Since joining Carlyle in 2011, Mr. Schmidt has been involved in a number of Carlyle’s investments globally, including Beats Electronics, Grand Rounds, MedRisk, One Medical and Sedgwick. He is currently a member of the board of directors of Grand Rounds, MedRisk and One Medical. Prior to joining Carlyle, Mr. Schmidt worked at Welsh, Carson, Anderson & Stowe, a private equity firm focused on information business services and healthcare investments, and Merrill Lynch Global Private Equity, which is focused on buyouts in North America. Mr. Schmidt received an M.B.A. from Harvard Business School and a B.S. from The Wharton School at the

144

University of Pennsylvania. Our board of directors has concluded that Mr. Schmidt should serve as a director because of his financial expertise and experience across a variety of healthcare investments, as well as the experience gained from advising and serving as a director of multiple Carlyle portfolio companies.

Stephen H. Wise. Stephen H. Wise is a Managing Director and Global Head of Healthcare at The Carlyle Group. He is based in New York. Since joining Carlyle in 2006, Carlyle’s Healthcare team has invested approximately $15 billion of equity in health care companies around the world. He serves as a member of the board of directors of Albany Molecular Research, Inc., a pharmaceutical contract development and manufacturing organization, CorroHealth, a business service provider for healthcare companies, MedRisk, a physical therapy-focused workers’ compensation solutions company, Millicent Pharma Limited, a pharmaceutical company, Ortho-Clinical Diagnostics, a global provider of in vitro diagnostic solutions for screening, diagnosing, monitoring and confirming diseases, PPD, Inc., a global contract research organization, Rede D’Or São Luiz S.A., a leading hospital provider in Brazil, Sedgwick Inc., a global multiline claims management firm, TriNetX, Inc., a global health research network optimizing clinical research, and WellDyneRx, LLC, an independent pharmacy benefit manager. Mr. Wise also serves on the Leadership Council of the Harvard School of Public Health. Prior to joining Carlyle, Mr. Wise worked with JLL Partners, a New York-based private equity firm, where he focused on health care-related investments. Previously, he worked with J.W. Childs Associates, a Boston-based private equity firm, and prior to that, in the leveraged finance group of Credit Suisse. Mr. Wise earned a bachelor’s degree in economics and finance from Bucknell University and received his master’s in business administration from Harvard Business School. Our board of directors has concluded that Mr. Wise should serve as a director because of his extensive knowledge and experience across the healthcare industry as well as his financial and corporate governance experience, as gained through his leadership of Carlyle’s Global Health Care team as well as his director positions across a variety of Carlyle portfolio companies.

Robert Yates. Robert Yates is a member of our board of directors. Mr. Yates previously served as Chairman and Chief Executive Officer of Ortho from February 2019 to August 2019 and non-executive Chairman from September 2019 to September 2020. Mr. Yates has been a member of our board of directors since 2014. Prior to his role as Chief Executive Officer, Mr. Yates held several executive roles at Ortho since joining in 2014, including as its Chief Operating Officer, President and Executive Advisor on Strategy, Partnerships and M&A. Mr. Yates previously served as an advisor to Carlyle for healthcare investment opportunities and as president and Chief Executive Officer of EMD/Merck Millipore. Our board of directors has concluded that Mr. Yates should serve as a director because of his prior in-depth knowledge and experience with Ortho, as well as his expertise and leadership across various diagnostics businesses, most notably EMD/Merck Millipore.

Board of directors

Our business and affairs are managed under the direction of our board of directors. Our board of directors currently consists of 10 directors. Following the completion of this offering, we expect our board of directors to initially consist of 10 directors.

Our articles of association will provide that, subject to the right of holders of any series of preferred shares, our board of directors will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving staggered three-year terms, with only one class of directors being elected at each annual meeting of shareholders. As a result, approximately one-third of our board of directors will be elected each year. We expect that, following this offering, our initial Class I directors will be Messrs. Schmidt and Perez and Ms. Bechtel (with their terms expiring at the annual meeting of shareholders to be held in 2022), our initial Class II directors will be Messrs. Wise, Hull, Labrum and Mac Mahon (with their terms expiring at the annual meeting of shareholders to be held in 2023) and our initial Class III directors will be Messrs. Smith, Holt and Yates (with their terms expiring at the annual meeting of shareholders to be held in 2024).

145

Subject to certain exceptions described below, newly created director positions resulting from an increase in size of the board of directors and vacancies may be filled by our board of directors.

Our articles of association will provide that following the completion of this offering, the Principal Shareholder will have the right to appoint a certain number of directors to our board of directors (such persons, the “Principal Shareholder appointees”). The number of Principal Shareholder appointees our Principal Shareholder (or any permitted transferee or affiliate) will be entitled to appoint is subject to maintaining certain ownership thresholds. If our Principal Shareholder (or such permitted transferee or affiliate) loses its right to appoint any directors pursuant to the terms of our articles of association, these positions will be filled by our shareholders in accordance with our articles of association.

Pursuant to our articles of association, for so long as the Principal Shareholder has the right to appoint any persons to our board of directors, the Principal Shareholder (or any permitted transferee or affiliate) will notify us in writing of any such appointment and, within five business days, we will appoint, or re-appoint, as the case may be, such Principal Shareholder appointee as a member of our board of directors.

In the event that a Principal Shareholder appointee ceases to serve as a director for any reason, the persons entitled to appoint such appointee director under our articles of association will be entitled to appoint another person to fill the resulting vacancy.

Background and experience of directors

When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors focused primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. Once appointed, directors serve until their term expires, they resign or they are removed by the shareholders.

Role of board of directors in risk oversight

The board of directors has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by the Audit Committee of the board of directors (the “Audit Committee”). The purpose of the Audit Committee is to assist the board of directors in fulfilling its fiduciary oversight responsibilities relating to (1) the quality and integrity of our financial statements, including oversight of our accounting and financial reporting processes, internal controls and financial statement audits, (2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firm’s qualifications, performance and independence, (4) our corporate compliance program, including our code of conduct and anti-corruption compliance policy, and investigating possible violations thereunder, (5) our risk management policies and procedures and (6) following implementation, the review of the performance of our internal audit function. Through its regular meetings with management, including the finance, legal and, following implementation, internal audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the board of directors all areas of risk and the appropriate mitigating factors. In addition, our board of directors receives periodic detailed operating performance reviews from management.

Controlled company exception

After the completion of this offering, the Principal Shareholder will continue to beneficially own more than 50% of our ordinary shares and voting power. As a result, (a) under certain provisions of our articles of association

146

that will be in effect upon the closing of this offering, the Principal Shareholder and these other parties to the Principal Shareholders Agreement will be entitled to nominate at least a majority of the total number of directors comprising our board of directors and (b) we will be a “controlled company” under the corporate governance standards of Nasdaq. Under the Nasdaq corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a compensation committee that is composed entirely of independent directors and (3) the requirement that our director nominations be made, or recommended to our full board of directors, by our independent directors or by a nominations committee that consists entirely of independent directors. Following this offering, we intend to utilize certain of these exemptions. As a result, we may not have a majority of independent directors, our nominations committee, if any, and compensation committee may not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in the Nasdaq corporate governance rules.

Committees of the board of directors

After the completion of this offering, we expect that the standing committees of our board of directors will consist of the Audit Committee, a Compensation Committee (the “Compensation Committee”), a Nominating and Corporate Governance Committee (the “Nominating and Corporate Governance Committee”) and an Executive Committee (the “Executive Committee”).

Our chief executive officer and other executive officers will regularly report to the non-executive directors and the Audit, the Compensation and the Nominating and Corporate Governance Committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. The internal audit function will report functionally and administratively to our chief financial officer and directly to the Audit Committee. We believe that the leadership structure of our board of directors provides appropriate risk oversight of our activities given the controlling interests held by the Principal Shareholder.

Audit Committee

Upon the completion of this offering, we expect to have an Audit Committee consisting of Messrs. Schmidt, as chair, Mac Mahon and Perez. Messrs. Mac Mahon and Perez qualify as independent directors under the Nasdaq corporate governance standards and independence requirements of Rule 10A-3 of the Exchange Act. Our board of directors has determined that each of Messrs. Schmidt, Mac Mahon and Perez qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K.

The purpose of the Audit Committee will be to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our board of directors in overseeing and monitoring (1) the quality and integrity of our financial statements, including oversight of our accounting and financial reporting processes, internal controls and financial statement audits, (2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firm’s qualifications, performance and independence, (4) our corporate compliance program, including our code of conduct and anti-corruption compliance policy, and investigating possible violations thereunder, (5) our risk management policies and procedures and (6) the performance of our internal audit function.

Our board of directors will adopt a written charter for the Audit Committee, which will be available on our website upon the completion of this offering.

147

Compensation Committee Interlocks and Insider Participation

Compensation decisions are made by our Compensation Committee. None of our current or former executive officers or employees currently serves, or has served during our last completed fiscal year, as a member of our Compensation Committee and, during that period, none of our executive officers served as a member of the compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers served as a member of our board of directors.

We have entered into certain indemnification agreements with our directors and are party to certain transactions with the Principal Shareholder described in “Certain relationships and related party transactions—Indemnification of directors and officers” and “—Shareholders agreements,” respectively.

Compensation Committee

Upon the completion of this offering, we expect to have a Compensation Committee consisting of Messrs. Wise, as chair, Hull, Labrum and Schmidt.

The purpose of the Compensation Committee will be to assist our board of directors in discharging its responsibilities relating to, among other things, (1) setting our compensation program and compensation of our executive officers and directors, (2) administering our incentive and equity-based compensation plans and (3) preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.

Our board of directors will adopt a written charter for the Compensation Committee, which will be available on our website upon the completion of this offering.

Nominating and Corporate Governance Committee

Upon the completion of this offering, we expect to have a Nominating and Corporate Governance Committee consisting of Messrs. Yates, as chair, Perez and Wise. The purpose of our Nominating and Corporate Governance Committee will be to assist our board of directors in discharging its responsibilities relating to (1) identifying individuals qualified to become new board members, consistent with criteria approved by the board of directors, (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the board of directors select, the director nominees for the next annual meeting of shareholders, (3) identifying board members qualified to fill vacancies on any committee of the board of directors and recommending that the board of directors appoint the identified member or members to the applicable committee, (4) reviewing and recommending to the board of directors corporate governance principles applicable to us, (5) overseeing the evaluation of the board of directors and management and (6) handling such other matters that are specifically delegated to the committee by the board of directors from time to time.

Our board of directors will adopt a written charter for the Nominating and Corporate Governance Committee, which will be available on our website upon completion of this offering.

Executive Committee

Upon completion of this offering, we expect to have an Executive Committee consisting of Messrs. Wise, as chair, Schmidt and Smith. The Executive Committee is responsible for exercising the powers of our board of directors between regularly scheduled meetings. The Executive Committee is authorized with all the powers of our board of directors except for certain specifically enumerated powers that may be exercised solely by the full board of directors, including the power to:

•

adopt, amend or repeal our articles of association;

148

•

approve or adopt, or recommend to our shareholders any action or matter (other than the election or removal of directors) expressly required by applicable law to be submitted to shareholders for approval;

•

approve a plan of merger, share exchange, or conversion of the Company;

•

recommend to our shareholders the sale, lease, or exchange of all or substantially all of the property or assets of the Company otherwise than in the usual and regular course of its business;

•

recommend to our shareholders a voluntary dissolution of the Company or a revocation thereof;

•

amend, alter, repeal, or take any action inconsistent with any resolution or action of our board of directors when the resolution or action of the board of directors provides by its terms that it shall not be amended, altered, or repealed by action of the Executive Committee;

•

exercise any authority that our board of directors has expressly delegated to another committee of the board of directors or has expressly reserved to itself;

•

fill vacancies on our board of directors or any of its committees;

•

fix the compensation of directors for serving on our board of directors or any of its committees;

•

declare or recommend a distribution our shareholders (including subject to shareholder approval at the annual general meeting), except at a rate or in a periodic amount or within a range of amounts determined by our board of directors and provided the requirements of the UK Companies Act 2006 have been satisfied;

•

appoint other committees of our board of directors or the members thereof; and

•

undertake any other action that must be performed by the full board of directors or another committee thereof or which cannot be delegated to a committee of our board of directors pursuant to our articles of association or applicable law, regulation, or listing standard.

Director independence

Pursuant to the corporate governance listing standards of Nasdaq, a director employed by us cannot be deemed to be an “independent director.” Each other director will qualify as “independent” only if our board of directors affirmatively determines that he has no material relationship with us, either directly or as a partner, shareholder or officer of an organization that has a relationship with us. Ownership of a significant amount of our ordinary shares, by itself, does not constitute a material relationship.

Our board of directors is expected to affirmatively determine that each of our directors, other than Messrs. Smith and Yates, qualifies as “independent” in accordance with the Nasdaq rules. In making its independence determinations, our board of directors is expected to consider and review all information known to it (including information identified through directors’ questionnaires).

Code of Conduct

Prior to the consummation of this offering, we will adopt a new Code of Business Conduct and Ethics (the “Code of Conduct”) applicable to all employees, executive officers and directors that addresses legal and ethical issues that may be encountered in carrying out their duties and responsibilities, including the requirement to report any conduct they believe to be a violation of the Code of Conduct. The Code of Conduct will be available on our website, www.orthoclinicaldiagnostics.com. The information available on or through our website is not part of this prospectus. If we ever were to amend or waive any provision of our Code of Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, we intend to satisfy our disclosure obligations with respect to any such waiver or amendment by posting such information on our internet website set forth above rather than by filing a Form 8-K.

149

Executive compensation

Compensation Discussion and Analysis

In this Compensation Discussion and Analysis, we address our philosophy, programs and processes related to the compensation paid or awarded for 2020 to our named executive officers, including the elements of our compensation program for named executive officers, material compensation decisions made under that program during 2020 and the material factors considered in making those decisions.

Our named executive officers are:

•

Christopher Smith, Chairman and Chief Executive Officer;

•

Joseph Busky, Chief Financial Officer;

•

Michael Iskra, Executive Vice President, Strategy & Commercial Excellence;

•

Chockalingam Palaniappan, Ph.D., Chief Innovation Officer;

•

Michael Schlesinger, Executive Vice President, General Counsel & Secretary; and

•

Todd Davachi, Former Chief Financial Officer.

These executive officers are referred to collectively in this Compensation Discussion and Analysis as our “named executive officers.”

Compensation philosophy, objectives and rewards

A key objective of our compensation program is to allow us to retain and, as needed, attract qualified executives. We believe that our ability to keep our senior executive team intact is tied to our compensation programs. Additionally, for us to be appropriately positioned to attract new talent as needed, we must be prepared to be, and be perceived as, an employer that offers a competitive total rewards package.

To achieve our compensation objectives, we provide executives with a compensation package consisting primarily of the following fixed and variable elements:



Compensation element		Compensation objective
Base Salary		Recognizes performance of job responsibilities and attracts and retains individuals with superior talent
Cash-Based Incentive Compensation		Provides short-term incentives to drive attainment of financial measures
Equity-Based Compensation		Promotes the maximization of stockholder value by aligning the interests of employees and stockholders
Limited Executive Perquisites		Aids executive performance and ensures consistent focus by providing convenient benefits with high perceived values.

In addition, from time to time we have entered into targeted retention bonus awards with certain of our named executive officers when we have determined it to be appropriate or necessary to ensure the continued retention and dedication of the executive.

Determination of compensation

For 2020, our executive compensation program was administered by the non-employee members of the executive committee of our board of directors (consisting of representatives of Carlyle in its role as our

150

principal stockholder), in consultation with our Chairman and Chief Executive Officer (“CEO”), who has also served on the executive committee. Our CEO provided recommendations to the other members of the executive committee and has discussed with them the compensation and performance of our executive officers, generally other than himself. The executive committee bases its compensation determinations and decisions upon their subjective review of the performance of the executive officers, our overall performance against our applicable corporate goals and their assessment of the officer’s contributions to such performance, internal pay equity considerations and the competitiveness of the market for each officer’s services. We did not retain the services of a third party compensation consultant in connection with making executive compensation decisions in 2020. In connection with this offering and in preparation for becoming a public company, we have engaged an independent compensation consultant to evaluate our executive compensation strategy, including the determination of an appropriate peer group that we expect may be used in connection with making compensation decisions for fiscal years 2021 and beyond.

Elements of our executive compensation program

For 2020, the primary elements of our named executive officers’ compensation were base salary, annual cash incentive bonuses, which we refer to as performance-based pay (“PBP”), long-term incentive awards and limited executive perquisites.

Base salaries

The base salaries of our named executive officers are an important part of their total compensation package and are intended to reflect their respective positions, duties and responsibilities. Base salary is a visible and stable fixed component of our compensation program. Annual base salaries have historically been based on, among other factors, a named executive officer’s knowledge, experience, expertise, perceived abilities and expected contributions, as well as external market benchmarks. The factors considered are not assigned specific weights.

The current annual base salary of each named executive officer and actions taken with respect to base salary in 2020 are listed below.



Named Executive Officer	Annual base salary ($)			Actions taken in 2020
Christopher Smith		$1,250,000
Joseph Busky		$500,000		Hired in July 2020
Michael Iskra		$450,000	(1)	Received a merit increase in March 2020 and a promotional increase in July 2020
Chockalingam Palaniappan		$450,000		Hired in February 2020
Michael Schlesinger		$548,375	(2)	Received a merit increase in March 2020
Todd Davachi		$450,000	(3)

(1)

Mr. Iskra’s annualized base salary was increased from $420,240 to $430,746 in March 2020 and increased in July 2020 to $450,000.

(2)

Michael Schlesinger’s annualized base salary was increased from $535,000 to $548,375 in March 2020.

(3)

Represents annualized base salary as in effect prior to Mr. Davachi’s resignation in March 2020.

Annual incentive compensation

We structure our compensation programs to reward named executive officers based on our overall company performance and the individual executive’s relative contribution to that performance. This allows the named

151

executive officers to receive performance-based pay awards, which we refer to as “PBP” in the event certain specified corporate performance measures are achieved. The annual PBP pool is determined by the executive committee based upon a formula with reference to the extent of achievement of corporate-level performance goals established annually by the executive committee. Our PBP program is designed to reward named executive officers for contributions made to help us meet our annual performance goals. The amount actually received will depend on overall company performance and individual performance during the year. The executive committee may make discretionary adjustments to the formulaic PBP awards to reflect its subjective determination of an individual’s impact and contribution to overall corporate performance.

Under the terms of the PBP program, the named executive officers’ formulaic PBP awards are based on a percentage of their base salaries and currently range from 50% to 100% for target-level performance achievement. Maximum formulaic PBP awards vary according to each executive and are set at levels that we determine are necessary to maintain competitive compensation practices and properly motivate our named executive officers by rewarding them for our short-term performance and their contributions to that performance. For 2020, none of our named executive officers were entitled to receive a guaranteed PBP award.

Once the extent of achievement of corporate PBP performance targets and the formulaic PBP calculations have been determined, the executive committee may adjust the amount of PBP awards paid upward or downward based upon its overall subjective assessment of each named executive officer’s performance, business impact, contributions, leadership, attainment of individual objectives established periodically throughout the year, as well as other related factors. In addition, PBP funding amounts may be adjusted by the executive committee to account for unusual events such as significant global or market dynamics, extraordinary transactions, asset dispositions and purchases, and mergers and acquisitions if, and to the extent, the compensation committee does not consider the effect of such events indicative of our performance.

The following table sets forth the formulaic PBP award levels for 2020 for threshold and target-level performance and the maximum PBP award opportunities for our named executive officers:



	Annual salary ($)		PBP min				PBP target				PBP maximum
Name(1)	Annual salary ($)		% of salary		Amount ($)		% of salary		Amount ($)		% of salary		Amount ($)
Christopher Smith	$	1,250,000		6.4%	$	80,030		100%	$	1,250,000		200.0%	$	2,500,000
Joe Busky(2)	$	241,803		3.8%	$	9,289		60%	$	145,082		120.6%	$	290,164
Mike Iskra(2)	$	440,110		3.5%	$	15,490		55%	$	241,940		109.9%	$	483,880
Chockalingam Palaniappan(2)	$	383,607		3.8%	$	14,736		60%	$	230,164		120.0%	$	460,328
Michael Schlesinger	$	548,375		3.2%	$	17,555		50%	$	274,188		100%	$	548,375

(1)

Mr. Davachi terminated employment with us in early 2020 and will not be eligible for a bonus for 2020 plan year.

(2)

Reflected percentages and amounts for Messrs. Busky, Palaniappan and Iskra are pro-rated based on hire dates or promotional dates, respectively.

The “Performance Based Pay” award for all named executive officers is based on the sum of a payout percentage for each of (i) earnings before interest, taxes, depreciation and amortization (EBITDA), revenue and individual performance. In general, for each named executive officer, 50% of PBP payout is based on Company EBITDA performance, 30% is based on Company revenue performance and 20% is based on individual performance. For this purpose, EBITDA excludes certain non-cash costs and expenses, including equity compensation expense, foreign currency exchange impacts, extraordinary or non-recurring costs or expenses, including restructuring charges, and similar adjustments. Individual performance is generally a subjective determination of the named executive officer’s achievements and contributions to our organization.

152

For 2020, aside from the individual performance component of each NEO, the EBITDA and revenue performance goals were as follows:



Metric	Target
EBITDA	$	508.61
Revenue	$	1,834.65

For determination of the PBP award for each named executive officer, achievement between 99-101% of our annual EBITDA target or revenue target yields a 100% payout percentage for that component. The company also set threshold and maximum percentages of achievement against our annual EBITDA and revenue targets. The minimum performance achievement threshold to receive a payment under the PBP plan for the EBITDA component is 90% and for the revenue component is 95%. Performance achievement of 110.5% for EBITDA and 105.5% for revenue yields the maximum payout of 200% of the target award for each component. The individual performance component can fluctuate from 0% to 200% based on the qualitative assessment of each named executive officer by our CEO and executive committee.

For EBITDA or revenue performance in between the threshold and 99% of target or performance in between 101% of target and maximum levels, we apply “Leverage Ratio” to determine the payout level for that component, whereby the payout level increases or decreases proportionately (on a linear basis) for every one percentage point that achievement exceeds or falls below target range level. The maximum Payout Percentage for each component is 200% and can decrease to a minimum Payout Percentage of 5.3% for the EBITDA component and 11.1% for the Revenue component. The executive committee retains discretion to adjust PBP awards up or down based on overall company performance, market conditions or other factors as it may consider in its discretion.

Annual PBP awards for 2020 are expected to be determined following completion of our audited financial statements for 2020 and will be based on our performance relative to the performance metrics outlined above and the executive committee’s overall subjective determination of the company performance relative to market conditions, and of each officer’s performance in 2020. As such, the annual 2020 PBP awards are not yet known and we expect to supplement this disclosure with appropriate filings with the Securities and Exchange Commission at such time as the annual bonus determinations are made.

Long-term incentive compensation

We believe that employees in a position to make a substantial contribution to the long-term success of our company should have a significant and ongoing stake in our success. Long-term equity incentive compensation creates a pay-for-performance culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns interest of executives with those of our stockholders. As a result, in connection with Carlyle’s initial acquisition of our business, we adopted our 2014 Equity Incentive Plan (the “2014 Plan”), which governs the terms of our outstanding equity incentive awards, which are described in this compensation discussion and analysis below. In connection with this offering, we intend to adopt a 2021 Incentive Award Plan, which will govern equity compensation awards that we may make to our named executive officers and other employees in the future, and which is described in more detail under the heading “equity incentive plans” below.

Outstanding equity incentive awards

Our long-term equity incentive compensation program presently consists primarily of share option awards that were granted under the 2014 Plan with an exercise price equal to the fair market value of our shares on the

153

date of grant. Historically, we have not granted equity incentive awards on an annual basis to our named executive officers and instead have granted larger “one-time” awards on an infrequent basis as an incentive for participants to drive long-term equity value growth in our business.

Named Executive Officers have historically received an award of share options upon their commencement of service with us or upon promotion, with a portion of the award being considered “time-based” and eligible to vest based on continued employment only, and a portion being eligible to vest based on performance conditions or in the event Carlyle achieves a liquidity event with respect to its investment in us. For option awards granted prior to December 2019, the time-based portion of the award accounted generally for 60% of the award and was eligible to vest in five equal annual installments. The remaining 40% of the award is subject to attaining certain performance metrics tied to our annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) and the portion of these awards that presently remains unvested will generally vest at such time as Carlyle has sold shares representing 70 % or more of its investment in us following the consummation of this offering, provided that it attains certain prescribed return hurdles in connection with its investment in us. The time-based awards are also subject to earlier vesting at such time as Carlyle has sold shares representing 70% or more of its investment in us.

In December 2019 and after, several of our named executive officers who were then employed with us, were a newly hired executive or was promoted, received an additional award of share options. For each participant, 50% of this award is considered “time-based” and is eligible to vest in annual installments over three years and 50% of the award is considered “performance-based.” The performance based portion of the award generally will vest at such time as the average closing price of our ordinary shares over a 10 day period equals or exceeds $32.50, subject to Carlyle having attained certain cash returns on its investment in us. The performance based portion of the award will also vest at such time as Carlyle has sold shares representing 50% or more of its investment in us following the consummation of this offering, provided that it attains certain prescribed return hurdles in connection with such sales. The time-based awards are also subject to earlier vesting at such time as Carlyle has sold shares representing 50% or more of its investment in us.

In addition to the share option awards described above, from time to time we have made limited awards of restricted shares to certain named executive officers in order to deliver an additional form of equity incentive compensation. The restricted stock awards are intended to deliver additional compensation opportunities tied to the increase in the equity value of our business over time while also providing a baseline amount of value to the executive in the event our equity value does not meaningfully increase. These restricted stock awards have been used only in select instances, primarily in connection with an executive’s initial commencement of employment with us, as an employment inducement and/or replacement of forfeited compensation from a prior employer.

Equity incentive awards granted in 2020

In 2020, we granted an award of 200,000 shares of restricted stock to Mr. Smith (the “Smith RSA Grant”) to fulfill compensation commitments made to Mr. Smith upon his commencement of employment with us in 2019. The Smith RSA Grant will be eligible to vest following the consummation of this offering as follows, subject to Mr. Smith’s continuous employment as the Chief Executive Officer of the Company through such vesting event:

•

100,000 shares subject to the Smith RSA Grant are designated as “Limited Shares” and will be eligible to vest as follows following the consummation of this offering: (a) 25% of the Limited Shares vest upon this six-month anniversary of the closing date of the offering if as of such date the volume weighted average closing price of the Company’s common stock over the preceding 30 trading days (“VWAP”) equals or exceeds $27.50, (b) 25% of the Limited Shares vest upon the one-year anniversary of the closing date of the offering if, as of such date, the VWAP equals or exceeds $30.00, (c) 25% of the Limited Shares vest upon the

154

eighteen month anniversary of the closing date of the offering if, as of such date the VWAP equals or exceeds $32.50 and (d) 25% of the Limited Shares vest upon the two-year anniversary of the closing date of the offering if, as of such date, the VWAP equals or exceeds $32.50; provided, that in each case, if the VWAP does not equal or exceed the threshold price on the respective vesting date, the Limited Shares remain eligible to vest if the VWAP achieves the applicable price per share threshold prior to December 31, 2023; and

•

The other 100,000 shares subject to the Smith RSA Grant are designated as “Unlimited Shares” and will be eligible to vest following the consummation of this offering as follows: (a) 25% of the Unlimited Shares vest upon the time that the VWAP equals or exceeds $25.00, (b) 25% of the Unlimited Shares vest upon the time that the VWAP equals or exceeds $30.00, (c) 25% of the Unlimited Shares vest upon the time that the VWAP equals or exceeds $35.00 and (d) 25% of the Unlimited Shares vest upon the time that the VWAP equals or exceeds $40.00; provided, that in each case, that no portion of the Unlimited Shares will vest prior to the six month anniversary of the closing date of the offering.

In 2020, we granted an award of 250,000 share options to Mr. Busky, and 200,000 share options to Dr. Palaniappan in connection with their commencement of employment with us. We also granted an award of 50,000 share options to Mr. Iskra in connection with his promotion to his current position in 2020. The amount of the awards were determined by the executive committee taking into account the named executive officer’s experience level, expected contributions to our organization, internal pay equity considerations and the other factors described above under the heading “—Determination of compensation.”

These awards will vest generally on the same terms as the stock option awards granted to our other named executive officers in December 2019 and after, as described above.

Executive perquisites

We provide limited executive perquisites in order to provide convenient benefits with high perceived values that assist the executive in providing services to us efficiently and consistently.

To increase the efficiency of our executives and maximize the use of their time, we maintain a lease agreement for a corporate airplane. Under his employment agreement, our Chairman and Chief Executive Officer is entitled to use the corporate airplane for business use, and for purposes of his and his immediate family members’ commuting needs to and from New Jersey, mindful of the best interests of the Company and his duties and position, up to 150 hours per year. Under a previously established agreement, we also lease and provide corporate apartments for our Chairman and Chief Executive Officer and General Counsel, and provide a company-leased vehicle for our Chairman and Chief Executive Officer in the Raritan, New Jersey area. The aggregate incremental cost associated with these items in 2020 is included in the Summary Compensation Table below and detailed in the footnotes to that table. In addition, Mr. Busky and Dr. Palaniappan are eligible for relocation benefits or a relocation stipend in conjunction with their possible and anticipated relocations to the Raritan, New Jersey area in the future.

Other elements of compensation

Retirement plans and other employee benefits

Our named executive officers are eligible to participate in our employee benefit plans and programs, including medical and dental benefits and life insurance, to the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans. We also sponsor a 401(k) defined contribution plan (the

“401(k) Plan”) in which our named executive officers may participate, subject to limits imposed by the Code, to

155

the same extent as our other full-time employees. Under this plan, we match 75% of the participants’ first 6% of contributions, following one year of continuous service, up to a specified amount and subject to IRS limitations.

In addition, we maintain a non-qualified defined contribution retirement benefit plan in which our named executive officers are eligible to participate. The non-qualified plan provides supplemental retirement benefits in accordance with the contribution amounts described above for participants whose participation in the 401(k) Plan is limited by IRS rules. The excess benefit plan is described in more detail in the narrative that follows the Nonqualified Deferred Compensation Table.

We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) and non-qualified plans adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

Retention and sign-on bonuses

From time to time we have entered into targeted sign-on and retention bonus awards with certain of our named executive officers when we have determined it to be appropriate or necessary to secure the services of and ensure the continued retention and dedication of our executive team. In 2020, we paid sign on bonuses of $56,627 to Dr. Palaniappan to make him whole for certain compensation repayment obligations to his former employer, which amount was grossed up for taxes, and $136,000 in respect of an annual bonus that was not paid by his former employer.

Employment and severance agreements

We consider maintenance of a strong management team essential to our success. To that end, we recognize that the uncertainty which may exist among management with respect to their “at-will” employment with us could result in the departure or distraction of management personnel to our detriment. Accordingly, we have determined that severance arrangements are appropriate to encourage the continued attention and dedication of certain members of our management team and to allow them to focus on the value to stockholders of strategic alternatives without concern for the impact on their continued employment. Certain of our named executive officers has entered into an employment agreement or letter agreement that entitles the named executive officer to severance payments and benefits in the event of certain terminations of employment, along with certain other benefits, the key terms of which are summarized as follows:

Christopher Smith

We have entered into an employment agreement with Mr. Smith, pursuant to which we employ Mr. Smith as our Chairman and Chief Executive Officer. The employment agreement has an initial term ending on September 9, 2022, which renews for an additional one year period unless Mr. Smith or the Company delivers written notice of non-renewal at least 90 days prior to the expiration of the then current term. Mr. Smith’s employment agreement provides for base salary, annual performance bonus eligibility and participation in our equity incentive plans. In addition, the agreement provides that Mr. Smith will be entitled to a one-time cash bonus equal to $2,000,000, payable within 10 days after the consummation of this offering.

If we terminate Mr. Smith’s employment without “cause” or he resigns for “good reason,” subject to his execution and non-revocation of a release in favor of the Company, he is entitled to receive (i) an amount equal to 1.0 times the sum of his then current base salary and target annual bonus, payable in installments for 12 months following Mr. Smith’s termination of employment and (ii) payments lasting for up to 12 months’ equal

156

to the amounts Mr. Smith would be required to pay for continued coverage under the Company’s group medical and dental benefit plans.

The employment agreement also includes restrictive covenants pursuant to which Mr. Smith has agreed to refrain from competing with us or soliciting our customers or employees during his employment and for 12 months following termination of his employment and from disclosing our proprietary information during or at any time following his employment.

For purposes of Mr. Smith’s employment agreement:

•

“cause” means, subject to notice and cure rights, Mr. Smith’s (i) failure to (A) substantially perform his duties with the Company (other than any such failure resulting from disability) or (B) comply with, in a material respect, any of the Company’s policies, in each case that results in material damage to the Company’s property, business or reputation, (ii) repeated failure in a material respect to carry out or comply with any lawful and reasonable directive of our Board of Directors within the scope of his duties, (iii) breach of a material provision of his employment agreement that results in material damage to the Company’s property, business or reputation, (iv) conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude, (v) unlawful use (including being under the influence) or possession of illegal drugs on the Company’s (or any of its affiliate’s) premises or while performing his duties and responsibilities under the employment agreement; or (vi) commission of an act of fraud, embezzlement, misappropriation, or breach of fiduciary duty against the Company or any of its affiliates; and

•

“good reason” means, subject to notice and cure rights, Mr. Smith’s resignation following any of the following without his prior written approval: (i) a decrease in his annual base salary or target bonus, other than a reduction in annual base salary of less than 10% that is implemented in connection with a contemporaneous and proportional reduction in annual base salaries affecting all other senior executives of the Company, (ii) a material decrease in his authority or areas of responsibility as are commensurate with his title or position (other than in connection with a corporate transaction where he continues to hold his position with respect to the Company’s business, substantially as such business exists prior to the date of consummation of such corporate transaction, but does not hold such position with respect to the successor corporation), (iii) the Company’s material breach of any material agreement with him.

Joseph Busky

We entered into an employment offer letter and severance letter with Mr. Busky, pursuant to which we employ him as our Chief Financial Officer. Mr. Busky’s offer letter provides for annual base salary, performance bonus eligibility, an initial equity award grant and benefits. Pursuant to the severance letter, if we terminate Mr. Busky’s employment without cause, he will be entitled to severance payments equal to six months of his annual base salary.

Michael Iskra

Mr. Iskra is party to an employment offer letter with us, pursuant to which we employ him as Executive Vice President, Strategy & Commercial Excellence. Generally, if we terminate Mr. Iskra without cause, he will be eligible to receive severance benefits under our Severance Pay Plan, which provides two weeks’ severance pay for each completed year of service, with a minimum benefit of 12 weeks’ base salary and a maximum benefit of 26 weeks’ base salary.

157

Chockalingam Palaniappan

We entered into an employment offer letter and severance letter with Dr. Palaniappan, pursuant to which we employ him as our Chief Innovation Officer. Dr. Palaniappan’s offer letter provides for annual base salary, performance bonus eligibility, an initial equity award grant and benefits. In addition, Dr. Palaniappan received an (i) initial signing bonus equal to $56,627, grossed up for taxes, which was reduced from $150,000 as a result of his former employer not requiring full repayment of a forgivable loan (“Initial Bonus”) and (ii) an additional payment of $136,000 (the “Additional Bonus”). In the event Dr. Palaniappan voluntarily resigns or we terminate his employment for cause, in each case prior to February 24, 2022, he is required to repay a pro rata portion of the Initial Bonus and the Additional Bonus. Dr. Palaniappan’s offer letter also includes an agreement by the Company to provide a relocation package, which Dr. Palaniappan will be required to repay in the event he resigns voluntarily or the Company terminates his employment for cause, in each case, within 24 months from when the relocation benefits are provided. Pursuant to the severance letter, if we terminate Dr. Palaniappan’s employment without cause, he will be entitled to severance payments equal to 12 months of his annual base salary.

Michael Schlesinger

We entered into an employment agreement with Mr. Schlesinger, pursuant to which we employ Mr. Schlesinger as our Executive Vice President, General Counsel & Secretary. The employment agreement has a term that renews on January 1 each year for an additional one year period unless Mr. Schlesinger or the Company delivers written notice of non-renewal at least 60 days prior to the expiration of the then current term.

If we terminate Mr. Schlesinger’s employment without “cause” or he resigns for “good reason,” subject to his execution and non-revocation of a release in favor of the Company, he is entitled to receive (i) an amount equal to 1.25 times the sum of his then current annual base salary and target annual bonus, payable in installments for 15 months following Mr. Schlesinger’s termination of employment and (ii) payments lasting for up to 15 months equal to the amounts Mr. Schlesinger would be required to pay for continued coverage under the Company’s group medical and dental benefit plans.

The employment agreement also includes restrictive covenants pursuant to which Mr. Schlesinger has agreed to refrain from competing with us or soliciting our customers or employees during his employment and for 12 months following termination of his employment and from disclosing our proprietary information during or at any time following his employment.

For purposes of Mr. Schlesinger’s employment agreement, “cause” and “good reason” have substantially the same meaning as in Mr. Smith’s employment agreement.

158

2020 Summary Compensation Table



Name and Principal Position	Year		Salary ($)		Bonus ($)(1)		Stock awards ($)(2)		Option awards ($)(2)		Non-equity incentive plan compensation ($)(3)		All other compensation ($)(4)		Total
Christopher Smith		2020		1,250,000		—		4,500,000		—		—		273,129		6,023,129
Chairman and Chief Executive Officer

Joseph Busky		2020		228,846		—		—		2,300,000		—		—		2,528,846
Chief Financial Officer

Michael Iskra		2020		437,612		—		—		460,000		—		23,482		921,094
Executive Vice President, Strategy & Commercial Excellence

Chockalingam Palaniappan, Ph.D.		2020		372,116		192,627		—		1,100,000		—		24,927		1,689,670
Chief Innovation Officer

Michael Schlesinger		2020		545,803		—		—		—		—		56,812		602,615
Executive Vice President, General Counsel & Secretary

Todd Davachi		2020		103,132		—		—		—		—		16,254		119,386
Former Chief Financial Officer

(1)

Amounts reflect the signing bonuses of $136,000 and $56,627 paid to Dr. Palaniappan following his commencement of employment with us.

(2)

Amounts reflect the full grant-date fair value of restricted stock awards and share options granted during 2020 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all stock awards made to named executive officers in Note 18 to the consolidated financial statements included in this prospectus.

(3)

Reflects amounts payable under our PBP program for 2020. For more information, refer to the discussion above under “—Annual incentive compensation.” We will supplement this disclosure with appropriate filings with the Securities and Exchange Commission at such time as the annual bonus determinations are made.

(4)

The amounts shown in this column consist of the components set forth in the table below, which include the contributions we made with respect to each named executive officer’s 401(k) plan and non-qualified deferred compensation plan account and perquisites provided to each named executive officer. The amounts set forth below reflect the cost to the company of providing the various benefits. For Mr. Smith, the company aircraft amount reflects Mr. Smith’s use of the company’s leased aircraft for commuting purposes to and from Colorado where he presently resides and is calculated based upon our actual incremental cost to operate the aircraft, including the cost of fuel, trip-related maintenance, crew, travel expenses, on-board catering, landing fees, trip-related hangar and parking costs and other variable costs. Mr. Palaniappan and other company employees occasionally accompanied Mr. Smith on flights using the company aircraft to and from Colorado where Mr. Palaniappan also resides. The Company incurred no incremental cost related to Mr. Palaniappan’s travel on the company aircraft.



Name	Year		401(k) and non-qualified plan contributions		Travel benefits ($)		Apartment Rental ($)		Tax gross ups ($)
Christopher Smith		2020				224,460		34,747		1,619
Joseph Busky		2020		—		—		—		—
Michael Iskra		2020		22,192		—		—		376
Chockalingam Palaniappan		2020		—		—		—		23,466
Michael Schlesinger		2020		28,128		—		28,684		—
Todd Davachi		2020		16,254		—		—		—

159

Grants of plan-based awards

The following table provides supplemental information relating to grants of plan-based awards made during fiscal 2020 to help explain information provided above in our 2020 Summary Compensation Table. This table presents information regarding all grants of plan-based awards occurring during fiscal 2020.



			Estimated future payouts under non-equity incentive plan awards(1)						Estimated future payouts under equity incentive plan awards			All other option awards: number of shares of stock or units (#)(3)		Exercise price of option awards ($/sh)		Grant date fair value of stock and option awards ($)
Name	Grant date		Threshold ($)		Target ($)		Maximum ($)		Target (#)					Exercise price of option awards ($/sh)		Grant date fair value of stock and option awards ($)
Christopher Smith		—		80,030		1,250,000		2,500,000
Limited Shares(2)		10/26/2020								100,000	(2)						2,250,000
Unlimited Shares(2)		10/26/2020								100,000	(2)						2,250,000

Joseph Busky				9,289		145,082		290,164
Time Options(3)		7/7/2020											125,000		20.00		1,237,500
Performance Options(4)		7/7/2020											125,000		20.00		1,062,500

Michael Iskra				15,490		241,940		483,880
Time Options(3)		7/27/2020											25,000		20.00		247,500
Performance Options(4)		7/27/2020								25,000	(4)				20.00		212,500

Palani Palaniappan				14,736		230,164		460,328
Time Options(3)		3/24/2020											100,000		20.00		645,000
Performance Options(4)		3/24/2020								100,000	(4)				20.00		455,000

Michael Schlesinger				17,555		274,188		548,375

(1)

The amounts reported in these columns reflect the cash PBP award opportunity range for each of our named executive officers. For more information, refer to the discussion above under “—Annual incentive compensation.”

(2)

The amount shown represents a performance-based restricted stock grant made to Mr. Smith in 2020 and will vest as described above under “—Long-term incentive compensation.”

(3)

The amount shown represents time-based option grants made to our named executive officers in 2020 and will vest in three annual installments, subject to acceleration as described above under “—Long-term incentive compensation.”

(4)

The amount shown represents performance-based option grants made to our named executive officers in 2020 and will vest as described above under “—Long-term incentive compensation.”

160

Outstanding equity awards at 2020 fiscal year-end

The following table includes certain information with respect to stock options held by the Named Executive Officers as of December 31, 2020.

Option Awards

Stock Awards

Name

Grant date

Number of
securities
underlying
unexercised
options (#)
exercisable

Number of
securities
underlying
unexercised
options (#)
unexercisable

Equity
incentive
plan
awards:
number of
securities
underlying
unexercised
unearned
options (#)

Option
exercise
price
($)

Option
expiration
date

Number
of
shares
or units
of stock
that
have not
vested
(#)

Market
value of
shares or
units of
stock that
have not
vested
($)

Equity
incentive
plan
awards:
number
of
unearned
shares,
units or
other
rights
that have
not
vested
(#)

Equity
incentive
plan
awards:
market or
payout
value of
unearned
shares,
units or
other
rights that
have not
vested

($)

Christopher Smith

Time Options(1)

12/20/2019

216,667

433,333

20.00

12/20/2029

Performance Options(1)

12/20/2019

650,000

20.00

12/20/2029

Restricted Stock(1)

12/12/2019

200,000

4,500,000

Restricted Stock(1)

10/26/2020

200,000

4,500,000

Joseph Busky

Time Options(2)

7/7/2020

125,000

20.00

7/7/2030

Performance Options(2)

7/7/2020

125,000

20.00

7/7/2030

Michael Iskra

Time Options(3)

7/27/2020

25,000

20.00

7/27/2030

Performance Options(3)

7/27/2020

25,000

20.00

7/27/2030

Time Options(4)

12/20/2019

25,000

50,000

20.00

12/20/2029

Performance Options(4)

12/20/2019

75,000

20.00

12/20/2029

Time Options(5)

12/21/2015

78,600

10.00

12/21/2025

Performance Options(5)

12/21/2015

52,400

10.00

12/21/2025

Palani Palaniappan

Time Options(6)

3/24/2020

100,000

20.00

3/24/2030

Performance Options(6)

3/24/2020

100,000

20.00

3/24/2030

Michael Schlesinger

Time Options(7)

12/20/2019

28,333

66,667

20.00

12/20/2029

Performance Options(7)

12/20/2019

100,000

20.00

12/20/2029

Time Options(8)

10/22/2014

139,474

10.00

10/22/2024

Performance Options(8)

10/22/2014

126,315

10.00

10/22/2024

(1)

Represents options granted to Mr. Smith in connection with his commencement of employment in September 2019. The three annual installments of time-vesting options were and are scheduled to vest equally on September 9, 2021 and 2022, subject to his continued employment on each vesting date. The performance-vesting options vest on such date as the Company’s stock price equals or exceeds $32.50 (the “Stock Price Hurdle”), provided that as of such date or prior thereto, Carlyle has attained certain cash returns on its investment in us (the “Return Metric”). The restricted stock awarded in 2019 will vest as to 100% of the total number of then-unvested shares underlying the award on September 9, 2022. Details regarding the vesting terms of the restricted stock award made in 2020 are described above under "— Long-term incentive compensation."

161

(2)

Represents options granted to Mr. Busky in connection with the commencement of his employment in July 2020. The three annual installments of time-vesting options vest equally on July 7, 2021, 2022 and 2023, subject to his continued employment on each vesting date. The performance-vesting options vest on such date as the Company’s stock price equals or exceeds the Stock Price Hurdle, provided that as of such date or prior thereto, the Return Metric has been achieved.

(3)

Represents options granted to Mr. Iskra in connection with promotion to Executive Vice President of Commercial Excellence and Strategy effective August 1, 2020. The three annual installments of time-vesting options vest equally on July 27, 2021, 2022 and 2023, subject to his continued employment on each vesting date. The performance-vesting options vest on such date as the Company’s stock price equals or exceeds the Stock Price Hurdle, provided that as of such date or prior thereto, the Return Metric has been achieved.

(4)

Represents options granted to Mr. Iskra in December 2019. The three annual installments of time-vesting options were and are scheduled to vest equally on December 20, 2021 and 2022, subject to his continued employment on each vesting date. The performance-vesting options vest on such date as the Company’s stock price equals or exceeds the Stock Price Hurdle, provided that as of such date or prior thereto, the Return Metric has been achieved.

(5)

Represents options granted to Mr. Iskra in December 2015. The unvested performance-vesting options are eligible to vest as described above under “—Long-term incentive compensation.”

(6)

Represents options granted to Dr. Palaniappan in connection with the commencement of his employment in March 2020. The three annual installments of time-vesting options vest equally on July 27, 2021, 2022 and 2023, subject to his continued employment on each vesting date. The performance-vesting options vest on such date as the Company’s stock price equals or exceeds the Stock Price Hurdle, provided that as of such date or prior thereto, the Return Metric has been achieved.

(7)

Represents options granted to Mr. Schlesinger in December 2019. The three annual installments of time-vesting options were and are scheduled to vest equally on December 20, 2020, 2021 and 2022, subject to his continued employment on each vesting date. The performance-vesting options vest on such date as the Company’s stock price equals or exceeds $32.50 (the “Stock Price Hurdle”), provided that as of such date or prior thereto, the Principal Stockholders have received aggregate Cash Proceeds equal to or in excess of two (2) times the Investment.

(8)

Represents options granted to Mr. Schlesinger in October 2014. The unvested performance-vesting options are eligible to vest as described above under “—Long-term incentive compensation.”

Option exercises and stock vested in 2020

The below table depicts options that were exercised by our named executive officers during the year ended December 31, 2020. None of our named executive officers vested in any stock awards during 2020.



Name	Option awards \|\| number of shares acquired on exercise		Option awards \|\| value realized on exercise		Stock awards \|\| number of shares acquired on vesting		Stock awards \|\| value realized on vesting
Christopher Smith		—		—		—		—
Joseph Busky		—		—		—		—
Michael Iskra		—		—		—		—
Chockalingam Palaniappan		—		—		—		—
Michael Schlesinger		15,000		137,500		—		—

Pension benefits table

None of our named executive officers participated in any defined benefit pension plans in 2020.

Nonqualified deferred compensation table

We maintain the Ortho Clinical Diagnostics Excess Plan, or Excess Plan, for a select group of our highly compensated employees, in which our named executive officers are eligible to participate. Under the terms of the Excess Plan, we make contributions to participant accounts equal to amounts which would have been received in the tax-qualified 401(k) Plan had the participant’s participation in the 401(k) Plan not been limited by rules imposed under the Code and ERISA.

162

The following table contains information regarding nonqualified deferred compensation plans for 2020.



Name	Registrant contributions in last FY ($)(1)		Aggregate earnings in last FY ($)		Aggregate withdrawals/ distributions ($)		Aggregate balance at last FYE ($)
Christopher Smith		—		—		—		—
Joseph Busky		—		—		—		—
Michael Iskra		9,367		2,492		—		49,637
Chockalingam Palaniappan		—		—		—		—
Michael Schlesinger		18,406		5,563		—		110,574
Todd Davachi(2)		11,970		307		34,609		—

(1)

Reflects contributions made to the plan in March 2020 in respect to Excess Plan amounts for 2019.

(2)

Reflects Mr. Davachi’s payout of deferred compensation in 2020 in connection with his termination of employment.

Potential payments upon termination or a change in control

Our named executive officers would be entitled to severance payments and benefits in the event their employment with us is terminated following an involuntary termination, which would include a termination of the officer’s employment by us without cause or, for Mr. Smith and Mr. Schlesinger, a resignation for good reason. For more information, refer to the discussion above under the heading “—Employment and severance arrangements.” In addition, our named executive officers’ outstanding stock option and restricted share awards would vest upon the occurrence of a “liquidity event” for Carlyle, which could include a change in control of us and generally would occur if Carlyle sold shares representing at least 50% of its investment in us (70% for option awards granted before December 2019), subject to attainment of certain share price and return thresholds for certain of the performance-based option awards. For more information, refer to the discussion above under the heading “—Long-term incentive compensation.”

163

The following table shows potential payments to our named executive officers under the employment and severance arrangements and with respect to their outstanding equity incentive awards for various scenarios involving a termination of employment or Carlyle liquidity event assuming such event occurred on December 31, 2020 and, where applicable, using a price of our common stock of $22.50, which was the most recent board determined value of our common stock as of such date:



	Form of payment
Name/Triggering Event	Cash severance ($)		Prorated bonus ($)			Benefit continuation ($)		Equity awards ($)		Total($)

Christopher Smith
Liquidity Event		0		2,000,000	(1)		0		5,583,333		7,583,333
Death/Disability		0		1,250,000			0		0		1,250,000
Involuntary Termination		1,250,000		1,250,000			27,987		0		2,528,430

Joseph Busky
Liquidity Event		0		0			0		312,500
Death/Disability		0		145,082			0		0		145,082
Involuntary Termination		250,000		145,082			9,932		0		395,082

Michael Iskra
Liquidity Event		0		0			0		187,500
Death/Disability		0		264,066			0		0		264,066
Involuntary Termination		103,846		264,066			4,803		0		367,912

Chockalingam Palaniappan
Liquidity Event		0		0			0		250,000
Death/Disability		0		230,164			0		0		230,164
Involuntary Termination		450,000		230,164			7,037		0		686,955

Michael Schlesinger
Liquidity Event		0		0			0		166,667
Death/Disability		0		274,188			0		0		274,188
Involuntary Termination		685,469		274,188			24,806		0		981,645

(1)

Amount includes a special one-time cash bonus of $2,000,000 payable upon the occurrence of an IPO or Liquidity Event.

Compensation of our directors

Directors who are representatives of Carlyle or who are also executive officers, receive no additional compensation for serving on our board of directors or its committees. Pursuant to our director compensation program as in effect prior to the consummation of this offering, we pay each of our other directors (other than Mr. Yates), which we refer to as our non-employee directors, $100,000 per year in cash for service on our Board of Directors, payable quarterly in arrears. Our non-employee directors have also historically received an annual award of restricted stock under our 2014 Equity Incentive Plan having an annual value of $75,000. For 2020 the restricted stock award granted to each of our non-employee directors covered 3,750 shares and was eligible to vest in equal quarterly installments over a period of two years.

Mr. Yates previously served as our Chief Operating Officer and Chief Executive Officer and continues to serve in a more extensive role than our non-employee directors, as both a member of our Board of Directors and as a non-officer level advisory employee of the Company. For his services as both a director and employee of us, for 2020, Mr. Yates received salary payments of $175,000 in cash and was eligible to participate in our benefit programs as if he was a regular employee.

164

In December 2020, we granted Mr. Yates an award of 200,000 restricted stock units (the “Yates RSU Award”). The Yates RSU Award was granted to fulfill compensation commitments made to Mr. Yates in respect of his service as our chief executive officer prior to Mr. Smith assuming that role in 2019; however, the Yates RSU Award is subject to vesting based on Mr. Yates’ continued service as a member of our board of directors through the date that is six months after the consummation of this offering. Notwithstanding the foregoing, in the event of Mr. Yates death or disability or removal from the board other than for cause, in each case, prior to a vesting date, the Yates RSU Award will vest in full.

The following table sets forth the compensation we paid to our non-employee directors for services performed in fiscal 2020:



Name	Fees earned or paid in cash ($)		Stock awards ($)(1)		All other compensation(2)		Total
Robert Yates		175,000		4,500,000		78,041		4,740,216
Thomas Mac Mahon		100,000		84,375		—		184,375
Ronald Labrum		100,000		84,375		—		184,375
David Perez		50,000		75,000		—		125,000
Carl Hull		100,000		84,375		—		184,375

(1)

Amounts reflect the full grant-date fair value of restricted shares granted during 2020 computed in accordance with ASC Topic 718. As of December 31, 2020, our non-employee directors (other than Mr. Yates) held the following number of unvested restricted shares: Mr. Mac Mahon: 4,687; Mr. Labrum: 4,687; Mr. Perez: 3,281; and Mr. Hull: 4,687. As of December 31, 2020, Mr. Yates held 657,895 outstanding share options and 200,000 unvested restricted shares.

(2)

Amounts reflect contributions we made for Mr. Yates pursuant to the Company’s 401(k) plan and in March 2020 in respect to Excess Plan amounts for 2019.

Following the consummation of this offering, we anticipate adopting a director compensation policy, pursuant to which our employee and non-employee directors will be compensated and which we anticipate may differ materially from our past director compensation practices. We will formally propose a director remuneration policy for approval by shareholders at the first annual general meeting of the Company following the consummation of this Offering, in accordance with the UK Companies Act 2006 and the regulations set out in the UK Large and Medium-sized Companies and Groups (Accounts and Report) Regulations 2008 (as amended).

Compensation risk assessment

Management conducted a risk assessment of our compensation plans and practices and concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. The objective of the assessment was to identify any compensation plans or practices that may encourage employees to take unnecessary risk that could threaten the Company. No such plans or practices were identified. The board of directors has reviewed and agrees with management’s conclusion.

Equity incentive plans

The following summarizes the material terms of the long-term incentive compensation plan in which our named executive officers will be eligible to participate following the consummation of this offering under which we may make periodic grants of equity and equity-based awards to our named executive officers and other key employees.

Incentive award plan

Effective the day prior to the first public trading date of our common stock, we intend to adopt and our shareholders will have approved the 2021 Incentive Award Plan, or the 2021 Plan, under which we may grant

165

cash and equity-based incentive awards to eligible service providers in order to attract, retain and motivate the persons who make important contributions to our company. The material terms of the 2021 Plan are summarized below.

Eligibility and administration

Our employees, consultants and directors, and employees and consultants of our subsidiaries, will be eligible to receive awards under the 2021 Plan. The 2021 Plan will be administered by our board of directors, which may delegate its duties and responsibilities to one or more committees of our directors and/or officers (referred to collectively as the plan administrator below), subject to the limitations imposed under the 2021 Plan, Section 16 of the Exchange Act, stock exchange rules and other applicable laws. The plan administrator will have the authority to take all actions and make all determinations under the 2021 Plan, to interpret the 2021 Plan and award agreements and to adopt, amend and repeal rules for the administration of the 2021 Plan as it deems advisable. The plan administrator will also have the authority to grant awards, determine which eligible service providers receive awards and set the terms and conditions of all awards under the 2021 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2021 Plan.

Shares available for awards

An aggregate of shares of our common stock will initially be available for issuance under the 2021 Plan. The number of shares initially available for issuance will be increased by an annual increase on January 1 of each calendar year beginning in 2022 and ending in and including 2031, equal to the least of (A) % of the shares of common stock outstanding on the final day of the immediately preceding calendar year and (B) a smaller number of shares determined by our board of directors. No more than shares of common stock may be issued under the 2021 Plan upon the exercise of incentive stock options. Shares issued under the 2021 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares.

If an award under the 2021 Plan or 2014 Plan expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new grants under the 2021 Plan. Awards granted under the 2021 Plan in substitution for any options or other stock or stock-based awards granted by an entity before the entity’s merger or consolidation with us or our acquisition of the entity’s property or stock will not reduce the shares available for grant under the 2021 Plan, but may count against the maximum number of shares that may be issued upon the exercise of incentive stock options.

Awards

The 2021 Plan provides for the grant of stock options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs, stock appreciation rights, or SARs, restricted stock, dividend equivalents, restricted stock units, or RSUs, and other stock or cash based awards. Certain awards under the 2021 Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code. All awards under the 2021 Plan will be set forth in award agreements, which will detail the terms and conditions of awards, including any applicable vesting and payment terms and post-termination exercise limitations. A brief description of each award type follows.

•

Stock Options and SARs. Stock options provide for the purchase of shares of our common stock in the future at an exercise price set on the grant date. ISOs, by contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. SARs entitle their holder, upon exercise, to receive from us an

166

amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. The plan administrator will determine the number of shares covered by each option and SAR, the exercise price of each option and SAR and the conditions and limitations applicable to the exercise of each option and SAR. The exercise price of a stock option or SAR will not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute awards granted in connection with a corporate transaction. The term of a stock option or SAR may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders).

•

Restricted Stock and RSUs. Restricted stock is an award of nontransferable shares of our common stock that remain forfeitable unless and until specified conditions are met and which may be subject to a purchase price. RSUs are contractual promises to deliver shares of our common stock in the future, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on shares of our common stock prior to the delivery of the underlying shares. The plan administrator may provide that the delivery of the shares underlying RSUs will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to restricted stock and RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the 2021 Plan.

•

Other Stock or Cash Based Awards. Other stock or cash-based awards are awards of cash, fully vested shares of our common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our common stock or other property. Other stock or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled. The plan administrator will determine the terms and conditions of other stock or cash-based awards, which may include any purchase price, performance goal, transfer restrictions and vesting conditions.

Performance criteria

The plan administrator may select performance criteria for an award to establish performance goals for a performance period. Performance criteria under the 2021 Plan may include, but are not limited to, the following: net earnings or losses (either before or after one or more of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on stockholders’ equity; total stockholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales or placement-related goals; financing and other capital raising transactions; cash on hand; acquisition activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any

167

incremental increase or decrease. Such performance goals also may be based solely by reference to the company’s performance or the performance of a subsidiary, division, business segment or business unit of the company or a subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. When determining performance goals, the plan administrator may provide for exclusion of the impact of an event or occurrence which the plan administrator determines should appropriately be excluded, including, without limitation, non-recurring charges or events, acquisitions or divestitures, changes in the corporate or capital structure, events unrelated to the business or outside of the control of management, foreign exchange considerations, and legal, regulatory, tax or accounting changes.

Certain transactions

In connection with certain corporate transactions and events affecting our common stock, including a change in control, or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the 2021 Plan to prevent the dilution or enlargement of intended benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes canceling awards for cash or property, accelerating the vesting of awards, providing for the assumption or substitution of awards by a successor entity, adjusting the number and type of shares subject to outstanding awards and/or with respect to which awards may be granted under the 2021 Plan and replacing or terminating awards under the 2021 Plan. In addition, in the event of certain non-reciprocal transactions with our stockholders, the plan administrator will make equitable adjustments to awards outstanding under the 2021 Plan as it deems appropriate to reflect the transaction.

Plan amendment and termination

Our board of directors may amend or terminate the 2021 Plan at any time; however, no amendment, other than an amendment that increases the number of shares available under the 2021 Plan, may materially and adversely affect an award outstanding under the 2021 Plan without the consent of the affected participant and stockholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. Further, the plan administrator may and shall have the right to, without the approval of our stockholders, amend any outstanding stock option or SAR to reduce its price per share. The 2021 Plan will remain in effect until the tenth anniversary of its effective date, unless earlier terminated by our Board of Directors. No awards may be granted under the 2021 Plan after its termination.

Foreign participants, claw-back provisions, transferability and participant payments

The plan administrator may modify awards granted to participants who are foreign nationals or employed outside the United States or establish subplans or procedures to address differences in laws, rules, regulations or customs of such foreign jurisdictions. All awards will be subject to any company claw-back policy as set forth in such claw-back policy or the applicable award agreement. Except as the plan administrator may determine or provide in an award agreement, awards under the 2021 Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding obligations arising in connection with awards under the 2021 Plan and exercise price obligations arising in connection with the exercise of stock options under the 2021 Plan, the plan administrator may, in its discretion, accept cash, wire transfer or check, shares of our common stock that meet specified conditions, a promissory note, a “market sell order,” such other consideration as the plan administrator deems suitable or any combination of the foregoing.

168

2014 Equity incentive plan

In addition to the 2021 Plan, we also maintain the 2014 Plan. Following the adoption of the 2021 Plan, we will not grant any future awards under the 2014 Plan. The 2014 Plan authorized us to grant to our subsidiaries’ employees, officers, directors and consultants options to purchase our common shares, restricted stock, restricted stock units and other stock-based awards. As of December 31, 2020, there were 10,042,128 options and 637,342 unvested restricted shares outstanding under the 2014 Plan.

169

Certain relationships and related party transactions

Consulting services agreement

In connection with the Acquisition, we entered into consulting services agreements with Carlyle Investment Management, L.L.C. (“CIM”), pursuant to which we pay CIM a fee for advisory, consulting and other services to be provided to us. The consulting services agreement was amended and restated effective as of October 15, 2020. Pursuant to the consulting services agreement, we pay an annual management fee to CIM of $3.0 million (the “Management Fee”). The Management Fee is payable on a quarterly basis. We will also reimburse CIM’s reasonable out-of-pocket expenses incurred in connection with services provided pursuant to the consulting services agreement, and we may pay CIM additional fees associated with other future transactions or in consideration of any additional services provided under the consulting services agreement. The consulting services agreement will terminate on the earlier of (a) the second anniversary of the consummation of this offering and (b) the date on which CIM and its affiliates collectively own less than 10% of our outstanding ordinary shares. During the fiscal nine months ended September 27, 2020 and the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, we recorded approximately $2.3 million, $3.1 million, $3.0 million and $3.1 million of Management Fee expense and other out-of-pocket expenses, respectively.

Transactions with portfolio companies of funds affiliated with Carlyle

We have entered into agreements to sell products and provide services to Global Health Private Limited, Rede D’Or São Luiz S.A. and Pharmaceutical Product Development, Inc., health care diagnostic companies that are portfolio companies of funds affiliated with Carlyle. During the fiscal nine months ended September 27, 2020 and the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017 we recognized revenues of approximately $0.6 million, $1.2 million, $0.4 million and $1.9 million, respectively, from Global Health Private Limited and approximately $0.7 million, $2.0 million, $0.6 million and $2.0 million, respectively, from Rede D’Or São Luiz S.A. For the fiscal years ended December 29, 2019 and December 30, 2018, we recognized revenues of approximately $0.2 million and $0.1 million, respectively, from Pharmaceutical Product Development, Inc. Revenues recognized from Pharmaceutical Product Development, Inc. during the fiscal year ended December 31, 2017 and the fiscal nine months ended September 27, 2020 were minimal.

ProKarma Holdings Inc., Reval Holdings Inc. and Cyient Limited, portfolio companies of funds affiliated with Carlyle, have provided IT services to us. During the fiscal nine months ended September 27, 2020 and fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, we incurred IT service fees of approximately $0.2 million, $0.3 million, $0.7 million and $0.2 million, respectively, to ProKarma Holdings Inc. For the fiscal years ended December 29, 2019 and December 30, 2018, we incurred IT service fees of approximately $0.3 million and $0.3 million, respectively, to Reval Holdings Inc. For the fiscal years ended December 30, 2018 and December 31, 2017, we incurred IT service fees of approximately $0.4 million and $1.2 million, respectively, to Cyient Limited. We did not incur such IT service fees to Reval Holdings Inc. or Cyient Limited during the fiscal nine months ended September 27, 2020.

CFGI, a portfolio company of a fund that became affiliated with Carlyle in the fourth quarter of fiscal year 2017, provides consulting services to us. During the fiscal nine months ended September 27, 2020 and the fiscal years ended December 29, 2019 and December 30, 2018, we incurred consulting fees to CFGI of approximately $0.7 million, $0.8 million and $0.6 million, respectively. During the fiscal year ended December 31, 2017, consulting fees incurred by us were minimal.

170

WellDyneRx, LLC, a pharmacy benefit management organization affiliated with Carlyle, started to provide pharmacy services to us during fiscal year 2020. During the fiscal nine months ended September 27, 2020, we incurred fees related to pharmacy services of approximately $4.6 million.

Shareholders agreements

Principal Shareholders Agreement

In connection with the Reorganization Transactions, we expect to enter into a shareholders agreement with the Principal Shareholder (the “Principal Shareholders Agreement”).

The Principal Shareholders Agreement will include provisions pursuant to which we will grant Carlyle (or such permitted transferee or affiliate) the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our ordinary shares held by Carlyle (or such permitted transferee or affiliate) or to piggyback on other registration statements in certain circumstances. These shares will represent approximately % of our ordinary shares after this offering, or approximately % if the underwriters exercise their option to purchase additional ordinary shares in full. These ordinary shares also may be sold under Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of ordinary shares held by persons deemed to be our affiliates. The Principal Shareholders Agreement will also require us to indemnify Carlyle (or such permitted transferee or affiliate) and its affiliates in connection with any registrations of our securities.

Amended and Restated Shareholders Agreement

In connection with the Reorganization Transactions, we expect to amend and restate our existing shareholders agreement with the Principal Shareholder and certain members of management (the “Amended and Restated Shareholders Agreement”). Such members of management who will be party to the Amended and Restated Shareholders Agreement (the “Management Shareholders”) are those who hold shares of common stock of Bermuda Holdco or who hold options, warrants or other rights to subscribe for or purchase shares of common stock of Bermuda Holdco (collectively, the “Management Shares”), which Management Shares will be exchanged for a like amount of our ordinary shares or options, warrants or other rights to subscribe for or purchase our ordinary shares upon consummation of the Reorganization Transaction.

The Amended and Restated Shareholders Agreement will provide for, among other things, provisions restricting the transfer of Management Shares. Pursuant to the Amended and Restated Shareholders Agreement, and subject to any permitted transfers described therein, there will be certain restrictions on the ability of Management Shareholders to transfer any Management Shares. Such agreement will terminate upon the earlier of a sale of our Company and a written election to terminate by the Principal Shareholder.

Indemnification of directors and officers

In connection with the completion of this offering, we expect UK Holdco and one of our U.S. subsidiaries to enter into deeds of indemnity and indemnification agreements, respectively, with each of our directors and certain of our officers that will indemnify such persons to the maximum extent permitted by applicable law against all losses suffered or incurred by them including, among other things, those that arise out of or in connection with his or her appointment as a director or officer, an act done, concurred in or omitted to be done by such person in connection with such person’s performance of his or her functions as a director or officer, or an official investigation, examination or other proceedings ordered or commissioned in connection with the affairs of the company of which he or she is serving as a director or officer at the request of the indemnifying

171

company. We expect that these deeds of indemnity and indemnification agreements will provide the directors and officers with contractual rights to indemnification and expense advancement.

Related persons transaction policy

Prior to the completion of this offering, our board of directors is expected to adopt a written policy on transactions with related persons, which we refer to as our “related person policy.” Our related person policy will require that all “related persons” (as defined in paragraph (a) of Item 404 of Regulation S-K) must promptly disclose to our general counsel any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) and all material facts with respect thereto. Our general counsel will communicate that information to our board of directors or to a duly authorized committee thereof. Our related person policy will provide that no related person transaction entered into following the completion of this offering will be executed without the approval or ratification of our board of directors or a duly authorized committee thereof. It will be our policy that any directors interested in a related person transaction must recuse themselves from any vote on a related person transaction in which they have an interest.

Other

From time to time, we may also enter into other employment or compensation arrangements with senior management or other key employees. See “Executive compensation—Compensation discussion and analysis—Employment and severance agreements.”

Express Scripts Holding Company (“Express Scripts”), a pharmacy benefit management organization affiliated with a member of our board of directors, previously provided pharmacy services to us. During the fiscal years ended December 30, 2018 and December 31, 2017, we incurred fees related to pharmacy services provided by Express Scripts of approximately $6.3 million and $6.6 million, respectively. During the fiscal year ended December 29, 2019, Express Scripts was no longer affiliated with us.

During the fiscal nine months ended September 27, 2020 and fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, we recognized approximately $0.2 million, $0.3 million, $0.2 million and $0.2 million, respectively, in sales to Quotient Ltd., another organization which is an investee of ours (“Quotient”). We also purchased inventories from Quotient amounting to approximately $17.1 million, $20.3 million, $11.9 million and $15.8 million for the fiscal nine months ended September 27, 2020 and the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively.

172

Principal shareholders

The following table and accompanying footnotes set forth information with respect to the beneficial ownership of the ordinary shares of Ortho Clinical Diagnostics Holdings plc as of , 2021, after giving effect to the Reorganization Transactions, by:

•

each person known by us to own beneficially 5% or more of our outstanding ordinary shares;

•

each of our directors;

•

each of our named executive officers; and

•

our directors and executive officers as a group.

The number of shares and percentages of beneficial ownership prior to this offering set forth below are based on the number of our ordinary shares to be issued and outstanding immediately prior to the consummation of this offering. The number of shares and percentages of beneficial ownership after this offering set forth below are based on the number of our ordinary shares to be issued and outstanding immediately after the consummation of this offering.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. A person is a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power,” which includes the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within 60 days.

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to their beneficially owned ordinary shares.

173

Except as otherwise indicated in the footnotes below, the address of each beneficial owner is c/o Ortho Clinical Diagnostics Holdings plc, 1001 Route 202, Raritan, New Jersey 08869.

Shares beneficially
owned prior to the
offering

Shares beneficially owned after the offering

If underwriters’ option
to purchase additional
ordinary shares
is not exercised

If underwriters’
option to purchase
additional shares is
exercised in full

Name of beneficial owner

Shares

Percentage

Shares

Percentage

Shares

Percentage

5% Shareholders:

Carlyle Investor(1)

Directors and Named Executive Officers:

Chris Smith

Joseph M. Busky

Chad Dale

Michael S. Iskra

Chockalingam Palaniappan

Michael A. Schlesinger

Karen H. Bechtel

Allan Holt

Carl Hull

Ron Labrum

Thomas Mac Mahon

David Perez

Robert R. Schmidt

Stephen H. Wise

Robert Yates

All directors and executive officers as a group (15 persons)

Indicates beneficial ownership of less than 1%.

(1)

Reflects ordinary shares held of record by Carlyle Partners VI Cayman Holdings, L.P. (the “Carlyle Investor”). Carlyle Group Management L.L.C. holds an irrevocable proxy to vote a majority of the shares of The Carlyle Group Inc. (“Carlyle”), a publicly traded company listed on Nasdaq. Carlyle is the sole member of Carlyle Holdings II GP L.L.C., which, with respect to the securities reported herein, is the managing member of CG Subsidiary Holdings L.L.C., which is the general partner of TC Group Cayman Investment Holdings, L.P., which is the general partner of TC Group Cayman Investment Holdings Sub L.P., which is the sole member of TC Group VI Cayman, L.L.C., which is the general partner of TC Group VI Cayman, L.P., which is the general partner of the Carlyle Investor. Voting and investment determinations with respect to the ordinary shares held of record by the Carlyle Investor are made by an investment committee of TC Group VI Cayman, L.P. Accordingly, each of the foregoing entities may be deemed to share beneficial ownership of the securities held of record by the Carlyle Investor. Each of them disclaims beneficial ownership of such securities. The address for each of TC Group Cayman Investment Holdings, L.P., TC Group Cayman Investment Holdings Sub L.P., TC Group VI Cayman, L.P. and the Carlyle Investor is c/o Walkers, Cayman Corporate Center, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. The address of each of the other entities named in this footnote is c/o The Carlyle Group, 1001 Pennsylvania Avenue, NW, Suite 220 South, Washington, D.C. 20004.

174

Description of share capital and articles of association

General

We were incorporated as a public limited company under the laws of England and Wales with the legal name Ortho Clinical Diagnostics Holdings plc on December 16, 2020, with company number 13084624. Prior to the consummation of this offering, new articles of association will be adopted in accordance with the description set out herein. Our registered office is 11-12 St. James’s Square, Suite 1, 3rd Floor, London, United Kingdom SW1Y 4LB. The principal legislation under which we operate and our ordinary shares are issued is the U.K. Companies Act 2006.

Share capital

As of September 27, 2020, after giving effect to the Reorganization Transactions, our issued share capital was $ . The nominal value of our ordinary shares is $ per ordinary share. Each issued ordinary share is fully paid.

Options

As of September 27, 2020, after giving effect to the Reorganization Transactions, there were options to purchase ordinary shares outstanding with a weighted average exercise price of $ per ordinary share.

Ordinary shares

The following summarizes the rights of holders of our ordinary shares:

•

each holder of our ordinary shares is entitled to one vote per ordinary share at a meeting of shareholders;

•

the holders of the ordinary shares shall be entitled to receive notice of, attend, speak, and vote at our general meetings; and

•

holders of our ordinary shares are entitled to receive such dividends as are recommended by our directors and declared by our shareholders.

Registered shares

We are required by the U.K. Companies Act 2006 to keep a register of our shareholders. Under English law, the ordinary shares are deemed to be issued when the name of the shareholder is entered in our share register. The share register therefore is prima facie evidence of the identity of our shareholders and the ordinary shares that they hold. The share register generally provides limited, or no, information regarding the ultimate beneficial owners of our ordinary shares. Our share register is maintained by our registrar, Computershare Trust Company N.A.

Under the U.K. Companies Act 2006, we must enter an allotment of ordinary shares in our share register as soon as practicable and in any event within two months of the allotment. We will perform all procedures necessary to update the share register to reflect the ordinary shares being sold in the offering. We also are required by the U.K. Companies Act 2006 to register a transfer of ordinary shares (or give the transferee notice of and reasons for refusal) as soon as practicable and in any event within two months of receiving notice of the transfer.

175

We, any of our shareholders or any other affected person may apply to the court for rectification of the share register if:

•

the name of any person, without sufficient cause, is wrongly entered in or omitted from our register of members; or

•

there is a default or unnecessary delay in entering on the register the fact of any person having ceased to be a member or on which we have a lien, provided that such refusal does not prevent dealings in the ordinary shares taking place on an open and proper basis.

Preemptive rights

English law generally provides shareholders with preemptive rights when new shares are issued for cash; however, it is possible for the articles of association, or shareholders in a general meeting, to exclude preemptive rights. Such an exclusion of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the exclusion is contained in the articles of association, or from the date of the shareholder resolution, if the exclusion is by shareholder resolution. In either case, this exclusion would need to be renewed by our shareholders upon its expiration (i.e., at least every five years). On , 2021, our shareholders approved the exclusion of preemptive rights for a period of five years from the date of the approval in respect of the allotment of up to a maximum amount of one billion ordinary shares, which exclusion will need to be renewed upon expiration (i.e., at least every five years) to remain effective, but may be sought more frequently for additional five-year terms (or any shorter period).

Articles of association

The following is a description of our articles of association to be adopted in connection with this offering. Unless noted otherwise, references in this prospectus to our articles of association refer to the articles of association to be adopted in connection with this offering.

Shares and rights attaching to them

Objects

The objects of our company are unrestricted.

Share rights

Subject to any special rights attaching to shares already in issue, our shares may be issued with or have attached to them any rights or restrictions as we may resolve by ordinary resolution of the shareholders or so far as the resolution does not make specific provision, as the board may determine.

Voting rights

Without prejudice to any special rights, privileges or restrictions as to voting rights attached to any shares forming part of our share capital from time to time, all votes at a general meeting shall be taken on a poll and each holder of the shares of the class shall, on a poll, have one vote in respect of every share of the class held by them.

176

Restrictions on voting

No shareholder shall be entitled to vote at any general meeting in respect of any share held by him unless all sums payable by him in respect of that share have been paid.

The board may from time to time make calls upon the shareholders in respect of any money unpaid on their shares and each shareholder shall (subject to at least 14 days’ notice specifying when and how the payment is to be made) pay at the time or times so specified the amount called on his shares.

Dividends

We may by ordinary resolution of the shareholders declare dividends out of profits available for distribution in accordance with the respective rights of shareholders but no such dividend shall exceed the amount recommended by the directors. The board may from time to time pay shareholders such interim dividends as appear to the board to be justified by our financial position but, if at any time, our share capital is divided into different classes the board may not pay such interim dividends in respect of those shares which confer on the holders thereof deferred or non-preferential rights with regard to dividends if, at the time of payment, any preferential dividend is in arrears.

Subject to any special rights attaching to or the terms of issue of any share, all dividends shall be declared and paid according to the amounts paid up on the ordinary shares and shall be apportioned and paid pro rata according to the amounts paid up on the ordinary shares during any part or parts of the period in respect of which the dividend is paid.

177

No dividend or other moneys payable by us on or in respect of any share shall bear interest against us unless otherwise provided by the rights attached to the share or the provisions of another agreement between the shareholder and us. Any dividend unclaimed after a period of 12 years from the date such dividend became due for payment shall be forfeited and cease to remain owing.

Dividends may be declared or paid in any currency and the board may decide the rate of exchange for any currency conversions that may be required, and how any costs involved are to be met, in relation to the currency of any dividend.

Any general meeting declaring a dividend may by ordinary resolution of shareholders, upon the recommendation of the board, direct payment or satisfaction of such dividend wholly or in part by the distribution of non-cash assets of equivalent value, including shares or other securities in any company.

The directors may, if authorized by an ordinary resolution of shareholders, offer any holders of ordinary shares the right to elect to receive in lieu of a dividend, or part of a dividend, an allotment of ordinary shares credited as fully paid up.

Change of control

Our articles of association will contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these provisions may have the effect of delaying, deterring or preventing a merger or acquisition of our company by means of a tender offer, a proxy contest or other takeover attempt that a shareholder might consider in its best interest, including attempts that might result in a premium over the prevailing market price for the ordinary shares held by shareholders.

Distributions on winding up

If we are in liquidation, the liquidator may, if authorized by a special resolution of shareholders and any other authority required at law, divide among shareholders (excluding us to the extent we are a shareholder by virtue only of holding treasury shares) in specie or in kind the whole or any part of our assets (whether or not the assets consist of property of one kind or consist of properties of different kinds and the liquidator may for such purpose set such value as the liquidator deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the shareholders or different classes of shareholders), or vest the whole or any part of such assets in trustees upon such trusts for the benefit of the shareholders as the liquidator determines (and the liquidation of the Company may be closed and the Company dissolved), but no shareholder shall be compelled to accept any shares or other assets upon which there is any liability or potential liability.

Variation of rights

All or any of the rights and privileges attached to any class of shares issued may be varied or abrogated only with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class (excluding any shares held as treasury shares) or by special resolution passed at a separate general meeting of the holders of such shares, subject to the other provisions of the U.K. Companies Act 2006 and the terms of their issue. The U.K. Companies Act 2006 also provides a right to object to the variation of the share capital by the shareholders who did not vote in favor of the variation. Should 15% or more of the shareholders

178

of the issued shares in question apply to the court to have the variation cancelled, the variation shall have no effect unless and until it is confirmed by the court.

Alteration to share capital

We may, by ordinary resolution of shareholders, consolidate all or any of our share capital into shares of larger amount than our existing shares, or sub-divide our shares or any of them into shares of a smaller amount. We may, by special resolution of shareholders, confirmed by the court, reduce our share capital or any capital redemption reserve or any share premium account in any manner authorized by the U.K. Companies Act 2006. We may redeem or purchase all or any of our shares as described in “—Other U.K. law considerations—Purchase of own shares.”

Preemption rights

In certain circumstances, our shareholders may have statutory preemption rights under the U.K. Companies Act 2006 in respect of the allotment of new shares as described in “—Preemptive rights” and “—Differences in corporate law—Pre-emptive rights” in this prospectus.

Transfer of shares

Any shareholder holding shares in certificated form may transfer all or any of his shares by an instrument of transfer in any usual form or any other form approved by the board. Any written instrument of transfer shall be signed by or on behalf of the transferor and (in the case of a partly paid share) the transferee.

In the case of uncertificated shares, the directors may take such action as they consider appropriate to achieve a transfer. The Uncertificated Securities Regulations 2001 permit shares to be issued and held in uncertificated form and transferred by means of a computer based system.

The board may decline to register any transfer of any share:

•

which is not a fully paid share;

•

where the transfer is not lodged at our registered office or such other place as the directors have appointed;

•

where the transfer is not accompanied by the share certificate to which it relates, or such other evidence as the board may reasonably require to show the transferor’s right to make the transfer, or evidence of the right of someone other than the transferor to make the transfer on the transferor’s behalf;

•

where the transfer is in respect of more than one class of share; and

•

where the number of joint holders to whom the share is to be transferred exceeds four.

If the board declines to register a transfer, it must return to the transferee the instrument of transfer together with notice of the refusal, unless the board suspects that the proposed transfer may be fraudulent.

Shareholder meetings

Annual general meetings

In accordance with the U.K. Companies Act 2006, we are required in each year to hold an annual general meeting in addition to any other general meetings in that year and to specify the meeting as such in the notice convening it. The annual general meeting shall be convened whenever and wherever the board sees fit, subject to the requirements of the U.K. Companies Act 2006, as described in “—Differences in corporate law—Annual general meeting” and “—Differences in corporate law—Notice of general meetings” in this prospectus.

179

Notice of general meetings

The arrangements for the calling of general meetings are described in “—Differences in corporate law—Notice of general meetings” in this prospectus.

Quorum of general meetings

No business shall be transacted at any general meeting unless a quorum is present. At least two shareholders present in person or by proxy and entitled to vote shall be a quorum for all purposes.

Class meetings

The provisions in our articles of association relating to general meetings apply to every separate general meeting of the holders of a class of shares.

Directors

Number of directors

We may not have less than two directors on the board of directors and not more than fifteen.

Appointment of directors

Subject to the provisions of our articles of association, we may, by ordinary resolution of the shareholders or a decision of the directors, elect any person to be a director, either to fill a casual vacancy or as an addition to the existing board, provided the total number of directors does not exceed the maximum number fixed by or in accordance with the articles of association, provided, further, that a vacancy caused by the departure of a Principal Shareholder appointee may only be filled by the Principal Shareholder. However, any person that is not a director retiring from the existing board must be recommended by the board or the person must have confirmed in writing to the Company their willingness to be elected as a director.

Our articles of association will provide for a staggered board consisting of three classes of directors. Directors of each class are chosen for three-year terms, with only one class of directors being elected at each annual meeting of shareholders. At the first annual meeting of shareholders, the terms of the Class I directors (other than a Principal Shareholder appointee who is a Class I director) will expire and Class I directors (other than a Principal Shareholder appointee who is a Class I director) will be elected for a full term of three years. At the second annual meeting of shareholders, the terms of the Class II directors (other than a Principal Shareholder appointee who is a Class II director) will expire and Class II directors (other than a Principal Shareholder appointee who is a Class II director) will be elected for a full term of three years. At the third annual meeting of shareholders, the terms of the Class III directors (other than a Principal Shareholder appointee who is a Class III director) will expire and Class III directors (other than a Principal Shareholder appointee who is a Class III director) will be elected for a full term of three years. At each succeeding annual meeting, directors (other than Principal Shareholder appointees) will be elected for a full term of 3 years to succeed the directors of the class whose terms expire at such annual general meeting.

Directors’ interests

If a situation arises in which a director has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with our interests (other than a situation that cannot reasonably be regarded as likely to give rise to a conflict of interest or a conflict of interest arising in relation to a transaction or arrangement with the Company), the board may authorize in accordance with the U.K. Companies Act 2006 the director’s interest and the continuing performance by the relevant director of his duties as a director on such terms as the board may determine.

180

A director shall not be accountable to us for any benefit which he derives from or in connection with a relationship involving a conflict of interest or possible conflict of interest which has been authorized by the directors or by the Company in a general meeting and any such transaction or arrangement shall not be liable to be avoided on the grounds of any such benefit.

Subject to the requirements under sections 175, 177 and 182 of the U.K. Companies Act 2006, a director shall declare the nature and extent of such conflicts.

A director may participate in the decision-making process and count in the quorum and vote on a proposed decision of the board which is concerned with such director’s interests (subject to any restrictions imposed by the other directors when providing such consent) if such director has declared the nature and extent of any interest of his and provided a majority of the other directors consent, or if one of the following situations applies:

•

the director’s interest arises solely through an interest in shares, debentures or other securities of or otherwise in or through the Company;

•

an ordinary resolution of the Company permits the director to count in the quorum and vote on the proposed decision;

•

the conflict of interest arises from one of the following:

•

the giving of a guarantee, security or indemnity in respect of money lent or obligations incurred by them or any other person at the request of or for the benefit of, the Company or any of its subsidiary undertakings;

•

the giving of a guarantee, security or indemnity in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which the director has assumed responsibility (in whole or part and whether alone or jointly with others) under a guarantee or indemnity or by the giving of security;

•

a contract, arrangement, transaction or proposal concerning an offer of shares, debentures or other securities of the Company or any of its subsidiary undertakings for subscription or purchase, in which offer they are or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which they are to participate;

•

proposals concerning another company in which the director is interested directly or indirectly (whether as officer, shareholder or otherwise), if the director and any other persons connected with him do not to his knowledge hold an interest in shares representing 1% or more of the issued shares of any class of the equity share capital of that company (or of any third company through which his or their interest is derived) or of the voting rights available to shareholders of the relevant company;

•

a contract, arrangement, transaction or proposal for the benefit of employees of the Company or of any of its subsidiary undertakings which does not award them any privilege or benefit not generally accorded to the employees to whom the arrangement relates; or

•

a contract, arrangement, transaction or proposal concerning any insurance which the Company is empowered to purchase or maintain for, or for the benefit of, and directors of the Company or for persons who include directors of the Company.

A director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote.

181

If a question arises at a meeting of the board or of a committee of the board as to the right of a director to vote, the question may, before the conclusion of the meeting, be referred to the chair of the meeting and their ruling in relation to any director other than himself shall be final and conclusive, save where the nature of the interests of the direct have been fully disclosed.

Directors’ fees and remuneration

Each of the directors is entitled to remuneration as determined by the board for their service as directors and other services undertaken for the Company.

Each director may be paid his expenses in connection with such director’s attendance at meetings of the board or committees of the board or general meetings or separate meetings of the holders class of shares or of debentures, or otherwise in connection with the exercise of powers and the discharge of responsibilities in relation to the Company.

Indemnity

Every director, officer or former director or officer of our group may be indemnified against all costs, charges, losses, expenses and liabilities incurred by him in connection with any negligence, default, breach of duty, or breach of trust by him in relation to us or in connection with our activities as a trustee of an occupational pension scheme, in the actual or purported exercise of his powers or duties or otherwise as our officer, to the extent permitted under the U.K. Companies Act 2006.

Other U.K. law considerations

Mandatory purchases and acquisitions

Pursuant to Sections 979 to 991 of the U.K. Companies Act 2006, where a takeover offer has been made for us and the offeror has acquired or unconditionally contracted to acquire not less than 90% in value of the shares to which the offer relates and not less than 90% of the voting rights carried by those shares, the offeror may give notice to the holder of any shares to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he wishes to acquire, and is entitled to so acquire, those shares on the same terms as the general offer. The offeror would do so by sending a notice to the outstanding minority shareholders telling them that it will compulsorily acquire their shares. Such notice must be sent within three months of the last day on which the offer can be accepted in the prescribed manner. The squeeze-out of the minority shareholders can be completed at the end of six weeks from the date the notice has been given, subject to the minority shareholders failing to successfully lodge an application to the court to prevent such squeeze-out any time prior to the end of those six weeks following which the offeror can execute a transfer of the outstanding shares in its favor and pay the consideration to us, which would hold the consideration on trust for the outstanding minority shareholders. The consideration offered to the outstanding minority shareholders whose shares are compulsorily acquired under the U.K. Companies Act 2006 must, in general, be the same as the consideration that was available under the takeover offer.

Sell out

The U.K. Companies Act 2006 also gives our minority shareholders a right to be bought out in certain circumstances by an offeror who has made a takeover offer for all of our shares. The holder of shares to which the offer relates, and who has not otherwise accepted the offer, may require the offeror to acquire his shares if, prior to the expiry of the acceptance period for such offer, (i) the offeror has acquired or unconditionally agreed

182

to acquire not less than 90% in value of the voting shares, and (ii) not less than 90% of the voting rights carried by those shares. The offeror may impose a time limit on the rights of minority shareholders to be bought out that is not less than three months after the end of the acceptance period. If a shareholder exercises his rights to be bought out, the offeror is required to acquire those shares on the terms of this offer or on such other terms as may be agreed.

Disclosure of interest in shares

Pursuant to Part 22 of the U.K. Companies Act 2006, we are empowered to give notice in writing to any person whom we know or have reasonable cause to believe to be interested in our shares, or to have been so interested at any time during the three years immediately preceding the date on which the notice is issued requiring such persons, within a reasonable time to disclose to us particulars of that person’s interest and (so far as is within his knowledge) particulars of any other interest that subsists or subsisted in those shares.

Under our articles of association, if a person defaults in supplying us with the required particulars in relation to the ordinary shares in question, or default shares, within the prescribed period, the directors may by notice direct that:

•

in respect of the default shares, the relevant shareholder shall not be entitled to attend or vote (either in person or by proxy) at a general meeting or at a separate meeting of the holders of that class of shares or on a poll;

•

in respect of the default shares:

•

no payment shall be made by way of dividend and no share shall be allotted pursuant to scrip dividend;

•

no transfer of any default share shall be registered unless:

(A) the shareholder is not himself in default as regards to supplying the information requested and the transfer when presented for registration is accompanied by a certificate by the shareholder in such form as the board may in its absolute discretion require to the effect that after due and careful enquiry the shareholder is satisfied that no person in default as regards supplying such information is interested in any of the shares the subject of the transfer; or

(B) the transfer is an approved transfer.

Purchase of own shares

Under English law, a limited company may only purchase its own shares out of the distributable profits of the company or the proceeds of a fresh issue of shares made for the purpose of financing the purchase, provided that they are not restricted from doing so by their articles. A limited company may not purchase its own shares if, as a result of the purchase, there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares. Shares must be fully paid in order to be repurchased.

We may purchase our own fully paid shares otherwise than on a recognized investment exchange pursuant to a purchase contract authorized by resolution of shareholders before the purchase takes place. Any authority will not be effective if any shareholder from whom we propose to purchase shares votes on the resolution and the resolution would not have been passed if he had not done so. The resolution authorizing the purchase must specify a date, not being later than five years after the passing of the resolution, on which the authority to purchase is to expire.

183

Distributions and dividends

Under the U.K. Companies Act 2006, before a company can lawfully make a distribution or dividend, it must ensure that it has sufficient distributable reserves (on a non-consolidated basis). The basic rule is that a company’s profits available for the purpose of making a distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. The requirement to have sufficient distributable reserves before a distribution or dividend can be paid applies to us and to each of our subsidiaries that has been incorporated under English law.

It is not sufficient that we, as a public company, have made a distributable profit for the purpose of making a distribution. An additional capital maintenance requirement is imposed on us to ensure that the net worth of the company is at least equal to the amount of its capital. A public company can only make a distribution:

•

if, at the time that the distribution is made, the amount of its net assets (that is, the total excess of assets over liabilities) is not less than the total of its called up share capital and distributable reserves; and

•

if, and to the extent that, the distribution itself, at the time that it is made, does not reduce the amount of the net assets to less than that total.

Compromises and arrangements

Where we and our creditors or shareholders or a class of either of them propose a compromise or arrangement between us and our creditors or our shareholders or a class of either of them (as applicable), the High Court of Justice in England and Wales may order a meeting of the creditors or class of creditors or of our shareholders or class of shareholders (as applicable) to be called in such a manner as the court directs. Any compromise or arrangement approved by a majority in number present and voting at the meeting representing 75% or more in value of the creditors or 75% or more of the voting rights of shareholders or class of either of them (as applicable) if sanctioned by the court, is binding upon us and all the creditors, shareholders or members of the specific class of either of them (as applicable).

Whether the capital of the Company is to be treated as being divided into a single or multiple class(es) of shares is a matter to be determined by the court. The court may in its discretion treat a single class of shares as multiple classes, or multiple classes of shares as a single class, for the purposes of the shareholder approval referred to above taking into account all relevant circumstances, which may include circumstances other than the rights attaching to the shares themselves.

City code on takeovers and mergers

The U.K. City Code on Takeovers and Mergers (the “Takeover Code”) applies, among other things, to an offer for a public company whose registered office is in the United Kingdom and which is considered by the Panel on Takeovers and Mergers (the “Takeover Panel”), to have its place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man (in each case, a “Code Company”). This is known as the “residency test.” Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man by looking at various factors, including the structure of our Board, the functions of the directors, and where they are resident.

If at the time of a takeover offer, the Takeover Panel determines that the residency test is satisfied and we have our place of central management and control in the United Kingdom, we would be subject to several rules and restrictions, including but not limited to the following: (i) our ability to enter into deal protection arrangements

184

with a bidder would be extremely limited; (ii) we might not, without the approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (iii) we would be obliged to provide equality of information to all bona fide competing bidders. The Takeover Code also contains certain rules in respect of mandatory offers for Code Companies. Under Rule 9 of the Takeover Code, if a person:

•

acquires an interest in shares of a Code Company that, when taken together with shares in which persons acting in concert with such person are interested, carry 30% or more of the voting rights of the Code Company; or

•

who, together with persons acting in concert with such person, is interested in shares that in the aggregate carry not less than 30% and not more than 50% of the voting rights in the Code Company, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested, the acquirer, and, depending on the circumstances, its concert parties, would be required (except with the consent of the Takeover Panel) to make a cash offer (or provide a cash alternative) for the Code Company’s outstanding shares at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the previous 12 months.

Upon completion of this offering, we expect a majority of our Board to reside outside of the United Kingdom, the Channel Islands and the Isle of Man. Based upon our current and intended plans for our directors and management, for the purposes of the Takeover Code, we anticipate that the residency test will not be met and that we will be considered to have our place of central management and control outside the United Kingdom, the Channel Islands or the Isle of Man. Therefore, the Takeover Code should not apply to us. It is possible that in the future changes in the Board’s composition, changes in the Takeover Panel’s interpretation of the Takeover Code, or other events may cause the Takeover Code to apply to us.

Exchange controls

There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares, other than withholding tax requirements. There is no limitation imposed by English law or in our articles of association on the right of non-residents to hold or vote shares.

Differences in corporate law

The applicable provisions of the U.K. Companies Act 2006 differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain differences between the provisions of the U.K. Companies Act 2006 applicable to us and the General Corporation Law of the State of Delaware relating to shareholders’ rights and protections.



	England and Wales	Delaware
Number of directors	Under the U.K. Companies Act 2006, a public limited company must have at least two directors and the number of directors may be fixed by or in the manner provided in a company’s articles of association.	Under Delaware law, a corporation must have at least one director and the number of directors shall be fixed by or in the manner provided in the bylaws.

185



	England and Wales	Delaware

Removal of directors	Under the U.K. Companies Act 2006, shareholders may remove a director without cause by an ordinary resolution (which is passed by a simple majority of those voting in person or by proxy at a general meeting) irrespective of any provisions of any service contract the director has with the company, provided 28 clear days’ notice of the resolution has been given to the company and its shareholders. On receipt of notice of an intended resolution to remove a director, the company must forthwith send a copy of the notice to the director concerned. Certain other procedural requirements under the U.K. Companies Act 2006 must also be followed such as allowing the director to make representations against his or her removal either at the meeting or in writing.	Under Delaware law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except (a) unless the certificate of incorporation provides otherwise, in the case of a corporation whose board of directors is classified, shareholders may effect such removal only for cause, or (b) in the case of a corporation having cumulative voting, if less than the entire board of directors is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors, or, if there are classes of directors, at an election of the class of directors of which he is a part.

Vacancies on the board of directors	Under English law, the procedure by which directors, other than a company’s initial directors, are appointed is generally set out in a company’s articles of association, provided that where two or more persons are appointed as directors of a public limited company by resolution of the shareholders, resolutions appointing each director must be voted on individually.	Under Delaware law, vacancies and newly created directorships may be filled by a majority of the directors then in office (even though less than a quorum) or by a sole remaining director unless (a) otherwise provided in the certificate of incorporation or by-laws of the corporation or (b) the certificate of incorporation directs that a particular class of stock is to elect such director, in which case a majority of the other directors elected by such class, or a sole remaining director elected by such class, will fill such vacancy.

Annual general meeting	Under the U.K. Companies Act 2006, a public limited company must hold an annual general meeting in each six-month period following the company’s annual accounting reference date.	Under Delaware law, the annual meeting of shareholders shall be held at such place, on such date and at such time as may be designated from time to time by the board of directors or as provided in the certificate of incorporation or by the bylaws.

General meeting	Under the U.K. Companies Act 2006, a general meeting of the shareholders of a public limited company may be called by the directors.	Under Delaware law, special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the

186



	England and Wales	Delaware
		certificate of incorporation or by the bylaws.

	Shareholders holding at least 5% of the paid-up capital of the company carrying voting rights at general meetings (excluding any paid up capital held as treasury shares) can require the directors to call a general meeting and, if the directors fail to do so within a certain period, may themselves convene a general meeting.

Notice of general meetings	Under the U.K. Companies Act 2006, 21 clear days’ notice must be given for an annual general meeting and any resolutions to be proposed at the meeting. Subject to a company’s articles of association providing for a longer period, at least 14 clear days’ notice is required for any other general meeting. In addition, certain matters, such as the removal of directors or auditors, require special notice, which is 28 clear days’ notice. The shareholders of a company may in all cases consent to a shorter notice period, the proportion of shareholders’ consent required being 100% of those entitled to attend and vote in the case of an annual general meeting and, in the case of any other general meeting, a majority in number of the members having a right to attend and vote at the meeting, being a majority who together hold not less than 95% in nominal value of the shares giving a right to attend and vote at the meeting.	Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, written notice of any meeting of the shareholders must be given to each shareholder entitled to vote at the meeting not less than ten nor more than 60 days before the date of the meeting and shall specify the place, date, hour, and purpose or purposes of the meeting.

Pre-emptive rights	Under the U.K. Companies Act 2006, “equity securities”, being (i) shares in the company other than shares that, with respect to dividends and capital, carry a right to participate only up to a specified amount in a distribution (“ordinary shares”) or (ii) rights to subscribe for, or to convert securities into, ordinary shares, proposed to be allotted for cash must be offered first to the existing equity shareholders in the company in proportion	Under Delaware law, shareholders have no preemptive rights to subscribe to additional issues of stock or to any security convertible into such stock unless, and except to the extent that, such rights are expressly provided for in the certificate of incorporation.

187



	England and Wales	Delaware
	to the respective nominal value of their holdings, unless an exception applies or a special resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise in each case in accordance with the provisions of the U.K. Companies Act 2006.

Authority to allot	Under the U.K. Companies Act 2006, the directors of a company must not allot shares or grant of rights to subscribe for or to convert any security into shares unless an exception applies or an ordinary resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise in each case in accordance with the provisions of the U.K. Companies Act 2006.	Under Delaware law, if the corporation’s charter or certificate of incorporation so provides, the board of directors has the power to authorize the issuance of stock. It may authorize capital stock to be issued for consideration consisting of cash, any tangible or intangible property or any benefit to the corporation or any combination thereof. It may determine the amount of such consideration by approving a formula. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such consideration is conclusive.

Liability of directors and officers	Under the U.K. Companies Act 2006, any provision, whether contained in a company’s articles of association or any contract or otherwise, that purports to exempt a director of a company, to any extent, from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void. Any provision by which a company directly or indirectly provides an indemnity, to any extent, for a director of the company or of an associated company against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is a director is also void except as permitted by the U.K. Companies Act 2006, which provides exceptions for the company to (a) purchase and maintain insurance against such liability; (b) provide a	Under Delaware law, a corporation’s certificate of incorporation may include a provision eliminating or limiting the personal liability of a director to the corporation and its shareholders for damages arising from a breach of fiduciary duty as a director. However, no provision can limit the liability of a director for: • any breach of the director’s duty of loyalty to the corporation or its shareholders; • acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; • intentional or negligent payment of unlawful dividends or stock purchases or redemptions; or • any transaction from which the director derives an improper personal benefit.

188



	England and Wales	Delaware
	“qualifying third party indemnity” (being an indemnity against liability incurred by the director to a person other than the company or an associated company or criminal proceedings in which he is convicted); and (c) provide a “qualifying pension scheme indemnity” (being an indemnity against liability incurred in connection with the company’s activities as trustee of an occupational pension plan).

Voting rights	Under English law, unless a poll is demanded by the shareholders of a company or is required by the chairman of the meeting or the company’s articles of association, shareholders shall vote on all resolutions on a show of hands. Under the U.K. Companies Act 2006, a poll may be demanded by (a) not fewer than five shareholders having the right to vote on the resolution; (b) any shareholder(s) representing not less than 10% of the total voting rights of all the shareholders having the right to vote on the resolution (excluding any voting rights attaching to treasury shares); or (c) any shareholder(s) holding shares in the company conferring a right to vote on the resolution (excluding any voting rights attaching to treasury shares) being shares on which an aggregate sum has been paid up equal to not less than 10% of the total sum paid up on all the shares conferring that right. A company’s articles of association may provide more extensive rights for shareholders to call a poll.	Delaware law provides that, unless otherwise provided in the certificate of incorporation, each shareholder is entitled to one vote for each share of capital stock held by such shareholder.

	Under English law, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) and entitled to vote. If a poll is demanded, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of

189



	England and Wales	Delaware
	shareholders present, in person or by proxy, who, being entitled to vote, vote on the resolution. Special resolutions require the affirmative vote of not less than 75% of the votes cast by shareholders present (in person or by proxy) at the meeting. If a poll is demanded, a special resolution is passed if it is approved by holders representing not less than 75% of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolutions.

	The U.K. Companies Act 2006 provides for schemes of arrangement, which are arrangements or compromises between a company and any class of shareholders or creditors and used in certain types of reconstructions, amalgamations, capital reorganizations, or takeovers. These arrangements require: • the approval at a shareholders’ or creditors’ meeting convened by order of the court, of a majority in number of shareholders or creditors representing 75% in value of the capital held by, or debt owed to, the class of shareholders or creditors, or class thereof present and voting, either in person or by proxy; and • the approval of the court.	Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of a merger, consolidation, sale, lease or exchange of all or substantially all of a corporation’s assets or dissolution requires: • the approval of the board of directors; and • approval by the vote of the holders of a majority of the outstanding stock or, if the certificate of incorporation provides for more or less than one vote per ordinary share, a majority of the votes of the outstanding stock of a corporation entitled to vote on the matter.

Standard of conduct for directors	Under English law, a director owes various statutory and fiduciary duties to the company, including: • to act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole; • to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly conflicts, with the interests of the company;	Delaware law does not contain specific provisions setting forth the standard of conduct of a director. The scope of the fiduciary duties of directors is generally determined by the courts of the State of Delaware. In general, directors have a duty to act without self-interest, on a well-informed basis and in a manner they reasonably believe to be in the best interest of the shareholders. Directors of a Delaware corporation owe fiduciary duties of care and loyalty to the corporation and to its shareholders. The

190



	England and Wales	Delaware
	• to act in accordance with the company’s constitution and only exercise his powers for the purposes for which they are conferred; • to exercise independent judgment; • to exercise reasonable care, skill, and diligence; • not to accept benefits from a third party conferred by reason of his being a director or doing, or not doing, anything as a director; and • a duty to declare any interest that he has, whether directly or indirectly, in a proposed or existing transaction or arrangement with the company.	duty of care generally requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. In general, but subject to certain exceptions, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Delaware courts have also imposed a heightened standard of conduct upon directors of a Delaware corporation who take any action designed to defeat a threatened change in control of the corporation.

		In addition, under Delaware law, when the board of directors of a Delaware corporation approves the sale or break-up of a corporation, the board of directors may, in certain circumstances, have a duty to obtain the highest value reasonably available to the shareholders.

Shareholder suits	Under English law, generally, the company, rather than its shareholders, is the proper claimant in an action in respect of a wrong done to the company or where there is an irregularity in the company’s internal management. Notwithstanding this general position, the U.K. Companies Act 2006 provides that (i) a court may allow a shareholder to bring a derivative claim (that is, an action in respect of and on behalf of the company) in respect of a cause of action arising from a director’s	Under Delaware law, a shareholder may initiate a derivative action to enforce a right of a corporation if the corporation fails to enforce the right itself. The complaint must: • state that the plaintiff was a shareholder at the time of the transaction of which the plaintiff complains or that the plaintiffs shares thereafter devolved on the plaintiff by operation of law; and

191



		England and Wales		Delaware
		negligence, default, breach of duty or breach of trust and (ii) a shareholder may bring a claim for a court order where the company’s affairs have been or are being conducted in a manner that is unfairly prejudicial to some of its shareholders.		• allege with particularity the efforts made by the plaintiff to obtain the action the plaintiff desires from the directors and the reasons for the plaintiff’s failure to obtain the action; or • state the reasons for not making the effort.

				Additionally, the plaintiff must remain a shareholder through the duration of the derivative suit. The action will not be dismissed or compromised without the approval of the Delaware Court of Chancery.

Transfer agent and registrar

The transfer agent and registrar for our ordinary shares is Computershare Trust Company N.A.

Listing

Our ordinary shares are expected to be approved for listing on Nasdaq under the symbol “OCDx.”

192

Shares eligible for future sale

General

Prior to this offering, there has not been a public market for our ordinary shares, and we cannot predict what effect, if any, market sales of ordinary shares or the availability of ordinary shares for sale will have on the market price of our ordinary shares prevailing from time to time. Nevertheless, sales of substantial amounts of ordinary shares, including shares issued upon the exercise of outstanding options, in the public market, or the perception that such sales could occur, could materially and adversely affect the market price of our ordinary shares and could impair our future ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate. See “Risk factors—Risks related to this offering and ownership of our ordinary shares—Future sales, or the perception of future sales, by us or our existing shareholders in the public market following this offering could cause the market price for our ordinary shares to decline.”

Upon the consummation of this offering, we will have ordinary shares outstanding. All shares sold in this offering will be freely tradable without registration under the Securities Act and without restriction, except for shares held by our “affiliates” (as defined under Rule 144). The ordinary shares held by the Principal Shareholder and certain of our directors, officers and employees after this offering will be “restricted” securities under the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act, unless an exemption from registration is available, including the exemptions pursuant to Rule 144 under the Securities Act.

Pursuant to Rule 144, the restricted shares held by our affiliates will be available for sale in the public market at various times after the date of this prospectus following the expiration of the applicable lock-up period.

In addition, a total of our ordinary shares has been reserved for issuance under the 2021 Incentive Award Plan (subject to adjustments for stock splits, stock dividends and similar events), which will equal approximately % of our ordinary shares outstanding immediately following this offering. We intend to file one or more registration statements on Form S-8 under the Securities Act to register ordinary shares issued or reserved for issuance under the 2021 Incentive Award Plan. Any such Form S-8 registration statement will automatically become effective upon filing. Accordingly, shares registered under such registration statement will be available for sale in the open market, unless such ordinary shares are subject to vesting restrictions or the lock-up restrictions described below.

Rule 144

In general, under Rule 144, as currently in effect, a person (or persons whose shares are deemed aggregated) who is not deemed to be or have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned the ordinary shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell such ordinary shares without registration, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the ordinary shares proposed to be sold for at least one year, including the holding period of a prior owner other than an affiliate, then such person is entitled to sell such ordinary shares without complying with any of the requirements of Rule 144.

Under Rule 144, our affiliates or persons selling shares on behalf of our affiliates, who have met the six-month holding period for beneficial ownership of “restricted shares” of our ordinary shares, are entitled to sell within any three-month period, a number of shares that does not exceed the greater of:

•

1% of the number of our ordinary shares then outstanding, which will equal approximately shares immediately after this offering; or

193

•

the average reported weekly trading volume of our ordinary shares on Nasdaq during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. The sale of these shares, or the perception that sales will be made, could adversely affect the price of our ordinary shares after this offering because a great supply of shares would be, or would be perceived to be, available for sale in the public market.

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement in a transaction that was completed in reliance on Rule 701, and complied with the requirements of Rule 701, will be eligible to resell such ordinary shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with certain restrictions, including the holding period, contained in Rule 144.

Registration rights

Our Principal Shareholder has certain registration rights with respect to our ordinary shares pursuant to the Principal Shareholders Agreement. See “Certain relationships and related party transactions—Shareholders agreements—Principal Shareholders Agreement.”

Lock-up agreements

Immediately following the consummation of this offering, equity holders subject to lock-up agreements will hold our ordinary shares, representing approximately % of our then outstanding ordinary shares, or approximately % if the underwriters exercise in full their option to purchase additional ordinary shares.

We have agreed not to issue, sell or otherwise dispose of any our ordinary shares during the 180-day period following the date of this prospectus. We may, however, grant options to purchase ordinary shares, issue ordinary shares upon the exercise of outstanding options, issue ordinary shares in connection with certain acquisitions or business combinations or an employee stock purchase plan and in certain other circumstances.

194

Material tax considerations

Material U.S. federal income tax considerations

The following summary describes certain material U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below), and solely to the extent described below under the heading “U.S. Foreign Account Tax Compliance Act,” to persons other than U.S. Holders, of an investment in the ordinary shares pursuant to this offering. This summary applies only to U.S. Holders that hold the ordinary shares as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”), that have acquired the ordinary shares in this offering and that have the U.S. dollar as their functional currency.

This discussion is based on the tax laws of the United States, including the Code, as in effect on the date hereof and on U.S. Treasury regulations as in effect or, in some cases, as proposed, on the date hereof, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change or differing interpretations, which change or differing interpretation could apply retroactively and could affect the tax consequences described below. No ruling will be requested from the Internal Revenue Service (the “IRS”) regarding the tax consequences of this offering and there can be no assurance that the IRS will agree with the discussion set out below. This summary does not address any estate or gift tax consequences, the alternative minimum tax, the Medicare tax on net investment income or any state, local or non-U.S. tax consequences.

This summary also does not address the tax consequences that may be relevant to persons in special tax situations such as:

•

banks;

•

certain financial institutions;

•

insurance companies;

•

regulated investment companies;

•

real estate investment trusts;

•

individual retirement accounts and other tax-deferred accounts;

•

broker-dealers;

•

traders that elect to mark to market their securities;

•

U.S. expatriates;

•

tax-exempt entities;

•

persons that own the ordinary shares as part of a “straddle,” “hedge,” “conversion transaction” or integrated transaction;

•

persons that actually or constructively own 10% or more of the Company’s share capital (by vote or value);

•

persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States;

•

persons who acquired the ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation;

195

•

persons liable for alternative minimum tax of the Medicare contribution tax on net investment income;

•

persons subject to special tax accounting rules as a result of any item of gross income with respect to the ordinary shares being taken into account in an applicable financial statement; or

•

pass-through entities or arrangements, or persons holding ordinary shares through pass-through entities or arrangements.

THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSIDERATIONS SET OUT BELOW IS FOR GENERAL INFORMATION ONLY. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL, NON-U.S. AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE ORDINARY SHARES.

As used herein, the term “U.S. Holder” means a beneficial owner of the ordinary shares that is, for U.S. federal income tax purposes:

•

an individual who is a citizen or resident of the United States;

•

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

•

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

•

a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all its substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If an entity or other arrangement treated as a partnership for U.S. federal income tax purposes holds ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships considering an investment in ordinary shares and partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences of owning and disposing of ordinary shares.

Taxation of dividends and other distributions on the ordinary shares

Subject to the passive foreign investment company rules discussed below, the gross amount of any distributions made by the Company with respect to our ordinary shares (including the amount of non-U.S. taxes withheld therefrom, if any) generally will be includible in a U.S. Holder’s gross income as dividend income on the date of receipt, but only to the extent the distribution is paid out of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, a U.S. Holder should expect all cash distributions to be reported as dividends for U.S. federal income tax purposes. Such dividends will not be eligible for the dividends received deduction allowed to U.S. corporations with respect to dividends received from other U.S. corporations.

With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, dividends may be taxed at the lower capital gain rates applicable to “qualified dividend income,” provided that (i) the ordinary shares are readily tradable on an established securities market in the United States, (ii) certain holding period and at-risk requirements are met and (iii) the Company is not a passive foreign investment company (as discussed below) with respect to the relevant U.S. Holder for either the taxable year in which the dividend was paid or the preceding taxable year. In this regard, the ordinary shares will generally be considered to be readily tradable

196

on an established securities market in the United States if they are listed on , as it is expected that the ordinary shares will be.

Dividends on the ordinary shares generally will constitute foreign source income for foreign tax credit limitation purposes. Subject to certain complex conditions and limitations, foreign taxes withheld on any distributions on ordinary shares, if any, may be eligible for credit against a U.S. Holder’s federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by the Company with respect to ordinary shares will generally constitute “passive category income.” However, if the Company is a “United States-owned foreign corporation,” solely for foreign tax credit purposes, a portion of the dividends allocable the Company’s U.S.-source earnings and profits may be re-characterized as U.S. source. A “United States-owned foreign corporation” is any foreign corporation in which United States persons own, directly or indirectly, 50% or more (by vote or by value) of the stock. Under an exception, dividends will not be allocated to U.S.-source income if less than 10% of the earnings and profits of the United States-owned foreign corporations are attributable to sources within the United States. We cannot provide any assurances that we will not be characterized as a “United States-owned foreign corporation..” If we are a United States-owned foreign corporation, if 10% or more of our earnings and profits are attributable to sources within the United States, the portion of the dividends paid on the ordinary shares allocable to our United States source earnings and profits would be treated as U.S.-source, and a U.S. Holder would not be permitted to offset any foreign tax withheld as a credit against U.S. federal income tax imposed on that portion of the dividends. The rules relating to the determination of the U.S. foreign tax credit are complex. U.S. Holders should consult their tax advisors regarding the availability of a foreign tax credit in their particular circumstances and the possibility of claiming an itemized deduction (in lieu of the foreign tax credit) for any foreign taxes paid or withheld.

Taxation of disposition of the ordinary shares

Subject to the passive foreign investment company rules discussed below, upon a sale or other taxable disposition of ordinary shares, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in such ordinary shares. In general, a U.S. Holder’s adjusted tax basis in its ordinary shares will be equal to (the cost of such ordinary shares to the U.S. Holder). Any such gain or loss generally will generally be treated as long-term capital gain or loss if the U.S. Holder’s holding period in the ordinary shares exceeds one year. Non-corporate U.S. Holders (including individuals) generally will be subject to U.S. federal income tax on long-term capital gain at preferential rates. The deductibility of capital losses is subject to significant limitations. Gain or loss, if any, recognized by a U.S. Holder on the sale or other disposition of ordinary shares generally will be treated as U.S. source gain or loss for U.S. foreign tax credit limitation purposes.

Passive foreign investment company rules

The Company will be classified as a passive foreign investment company (a “PFIC”) for any taxable year if either: (a) at least 75% of its gross income is “passive income” for purposes of the PFIC rules or (b) at least 50% of the value of its assets (determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. For this purpose, the Company will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock.

Under the PFIC rules, if the Company were considered a PFIC at any time that a U.S. Holder holds ordinary shares, the Company would continue to be treated as a PFIC with respect to such investment unless (i) the Company ceases to be a PFIC and (ii) the U.S. Holder has made a “deemed sale” election under the PFIC rules.

197

Based on the recent, current and anticipated composition of the income, assets and operations of the Company and its subsidiaries, the Company does not expect to be treated as a PFIC for the taxable year ended December 29, 2019, the current taxable year or in the foreseeable future. This is a factual determination, however, that depends on, among other things, the composition of the income and assets, and the market value of the shares and assets, of the Company and its subsidiaries from time to time, and thus the determination can be made only annually after the close of each taxable year. Therefore there can be no assurances that the Company will not be classified as a PFIC for the taxable year ended December 29, 2019, the current taxable year or for any future taxable year.

If the Company is considered a PFIC at any time that a U.S. Holder holds ordinary shares, any gain recognized by the U.S. Holder on a sale or other disposition of the ordinary shares, as well as the amount of any “excess distribution” (defined below) received by the U.S. Holder, would be allocated ratably over the U.S. Holder’s holding period for the ordinary shares. The amounts allocated to the taxable year of the sale or other disposition (or the taxable year of receipt, in the case of an excess distribution) and to any year before the Company became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed. For purposes of these rules, an excess distribution is the amount by which any distribution received by a U.S. Holder on ordinary shares exceeds 125% of the average of the annual distributions on the ordinary shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter. Certain elections may be available that would result in alternative treatments (such as qualified electing fund treatment or mark-to-market treatment) of our ordinary shares if we are considered a PFIC. We do not intend to provide the information necessary for U.S. Holders of our ordinary shares to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for an investment in a PFIC described above. If we are treated as a PFIC with respect to a U.S. Holder for any taxable year, the U.S. Holder will be deemed to own shares in any of our subsidiaries that are also PFICs. However, an election for mark-to-market treatment would likely not be available with respect to any such subsidiaries.

If the Company is considered a PFIC, a U.S. Holder would also be subject to annual information reporting requirements. Failure to comply with such information reporting requirements may result in significant penalties and may suspend the running of the statute of limitations. U.S. Holders should consult their tax advisors about the potential application of the PFIC rules to an investment in ordinary shares.

Information reporting and backup withholding

Dividend payments with respect to ordinary shares and proceeds from the sale, exchange or redemption of ordinary shares may be subject to information reporting to the IRS and U.S. backup withholding. A U.S. Holder may be eligible for an exemption from backup withholding if the U.S. Holder furnishes a correct taxpayer identification number and makes any other required certification or is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status may be required to provide such certification on IRS Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federal income tax liability, and such U.S. Holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing an appropriate claim for refund with the IRS and furnishing any required information.

Information with respect to foreign financial assets

Certain U.S. Holders who are individuals (and certain entities) that hold an interest in “specified foreign financial assets” (which may include the ordinary shares) are required to report information relating to such

198

assets, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions). U.S. Holders should consult their tax advisors regarding the effect, if any, of this requirement on their ownership and disposition of the ordinary shares.

Transfer reporting requirements

A U.S. Holder that transfers cash in exchange for equity of a newly created non-U.S. corporation may be required to file Form 926 or a similar form with the IRS if the transferred cash, when aggregated with all transfers made by such U.S. Holder (or any related person) within the preceding 12 month period, exceeds U.S. $100,000. U.S. Holders should consult their tax advisers regarding the applicability of this requirement to their acquisition of ordinary shares.

U.S. foreign account tax compliance Act (FATCA)

Certain provisions of the Code and the Treasury regulations (commonly collectively referred to as “FATCA”) generally impose withholding at a rate of 30% on “foreign passthru payments” made by a “foreign financial institution” (as defined in the Code) (an “FFI”). If the Company were to be treated as an FFI, such withholding may be imposed on such payments to any other FFI (including an intermediary through which an investor may hold the ordinary shares) that is not a “participating FFI” (as defined under FATCA) or any other investor who does not provide information sufficient to establish that the investor is not subject to withholding under FATCA, unless such other FFI or investor is otherwise exempt from FATCA. In addition, under those circumstances, the Company may be required to report certain information regarding investors to the relevant tax authorities, which information may be shared with taxing authorities in the United States. Under current guidance, the term “foreign passthru payment” is not defined. Consequently, it is not clear whether or to what extent payments on the ordinary shares would be considered foreign passthru payments. Withholding on foreign passthru payments would not be required with respect to payments made before the date that is two years after the date of publication in the Federal Register of final regulations defining the term “foreign passthru payment.” Prospective investors should consult their tax advisors regarding the potential impact of FATCA, any applicable inter-governmental agreement relating to FATCA, and any non-U.S. legislation implementing FATCA on the investment in the ordinary shares.

THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE IMPORTANT TO YOU. EACH PROSPECTIVE PURCHASER SHOULD CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF AN INVESTMENT IN ORDINARY SHARES UNDER THE INVESTOR’S OWN CIRCUMSTANCES.

Material U.K. tax considerations

The following statements are of a general nature and do not purport to be a complete analysis of all potential United Kingdom tax consequences of acquiring, holding and disposing of the ordinary shares pursuant to this offering. They are based on current United Kingdom tax law and on the current published practice of HMRC (which may not be binding on HMRC), as of the date of this prospectus, all of which are subject to change, possibly with retrospective effect. They are intended to address only certain United Kingdom tax consequences for holders who are tax resident in (and only in) the United Kingdom, and in the case of individuals, domiciled in (and only in) the United Kingdom (except where expressly stated otherwise) who are the absolute beneficial owners of the ordinary shares and any dividends paid on them and who hold the ordinary shares as investments (other than in an individual savings account or a self-invested personal pension). They do not address the United Kingdom tax consequences which may be relevant to certain classes of holders such as traders, brokers, dealers, banks, financial institutions, insurance companies, investment companies, collective investment

199

schemes, tax-exempt organisations, trustees, persons connected with the Company, persons holding its ordinary shares as part of hedging or conversion transactions, holders who have (or are deemed to have) acquired their ordinary shares by virtue of an office or employment, and holders who are or have been officers or employees of the Company. The statements do not apply to any holder who either directly or indirectly holds or controls 10% or more of the Company’s share capital (or class thereof), voting power or profits.

The following is intended only as a general guide and is not intended to be, nor should it be considered to be, legal or tax advice to any particular prospective subscriber for, or purchaser of, the ordinary shares. Accordingly, prospective subscribers for, or purchasers of, the ordinary shares who are in any doubt as to their tax position regarding the acquisition, ownership or disposition of the ordinary or who are subject to tax in a jurisdiction other than the United Kingdom should consult their own tax advisers.

(1) Taxation of dividends

Withholding tax

The Company will not be required to withhold United Kingdom tax at source when paying dividends. The amount of any liability to United Kingdom tax on dividends paid by the Company will depend on the individual circumstances of a holder.

Income tax

An individual holder who is resident for tax purposes in the United Kingdom may, depending on his or her particular circumstances, be subject to United Kingdom tax on dividends received from the Company. An individual holder who is not resident for tax purposes in the United Kingdom should not be chargeable to United Kingdom income tax on dividends received from the Company unless he or she carries on (whether solely or in partnership) any trade, profession or vocation in the United Kingdom through a branch or agency to which the ordinary shares are attributable. There are certain exceptions for trading in the United Kingdom through independent agents, such as some brokers and investment managers.

All dividends received by a United Kingdom tax resident individual holder from the Company or from other sources will form part of the holder’s total income for income tax purposes and will constitute the top slice of that income. A nil rate of income tax will apply to the first £2,000 of taxable dividend income received by the holder in a tax year. Income within the nil rate band will be taken into account in determining whether income in excess of the nil rate band falls within the basic rate, higher rate or additional rate tax bands. Where the dividend income is above the £2,000 dividend allowance, the first £2,000 of the dividend income will be charged at the nil rate and any excess amount will be taxed at 7.5%. to the extent that the excess amount falls within the basic rate tax band, 32.5%. to the extent that the excess amount falls within the higher rate tax band and 38.1%. to the extent that the excess amount falls within the additional rate tax band.

Corporation tax

Corporate holders which are resident for tax purposes in the United Kingdom should not be subject to United Kingdom corporation tax on any dividend received from the Company so long as the dividends qualify for exemption (as is likely) and certain conditions are met (including anti-avoidance conditions). If the conditions for exemption are not met or cease to be satisfied, or such a holder elects for an otherwise exempt dividend to be taxable, the holder will be subject to United Kingdom corporation tax on dividends received from the Company, at the rate of corporation tax applicable to that holder (the main rate of United Kingdom corporation tax is currently 19%).

200

Corporate holders who are not resident in the United Kingdom will not generally be subject to United Kingdom corporation tax on dividends unless they are carrying on a trade, profession or vocation in the United Kingdom through a permanent establishment in connection with which the ordinary shares are used, held, or acquired.

A holder who is resident outside the United Kingdom may be subject to non-United Kingdom taxation on dividend income under local law.

(2) Taxation of capital gains

United Kingdom resident holders

A disposal or deemed disposal of ordinary shares by an individual or corporate holder who is tax resident in the United Kingdom may, depending on the holder’s circumstances and subject to any available exemptions or reliefs, give rise to a chargeable gain or allowable loss for the purposes of United Kingdom taxation of chargeable gains.

Any chargeable gain (or allowable loss) will generally be calculated by reference to the consideration received for the disposal of the ordinary shares less the allowable cost to the holder of acquiring such ordinary shares.

The applicable tax rates for individual holders realising a gain on the disposal of ordinary shares is, broadly, 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers. For corporate holders, corporation tax is generally charged on chargeable gains at the rate applicable to the relevant corporate holder.

Non-United Kingdom holders

Holders who are not resident in the United Kingdom and, in the case of an individual holder, not temporarily non-resident, should not be liable for United Kingdom tax on capital gains realised on a sale or other disposal of ordinary shares unless (i) such ordinary shares are used, held or acquired for the purposes of a trade, profession or vocation carried on in the United Kingdom through a branch or agency or, in the case of a corporate holder, through a permanent establishment or (ii) where certain conditions are met, the Company derives 75% or more of its gross value from United Kingdom land. Holders who are not resident in the United Kingdom may be subject to non-United Kingdom taxation on any gain under local law.

Generally, an individual holder who has ceased to be resident in the United Kingdom for United Kingdom tax purposes for a period of five years or less and who disposes of ordinary shares during that period may be liable on their return to the United Kingdom to United Kingdom taxation on any capital gain realised (subject to any available exemption or relief).

(3) United Kingdom stamp duty (“stamp duty”) and United Kingdom stamp duty reserve tax (“SDRT”)

The statements in this paragraph 3 are intended as a general guide to the current position relating to stamp duty and SDRT and apply to any holder irrespective of their place of tax residence. Certain categories of person, including intermediaries, brokers, dealers and persons connected with depositary receipt arrangements and clearance services, may not be liable to stamp duty or SDRT or may be liable at a higher rate or may, although not primarily liable for the tax, be required to notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.

Transfers of ordinary shares within a clearance service or depositary receipt system should not give rise to a liability to stamp duty or SDRT, provided that no instrument of transfer is entered into and that no election that

201

applies to the ordinary shares is, or has been, made by the clearance service under Section 97A of the United Kingdom Finance Act 1986.

Transfers of ordinary shares within a clearance service where an election has been made by the clearance service under Section 97A of the Finance Act 1986 will generally be subject to SDRT (rather than stamp duty) at the rate of 0.5% of the amount or value of the consideration.

Transfers of ordinary shares that are held in certificated form will generally be subject to stamp duty at the rate of 0.5% of the consideration given (rounded up to the nearest £5). An exemption from stamp duty is available for a written instrument transferring an interest in ordinary shares where the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds £1,000. SDRT may be payable on an agreement to transfer such ordinary shares, generally at the rate of 0.5% of the consideration given in money or money’s worth under the agreement to transfer the ordinary shares. This charge to SDRT would be discharged if an instrument of transfer is executed pursuant to the agreement which gave rise to SDRT and stamp duty is duly paid on the instrument transferring the ordinary shares within six years of the date on which the agreement was made or, if the agreement was conditional, the date on which the agreement became unconditional.

If ordinary shares (or interests therein) are subsequently transferred into a clearance service or depositary receipt system, stamp duty or SDRT will generally be payable at the rate of 1.5% of the amount or value of the consideration given or, in certain circumstances, the value of the shares (save to the extent that an election has been made under section 97A of the United Kingdom Finance Act 1986). This liability for stamp duty or SDRT will strictly be accountable by the clearance service or depositary receipt system, as the case may be, but will, in practice, generally be reimbursed by participants in the clearance service or depositary receipt system.

Following litigation, HMRC has confirmed that it will no longer seek to impose the 1.5% SDRT charge on issues or transfers integral to capital raising of UK shares to depositary receipt issuers and clearance services anywhere in the world on the basis that the charge is not compatible with European Union law. HMRC considers, though, that the 1.5% SDRT charge will still apply to transfers of shares to depositary receipt issuers or clearance services that are not an integral part of an issue of share capital. It is noted that on 31 January 2020 the United Kingdom ceased to be a Member State of the European Union. Accordingly, the extent to which HMRC’s position will remain as set out in this paragraph is uncertain. Specific professional advice should be sought before paying the 1.5% SDRT or stamp duty charge in any circumstances.

202

Underwriting (Conflicts of Interest)

We are offering the ordinary shares described in this prospectus through a number of underwriters. J.P. Morgan Securities LLC is acting as representative of the underwriters. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of ordinary shares listed next to its name in the following table:



Name		Number of shares
J.P. Morgan Securities LLC
BofA Securities, Inc.
Goldman Sachs & Co. LLC
Barclays Capital Inc.
Morgan Stanley & Co. LLC
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
UBS Securities LLC
Evercore Group L.L.C.
Piper Sandler & Co.
ING Financial Markets LLC
Macquarie Capital (USA) Inc.
Nomura Securities International, Inc.
TCG Capital Markets L.L.C.
Drexel Hamilton, LLC
H.C. Wainwright & Co., LLC
Samuel A. Ramirez & Company, Inc.
Siebert Williams Shank & Co., LLC

Total

The underwriters are committed to purchase all the ordinary shares offered by us if they purchase any shares. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.

The underwriters propose to offer the ordinary shares directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $ per share from the initial public offering price. After the initial offering of the shares to the public, if all of the ordinary shares are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms. The underwriters may offer and sell ordinary shares through certain of their affiliates or other registered broker-dealers or selling agents. Sales of any shares made outside of the United States may be made by affiliates of the underwriters.

The underwriters have an option to buy up to additional ordinary shares from us to cover sales of shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this option to purchase additional shares. If any shares are purchased with this option to purchase additional shares, the underwriters will purchase shares in approximately the same proportion as shown in the table above. If any additional ordinary shares are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

203

The underwriting fee is equal to the public offering price per share of ordinary shares less the amount paid by the underwriters to us per share of ordinary shares. The underwriting fee is $ per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.



	Without option to purchase additional shares exercise	With full option to purchase additional shares exercise
Per share	$	$
Total	$	$

We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $ .

A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.

We have agreed that we will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to, any of our ordinary shares or securities convertible into or exercisable or exchangeable for any of our ordinary shares, or publicly disclose the intention to make any offer, sale, pledge, loan, disposition or filing, or (ii) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any ordinary shares or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of ordinary shares or such other securities, in cash or otherwise), in each case without the prior written consent of J.P. Morgan Securities LLC for a period of 180 days after the date of this prospectus, other than our ordinary shares to be sold in this offering.

The restrictions on our actions, as described above, do not apply to certain transactions, including (i) the issuance of ordinary shares or securities convertible into or exercisable for our ordinary shares pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants or options (including net exercise) or the settlement of RSUs (including net settlement), in each case outstanding on the date of the underwriting agreement and described in this prospectus; (ii) grants of stock options, stock awards, restricted stock, RSUs, or other equity awards and the issuance of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares (whether upon the exercise of stock options or otherwise) to our employees, officers, directors, advisors, or consultants pursuant to the terms of an equity compensation plan in effect as of the closing of this offering and described in this prospectus; or (iii) our filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to any plan described in this prospectus or any assumed benefit plan pursuant to an acquisition or similar strategic transaction.

Our directors and executive officers, and holders of substantially all of our ordinary shares (such persons, the “lock-up parties”) have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each lock-up party, with limited exceptions, for a period of 180 days after the date of this prospectus (such period, the “restricted period”), may not (and may not cause any of their direct or indirect affiliates to), without the prior written consent of J.P. Morgan Securities LLC, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any

204

option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any of our ordinary shares or any securities convertible into or exercisable or exchangeable for our ordinary shares (including, without limitation, ordinary shares or such other securities which may be deemed to be beneficially owned by such lock-up parties in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant (collectively with the ordinary shares, the “lock-up securities”)), (2) enter into any hedging, swap or other agreement or transaction that transfers, in whole or in part, any of the economic consequences of ownership of the lock-up securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of lock-up securities, in cash or otherwise or (3) publicly disclose the intention to do any of the foregoing. Such persons or entities have further acknowledged that these undertakings preclude them from engaging in any hedging or other transactions or arrangements (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) designed or intended, or which could reasonably be expected to lead to or result in, a sale or disposition or transfer (by any person or entity, whether or not a signatory to such agreement) of any economic consequences of ownership, in whole or in part, directly or indirectly, of any lock-up securities, whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of lock-up securities, in cash or otherwise.

The restrictions described in the immediately preceding paragraph and contained in the lock-up agreements between the underwriters and the lock-up parties do not apply, subject in certain cases to various conditions, to certain transactions, including (a) transfers of lock-up securities: (i) as bona fide gifts, or for bona fide estate planning purposes, (ii) by will or intestacy, (iii) to any trust for the direct or indirect benefit of the lock-up party or any immediate family member, (iv) to a partnership, limited liability company or other entity of which the lock-up party and its immediate family members are the legal and beneficial owner of all of the outstanding equity securities or similar interests, (v) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (iv), (vi) in the case of a corporation, partnership, limited liability company, trust or other business entity, (A) to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate of the lock-up party, or to any investment fund or other entity controlling, controlled by, managing or managed by or under common control with the lock-up party or its affiliates or (B) as part of a distribution to members or stockholders of the lock-up party; (vii) by operation of law, (viii) to us from an employee upon death, disability or termination of employment of such employee, (ix) as part of a sale of lock-up securities acquired in open market transactions after the completion of this offering, (x) to us in connection with the vesting, settlement or exercise of restricted stock units, options, warrants or other rights to purchase shares of our ordinary shares (including “net” or “cashless” exercise), including for the payment of exercise price and tax and remittance payments, or (xi) pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction approved by our board of directors and made to all shareholders involving a change in control, provided that if such transaction is not completed, all such lock-up securities would remain subject to the restrictions in the immediately preceding paragraph; (b) exercise of the options, settlement of RSUs or other equity awards, or the exercise of warrants granted pursuant to plans described in in this prospectus, provided that any lock-up securities received upon such exercise, vesting or settlement would be subject to restrictions similar to those in the immediately preceding paragraph; (c) the conversion of outstanding preferred stock, warrants to acquire preferred stock, or convertible securities into shares of our ordinary shares or warrants to acquire shares of our ordinary shares, provided that any ordinary shares or warrant received upon such conversion would be subject to restrictions similar to those in the immediately preceding paragraph; and (d) the establishment by lock-up parties of trading plans under Rule 10b5-1 under the Exchange Act, provided that such plan does not provide for the transfer of lock-up securities during the restricted period.

J.P. Morgan Securities LLC, in its sole discretion, may release the securities subject to any of the lock-up agreements with the underwriters described above, in whole or in part at any time.

205

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.

We will apply to have our ordinary shares approved for listing/quotation on Nasdaq under the symbol “OCDx”.

In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling ordinary shares in the open market for the purpose of preventing or retarding a decline in the market price of the ordinary shares while this offering is in progress. These stabilizing transactions may include making short sales of ordinary shares, which involves the sale by the underwriters of a greater number of ordinary shares than they are required to purchase in this offering, and purchasing ordinary shares on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the underwriters’ option to purchase additional shares referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ordinary shares in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.

The underwriters have advised us that, pursuant to Regulation M of the Securities Act of 1933, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the ordinary shares, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase ordinary shares in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.

These activities may have the effect of raising or maintaining the market price of the ordinary shares or preventing or retarding a decline in the market price of the ordinary shares, and, as a result, the price of the ordinary shares may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on Nasdaq, in the over-the-counter market or otherwise.

Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors including:

•

the information set forth in this prospectus and otherwise available to the representatives;

•

our prospects and the history and prospects for the industry in which we compete;

•

an assessment of our management;

•

our prospects for future earnings;

•

the general condition of the securities markets at the time of this offering;

•

the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

•

other factors deemed relevant by the underwriters and us.

206

Neither we nor the underwriters can assure investors that an active trading market will develop for our ordinary shares, or that the shares will trade in the public market at or above the initial public offering price.

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

Notice to prospective investors in Canada

The ordinary shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the ordinary shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Notice to prospective investors in the European Economic Area

In relation to each Member State of the European Economic Area (each a “Member State”), no ordinary shares have been offered or will be offered pursuant to the offering to the public in that Member State prior to the publication of a prospectus in relation to the ordinary shares which has been approved by the competent authority in that Member State or, where appropriate, approved in another Member State and notified to the competent authority in that Member State, all in accordance with the Prospectus Regulation, except that offers of ordinary shares may be made to the public in that Member State at any time under the following exemptions under the Prospectus Regulation:

(a) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the underwriters; or

provided that no such offer of ordinary shares shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the

207

Prospectus Regulation and each person who initially acquires any ordinary shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the underwriters and the Company that it is a “qualified investor” within the meaning of Article 2(e) of the Prospectus Regulation. In the case of any ordinary shares being offered to a financial intermediary as that term is used in the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the ordinary shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any ordinary shares to the public other than their offer or resale in a Member State to qualified investors as so defined or in circumstances in which the prior consent of the underwriters have been obtained to each such proposed offer or resale.

For the purposes of this provision, the expression an “offer to the public” in relation to ordinary shares in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any ordinary shares to be offered so as to enable an investor to decide to purchase or subscribe for any ordinary shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

Notice to prospective investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Regulation as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”) or otherwise in circumstances which have not resulted and will not result in an offer to the public of the ordinary shares in the United Kingdom within the meaning of the Financial Services and Markets Act 2000.

Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as a basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.

Notice to prospective investors in Switzerland

The ordinary shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the ordinary shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the Company, the ordinary shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of ordinary shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of ordinary shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of ordinary shares.

208

Notice to prospective investors in Australia

This prospectus:

•

does not constitute a disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth) (the “Corporations Act”);

•

has not been, and will not be, lodged with the Australian Securities and Investments Commission (“ASIC”), as a disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document for the purposes of the Corporations Act; and

•

may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the categories of investors, available under section 708 of the Corporations Act (“Exempt Investors”).

The ordinary shares may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the ordinary shares may be issued, and no draft or definitive offering memorandum, advertisement or other offering material relating to any ordinary shares may be distributed in Australia, except where disclosure to investors is not required under Chapter 6D of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the ordinary shares, you represent and warrant to us that you are an Exempt Investor.

As any offer of ordinary shares under this document will be made without disclosure in Australia under Chapter 6D.2 of the Corporations Act, the offer of those securities for resale in Australia within 12 months may, under section 707 of the Corporations Act, require disclosure to investors under Chapter 6D.2 if none of the exemptions in section 708 applies to that resale. By applying for the ordinary shares you undertake to us that you will not, for a period of 12 months from the date of issue of the ordinary shares, offer, transfer, assign or otherwise alienate those ordinary shares to investors in Australia except in circumstances where disclosure to investors is not required under Chapter 6D.2 of the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.

Notice to prospective investors in Japan

The ordinary shares have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act. Accordingly, none of the ordinary shares nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any “resident” of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan in effect at the relevant time.

Notice to prospective investors in Hong Kong

The ordinary shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) of Hong Kong and any rules made thereunder; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong) (the “CO”) or which do not constitute an offer to the public within the meaning of the CO. No advertisement, invitation or document relating to the ordinary shares has been or may be issued or has been or may be in the possession of any person for the

209

purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to ordinary shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made thereunder.

Notice to prospective investors in Singapore

Each underwriter has acknowledged that this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each underwriter has represented and agreed that it has not offered or sold any ordinary shares or caused the ordinary shares to be made the subject of an invitation for subscription or purchase and will not offer or sell any ordinary shares or cause the ordinary shares to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the ordinary shares, whether directly or indirectly, to any person in Singapore other than:

(a)

to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA;

(b)

to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA; or

(c)

otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the ordinary shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a)

a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b)

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the ordinary shares pursuant to an offer made under Section 275 of the SFA except:

(i)

to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) orSection 276(4)(i)(B) of the SFA;

(ii)

where no consideration is or will be given for the transfer;

(iii)

where the transfer is by operation of law;

(iv)

as specified in Section 276(7) of the SFA; or

(v)

as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.

210

Notice to prospective investors in the Dubai International Financial Centre (“DIFC”)

This prospectus relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for this prospectus. The securities to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

In relation to its use in the DIFC, this prospectus is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.

Other relationships

Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future. Furthermore, certain of the underwriters and/or affiliates of certain of the underwriters are lenders and/or agents under our Senior Secured Credit Facilities, including an affiliate of Barclays Capital Inc. that serves as administrative agent under our Senior Secured Credit Facilities, and accordingly, are entitled to fees and expenses in connection therewith. In addition, affiliates of certain of the underwriters may also be holders of our other debt.

Conflicts of Interest

Affiliates of Carlyle beneficially own in excess of 10% of our issued and outstanding common stock. Because TCG Capital Markets L.L.C., an affiliate of Carlyle, is an underwriter, this offering is being made in compliance with the requirements of Rule 5121 of FINRA. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as TCG Capital Markets L.L.C. is not primarily responsible for managing this offering. TCG Capital Markets L.L.C. will not confirm sales of the securities to any account over which it exercises discretionary authority without the specific written approval of the account holder.

211

Legal matters

Certain legal matters in connection with this offering relating to United States federal securities law will be passed upon for us by Latham & Watkins LLP, Washington, District of Columbia. The validity of the ordinary shares under English law offered by this prospectus will be passed upon for us by Latham & Watkins LLP, London, United Kingdom. Certain legal matters relating to this offering will be passed upon for the underwriters by Cahill Gordon & Reindel LLP, New York, New York.

Experts

The financial statements as of December 29, 2019 and December 30, 2018 and for each of the three years in the period ended December 29, 2019 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP (“PwC”), an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

In connection with this offering, PwC completed an independence assessment to evaluate the services and relationships with the Company and its affiliates that may bear on PwC’s independence under the SEC and the PCAOB (United States) independence rules for an audit period commencing January 2, 2017, PwC informed us that certain of its member firms within PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity (“PwC member firm”), were engaged to perform non-audit services by and had relationships with entities that are under common control with Ortho-Clinical Diagnostics. These non-audit services and relationships are not in accordance with the SEC and PCAOB auditor independence rules and are described below:

•

From April 2018 to March 2019, a PwC covered person, who was not involved in the audit of the Company, held an impermissible financial interest in an affiliate of the Company.

•

From January 2017 to August 2017, a PwC member firm held custody of assets and initiated a payment of statutory payroll deductions to appropriate governmental authorities on behalf of an entity under common control with the Company. There were no fees earned for this service during the period.

•

In February 2017, a PwC member firm filed the statutory financial statements of and on behalf of an entity under common control with the Company with a non-tax authority. The fees for these services were approximately $4,800.

•

From August 2017 to January 2018, a PwC member firm had a business relationship with an entity under common control with the Company. The fees for these services were approximately $180,000.

•

From November 2018 to February 2019, a PwC member firm provided an expert service to an entity under common control with the Company. The fees for these services were approximately $360,000 (fees for the services were not invoiced or collected).

•

During March 2019, a PwC member firm held custody of documents and provided a registered office address for an entity under common control with the Company. There were no fees earned for this service.

PwC provided an overview of the facts and circumstances surrounding the services and relationships to our audit committee and management, including the entities involved, the nature of the relationships, where applicable, an approximation of the fees earned related to the services and relationships and other relevant factors. Considering the facts presented, our audit committee and PwC have concluded that the relationships would not impair PwC’s application of objective and impartial judgment on any matters encompassed within the audit engagement performed by PwC for our consolidated financial statements for each of the three years in the period ended December 29, 2019, and that no reasonable investor would conclude otherwise.

212

Where you can find additional information

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the ordinary shares offered by this prospectus. This prospectus is a part of the Registration Statement and does not contain all of the information set forth in the Registration Statement and its exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and our ordinary shares, you should refer to the Registration Statement and its exhibits and schedules.

We will file annual, quarterly and special reports and other information with the SEC. Our filings with the SEC will be available to the public on the SEC’s website at http://www.sec.gov. Those filings will also be available to the public on, or accessible through, our website under the heading “Investor Relations” at www.orthoclinicaldiagnostics.com. The information we file with the SEC or contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the Registration Statement of which this prospectus is a part.

Enforcement of judgments

UK Holdco will be a public limited company organized under the laws of England and Wales. As a result, the rights of holders of our ordinary shares will be governed by U.K. law and our articles of association. The rights of shareholders under U.K. law may differ from the rights of shareholders of companies incorporated in other jurisdictions. A substantial amount of our assets are located outside the United States. As a result, it may be difficult for investors to enforce in the United States judgments obtained in U.S. courts against us based on the civil liability provisions of the U.S. securities laws. It is doubtful whether courts in England and Wales will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in England and Wales against us or our directors or officers under the securities laws of other jurisdictions.

Our registered address in the United Kingdom is 11-12 St. James’s Square, Suite 1, 3rd Floor, London, United Kingdom SW1Y 4LB.

213

Index to consolidated financial statements


Ortho-Clinical Diagnostics Bermuda Co. Ltd.—Audited Consolidated Financial Statements:

Report of independent registered public accounting firm			F-2

Consolidated statements of operations for the years ended December 29, 2019, December 30, 2018 and December 31, 2017			F-3

Consolidated statements of comprehensive loss for the years ended December 29, 2019, December 30, 2018 and December 31, 2017			F-4

Consolidated balance sheets as of December 29, 2019 and December 30, 2018			F-5

Consolidated statements of changes in shareholders’ equity (deficit) for the years ended December 29, 2019, December 30, 2018 and December 31, 2017			F-6

Consolidated statements of cash flows for the years ended December 29, 2019, December 30, 2018 and December 31, 2017			F-7

Notes to audited consolidated financial statements			F-8

Ortho-Clinical Diagnostics Bermuda Co. Ltd.—Interim Unaudited Consolidated Financial Statements:

Consolidated statements of operations for the nine months ended September 27, 2020 and September 29, 2019			F-81

Consolidated statements of comprehensive loss for the nine months ended September 27, 2020 and September 29, 2019			F-82

Consolidated balance sheets as of September 27, 2020 and September 29, 2019			F-83

Consolidated statements of changes in shareholders’ deficit for the nine months ended September 27, 2020 and September 29, 2019			F-84

Consolidated statements of cash flows for the nine months ended September 27, 2020 and September 29, 2019			F-86

Notes to interim unaudited consolidated financial statements			F-87

F-1

Report of independent registered public accounting firm

To the Board of Directors and Stockholders of Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Ortho-Clinical Diagnostics Bermuda Co. Ltd. and its subsidiaries (the “Company”) as of December 29, 2019 and December 30, 2018, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 29, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 29, 2019 and December 30, 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2019 in conformity with accounting principles generally accepted in the United States of America.

Changes in accounting principles

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers and the manner in which it accounts for restricted cash within the statement of cash flows in 2018 and the manner in which it accounts for leases in 2019.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

March 11, 2020, except for (i) the change in the manner in which the Company accounts for revenue from contracts with customers and leases discussed in Note 3 to the consolidated financial statements, (ii) the effects of disclosing net loss per common share data discussed in Note 3 and (iii) the segment disclosures in Note 20, as to which the date is October 16, 2020.

We have served as the Company’s auditor since 2013.

F-2

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of operations

(In millions, except share and per share data)



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net revenue	$	1,801.5		$	1,787.3		$	1,781.7
Cost of revenue, excluding amortization of intangible assets		922.4			930.5			897.7

Gross profit		879.1			856.8			884.0
Selling, marketing and administrative expenses		515.1			491.6			499.8
Research and development expense		98.0			98.7			96.4
Amortization of intangible assets		131.7			128.8			162.0
Intangible asset impairment charge		—			—			11.0
Other operating expense, net		48.8			71.2			79.5

Income from operations		85.5			66.5			35.3
Interest expense, net		231.4			235.6			239.8
Tax indemnification expense (income)		29.2			(13.1	)		(124.1	)
Other expense (income), net		5.7			61.6			(66.1	)

Loss before (benefit from) provision for income taxes		(180.8	)		(217.6	)		(14.3	)
(Benefit from) provision for income taxes		(23.9	)		31.2			102.0

Net loss	$	(156.9	)	$	(248.8	)	$	(116.3	)

Basic and diluted net loss per common share	$	(1.72	)	$	(2.73	)	$	(1.28	)
Basic and diluted weighted-average common shares outstanding		91.3			91.0			90.9
Unaudited pro forma basic and diluted net loss per common share	$	—
Unaudited pro forma basic and diluted weighted-average common shares outstanding		—

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of comprehensive loss

(In millions)



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net loss	$	(156.9	)	$	(248.8	)	$	(116.3	)

Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments		(0.9	)		(21.2	)		25.3
Foreign currency derivatives		2.1			2.6			(4.8	)
Interest rate derivatives		(17.6	)		4.1			(3.7	)
Pension and other postemployment benefits		(3.3	)		7.7			5.1

Other comprehensive (loss) income, before tax		(19.7	)		(6.8	)		21.9
Income tax benefit (provision) related to items of other comprehensive (loss) income		—			0.1			(0.2	)

Other comprehensive (loss) income, net of tax		(19.7	)		(6.7	)		21.7

Comprehensive loss	$	(176.6	)	$	(255.5	)	$	(94.6	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated balance sheets

(In millions, except share and per share data)



	December 29, 2019			December 30, 2018

Assets

Current assets:
Cash and cash equivalents	$	72.0		$	56.4
Accounts receivable (net of allowance for doubtful accounts of $7.5 and $6.2, respectively)		348.5			332.0
Inventories		253.9			264.3
Other current assets		147.0			114.1

Total current assets		821.4			766.8
Property, plant and equipment, net		848.2			866.1
Goodwill		567.3			561.5
Intangible assets, net		1,134.5			1,257.0
Deferred income taxes		6.1			4.0
Other assets		211.7			232.0

Total assets	$	3,589.2		$	3,687.4


Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	198.4		$	167.1
Accrued liabilities		291.3			223.6
Deferred revenue		36.3			27.6
Current portion of borrowings		156.7			159.7

Total current liabilities		682.7			578.0
Long-term borrowings		3,442.4			3,489.8
Employee-related obligations		36.9			33.7
Other liabilities		175.0			173.8
Deferred income taxes		65.0			66.8

Total liabilities		4,402.0			4,342.1


Commitments and contingencies (Note 22)

Stockholders’ Equity (Deficit):
Common stock, $0.00001 par, 1,000,000,000 shares authorized, 91,902,564 and 91,109,238 shares issued and outstanding as of December 29, 2019 and December 30, 2018, respectively		—			—
Additional paid-in capital		964.7			946.4
Accumulated deficit		(1,705.6	)		(1,548.9	)
Accumulated other comprehensive loss		(71.9	)		(52.2	)

Total stockholders’ deficit		(812.8	)		(654.7	)

Total liabilities and stockholders’ deficit	$	3,589.2		$	3,687.4

The accompanying notes are an integral part of the consolidated financial statements.

F-5

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of changes in stockholders’ equity (deficit)

(In millions)



	Common stock shares issued			Common stock par value		Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive loss			Total
Balance as of January 1, 2017		90,690,240			—		933.2			(1,195.7	)		(67.2	)		(329.7	)
Net loss		—			—		—			(116.3	)		—			(116.3	)
Exercise of stock options, net of shares retained for taxes		320,859			—		3.2			—			—			3.2
Restricted stock grant, net of shares retained for taxes		17,628			—		—			—			—			—
Recognition of stock-based compensation		—			—		4.4			—			—			4.4
Pension and other postemployment benefits, net of tax of $0.2		—			—		—			—			4.9			4.9
Foreign currency derivatives, net of tax of $0.0		—			—		—			—			(4.8	)		(4.8	)
Interest rate derivatives, net of tax of $0.0		—			—		—			—			(3.7	)		(3.7	)
Foreign currency translation adjustments		—			—		—			—			25.3			25.3

Balance as of December 31, 2017		91,028,727			—		940.8			(1,312.0	)		(45.5	)		(416.7	)
Net loss		—			—		—			(248.8	)		—			(248.8	)
Exercise of stock options, net of shares retained for taxes		93,439			—		0.2			—			—			0.2
Restricted stock grant, net of shares retained for taxes		13,644			—		—			—			—			—
Share repurchases		(26,572	)		—		(0.5	)		—			—			(0.5	)
Recognition of stock-based compensation		—			—		5.9			—			—			5.9
Impact from adoption of ASC 606		—			—		—			11.9			—			11.9
Pension and other postemployment benefits, net of tax of $0.1		—			—		—			—			7.8			7.8
Foreign currency derivatives, net of tax of $0.0		—			—		—			—			2.6			2.6
Interest rate derivatives, net of tax of $0.0		—			—		—			—			4.1			4.1
Foreign currency translation adjustments		—			—		—			—			(21.2	)		(21.2	)

Balance as of December 30, 2018		91,109,238		$	—	$	946.4		$	(1,548.9	)	$	(52.2	)	$	(654.7	)

Net loss		—			—		—			(156.9	)		—			(156.9	)
Exercise of stock options, net of shares retained for taxes		597,566			—		—			—			—			—
Restricted stock grant, net of shares retained for taxes		215,197			—		—			—			—			—
Share repurchases		(19,437	)		—		(0.3	)		—			—			(0.3	)
Recognition of stock-based compensation		—			—		18.6			—			—			18.6
Impact from adoption of ASU 2017-12		—			—		—			0.2			(0.2	)		—
Pension and other postemployment benefits, net of tax of $0.0		—			—		—			—			(3.3	)		(3.3	)
Foreign currency derivatives, net of tax of $0.0		—			—		—			—			2.1			2.1
Interest rate derivatives, net of tax of $0.0		—			—		—			—			(17.4	)		(17.4	)
Foreign currency translation adjustments		—			—		—			—			(0.9	)		(0.9	)

Balance as of December 29, 2019		91,902,564		$	—	$	964.7		$	(1,705.6	)	$	(71.9	)	$	(812.8	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of cash flows

(In millions)



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017

Cash Flows from Operating activities:
Net loss	$	(156.9	)	$	(248.8	)	$	(116.3	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		327.5			332.2			333.3
Unrealized and non-cash foreign exchange (gains) losses, net		(18.1	)		43.3			(66.9	)
Equity investment impairment charge		—			—			20.2
Intangible asset impairment charge		—			—			11.0
Amortization of deferred financing costs and original issue discount		12.4			14.9			17.7
Deferred tax benefit		(4.4	)		(4.7	)		(32.7	)
Stock based compensation		18.6			5.9			4.4
Provision for doubtful accounts		4.5			2.2			3.5
Loss on extinguishment of debt		—			2.1			—
Other non-cash, net		15.9			7.3			10.6
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(21.4	)		18.0			(29.1	)
Inventories		(108.6	)		(83.3	)		(114.3	)
Other current and non-current assets		(27.2	)		(18.7	)		27.6
Accounts payable and accrued liabilities		83.6			(22.4	)		2.5
Deferred revenue		7.3			1.8			(2.9	)
Other current and non-current liabilities		9.8			19.8			(0.6	)

Cash provided by operating activities		143.0			69.6			68.0


Cash Flows from Investing activities:
Purchase of property, plant and equipment		(66.2	)		(79.2	)		(91.6	)
Acquisition of Ortho-Clinical Diagnostics (purchase price adjustment)		—			(8.1	)		(21.0	)
Day 2 Country Payments paid		—			—			(2.6	)
Milestone payments and other		(2.3	)		0.2			(2.8	)

Cash used in investing activities		(68.5	)		(87.1	)		(118.0	)


Cash Flows from Financing activities:
Payments on long-term debt		(49.7	)		(125.5	)		(33.3	)
Borrowings (payments) on short-term borrowings, net		(17.2	)		15.2			(85.0	)
Proceeds from other long-term debt		2.8			1.1			2.4
Repurchase of common stock		(0.3	)		(0.5	)		—
Proceeds from exercise of stock options		—			0.2			3.2
Proceeds from issuance of term loan		—			101.3			197.6

Cash (used in) provided by financing activities		(64.4	)		(8.2	)		84.9

Effect of exchange rate changes on cash		(0.7	)		(4.3	)		3.6

Increase (decrease) in cash, cash equivalents and restricted cash		9.4			(30.0	)		38.5
Cash, cash equivalents and restricted cash at beginning of year		74.6			104.6			66.1

Cash, cash equivalents and restricted cash at end of year	$	84.0		$	74.6		$	104.6



	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017

Reconciliation to amounts within the consolidated balance sheets:
Cash and cash equivalents	$	72.0	$	56.4	$	93.3
Restricted cash included in Other Assets		12.0		18.2		11.3

Cash, cash equivalents and restricted cash	$	84.0	$	74.6	$	104.6

The accompanying notes are an integral part of these consolidated financial statements

F-7

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(1) General and description of the business

Ortho-Clinical Diagnostics Bermuda Co. Ltd. (“Bermuda Holdco” or the “Company”), a Bermuda exempted limited liability company formed at the direction of The Carlyle Group Inc. (f/k/a/ The Carlyle Group L.P.) (“Carlyle”), was incorporated on January 8, 2014 for the purpose of consummating the acquisition of Ortho-Clinical Diagnostics (“Ortho”), a business formerly owned by Johnson & Johnson, including certain assets of Ortho and all the capital stock of certain entities engaged in the Ortho business (the “Acquisition”). On January 16, 2014, Bermuda Holdco entered into an acquisition agreement (the “Acquisition Agreement”) with Johnson & Johnson pursuant to which, among other things, Bermuda Holdco would acquire Ortho.

Bermuda Holdco is a holding company with no business operations or assets other than cash, intercompany receivables, guarantees of certain obligations of Ortho-Clinical Diagnostics, Inc. (“Ortho U.S.”) and 100% of its ownership interest of Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., which itself is a holding company with no operations or assets other than cash, intercompany receivables, miscellaneous administrative costs and its ownership of 100% of the capital stock of Ortho-Clinical Diagnostics S.A. (“LuxCo”). LuxCo, together with its indirect wholly owned subsidiary, Ortho U.S., are co-borrowers under the Senior Secured Credit Facilities and co-issuers of the Notes (each as defined below). The Company’s global operations are conducted by indirect wholly owned subsidiaries.

The Company is a leading global provider of in-vitro diagnostics solutions to the clinical laboratory and transfusion medicine communities. The Company maintains a commercial presence in more than 130 countries and territories. The Company’s instruments, assays, reagents and other consumables are used in hospitals, laboratories, clinics, blood banks and donor centers worldwide. The Company is globally operated with manufacturing facilities in the United States and the United Kingdom and sales centers, administrative offices and warehouses located throughout the world.

Subsequent to the conclusion of the fiscal year ended December 29, 2019, the Company’s domestic and international operations have been and continue to be affected by the ongoing global pandemic of a novel strain of coronavirus (“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S. and international markets. In March 2020, the World Health Organization declared COVID-19 a pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, President Trump announced a National Emergency relating to the disease. The COVID-19 pandemic has caused significant volatility and uncertainty in the U.S. and international markets, which could result in a prolonged economic downturn that has disrupted and is expected to continue to disrupt the Company’s business. The Company has a direct commercial presence in more than 30 countries, including many of the regions most impacted by the COVID-19 pandemic.

As a result of the COVID-19 pandemic, the Company has experienced decreased demand from customers for certain of its products during the fiscal second quarter of 2020, and it is expected that the negative impact to revenues will continue for the remainder of fiscal year 2020. The extent of the negative impact on revenues is uncertain and will depend on the length and extent of the pandemic, its consequences, and containment measures. Any prolonged material disruption of the Company’s employees, suppliers, manufacturing, or customers could materially impact its consolidated financial position, results of operations or cash flows.

F-8

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The accompanying consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As shown in the consolidated financial statements, at December 29, 2019, the Company has total cash and cash equivalents balance of $72.0 million and an accumulated deficit of $1,705.6 million. The Company has incurred losses since the acquisition from Johnson & Johnson and reported a net loss of $156.9 million , while generating $143.0 million of cash from operations during the fiscal year ended December 29, 2019. The Company’s primary cash needs will be to meet debt service requirements, working capital needs and capital expenditures. Management is required to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern for at least one year from the date the financial statements are issued and, if so, disclose that fact.

The Company’s debt agreements contain various covenants that may restrict the Company’s ability to borrow on available credit facilities and future financing arrangements and require the Company to remain below a specific credit coverage threshold. The Company’s credit agreement has a financial covenant (First Lien Net Leverage Ratio (as defined in the credit agreement) not to exceed 6-to-1, subject to two 50 basis point step-downs on June 30, 2021 and September 30, 2022) that is tested when borrowings under the Revolving Credit Facility exceed $105 million at any period end reporting date. As of December 29, 2019, the Company had no outstanding borrowings under its Revolving Credit Facility. The Company believes that it has complied and will continue to comply with the financial covenant for the next 12 months. In the event the Company does not comply with the financial covenant of the Revolving Credit Facility, the lenders will have the right to call on all of the borrowings under the revolving facility. If the lenders on the revolving facility terminate their commitments and accelerate the loans, this would become a cross default to other material indebtedness.

Given the expected impact of the COVID-19 pandemic and economic slowdown on its business the Company evaluated its liquidity position and ability to comply with financial covenants in its Revolving Credit Facility as of the date of the issuance of these consolidated financial statements. Based on this evaluation, management believes, despite the expected impact of COVID-19 on the Company’s business, that the Company’s financial position, net cash provided by operations combined with cash and cash equivalents, and borrowing availability under its Revolving Credit Facility, will be sufficient to fund its current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months from the issuance of these consolidated financial statements.

Should it become necessary, the Company may seek to raise additional capital within the next 12 months through borrowings on credit facilities, other financing activities and/or the private sale of equity securities. The Company may also need to control discretionary spending, which could impact its planned general and administrative, research and development, or capital spend in an effort to provide sufficient funds to continue its operations or maintain compliance with the financial covenants, and the Company may be subject to adverse business conditions due to the global COVID-19 pandemic, all of which could adversely affect the Company’s business.

F-9

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(2) Basis of presentation of the consolidated financial statements

Annual closing date

The Company follows the concept of a fiscal year which ends on the Sunday nearest to the end of the month of December. Normally each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks as was the case for fiscal year 2015.

Day 1 / Day 2 Presentation

The Acquisition Agreement provided for an initial closing with respect to certain countries (the “Day 1 Countries”) and, subject to receipt of appropriate regulatory approvals and certain other conditions, closings on the remaining countries (the “Day 2 Countries”). The closing for the Day 1 Countries was June 30, 2014 (the “Day 1 Closing Date”). The Day 1 Countries included Belgium (including the Netherlands), Canada, the Czech Republic, Germany (including Austria and Switzerland), Italy, Japan, Mexico, Portugal, Spain, the United Kingdom and the United States. The Day 2 Countries include the equity interests of a French entity which was acquired from Johnson & Johnson in September 2014 and certain assets and liabilities of certain entities which are expected to be acquired from Johnson & Johnson following the Day 1 Closing Date. These assets and liabilities are associated with activities in various countries including: Argentina, Australia, Brazil, Chile, China, Colombia, the Commonwealth of Puerto Rico, Denmark, the Dominican Republic, Ecuador, Hong Kong, India, Indonesia, Malaysia, New Zealand, Norway, Panama, Peru, the Philippines, Poland, Russia, Singapore, South Korea, Sweden, Taiwan, Thailand, Uruguay, Venezuela and Vietnam.

On the Day 1 Closing Date, Bermuda Holdco, through its subsidiaries, acquired the Day 1 Countries and numerous patents, patent applications, trademarks and trademark applications as well as certain know-how of the Ortho business. The Company licensed back to Johnson & Johnson certain of those trademarks on a non-exclusive basis, and for a transitional period following the Day 1 Closing Date, for use in the businesses of Johnson & Johnson unrelated to Ortho. In addition, Johnson & Johnson granted to the Company and its subsidiaries an exclusive license to various trademarks and trademark applications for use by Ortho on an exclusive basis in a specified field of use relating to medical diagnostic products and services.

Immediately following the Day 1 Closing Date, the operating results of each Day 2 Country were not included within the Company’s results of operations until the applicable closing date for each Day 2 Country (the “Day 2 Closing Date”). As a result, the Company agreed to implement an arrangement with Johnson & Johnson on the Day 1 Closing Date whereby the Company received from or paid to Johnson & Johnson an amount that approximates the earnings before interest, taxes, depreciation and amortization less local income taxes (the “Day 2 Country Payment”) with respect to each Day 2 Country between the Day 1 Closing Date and the applicable Day 2 Closing Date.

The consideration for the purchase of all of the Day 1 Countries and the Day 2 Countries was paid on the Day 1 Closing Date. The allocation of consideration transferred included an amount related to the value of the Day 2 Countries that did not close on the Day 1 Closing Date. The Day 2 Country Payments are accounted for financial reporting purposes as a reduction of the prepaid consideration. At the time of closing of each Day 2 Country, any remaining prepaid consideration related to that specific entity was included in the calculation of

F-10

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

consideration paid in the application of acquisition accounting for each of the Day 2 Countries. The change in consideration resulting from the Day 2 Country Payments are reflected as adjustments to goodwill at the close of the Day 2 Countries or a bargain purchase resulting in a gain on the acquisition of a Day 2 Country. As of July 3, 2017, the Company has completed the acquisition of all Day 2 Countries.

(3) Summary of significant accounting policies

The consolidated financial statements of Bermuda Holdco and its subsidiaries have been prepared in conformity with U.S. GAAP. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results for periods have been included. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, after the elimination of intercompany transactions.

(a) Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the closing date of the Acquisition and the date of the financial statements, the reported amounts of revenues and expenses during the periods and disclosures. The estimates and underlying assumptions can impact all elements of the financial statements, including, but are not limited to, accounting for deductions from revenues (e.g. rebates, sales allowances, and discounts), receivable and inventory valuations, fixed asset valuations, useful lives, impairment of goodwill and tangible and intangible assets, the fair value of assets acquired and liabilities assumed in a business combination and related purchase price allocation, long-term employee benefit obligations, income taxes, environmental matters, litigation and allocations of costs. Estimates are based on historical experience, complex judgments, facts and circumstances available at the time and various other assumptions that are believed to be reasonable under the circumstances but are inherently uncertain and unpredictable. Actual results could differ materially from those estimates.

(b) Accounting for business combinations

Business combinations are accounted for under the acquisition method of accounting, which requires the acquired assets, including separately identifiable intangible assets, and assumed liabilities to be recorded as of the acquisition date at their respective fair values. Any excess of the purchase price over the fair value of the assets acquired, including separately identifiable intangible assets, and liabilities assumed is recorded as goodwill. Fair value determination is subject to a significant degree of estimates.

The determination of the fair value of assets acquired and liabilities assumed involves assessments of factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition. Where appropriate, external advisors are consulted to assist in the determination of fair value. For non-observable market values, fair value has been determined using acceptable valuation principles (e.g., multiple excess earnings and relief from royalty methods).

F-11

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(c) Revenue recognition

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services. The Company considers revenue to be earned when all of the following criteria are met: the Company has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or consideration the Company expects to receive for transferring the goods or providing services, is determinable; and the Company has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Provisions for rebates and discounts are provided for in the period in which related sales are recorded based on historical experience and updated for changes in facts and circumstances, as appropriate. Such provisions are recorded as a reduction of revenue.

Product revenue includes sales of consumable supplies and test kits for equipment, sales and leases of instruments, as well as services related thereto. Revenue from sales of consumable supplies and test kits is generally recognized upon shipment or delivery based on the contractual shipping terms of the respective customer contract. Revenue from instrument sales is generally recognized upon installation and customer acceptance. Service revenue on equipment and instrument maintenance contracts is recognized over the life of the service arrangement or as services are performed. Revenue earned from operating leases is recognized over the lease term, normally five to seven years. Revenue earned under sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease.

The Company may also enter into transactions that involve multiple performance obligations, such as the sale of products and related services. In accounting for these transactions, the Company allocates arrangement consideration to the deliverables by use of the standalone selling price method.

The Company enters into collaboration arrangements that generate collaboration revenue and royalty revenue from license agreements. Revenue from collaborations is presented “gross” where the Company is deemed the principal in the arrangement and “net” where the Company is deemed the agent in the arrangement. For more information related to the Company’s collaboration arrangements, see Note 14—Collaborations and Other Relationships.

F-12

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(d) Shipping and handling

The revenue received for shipping and handling is included in “Net revenue” on the consolidated statements of operations and is less than 1% of total net revenue for each period presented. Shipping and handling costs were $62.1 million, $56.2 million and $55.4 million for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively, and are included in “Selling, marketing and administrative expenses” on the consolidated statements of operations.

(e) Research and development

Research and development expense incurred in the normal course of business is expensed as incurred, including in asset acquisitions that are not considered to be business combinations.

In-process research and development projects acquired in a business combination are recorded as intangible assets at their fair value as of the acquisition date. Subsequent costs related to acquired in-process research and development projects are expensed as incurred. Research and development intangible assets are considered indefinite-lived until the abandonment or completion of the associated research and development efforts. Upon completion of the research and development process, the carrying value of acquired in-process research and development projects is reclassified as a finite-lived asset and is amortized over its useful life. In-process research and development indefinite-lived intangible assets are tested for impairment on an annual basis in the Company’s fiscal fourth quarter, unless conditions arise that would require a more frequent evaluation.

Upfront and milestone payments made to third parties in connection with research and development collaborations are expensed as incurred up to the point of regulatory approval. Payments made to third parties at or subsequent to regulatory approval are capitalized and amortized over the remaining useful life of the related product. Amounts capitalized for such payments are included in other intangibles, net of accumulated amortization.

The Company enters into collaborative arrangements to develop and commercialize intellectual property. These arrangements typically involve two (or more) parties who are active participants in the collaboration and are exposed to significant risks and rewards dependent on the commercial success of the activities. These collaborations usually involve various activities by one or more parties, including research and development, marketing and selling and distribution. Often, these collaborations require upfront, milestone and royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development. Amounts due from collaborative partners related to development activities are generally reflected as a reduction of research and development expense because the performance of contract development services is not central to the Company’s operations.

In general, the income statement presentation for these collaborations is as follows:



Nature / type of collaboration		Statement of operations presentation
Third party sale of product		Net revenue
Royalties received from collaborative partner		Net revenue

F-13

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)



Nature / type of collaboration		Statement of operations presentation
Royalties/milestones paid to collaborative partner (post- regulatory approval)*		Amortization of intangible assets
Upfront payments and milestones paid to collaborative partner (pre-regulatory approval)		Research and development expense
Research and development payments to collaborative partner		Research and development expense
Research and development payments received from collaborative partner		Reduction to research and development expense

Milestone payments are capitalized as intangible assets and amortized as component of amortization of intangible assets over the useful life

(f) Advertising

Advertising costs, which are not material to the Company, are expensed as incurred and included in “Selling, marketing and administrative expenses” on the consolidated statements of operations.

(g) Employee benefits

In connection with the Acquisition, the Company assumed certain defined benefit plan obligations and acquired certain related plan assets for current employees of our subsidiaries. In addition to the defined benefit plan obligations assumed in connection with the Acquisition, the Company implemented a replacement retiree health care reimbursement plan for certain U.S. employees.

Defined benefit plans specify an amount of pension benefit that an employee will receive on retirement, usually dependent on factors such as age, years of service and compensation. The net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of the future benefits that employees have earned in return for their service in the current and prior periods. These benefits are then discounted to determine the present value of the obligations and are then adjusted for the impact of any unamortized prior service costs. All unamortized prior service costs and actuarial gains (losses) existing at the closing date of the Acquisition were eliminated in the determination of the fair value of the pension funded status at acquisition. The net obligation is then determined with reference to the fair value of the plan assets (if any). The discount rate used is the yield on bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the obligations. The calculations are performed by qualified actuaries using the projected unit credit method.

The implementation of the replacement retiree health care reimbursement plan for certain U.S. employees was considered the initiation of a new plan. The accumulated benefit obligation was calculated by estimating the amount of the future benefits that employees have earned in return for their service in the current and prior periods. These benefits were then discounted to determine the present value of the obligations. The discount rate used was the yield on bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the obligations. The amount of the accumulated benefit obligation on the initiation date is accounted for as prior service cost and is deferred as a component of accumulated other comprehensive income and amortized over the period benefited.

F-14

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(h) Stock-based compensation

Stock-based compensation, comprised of Bermuda Holdco stock options and restricted stock awards to employees and directors, is measured at fair value on the grant date or date of modification, as applicable. Compensation expense is recognized over the requisite service period and includes an estimate of the awards that will be forfeited, and an estimate of what level of performance the company will achieve for performance-based awards.

(i) Income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets are also recognized for operating losses and tax credit carryforwards. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date.

The Company does not intend to permanently reinvest earnings of foreign subsidiaries at this time. As such, the Company provides for income taxes and foreign withholding taxes, where applicable, on undistributed earnings. Any repatriation of undistributed earnings would be done at little or no tax cost.

The Company recognizes the benefit of an income tax position only if it is “more likely than not” that the tax position will be sustained. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized. Additionally, the Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of provision for taxes on income. The Acquisition Agreement includes indemnification provisions with respect to tax liabilities, including reserves for unrecognized tax benefits, as of the date of the Acquisition.

(j) Net loss per common share

Basic net loss per share attributable to the Company’s common shareholders is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock that have been issued but are not yet vested. Diluted net loss per share attributable to the Company’s common shareholders is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period when the effect is dilutive. Common equivalent shares result from the assumed exercise of outstanding stock options (the proceeds of which are then assumed to have been used to repurchase outstanding stock using the treasury stock method) and the vesting of unvested restricted shares of common stock. The following common stock equivalents outstanding were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:



	December 29, 2019		December 30, 2018		December 31, 2017
Stock options		9,551,102		7,794,263		8,173,609
Unvested restricted shares		217,783		20,677		36,133


		9,768,885		7,814,940		8,209,742

F-15

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(k) Fair value measurements

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. U.S. GAAP defines a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following valuation techniques are used to measure fair value for assets and liabilities:

Level 1—Quoted market prices in active markets for identical assets or liabilities;

Level 2—Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs); and

Level 3—Unobservable inputs for the asset or liability, which are valued based on management’s estimates of assumptions that market participants would use in pricing the asset or liability.

(l) Derivatives and hedging

The Company utilizes derivatives to manage exposures to risk and not for speculative or trading purposes. The fair values of all derivatives are recognized as assets or liabilities at the balance sheet date. Changes in the fair value of these instruments are reported in current earnings or other comprehensive income (“OCI”), depending on the use of the derivative and whether it qualifies for hedge accounting treatment. Cash flows from derivatives are recognized in the consolidated statement of cash flows in a manner consistent with the underlying transactions.

Unrealized gains and losses on derivatives that are designated and qualify as cash flow hedging instruments are recorded in OCI, to the extent the hedges are effective, until the underlying transactions settle, and the remaining gain or loss is recognized to the corresponding account in income (loss) from operations. The ineffective portions of cash flow hedging instruments, if any, are recognized immediately to the corresponding account in income (loss) from operations.

Derivatives not designated as hedging instruments are marked-to-market at the end of each accounting period with the results recorded in Other income (loss).

(m) Other comprehensive income (loss)

Other comprehensive income (loss) is recorded directly to a separate section of stockholder’s equity in accumulated other comprehensive income (loss) and primarily includes unrealized gains and losses excluded from the Consolidated statement of operations. These unrealized gains and losses consist of changes in foreign currency translation, changes in unamortized pension, postretirement and postemployment actuarial gains and losses and prior service cost, changes in the fair value of interest rate cap and foreign currency derivatives that are designated and qualify as cash flow hedging instruments and changes in available for sale securities.

F-16

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(n) Cash and cash equivalents

Cash equivalents represent investments with original maturities of three months or less from time of purchase. They are carried at cost plus accrued interest, which approximates fair value because of the short-term maturity of these instruments. As of December 29, 2019 and December 30, 2018, the Company did not hold any cash equivalents. Cash balances may exceed government insured limits in certain jurisdictions.

(o) Concentration of credit risk

No single customer accounted for 10% or more of total revenue or accounts receivable for all periods presented.

(p) Accounts receivable and allowance for doubtful accounts

Accounts receivable are recognized net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the collectability of customer accounts. The Company establishes a reserve based on historical losses, the age of receivables, customer mix and credit policies, and economic conditions in customers’ country or industry, and specific allowances for large or risky accounts. Amounts later determined to be uncollectible are charged or written off against this allowance.

(q) Inventories

Inventories are stated at the lower of cost and net realizable value on a first-in, first-out method. Elements of cost include raw materials, direct labor and manufacturing overhead.

Equipment inventory can either be sold or leased to customers. When leased, the equipment is transferred to “Property, plant and equipment” and depreciation commences.

(r) Customer leased instruments

Determining the economic life of leased instruments requires significant judgment based on our historical experience. The Company estimates the economic life for leased equipment to be ten years. The Company believes these lives represent the periods during which the instruments are expected to be economically usable, with normal repairs and maintenance, for the purposes for which they are intended. The Company regularly evaluates the economic life of existing and new products for purposes of this determination.

(s) Property, plant and equipment and depreciation

Property, plant and equipment acquired in the Acquisition were recorded at fair value as of the acquisition date and are depreciated over their estimated remaining useful lives using the straight-line method. The weighted average estimated remaining useful lives of property, plant and equipment acquired in connection with the Acquisition was approximately 5 years.

F-17

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Subsequent additions to property, plant and equipment, including the fair value of any asset retirement obligations upon initial recognition of the liability, are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the assets as follows:



Asset type	Useful life
Leasehold improvements		Up to 30 years
Building and building improvements		7-55 years
Machinery and equipment		3-30 years
Customer leased Instruments		5-8 years
Computer software		3-8 years

The Company depreciates customer leased instruments over the shorter of the contract length or useful economic life.

The Company capitalizes certain computer software and development costs when incurred in connection with developing or obtaining computer software for internal use. Costs are capitalized subsequent to the achievement of technological feasibility.

Software developed for use in the Company’s products is expensed as incurred to research and development expense until technological feasibility is achieved. Costs incurred subsequent to the achievement of technological feasibility are capitalized. As of December 29, 2019 and December 30, 2018, capitalized costs related to software for use in the Company’s’ products amounted to $13.2 million and $5.8 million, respectively.

When assets are surrendered, retired, sold or otherwise disposed of, their gross carrying values and related accumulated depreciation are removed from the accounts and included in determining gain or loss on such disposals. Maintenance and repairs are expensed as incurred; major replacements and improvements that extend the useful life are capitalized.

(t) Goodwill and other identifiable intangible assets

Goodwill represents the excess of purchase price over the fair values of underlying net assets acquired in an acquisition. Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis in the Company’s fiscal fourth quarter, however, these tests are performed more frequently if events or changes in circumstances indicate that the asset may be impaired. The fair value methodology is based on prices of similar assets or other valuation methodologies including discounted cash flow techniques.

When testing goodwill and indefinite-lived intangible assets for impairment, the Company first has an option to assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that impairment exists. The Company is also required to perform a qualitative assessment if the carrying value of the reporting unit is zero or negative. Such qualitative factors may include the following: macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other relevant entity-specific events. In the event the qualitative assessment indicates that an impairment is more likely than not, the Company would be required to perform a quantitative impairment test, otherwise no further analysis is required. Under the quantitative

F-18

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

goodwill impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill.

The Company determined that it has one reporting unit for purposes of the impairment testing performed in the fourth quarter of fiscal year 2019. Based upon the Company’s qualitative impairment test for the fiscal year ended December 29, 2019, the fair value of its reporting unit is in excess of its carrying value.

Definite-lived intangible assets, such as technology, tradenames, customer relationships and capitalized milestone payments are amortized over their estimated useful lives, generally for periods ranging from 4 to 20 years. The reasonableness of the useful lives of these assets is regularly evaluated. The Company evaluates these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

(u) Impairment of long-lived assets

The process of evaluating the potential impairment of other long-lived assets, such as property, plant and equipment, is subjective and requires judgment. The Company reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. This impairment test may be triggered by a decrease in the market price of a long-lived asset, an adverse change in the extent or manner in which the asset is being used, or a forecast of continuing losses associated with the use of the asset. If the fair value is less than the asset’s carrying amount, a loss is recognized for the difference. The fair value methodology used is an estimate of fair value and is based on the discounted future cash flows of the asset or quoted market prices of similar assets. Based on these assumptions and estimates, the Company determines whether a need for an impairment charge exists to reduce the value of the asset stated on the balance sheet to reflect its estimated fair value.

(v) Equity investments

The Company’s equity investments in publicly-traded equity securities are recorded using either the equity method of accounting or as available-for-sale securities, depending on our ownership percentage and other factors that suggest we have significant influence. For equity investments accounted for under the equity method, the Company records its share of the equity affiliates results of operations based on its percentage of ownership. Dividends declared are recorded as a reduction to the equity investment value. Equity investments with readily determinable fair values that are accounted for as available-for-sale securities are measured at their fair value with the changes in their fair value reported as a component of other comprehensive income (loss). The Company monitors these investments to determine whether any decline in their fair value is considered other-than-temporary.

Equity investments that the Company does not have the ability to exercise significant influence and do not have readily determinable fair values are accounted for under the cost method. The Company periodically reviews its cost method investments for impairment and adjusts these investments to their fair value when a decline in market value is deemed to be other than temporary. If losses on these securities are considered to be other than temporary, the loss is recognized in earnings. Dividends are reported in current earnings as a component of Other operating expense, net in the consolidated statements of operations.

F-19

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(w) Litigation

The Company accrues for liabilities related to litigation matters when available information indicates that the liability is probable and the amount can be reasonably estimated. Legal costs, such as outside counsel fees and expenses, are charged to expense in the period incurred.

(x) Foreign currency translation

The Company’s reporting currency is the U.S. dollar. In most cases, non-U.S. based subsidiaries use their local currency as the functional currency for their respective business operations. Assets and liabilities of these operations are translated into U.S. dollars at end-of-period exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Resulting cumulative translation adjustments are recorded in “Foreign currency translation” in the consolidated statement of comprehensive income (loss).

Gains and losses from transactions denominated in foreign currencies other than the functional currency of the respective entity are included in the consolidated statements of operations in Other (income) expense, net.

(y) Reportable Segments

In the first quarter of 2020, the company changed the financial information that was regularly reviewed by the Chief Operating Decision Maker, which resulted in three geographically-based reportable segments: North America, EMEA and Greater China. Although all three segments are engaged in the marketing, distribution and sale of diagnostic instruments and assays for hospitals, laboratories and/or blood and plasma centers worldwide, each region is managed separately to better align with the market dynamics of the specific geographic region. See Note 20 “Segments and geographic information” for additional information on the Company’s identified reportable segments.

(z) New accounting guidance

Accounting pronouncements adopted during the fiscal year ended December 30, 2018

Revenue from contracts with customers

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity is to apply the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

F-20

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The Company adopted this new guidance on January 1, 2018 using the modified retrospective method and applying the practical expedient for all contracts not completed as of the date of adoption. The adoption of this guidance resulted in a cumulative net decrease of $11.9 million to opening accumulated deficit. Results for reporting periods beginning after December 31, 2017 are presented in accordance with the new guidance. Prior period amounts were not adjusted and are reported in accordance with legacy GAAP requirements under FASB ASC Topic 605, Revenue Recognition. See Note 5 – Revenue for additional details.

Statement of Cash Flows (Topic 230), Restricted Cash

In November 2016, the FASB issued ASU 2016-18, Restricted Cash. ASU 2016-18 provides guidance on the classification and presentation of restricted cash in the statement of cash flows which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

The Company adopted this standard during the fiscal year ended December 30, 2018 and as a result of adoption, the Company has included restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statement of cash flows. This change has been made for all consolidated statements of cash flows included in these consolidated financial statements.

Accounting pronouncements adopted during the fiscal year ended December 29, 2019

Accounting for leases

In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the previous leasing standard Topic 840. The main difference between previous U.S. GAAP and ASC 842 is the recognition of lease assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. A lessee is required to recognize in the statement of financial position a liability to make lease payments and a Right-of-use asset representing its right to use the underlying asset during the lease term. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria in the previous U.S. GAAP. The result of retaining a distinction between finance leases and operating leases is that the effect of leases on the income statement and the statement of cash flows is largely unchanged from previous U.S. GAAP. The accounting applied by a lessor is largely unchanged from that applied under previous U.S. GAAP.

The Company adopted ASU 2016-02 on December 31, 2018 using a modified retrospective approach, which does not require prior periods to be restated. The Company elected the “package” of practical expedients related to the identification and classification of leases that commenced before the effective date, not to apply the recognition requirements for short term leases, and to not separate lease and non-lease components. The adoption of this guidance resulted in the recognition of right-of-use asset $46.9 million and lease liabilities of $47.3 million. The lease liabilities included $14.5 million of current lease liabilities and $32.8 million in long-term lease liabilities. For more information, see Note 11—Leases.

F-21

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Derivatives and hedging (Topic 815), targeted improvements to accounting for hedging activities

In August 2017, the FASB issued Update No. 2017-12, Derivatives and Hedging. The new guidance amends the hedge accounting model in ASC 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments expand an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The Company adopted this guidance during the fiscal first quarter ended March 31, 2019, and the adoption did not have a material effect on the consolidated financial statements.

Recent accounting pronouncements not yet adopted

Financial instruments—credit losses (Topic 326)

In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. Update No. 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements.

Cloud computing

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not expect that the adoption of this standard will have a material impact on the Company’s consolidated financial statements.

Income taxes (Topic 740), simplifying the accounting for income taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intra-period tax allocations, interim-period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim period tax accounting. The guidance is effective for fiscal years beginning after December 15, 2020. Early adoption permitted. The Company is in the process of evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

F-22

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(4) Acquisition of Ortho-Clinical Diagnostics

The consideration related to the value of the Day 2 Countries that did not close on the Day 1 Closing Date was paid on the Day 1 Closing Date. Day 2 Country Payments (Receipts) are accounted for financial reporting purposes as an increase (decrease) in the consideration to be used in the application of acquisition accounting for the Day 2 Countries upon each respective Day 2 Closing. The change in consideration resulting from the Day 2 Country Payments resulted in a change to goodwill at the close of any or all of the closings of the Day 2 Countries. As of July 3, 2017, the Company has completed the acquisition of all Day 2 Countries.

Fiscal 2017 acquisitions

On July 3, 2017, the Company completed the acquisition of Day 2 Country operations in Brazil. The results of operations of Brazil are included in the Company’s financial statements immediately thereafter. The Company finalized the fair values of the net assets acquired and the purchase price adjustments for Brazil in the fiscal second quarter ended July 1, 2018. During the fiscal year ended December 30, 2018, the Company paid $8.3 million of purchase price adjustments due to Johnson & Johnson.

The following table summarizes the fair value of the net assets acquired for Brazil, adjusted for measurement period adjustments:



	At acquisition date (As previously reported)			Measurement period adjustments(a)			At acquisition date (As adjusted)
Prepaid consideration	$	36.3		$	0.5		$	36.8
Purchase price adjustment		7.5			2.3			9.8
Reduction in deferred revenue		(0.8	)		—			(0.8	)

Purchase Consideration		43.0			2.8			45.8

Inventories		6.0			—			6.0
Property, plant and equipment		12.7			—			12.7
Identifiable intangible assets (weighted average useful life of 10 years)		5.7			(0.3	)		5.4
Assumed liabilities		(0.7	)		0.7			—

Net assets acquired		23.7			0.4			24.1

Goodwill	$	19.3		$	2.4		$	21.7

(a)

Relate primarily to adjustments in Day 2 Country payments and working capital adjustments.

On January 2, 2017, the Company completed the acquisition of Day 2 Country operations in Chile, Colombia, Panama and Puerto Rico. The results of operations of Chile, Colombia, Panama and Puerto Rico are included in the Company’s financial statements immediately thereafter and Day 2 Country Payments related to these countries ceased. The Company also entered into distribution arrangements with third party distributors to transition the operations in Day 2 Countries Argentina, the Dominican Republic and Uruguay.

During the fiscal year ended December 31, 2017, the Company finalized the fair values of the net assets acquired and the purchase price adjustment for these Day 2 Countries of $10.8 million. The Company paid $10.0 million

F-23

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

and $0.5 million of purchase price adjustments during the fiscal year ended December 31, 2017 and December 30, 2018, respectively.

The following table summarizes the fair value of the net assets acquired, adjusted for measurement period adjustments:



	At acquisition date (As previously reported)			Measurement period adjustments(a)			At acquisition date (As adjusted)
Prepaid consideration	$	27.1		$	—		$	27.1
Purchase price adjustment		10.2			0.6			10.8
Reduction in deferred revenue		(2.6	)		—			(2.6	)

Purchase Consideration		34.7			0.6			35.3

Inventories		8.0			(0.1	)		7.9
Property, plant and equipment		13.1			(0.1	)		13.0
Identifiable intangible assets (weighted average useful life of 10 years)		11.1			(1.0	)		10.1
Deferred tax asset		—			2.5			2.5
Assumed liabilities		(0.5	)		0.1			(0.4	)

Net assets acquired		31.7			1.4			33.1

Goodwill	$	3.0		$	(0.8	)	$	2.2

(a)

Relate primarily to adjustments in Day 2 Country Payments and working capital adjustments.

(5) Revenue

Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606, or “ASC 606”) on a modified retrospective basis. ASC 606 is a comprehensive new revenue recognition model that requires the Company to recognize revenue in a manner which depicts the transfer of goods or services to its customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

Under ASC 606, revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services. The Company considers revenue to be earned when all of the following criteria are met: the Company has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or consideration the Company expects to receive for transferring the goods or providing services, is determinable; and the Company has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

F-24

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

the customer obtains control of the products, which occurs at a point in time. For instruments, the Company generally recognizes revenue upon installation and customer acceptance. The Company has determined that the installation services do not constitute a separate performance obligation. For assays, reagents and other consumables, the Company recognizes revenue upon shipment or delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time using a time-based model, which is consistent with the pattern in which the Company provides the services.

The Company also generates revenues from a limited number of contract manufacturing arrangements. Prior to the adoption of ASC 606, the Company recognized revenues related to its contract manufacturing arrangements at a point in time as the goods were shipped to customer, title and risk were transferred to the customer, the price was fixed or determinable and collection was reasonably assured. Under ASC 606, the Company recognizes revenues related to certain of these arrangements over time as the products are manufactured and the Company’s performance obligations have been satisfied under the terms of the contract because the Company has an enforceable right to payment and the products have no alternative use. This change resulted in revenue for certain of these arrangements being recognized earlier than under the previous guidance. The Company generally uses the cost-to-cost approach to measure the extent of progress towards completion of the performance obligation for these arrangements because it believes it best depicts the transfer of assets to the customer. Under the cost-to-cost approach, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Historically, adjustments made as a result of changes in the estimate of total costs to complete the performance obligation have been immaterial to the financial statements.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company may also enter into transactions that involve multiple performance obligations, such as the sale of products and related services. In accounting for these transactions, the Company allocates the consideration to the deliverables by use of the relative standalone selling price method.

A portion of the Company’s product revenue includes revenue earned under reagent rental programs which provide customers the right to use instruments at no separate cost to the customer in consideration for a multi-year agreement to purchase reagents, assays and consumables. For these arrangements, the contract consideration is allocated between the lease component related to the instruments and the non-lease component related to the reagents, assays and consumables on based on the relative standalone prices for each component. The cost of the instrument is capitalized within property and equipment, and is charged to cost of product revenue on a straight-line basis over the term of the minimum purchase agreement. Revenue related to the lease component is recognized over the lease term, normally five to seven years. Revenue earned under sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease. Revenue related to the non-lease component is recognized when control has transferred for the reagents, assays and consumables. Costs related to product sales are recognized at time of delivery. There was no impact to the Company’s consolidated financial statements upon transition to ASC 606 as a result of the Company’s reagent rental programs.

F-25

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Company’s arrangements with customers. Management’s estimates of rebates and discounts are determined using the expected value method and take into consideration historical experience, contractual and statutory requirements, and other relevant information such as forecasted activity. These reserves reflect the Company’s best estimate of the amount of consideration to which it is entitled. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant future reversal of cumulative revenue under the contract.

Adoption impact

The cumulative effect of applying the new guidance to contracts with customers that were not completed as of December 31, 2017 was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the consolidated balance sheet as of December 31, 2017:



	Previous U.S. GAAP December 31, 2017 (As reported)			Adjustments due to adoption of ASC 606			Balance as of December 31, 2017

Assets
Accounts receivable	$	349.8		$	11.8		$	361.6
Inventories		291.3			(10.6	)		280.7
Other current assets(a)		57.6			13.9			71.5
Deferred income taxes		4.2			(0.3	)		3.9

Liabilities and Stockholders’ Deficit
Accounts payable		180.7			2.9			183.6
Accumulated deficit		(1,312.0	)		11.9			(1,300.1	)

(a)

Adjustments to other current assets include a $15.8 million increase related to the Company’s contract asset and a $1.9 million reduction in other current assets.

The following table presents the effect of the adoption of ASC 606 on the consolidated balance sheet as of December 30, 2018:



	As reported			Balance without the adoption of ASC 606

Assets
Accounts receivable	$	332.0		$	330.3
Inventories		264.3			271.0
Other current assets		114.1			95.7
Deferred income taxes		4.0			4.5

Liabilities and Stockholders’ Deficit
Accounts payable		167.1			164.7
Accumulated deficit		(1,548.9	)		(1,559.4	)

F-26

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The following table presents the effect of the adoption of ASC 606 on the consolidated statement of operations for the fiscal year ended December 30, 2018:



	Fiscal year ended December 30, 2018
	As reported		Balance without the adoption of ASC 606
Net revenue	$	1,787.3	$	1,792.9
Cost of revenue		930.5		934.4
Other operating expense, net		71.2		71.7
Provision for income taxes		31.2		31.0
Net loss		248.8		247.4

Contract balances

Timing of revenue recognition may differ from timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (“contract asset”). Contract assets are included within other current assets or other assets in the Company’s consolidated balance sheet and are transferred to accounts receivable when the right to payment becomes unconditional. The balance of contract assets in the consolidated balance sheets were as follows:



	December 29, 2019		December 30, 2018
Other current assets	$	31.5	$	20.8
Other assets		2.0		—

Total Contract assets	$	33.5	$	20.8

The contract asset balance consists of the following components:

•

A customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $13.8 million as of December 29, 2019, of which $11.8 million was recorded within other current assets and $2.0 million was recorded within other assets. The balance of this contract asset was $0.0 million as of December 30, 2018.

•

Contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents, however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract, which allows the Company to record the related revenue. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $14.1 million and $16.4 million as of December 29, 2019 and December 30, 2018, respectively.

•

One of the Company’s contract manufacturing agreements where revenue is recognized as the products are manufactured. The balance of the contract asset related to this arrangement was $5.6 million and $4.4 million as of December 29, 2019 and December 30, 2018, respectively.

F-27

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The Company reviews contract assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. No impairment costs related to contract assets were recognized during the fiscal year ended December 29, 2019 and December 30, 2018, respectively.

The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). The Company’s contract liabilities consist of deferred revenue primarily related to customer service contracts. The Company classifies deferred revenue as current or noncurrent based on the timing of the transfer of control or performance of the service. The balance of the Company’s current deferred revenue was $36.3 million and $27.6 million as of December 29, 2019 and December 30, 2018, respectively. The Company has one arrangement with a customer that is expected to be recognized beyond one year. The balance of the deferred revenue included in long term liabilities was $6.9 million and $4.5 million as of December 29, 2019 and December 30, 2018, respectively, and was included in other liabilities in the consolidated balance sheet. The amount of deferred revenue as of December 30, 2018 that was recorded in revenue during the fiscal year ended December 29, 2019 was $25.8 million. The amount of deferred revenue as of December 31, 2017 that was recorded in revenue during the fiscal year ended December 30, 2018 was $23.4 million.

Disaggregation of revenue

The Company generates revenue in the following lines of business:

•

Clinical Laboratories—Focused on clinical chemistry and immunoassay instruments and tests to detect and monitor disease progression across a broad spectrum of therapeutic areas.

•

Transfusion Medicine—Focused on immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions and donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the United States.

•

Other Product—Other product revenue includes revenues primarily from contract manufacturing.

•

Collaborations and Other—The Company has entered into collaboration and license agreements pursuant to which the Company derives collaboration and royalty revenues.

The following table summarizes net revenue by line of business for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017:



	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Clinical Laboratories	$	1,142.3	$	1,102.5	$	1,097.9
Transfusion Medicine		598.0		616.1		598.7
Other Product		37.3		36.0		46.0
Collaborations and other revenue		23.9		32.7		39.1

Net Revenue	$	1,801.5	$	1,787.3	$	1,781.7

F-28

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The following table summarizes changes to the rebate reserves balances, which reduce accounts receivable, for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017:



	Balance at Beginning of Fiscal Year		Additions		Deductions			Balance at end of period

Rebate reserves
Fiscal Year ended December 29, 2019		30.6		207.0		(205.5	)		32.1
Fiscal Year ended December 30, 2018		40.1		183.9		(193.4	)		30.6
Fiscal Year ended December 31, 2017		27.0		171.8		(158.7	)		40.1

(a)

Primarily reflects payments of customer rebates.

(6) Inventories

The Company’s inventories were as follows:



	December 29, 2019		December 30, 2018
Raw materials and supplies	$	70.9	$	70.7
Goods in process		36.7		34.8
Finished goods		146.3		158.8

Total Inventories	$	253.9	$	264.3

When leased, instrument equipment is transferred from “Inventories” to “Property, plant and equipment” and depreciation commences. The Company transferred $118.6 million and $93.0 million during the fiscal years ended December 29, 2019 and December 30, 2018, respectively, from “Inventories” to “Property, plant and equipment, net.”

F-29

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(7) Property, plant and equipment, net

The Company’s property, plant and equipment and accumulated depreciation balances were as follows:



	December 29, 2019			December 30, 2018
Land and leasehold improvements	$	23.0		$	22.8
Buildings and building improvements		237.3			233.9
Machinery and equipment		400.3			360.3
Computer software and development costs		262.4			238.6
Customer leased instruments		616.1			535.9
Construction in progress		100.4			98.6

Total property, plant and equipment		1,639.5			1,490.1
Less: Accumulated depreciation		(791.3	)		(624.0	)

Net property, plant and equipment	$	848.2		$	866.1

Depreciation expense was $195.6 million, $203.4 million and $171.3 million for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. Depreciation expense for computer software and development costs was $38.4 million, $40.4 million and $35.9 million for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. The Company recognized a loss on disposal of fixed assets of $5.5 million, $4.5 million and $7.0 million during the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. Loss on disposals of fixed assets is either included within Costs of revenue or Other operating expense.

(8) Goodwill and other intangible assets

Goodwill

Changes in goodwill were as follows:



	Fiscal year ended
	December 29, 2019		December 30, 2018
Balance at the beginning of the year	$	561.5	$	581.1
Foreign currency translation		5.8		(19.6	)

Balance at the end of the year	$	567.3	$	561.5

On December 30, 2019, the Company established new reporting units aligned to our geographically-based reportable segments (see Note 20—Segments and geographic information).

F-30

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Identifiable intangible assets

The following table summarizes the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:



December 29, 2019	Gross carrying amount		Accumulated amortization			Net book value		Estimated useful lives
Technology	$	962.1	$	(326.3	)	$	635.8		10-15 years
Customer relationships		606.9		(275.2	)		331.7		5-12 years
Corporate tradename		163.3		(44.9	)		118.4		20 years
Other (including milestone payments)		205.5		(156.9	)		48.6		4-14 years

	$	1,937.8	$	(803.3	)	$	1,134.5



December 30, 2018	Gross carrying amount		Accumulated amortization			Net book value		Estimated useful lives
Technology	$	956.4	$	(259.2	)	$	697.2		10-15 years
Customer relationships		603.8		(221.3	)		382.5		5-12 years
Corporate tradename		162.3		(36.5	)		125.8		20 years
Other (including milestone payments)		201.6		(150.1	)		51.5		4-14 years

	$	1,924.1	$	(667.1	)	$	1,257.0

During the fiscal second quarter ended July 2, 2017, the Company revised the scope of an ongoing program to develop its next generation of dry slide technology and related instrument platforms in order to prioritize certain project deliverables and deprioritize other items. The Company also increased the estimated costs to obtain certain regulatory approvals in international markets for the next generation of dry slide technology. As a result, the Company performed an impairment test of its in-process research and development project during the fiscal second quarter ended July 2, 2017 based on the discounted estimated future cash flows using the relief from royalty method, which includes management’s estimates of future growth rates and discount rates. Based on the assessment, a noncash impairment charge of $11.0 million was recorded to write down the in-process research and development intangible asset to its estimated fair value. In July 2018, the in-process research and development project was completed upon the receipt of CE Mark on the related instrument. The Company performed a qualitative impairment assessment at the date of completion and determined there was no impairment. Accordingly, the $111.8 million carrying amount of the in-process research and development intangible asset was reclassified as developed technology and is subsequently being amortized over its estimated useful life of 15 years.

F-31

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

During the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, amortization expense of intangible assets was $131.7 million, $128.8 million and $162.0 million, respectively. The estimated amortization expense related to the fair value of acquired intangible assets for each of the succeeding five years is:



2020	$	131.1
2021		130.1
2022		130.1
2023		129.8
2024		127.7

(9) Other assets

The components of other assets were as follows:



	December 29, 2019		December 30, 2018
Indemnity receivables	$	101.3	$	133.7
Right-of-use asset		40.3		—
Equity investments		20.1		19.5
Indirect tax benefit		16.8		16.2
Restricted cash		12.0		18.2
Lease receivable		6.3		9.6
Deposits and advances		5.2		5.7
Derivatives		—		20.1
Other		9.7		9.0

Total Other Assets	$	211.7	$	232.0

Equity investments

In January 2015, the Company entered into an exclusive agreement with commercial-stage diagnostics company Quotient Limited (“Quotient”) to distribute and sell Quotient’s transfusion diagnostics platform MosaiQ^™. See further discussion of the Quotient relationship in Note 14—Collaborations and Other Relationships. Simultaneous with the establishment of the Distribution and Supply Agreement, the Company invested $25.0 million in Quotient consisting of (i) 444,445 common shares with a fair value of $5.8 million and (ii) 666,665 cumulative redeemable preferred shares carrying a 7% annual dividend with a fair value of $11.7 million and a redemption value of $15.0 million. The excess of the cost of the total investment over the fair value of the equity acquired at the date of the investment was determined to be $7.5 million and was recorded as component of research and development expense in the fiscal year ended January 3, 2016. As of December 29, 2019, the investment in common shares represented approximately 0.7% of outstanding Quotient shares.

In July 2014, the Company entered into a strategic partnership with Astute Medical Inc. (“Astute”) under which the Company became the exclusive commercial partner for the distribution of Astute’s NephroCheck^® Test and

F-32

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Astute140^® Meter in certain markets in Europe and, pending clearance by the Food and Drug Administration, the United States. The Company made a total investment in Astute common stock of $20.2 million, which the Company recorded as a cost-method investment. The Company recognizes an impairment loss when a decline in the fair value of its investments below the cost basis is determined to be other-than-temporary. Factors considered in determining whether a loss is temporary include the length of time and extent to which the market value has been less than cost, the financial condition and near-term prospects of the investee, extent of the loss related to credit of the issuer, the expected cash flows from the investment, the intent to sell the investment and whether or not the Company will be required to sell the security before recovery. During the fiscal year ended December 31, 2017, based on the Company’s impairment assessment of its investments, it determined that the carrying value of its investment in Astute was not recoverable based on a review of the factors noted above. Accordingly, the Company recorded a noncash impairment charge of $20.2 million, which is included in other operating expense, net, in the consolidated statement of operations for the fiscal year ended December 31, 2017.

Indemnity receivables

The Acquisition Agreement included indemnification provisions with respect to certain tax liabilities. The Acquisition Agreement generally provided that Johnson & Johnson retained all income tax liabilities accrued as of the date of the Acquisition, including reserves for unrecognized tax benefits.

(10) Borrowings

As of December 29, 2019 and December 30, 2018, the components of borrowings were:



	December 29, 2019			December 30, 2018
Senior Secured Credit Facilities
Term Loan	$	2,243.6		$	2,290.1
Revolving Credit Facility		—			11.5
Notes		1,300.0			1,300.0
Accounts Receivable Financing		75.0			75.0
Sale and Leaseback Financing		20.5			20.5
Capital lease obligation		2.6			4.9
Other short-term borrowings		1.0			3.7
Other long-term borrowings		4.6			2.8
Unamortized deferred financing costs		(34.6	)		(43.1	)
Unamortized original issue discount		(13.6	)		(15.9	)

Total borrowings		3,599.1			3,649.5
Less: Current portion		(156.7	)		(159.7	)

Long-term borrowings	$	3,442.4		$	3,489.8

F-33

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Senior secured credit facilities

On June 30, 2014, LuxCo, as “Lux Borrower”, and its indirect wholly owned subsidiary, Ortho U.S., as “U.S. Borrower,” entered into the Senior Secured Credit Facilities comprising a $2,175.0 million senior secured U.S. dollar denominated term loan (the “Term Loan”) and a $350.0 million senior secured multi-currency revolving facility (the “Revolving Credit Facility”).

On June 6, 2017, the Company amended the credit agreement governing its Senior Secured Credit Facilities to, among other amendments, provide for an additional loan of $200.0 million (the “Incremental Term Loan”). This was accounted for as a modification of the Company’s existing indebtedness. The net proceeds of approximately $197.6 million were used primarily to reduce the outstanding borrowings on the Company’s existing Revolving Credit Facility and for general corporate purposes.

On June 8, 2018, the Company entered into a second amendment of its Senior Secured Credit Facilities (“the Second Amendment”). The amended Senior Secured Credit Facilities refinanced the existing Term Loan, increased the Term Loan balance to $2,325.0 million and extended the maturity date from June 30, 2021 to June 30, 2025. The amendment also extended the maturity of the Revolving Credit Facility from June 30, 2021 to June 30, 2023. The maturities of the Term Loan and Revolving Credit Facility accelerate to February 15, 2022 and January 15, 2022, respectively, should (i) a Qualified IPO not occur and (ii) the aggregate principal amount of Senior Notes outstanding exceeds $500.0 million, in each case as of January 15, 2022. Certain terms of the financial covenant were also amended. In addition, the amendment also lowered the applicable interest rates on the Term Loan and Revolving Credit Facility.

The Company accounted for the portion of lenders whose participation in the Senior Secured Credit Facilities terminated on June 8, 2018 as an extinguishment of debt. The remaining lenders that continued their participation in the Term Loan and the extension of the Revolving Credit Facility was accounted for as a modification of the Company’s existing indebtedness. During the fiscal year ended December 30, 2018, the Company recorded a $2.1 million loss on extinguishment of debt included as a component of “Other expense (income), net”, primarily related to unamortized debt issuance costs and investor discount costs. During the fiscal year ended December 30, 2018, the Company expensed $18.5 million of debt refinancing costs, included in “Other operating expense, net” in the Consolidated statements of operations.

Costs of $57.5 million related to the issuance of the Term Loan are recorded as a reduction of the principal amount of the borrowings and are being amortized using the effective interest method as a component of interest expense over the life of the Senior Secured Credit Facilities. As of December 29, 2019 and December 30, 2018, the remaining balance of deferred financing costs related to the Term Loan was $20.9 million and $24.4 million, respectively.

Costs of $9.2 million related to the establishment of the Revolving Credit Facility are recorded as “Other assets” and are being amortized on a straight-line basis over the term of the Revolving Credit Facility. Costs of $0.5 million related to the First Amendment of the Revolving Credit Facility were recorded as “Other assets” and are being amortized on a straight-line basis over the term of the amended Revolving Credit Facility. The Company also incurred lender fees and third-party fees of $5.0 million related to the Second Amendment of the Revolving Credit Facility, which was included in “Other assets” and are being amortized on a straight-line basis over the term of the amended Revolving Credit Facility. As of December 29, 2019 and December 30, 2018, the

F-34

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

remaining unamortized balance related to the Revolving Credit Facility was $4.8 million and $6.1 million, respectively. The effective interest rate of the Term Loan as of December 29, 2019 is 5.65%.

Original issue discount of $21.8 million related to the Senior Secured Credit Facilities is recorded as a reduction of the principal amount of the borrowings and is amortized using the effective interest method as a component of interest expense over the life of the Senior Secured Credit Facilities. Costs of $1.9 million related to the Incremental Term Loan reduced the principal amount of the borrowings, and are being amortized using the effective interest method as a component of interest expense over the life of the Senior Secured Credit Facilities. The Company incurred original issue discount costs of $5.8 million related to the Second Amendment of the Term Loan, which were capitalized are being amortized using the effective interest method as a component of interest expense over the life of the Term Loan. As of December 29, 2019 and December 30, 2018, the remaining unamortized balance was $13.4 million and $15.9, respectively.

As of December 29, 2019, there was no outstanding balance under the Revolving Credit Facility and letters of credit issued under the Revolving Credit Facility totaled $34.6 million, which reduced the availability under the Revolving Credit Facility to $315.4 million. The Senior Secured Credit Facilities are subject to various covenants that may restrict the Company’s ability to borrow on available credit facilities and future financing arrangements or require the Company to remain below a specific credit coverage threshold as indicated in our debt agreements.

Significant terms of the senior secured credit facilities

The following table provides an overview of the significant terms of the Senior Secured Credit Facilities:




Borrowers:		Ortho-Clinical Diagnostics S.A., as “Lux Borrower”, and Ortho-Clinical Diagnostics, Inc., as “U.S. Borrower”

Facilities:		Term Loan Facility: $2,325.0 million Revolving Credit Facility: $350.0 million (multi-currency sublimit of $150.0 million and letter of credit sublimit of $100.0 million)

Incremental Facility Amount:		An aggregate of (i) $375.0 million of incremental term or revolving facilities plus (ii) an unlimited amount so long as on a pro-forma basis First Lien Leverage Ratio (as defined in the Senior Secured Credit Facilities) does not exceed 4.00:1.00

Guarantors:		Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l. (“Holdings”), the direct subsidiary of the Company, and each of Holdings’ current and future Restricted Subsidiaries (as defined in the Senior


		Secured Credit Facilities) (subject to local law and certain other exceptions)

F-35

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)



Security:		First priority lien on substantially all tangible and intangible assets of Holdings and each subsidiary guarantor (subject to certain exceptions)

Term (Maturity Date):		Term Loan : June 30, 2025 Revolving Credit Facility: June 30, 2023

Interest on Euro- currency Rate Loans		In the case of Eurocurrency Rate Loans (as defined in the Senior Secured Credit Facilities), the Adjusted Eurocurrency Rate (as defined in the Senior Secured Credit Facilities) applicable to the currency in which the Eurocurrency Rate Loan is incurred which is subject to a floor of 1.00%, plus an applicable rate as follows: • 3.25% per annum—Term Loan (with step down to 3.00% when First Lien Leverage Ratio is less than or equal to 3.75:1.00) • 3.00% per annum—Revolver Loans (and Letters of Credit issued thereunder) (with steps down to 2.75% and 2.50% when First Lien Leverage Ratio is less than 3.50:1.00 and 3.00:1.00, respectively) • Rates with respect to Term Loans shall decrease by 25 basis points after the consummation of a Qualified IPO

Interest on Base Rate Loans		In the case of Base Rate Loans (as defined in the Senior Secured Credit Facilities), the greater of (i) the Federal Funds Rate effective from time to time plus ¹/₂ of 1%, (ii) the agent’s Prime Lending Rate (as defined in the Senior Secured Credit Facilities) in effect from time to time, (iii) the Adjusted Eurocurrency Rate (as defined in the Senior Secured Credit Facilities) for Eurocurrency Rate Loans denominated in US dollars plus 1% and (iv) 2.00%; plus an applicable rate as follows: • 2.25% per annum—Term Loan (with step down to 2.00% when First Lien Leverage Ratio is less than or equal to 3.75:1.00) • 2.00% per annum—Revolver Loans (and Letters of Credit issued thereunder) (with step downs to

F-36

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)


		1.75% and 1.50% when First Lien Leverage Ratio is less than 3.50:1.00 and 3.00:1.00, respectively) • Rates with respect to Term Loans shall decrease by 25 basis points after the consummation of a Qualified IPO

Fees:		Unused Revolving Credit Facility Commitment Fee: 0.50% per annum (with a step down to 0.375% when the First Lien Net Leverage Ratio is less than 2.50:1.00)

Repayment of Principal:		Term Loan: 1.00% of initial principal amount on the last business day of fiscal quarter ending September 30, 2018 0.50% of initial principal amount on the last business day of each fiscal quarter through December 31, 2019 0.625% of initial principal amount on the last business day of each fiscal quarter through June 30, 2025

Optional Prepayments:		Indebtedness under the Senior Secured Credit Facilities may be voluntarily prepaid in whole or in part, in minimum amounts, subject to make whole provisions set forth in the Senior Secured Credit Facilities

Mandatory Prepayments:		• 100% of net cash proceeds of asset sales in excess of $10.0 million or $25.0 million in any fiscal year, subject to reinvestment rights

		• 100% of debt issuances (not otherwise permitted by the Senior Secured Credit Facilities)

		• 50% of Excess Cash Flow (as defined in the Senior Secured Credit Facilities) with step downs to 25% and 0% when First Lien Leverage Ratio is less than 3.00:1.00 and 2.50:1.00, respectively

Financial Covenants:		The Company must maintain a Maximum First Lien Leverage Ratio of 5.00:1.00 for each fiscal quarter, if more than 30% of the Revolving Credit Facility (including letters of credit) is outstanding at the end of a fiscal quarter. On January 7, 2020, the Maximum First Lien Leverage Ratio was amended to (i) 6.00:1.00 for each fiscal quarter ending after the Third Amendment Effective Date and on or prior to June 30, 2021, (ii) 5.50:1.00 for each fiscal quarter

F-37

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)



		ending after June 30, 2021 and on or prior to September 30, 2022 and (iii) 5.00:1:00 for each fiscal quarter ending thereafter. Maximum First Lien leverage Ratio is calculated using consolidated funded first lien indebtedness (as defined in the Senior Secured Credit Facilities) of the Borrower Parties for such period divided by consolidated EBITDA (as defined in the Senior Secured Credit Facilities) of the Borrower Parties for the four fiscal quarter period most recently then ended for which financial statements have been delivered.

Negative Covenants:		The Senior Secured Credit Facilities include certain negative covenants restricting or limiting the ability of the borrowers and their material subsidiaries to, among other things: declare dividends; repurchase equity interests of the parent or other restricted payments; prepay subordinated debt; make loans, acquisitions, capital contributions and other investments; engage in mergers, consolidations, liquidations and dissolutions; sell assets; incur additional debt; incur liens on property; dispose of assets; and enter into transactions with affiliates.

Significant terms of the notes

On May 16, 2014, Lux Borrower, as “Lux Issuer”, and Ortho U.S, as “US Issuer” (collectively the “Issuers”), issued the Notes and related guarantees thereof and the proceeds were placed into escrow. On the Day 1 Closing Date, the proceeds of the Notes were released from escrow and, together with the Equity Contribution and the proceeds from borrowings under the Term Loan Facility, were used to fund the Acquisition. The Notes were sold at par and are due May 15, 2022. The Notes bear interest at 6.625% and interest is payable semi-annually on May 15 and November 15. Costs related to the issuance of the Notes of $36.8 million are recorded as a reduction of the principal amount of the borrowings and are amortized using the effective interest rate method as a component of interest expense over the life of the Notes. As of December 29, 2019 and December 30, 2018, the remaining unamortized balance was $13.4 million, and $18.5 million, respectively. The effective interest rate on the Notes is 7.27%.

On or after January 1, 2019, the Company has the option to redeem all or part of the Notes at 100% of the principal amount.

F-38

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

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

The indebtedness evidenced by the Notes is senior unsecured indebtedness of the Issuers, is senior in right of payment to all future subordinated indebtedness of the Issuers and is equal in right of payment to all existing and future senior indebtedness of the Issuers. The Notes are effectively subordinated to any secured indebtedness of the Issuers (including indebtedness of the Issuers outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness. The Notes are unconditionally guaranteed on a senior basis by certain of the Issuers’ subsidiaries.

The indentures governing the Notes contain covenants that restrict the ability of the Issuers and their subsidiaries to, among other things, incur additional debt, make certain payments including payment of dividends or repurchase equity interest of the Issuers, make loans or acquisitions or capital contributions and certain investments, incur certain liens, sell assets, merge or consolidate or liquidate other entities, and enter into transactions with affiliates.

Sale and leaseback financing

In June 2016, the Company entered into a sale-leaseback financing arrangement with a third-party financing company (Buyer-lessor) related to specific property and equipment of the Company. The property and equipment were sold for $36.3 million and leased back over an initial term of two years. The monthly lease payments are $1.5 million until the equipment is repurchased or the lease is terminated. At the end of the initial term, the Company can repurchase the property and equipment at a price to be negotiated with the Buyer-lessor or terminate the lease arrangement, return the property and (possibly) enter into a new lease agreement. During the fiscal second quarter ended July 1, 2018, Ortho gave notice to the Buyer-lessor that it intends to negotiate with the Buyer-lessor the purchase of the property and equipment at the end of the initial term and have had discussions on negotiating the repurchase price for the property and equipment. The Company and the Buyer-lessor have been unable to agree on a repurchase price for the property and equipment and are currently involved in legal proceedings with respect to the lease arrangement. According to the wording of the agreement and subject to certain legal interpretations, if the parties do not reach an agreement to purchase the property and equipment at the end of the initial term, the lease will automatically renew for another year, afterwards the lease will automatically be renewed for successive 6-month periods, provided that each of the Company and the Buyer-lessor have a right to terminate the lease 30 days prior to the end of each 6-month renewal period. A security deposit for the leaseback was retained by the third-party financing company and will be refunded to the Company at the end of the lease term. The balance of the security deposit was $9.1 million and $9.1 million as of December 29, 2019 and December 30, 2018, respectively, and was included in other current assets in the consolidated balance sheet. The transaction did not meet the criteria for sale-leaseback accounting as the security deposit constitutes a continuing involvement. Therefore, the Company is accounting for this arrangement as a financing over 42 months and recorded a financing obligation amounting to $36.3 million at inception. As a result of the Company’s adoption of ASC Topic 842 on December 31, 2018, the Company reassessed its accounting treatment of this arrangement and concluded that this arrangement continues to be recorded as a financing obligation.

F-39

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Accounts receivable financing

In September 2016, the Company entered into a three-year accounts receivable financing program (the “Financing Program”) with a financial institution. The Financing Program is secured by receivables from the Ortho U.S. business that are sold or contributed to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary’s sole business consists of the purchase or receipt of the receivables and subsequent granting of a security interest to the financial institution under the program, and its assets are available first to satisfy obligations and are not available to pay creditors of the Company’s other legal entities. Under the Financing Program, the Company may borrow up to the lower of $75 million or 85% of the accounts receivable borrowing base.

At December 29, 2019, the accounts receivable borrowing base was $90.7 million. Interest on outstanding borrowing under the Financing Program is charged based on a per annum rate equal to LIBOR Rate (with a floor of zero percent and as defined in the agreement) plus the LIBOR Rate Margin (2.25 percentage points) if the related loan is a LIBOR Rate Loan. Otherwise, the per annum rate is equal to a Base Rate (as defined in the agreement) plus the Base Rate Margin (1.25 percentage points). Interest is due and payable, in arrears, on the first day of each month. The Financing Program is also subject to termination under standard events of default as defined. Costs related to the Financing Program of $1.0 million are recorded as a reduction of the principal amount of the borrowings and are amortized using the effective interest method as a component of interest expense over the life of the Financing Program. The remaining unamortized balance was $0.3 million and $0.2 million as of December 29, 2019 and December 30, 2018, respectively. Outstanding borrowings under the Financing program bore interest at 2.77% and 2.77% per annum as of December 29, 2019 and December 30, 2018, respectively.

In addition to customary representations, warranties and affirmative and negative covenants, the program is subject to interest coverage and minimum liquidity covenants. As of December 29, 2019, the Company was in full compliance with all debt covenant requirements.

On January 24, 2019, the Company extended the maturity of the Financing Program from September 23, 2019 to January 24, 2022. In addition, the Company amended its Financing Program terms to increase availability under the terms of the program within the existing $75 million limit of the agreement.

Capital lease obligation

During the fiscal year ended January 3, 2016, the Company relocated its U.S. distribution operations from a Johnson & Johnson facility to a new location. In connection with the new distribution facility, the Company entered into a capital lease with an initial obligation of $9.7 million. The capital lease is payable in monthly payments of $0.2 million over 60 months.

F-40

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Interest expense, net

The following table provides the detail of interest expense, net for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017.



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017

Interest expense:
Term Loan	$	128.6		$	127.6		$	110.7
Revolving Credit Facility		4.2			6.6			9.0
Notes		85.9			86.1			85.9
Accounts Receivable Financing		5.5			3.1			2.6

Amortization of:
Deferred financing costs		10.1			12.0			14.4
Original issue discount		2.3			2.8			3.3
Capital lease obligation and other		2.9			6.6			10.8
Derivative instruments		(8.0	)		(8.9	)		3.7
Less: Capitalized interest		(0.1	)		(0.3	)		(0.6	)

Interest expense, net	$	231.4		$	235.6		$	239.8

Future repayments

The following table provides a schedule of required future repayments of all borrowings outstanding on December 29, 2019.



2020	$	157.1
2021		59.6
2022		1,359.6
2023		59.2
2024		58.8
Thereafter(1)		1,953.0

	$	3,647.3

(1)

Amounts included primarily relate to the Term Loan, the maturity of which accelerates to February 15, 2022, should (i) a Qualified IPO not occur and (ii) the aggregate principal amount of Senior Notes outstanding exceeds $500.0 million, in each case as of January 15, 2022.

Interest paid during the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017 was $189.7 million, $218.8 million and $222.3 million, respectively.

2028 Notes

In January 2020, the Company issued $675 million aggregate principal amount of the 2028 Notes, which bear interest at a rate of 7.250% per annum, which is payable semi-annually in arrears on February 1 and August 1 of

F-41

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

each year, commencing August 1, 2020. Concurrent with the issuance of the $675 million aggregate principal amount of 2028 Notes, the Company entered into a $350 million U.S. Dollar equivalent swap to Japanese Yen-denominated interest at a weighted average rate of 5.56%, for a five-year term. The 2028 Notes will mature on February 1, 2028. The 2028 Notes are the Company’s senior unsecured obligations and the 2028 Notes and the guarantees thereof rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2022 Notes. The 2028 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities and the Financing Program, to the extent of the value of the assets securing such debt. In addition, the 2028 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Company’s non-guarantor subsidiaries.

In January 2020, the Company entered into a Euro-denominated senior secured term loan facility in an amount equal to the Euro-equivalent of $375 million, which bears interest at a rate of Euribor + 350 basis points per annum. The Euro Term Loan Facility will mature on June 30, 2025; provided that, to the extent (x) a qualified IPO has not been consummated prior to January 15, 2022 and (y) the aggregate principal amount of the 2022 Notes (and any refinancing indebtedness with respect thereto that matures on or prior to June 30, 2025) outstanding as of January 15, 2022 is more than $500 million, the Euro Term Loan Facility will mature on February 15, 2022. The Euro Term Loan Facility is expected to amortize in equal quarterly installments in an amount equal to 1.00% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity.

The purpose of the new financings was to refinance the Company’s $1.3 billion 6.625% 2022 Notes. On January 28, 2020, the Company used the net proceeds from the new financings, after payment of fees and expenses, to fund the redemption and discharge of $1.0 billion of the 2022 Notes.

(11) Leases

Lessee

The Company has operating leases for office space, warehouse and manufacturing space, vehicles and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2019 and later, the Company accounts for the lease components and the non-lease components as a single lease component with the exception for the third-party logistics arrangements. The Company’s leases have remaining lease terms of one year to approximately 18 years, some of which may include options to extend the leases for up to 5 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees.

The Company evaluates contracts at inception to determine whether they contain a lease, where the Company obtains the right to control an identified asset. The right-of-use assets and related liabilities for operating leases are included in other assets, accrued expenses, and other long-term liabilities in the consolidated balance sheet as of December 29, 2019.

F-42

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The weighted average discount rate utilized on the Company’s operating and finance lease liabilities as of December 30, 2018 was 9.4%. The following table presents supplemental balance sheet information related to the Company’s operating and finance leases.

The components of lease cost for the year ended December 29, 2019 were:



(in millions)	December 29, 2019
Operating lease cost	$	22.2

Finance lease cost:
Amortization of right-of-use assets		2.1
Interest on lease liabilities		0.4
Variable lease cost		2.0

Lease cost	$	26.7

The following table contains supplemental cash flow information related to leases for the year ended December 29, 2019:



(in millions)	December 29, 2019

Cash paid for amounts included in the measurement of lease liabilities:
Net operating cash flows from operating leases	$	24.2
Net operating cash flows from finance leases		0.4
Net financing cash flows from finance leases		2.3

Right-of-use operating lease assets obtained in exchange for lease obligations	$	12.8

There were no material lease transactions that we entered into but have not yet commenced as of December 29, 2019.

F-43

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Supplemental balance sheet information related to leases as of December 29, 2019 includes:



(in millions)	December 29, 2019

Operating leases ROU assets
Other assets	$	40.3


Operating lease liabilities
Accrued liabilities	$	16.3
Other liabilities		24.6

Total operating lease liabilities	$	40.9


Finance leases ROU assets
Property, plant and equipment, at cost	$	11.0
Accumulated depreciation		(8.8	)

Property, plant and equipment, net	$	2.2


Finance lease liabilities
Current portion of borrowings	$	1.3
Long-term borrowings		1.3

Total finance lease liabilities	$	2.6

Lease term and discount rates as of December 29, 2019 were:



	December 29, 2019

Weighted-average remaining lease term (years)
Operating leases		3.1
Finance leases		2.9

Weighted-average discount rate
Operating leases		9.2%
Finance leases		13.0%

F-44

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Maturities of operating and finance lease liabilities as of December 29, 2019 were:



	Finance leases		Operating leases
2020	$	1.3	$	20.3
2021		0.3		15.2
2022		0.3		6.4
2023		0.4		2.6
2024		0.3		0.8
Thereafter		—		2.0

Total minimum lease payments	$	2.6	$	47.3
Less: imputed interest		—		6.4

Present value of lease liabilities	$	2.6	$	40.9

Maturities of operating and finance lease liabilities as of December 30, 2018 were:



(in millions)	Finance leases		Operating leases
2019	$	2.3	$	19.4
2020		1.3		10.7
2021		0.3		6.6
2022		0.3		2.0
2023		0.4		1.3
Thereafter		0.3		2.0

Total minimum lease payments	$	4.9	$	42.0

For the years ended December 30, 2018 and 20 December 31, 2017, rent expense was $20.8 million and $17.2 million, respectively.

Lessor

Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. These contractual arrangements are subject to termination provisions which are evaluated in determining the lease term for lease accounting purposes. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Variable lease revenue and fixed lease revenue represented approximately 4% and 1%, respectively, of the Company’s consolidated revenue for the fiscal year ended December 29, 2019.

The Company’s reagent rental agreements may require the customers to commit to making minimum reagent purchases over the lease term, which is typically 5 years. In certain jurisdictions, the Company has concluded

F-45

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

that these minimum purchase commitments represent legally enforceable rights pursuant to the lease. If a contract contains a legally enforceable minimum purchase commitment, the minimums are considered in-substance fixed lease payments and the Company will evaluate the probability of collecting the lease payments. If collection is probable, for operating leases, the lease payments will be recognized on a straight-line basis over the lease term. If collection is not probable, for reagent rental agreements classified as operating leases, the lease income recognized by the Company is limited to the lesser of the income that would be recognized on a straight-line basis over the lease term or the lease payments, including variable lease payments, that have been collected from the lessee. In certain other jurisdictions, the Company has concluded that the minimum purchase commitments within the Company’s reagent rental agreements are not legally enforceable and, therefore, the entire contract consideration is concluded to be variable. The Company recognizes the variable payments that relate to the lease component as rental income when the variability is resolved, and the underlying reagent sale occurs.

As of December 29, 2019 and December 30, 2018, the Company’s equipment leased to customers under operating-type leases was:



	December 29, 2019			December 30, 2018
Customer leased instruments	$	616.1		$	535.9
Less: Accumulated depreciation		(342.9	)		(267.1	)

Total Customer leased instruments, net	$	273.2		$	268.8

Depreciation expense related to customer leased instruments was $103.1 million, $102.0 million and $79.6 million for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. The depreciation expense related to customer leased instruments is recorded in “Cost of revenue” in the consolidated statements of operations. The depreciation expense related to customer leased instruments is a component of total depreciation expense presented in Note 7 – Property, Plant and Equipment, Net.

(12) Accrued liabilities

Accrued liabilities included in current liabilities consist of the following:



	December 29, 2019		December 30, 2018
Accrued compensation and employee-related obligations	$	96.7	$	83.2
Accrued interest		46.1		14.9
Income taxes payable		37.9		34.0
Accrued commissions and rebates		18.8		18.6
Current portion of operating lease liabilities		16.3		—
Accrued taxes other than income		14.2		10.9
Accrued IT-related costs		4.4		5.0
Other accrued liabilities		56.9		57.0

Total Accrued Liabilities	$	291.3	$	223.6

F-46

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(13) Restructuring costs

Restructuring costs (credit) for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, are presented in the consolidated statements of operations in the following captions.



	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Cost of revenue	$	11.7	$	32.5	$	13.4
Other operating expense (income), net		0.2		3.6		(1.4	)

Total restructuring costs	$	11.9	$	36.1	$	12.0

The following table summarizes the activities related to restructuring and related reserves for the fiscal years ended December 29, 2019 and December 30, 2018:



	Severance and employee benefits			Other			Total
Balance at December 31, 2017	$	7.1		$	2.7		$	9.8
Restructuring costs		2.8			33.3			36.1
Payments made		(1.8	)		(24.2	)		(26.0	)
Costs charged against assets		—			(10.8	)		(10.8	)

Balance at December 30, 2018	$	8.1		$	1.0		$	9.1
Restructuring costs		—			11.9			11.9
Payments made		(5.7	)		(3.3	)		(9.0	)
Costs charged against assets		—			(3.6	)		(3.6	)

Balance at December 29, 2019	$	2.4		$	6.0		$	8.4

As of December 29, 2019, the Company has several initiatives intended to strengthen operational performance and to support building capabilities to enable us to win in the marketplace. These restructuring activities to improve operational performance are primarily cost reduction and productivity improvement initiatives in procurement, manufacturing, supply chain and logistics.

During the fiscal year ended January 3, 2016, the Company announced that it will outsource its equipment manufacturing operations in Rochester, New York and refurbishment operations in Neckargemund, Germany to a third-party contract manufacturing company. These initiatives were substantially completed during fiscal year 2019, with the majority of the related cash payments being made through early 2020. The Company incurred $7.6 million and $75.4 million of charges during the fiscal year ended December 29, 2019 and cumulative to date, respectively, related to these initiatives. The Company made cash payments of $4.4 million during the fiscal year ended December 29, 2019 and have made cumulative cash payments of $63.8 million to date, respectively, related to these initiatives.

F-47

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

that the implementation of these initiatives will result in pre-tax charges of approximately $22 million, comprised of approximately $12 million in accelerated depreciation, $5 million in severance charges and $5 million in other facility-related costs. These initiatives are expected to be substantially completed by the end of fiscal 2020, with the majority of cash payments being made by the end of fiscal 2020. The Company incurred $4.2 million and $18.9 million of charges during the fiscal year ended December 29, 2019 and cumulative to date, respectively, related to these initiatives. The Company made cash payments of $4.6 million during the fiscal year ended December 29, 2019 and cumulative to date.

The Company currently estimates payments of $8.4 million will be made over the following twelve months and are included as components of “Accounts Payable” and “Accrued liabilities” in the consolidated balance sheet as of December 29, 2019. The Company has incurred restructuring costs of $11.9 million and $94.5 million during the fiscal year ended December 29, 2019 and cumulative to date, respectively.

(14) Collaborations and other relationships

In the normal course of business, the Company has entered into various collaboration arrangements which provide the Company with rights to develop, produce and market products using certain know-how, technology and patent rights maintained by the Company’s collaborative partners. The arrangements are often entered into in order to share risks and rewards related to a specific program or product. The Company’s collaborative arrangements include agreements with respect to transition services and a number of on-going relationships.

Grifols / Novartis Vaccines and Diagnostics, Inc.

In 1989, Ortho Diagnostics Systems Inc. (now Ortho U.S.) and Chiron Corporation (a predecessor in interest to Novartis Vaccines and Diagnostics, Inc. (“Novartis”) entered into a 50-year collaboration arrangement (the “Joint Business”) to pursue income generating opportunities through the development of certain intellectual properties (“IP”). In January 2014, Novartis transferred its interest in the Joint Business to Grifols Diagnostic Solutions, Inc. (“Grifols”). The transfer to Grifols has not altered the existing structure or operations of the Joint Business. The Company’s portion of the pre-tax net profit shared under the Joint Business was $70.7 million, $68.7 million and $86.4 million during the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively.

Quotient limited

In January 2015, the Company entered into an exclusive agreement with Quotient, a commercial-stage diagnostics company, to distribute and sell Quotient’s transfusion diagnostics platform MosaiQ^™. Under the terms of a Distribution and Supply Agreement, Quotient is responsible for the development and launch of MosaiQ^™, while the Company will leverage its worldwide commercial capabilities to sell the product to customers. The Company has exclusive rights to distribute MosaiQ^™ for the global patient testing market (for blood grouping) and the donor testing market in the developing world and Japan (for blood grouping and serological disease screening). Quotient retains all rights to commercialize MosaiQ^™ in the developed world (excluding Japan) for the donor testing market. On November 27, 2019, Quotient sent the Company a notice purporting to terminate the Agreement effective December 27, 2019. The Company disputes Quotient’s right to

F-48

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

terminate the Agreement between Ortho and Quotient and has commenced an arbitration challenging the termination. Under the Agreement, the Company is obligated to make payments to Quotient as certain milestones are achieved in the amount of $59 million. The Company does not anticipate making any such payments in 2020 and the future timing of when such payments would be made, if ever, is unclear at this time.

On December 23, 2019, Ortho and Quotient entered into an agreement under which both parties agreed, while the arbitration is pending, not to enter into any agreement under which Quotient would grant rights to commercialize products that overlap with Ortho’s rights under the agreement without thirty days’ prior written notice to Ortho. Such thirty day notice will give Ortho the ability to file for injunctive relief should Quotient intend to enter into an agreement with a third party that would limit Ortho’s bargained for rights under the agreement.

During the fiscal years ended December 29, 2019 and December 30, 2018 the Company recognized $0.3 million and $0.2 million in sales to Quotient. During the fiscal year December 31, 2017, sales to Quotient were not material. The Company also purchased inventories from Quotient amounting to $20.3 million, $11.9 million and $10.0 million for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively.

(15) Long-term employee benefits

Defined benefit plans

In connection with the Acquisition, the Company assumed certain defined benefit plan obligations related to employees of non-U.S. subsidiaries and acquired certain related plan assets for current employees of the Company’s subsidiaries.

Other postemployment benefits

In addition to the defined benefit obligations assumed in connection with the Acquisition, on June 30, 2014, the Company implemented a replacement retiree health care reimbursement plan for certain U.S. employees. The plan is funded on a pay-as-you-go basis and not accepting new participants. In accordance with ASC 715, Compensation – Retirement Benefits, the amount of the accumulated benefit obligation on the initiation date was accounted for as prior service cost and was deferred as a component of accumulated other comprehensive income (“AOCI”) and amortized over 5 years. The Company also maintains one non-U.S. post-employment benefit plan.

During the fiscal year ended December 30, 2018, the Company reduced the benefits provided to certain U.S. employees related to its replacement retiree health care reimbursement plan, resulting in a curtailment to the plan. As a result of the curtailment, the Company recorded a pre-tax charge of $2.5 million, which was included in selling, marketing and administrative expenses in the consolidated statement of operations for the fiscal year ended December 30, 2018. This pre-tax charge consisted of $7.5 million released from AOCI, offset by a $5.0 million reduction of the pension liability.

F-49

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Obligation and funded status

The measurement date used to determine the defined benefit and other postemployment benefits obligations was December 29, 2019. The following tables set forth the changes to the projected benefit obligations (“PBO”) and plan assets:



	Fiscal year ended
	December 29, 2019			December 30, 2018

Defined Benefit Plans

Change in benefit obligation:
Projected benefit obligation at beginning of year	$	39.7		$	40.9
Service cost		2.2			2.3
Interest cost		0.5			0.4
Contributions by plan participants		—			—
Benefits paid		(0.4	)		(0.9	)
Actuarial loss (gain)		2.9			(0.8	)
Settlements and amendments		(3.2	)		(1.8	)
Foreign currency exchange rate changes		(0.4	)		(0.4	)

Projected benefit obligation at end of year	$	41.3		$	39.7


Change in plan assets:
Fair value of plan assets at beginning of year	$	22.2		$	23.4
Actual return on plan assets		2.0			(0.9	)
Employer contributions		2.2			2.2
Contributions by plan participants		—			—
Benefits paid		(0.4	)		(0.9	)
Settlements		(3.2	)		(1.8	)
Foreign currency exchange rate changes		0.3			0.2

Fair value of plan assets at end of year	$	23.1		$	22.2

Funded status at end of year	$	(18.2	)	$	(17.5	)


Amounts recognized on the consolidated balance sheets:
Other assets	$	—		$	—
Accrued compensation and employee related obligations		(0.3	)		(0.3	)
Employee related obligations		(17.9	)		(17.2	)

Net amount recognized	$	(18.2	)	$	(17.5	)

F-50

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)



	Fiscal year ended
	December 29, 2019			December 30, 2018

Other Postemployment Benefits

Change in benefit obligation:
Projected benefit obligation at beginning of year	$	18.6		$	23.2
Service cost		0.8			0.9
Interest cost		0.6			0.5
Curtailment		—			(5.0	)
Benefits paid		(0.4	)		(0.2	)
Actuarial loss (gain)		0.7			(0.8	)

Projected benefit obligation at end of year	$	20.3		$	18.6


Amounts recognized on the consolidated balance sheets:
Accrued compensation and employee related obligations	$	(1.5	)	$	(2.1	)
Employee related obligations		(18.8	)		(16.5	)

Net amount recognized	$	(20.3	)	$	(18.6	)

PBO is the actuarial present value of benefits attributable to employee service rendered to date and reflects the effects of estimated future pay increases. The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits attributable to employee service to date, but does not include the effects of estimated future pay increases.

The following table reflects the ABO for all defined benefit plans as of December 29, 2019 and December 30, 2018. Further, the table reflects the aggregate PBO, ABO and fair value of plan assets for pension plans with PBO in excess of plan assets and for pension plans with ABO in excess of plan assets.



	December 29, 2019		December 30, 2018
ABO	$	34.2	$	32.5

Plans with PBO in excess of plan assets
PBO	$	41.3	$	39.3
Fair value of plan assets		23.1		22.0

Plans with ABO in excess of plan assets
PBO	$	19.9	$	18.9
ABO		16.6		14.9
Fair value of plan assets		2.3		3.1

F-51

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The pretax amounts that are not yet reflected in the net periodic benefit cost and are included in AOCI as of December 29, 2019, December 30, 2018 and December 31, 2017 include the following:



	December 29, 2019			December 30, 2018			January 1, 2017

Defined Benefit Plans
Accumulated net actuarial losses	$	(4.0	)	$	(1.4	)	$	(0.4	)


Other Postemployment Benefits
Accumulated net actuarial gains (losses)	$	—		$	0.7			(1.4	)
Accumulated prior service cost		(0.2	)		(0.2	)		(7.2	)

Net amount recognized	$	(0.2	)	$	0.5		$	(8.6	)

These accumulated net actuarial losses for defined benefit plans and other postemployment benefits primarily relate to differences between the actual net periodic expense and the expected net periodic expense from differences in significant assumptions, including primarily return on plan assets and discount rates used in these estimates. The accumulated prior service cost for the other postemployment benefit plans relates to the remaining unamortized amount of the ABO on the initiation date of the plans.

The estimated pretax amount of net actuarial gain related to the Company’s defined benefit plans that is expected to be amortized from AOCI into net periodic benefit cost during fiscal year 2020 is $0.1 million. The amount of net actuarial gain related to the Company’s other postemployment benefit plans that is expected to be amortized from AOCI into net periodic benefit cost during fiscal year 2020 is not material. The amount of prior service cost expected to be amortized from AOCI into net periodic benefit cost during fiscal year 2020 related to the Company’s defined benefit and other postemployment benefit plans is not material.

F-52

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Components of net periodic benefit cost

The following table sets forth the components of net periodic benefit cost:



	Fiscal year ended
	December 29, 2019			December 30, 2018			January 1, 2017

Defined Benefit Plans

Net periodic benefit cost:
Service cost	$	2.2		$	2.3		$	2.4
Interest cost		0.5			0.4			0.4
Expected return on plan assets		(0.6	)		(0.6	)		(0.5	)
Amortization of net loss		(0.4	)		(0.2	)		0.1
Settlement loss (gain)		(0.7	)		(0.1	)		0.2

Net periodic benefit cost	$	1.0		$	1.8		$	2.6


Changes in plan assets and benefit obligations recognized in other comprehensive loss:
Net actuarial loss (gain)	$	1.5		$	1.1		$	(3.5	)
Net translation adjustment		—			—			0.2
Amortization of gain (loss)		1.0			0.3			(0.2	)

Total loss (income) recognized in other comprehensive loss	$	2.5		$	1.4		$	(3.5	)

Total recognized in net periodic benefit cost and other comprehensive loss	$	3.5		$	3.2		$	(0.9	)

F-53

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)



	Fiscal year ended
	December 29, 2019		December 30, 2018			January 1, 2017

Other Postemployment Benefit Plans

Net periodic benefit cost:
Service cost	$	0.8	$	0.9		$	1.2
Interest cost		0.6		0.5			0.6
Amortization of prior service cost		—		0.8			2.4
Curtailment		—		2.5			—

Net periodic benefit cost	$	1.4	$	4.7		$	4.2


Changes in benefit obligations recognized in other comprehensive loss:
Net actuarial loss (gain)	$	0.7	$	(2.1	)	$	0.8
Amortization of prior service cost		—		(7.0	)		(2.4	)

Total income recognized in other comprehensive loss	$	0.7	$	(9.1	)	$	(1.6	)

Total recognized in net periodic benefit cost and other comprehensive loss	$	2.1	$	(4.4	)	$	2.6

The components of net periodic benefit cost other than the service cost component are recorded in “Other expense (income), net” in the consolidated statements of operations.

Assumptions and sensitivities

In determining the defined benefit obligations and net periodic benefit cost for the fiscal years ended December 29, 2019 and December 30, 2018, the Company used the following weighted-average assumptions:



	Fiscal year ended
	December 29, 2019		December 30, 2018

Defined Benefit Plans
Discount rate to determine benefit obligations		1.0%		1.5%
Discount rate to determine net cost		1.5%		1.3%
Rate of compensation increases to determine benefit obligations		2.5%		2.7%
Rate of compensation increases to determine net costs		2.7%		2.6%
Return on plan assets to determine cost		2.8%		2.7%

Other Postemployment Benefit Plans
Discount rate to determine benefit obligations		2.5%		3.8%
Discount rate to determine net cost		3.8%		3.3%

The discount rates used reflect the expected future cash flow based on plan provisions, participant data and the currencies in which the expected future cash flows will occur. For the majority of defined benefit obligations, the Company utilizes prevailing long-term high quality corporate bond indices applicable to the respective

F-54

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

country at the measurement date. In countries where established corporate bond markets do not exist, the Company utilizes other index movement and duration analysis to determine discount rates. The long-term rate of return on plan assets assumptions reflect economic assumptions applicable to each country and assumptions related to the preliminary assessments regarding the type of investments to be held by the respective plans.

The discount rate is determined as of each measurement date, based upon a review of yield rates associated with long-term, high-quality corporate bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.

The long-term rate of return on plan assets assumption represents the expected average rate of earnings on the funds invested to provide for the benefits included in the benefit obligations and is determined based on a number of factors, including historical market index returns, the anticipated long-term allocation of the plans, historical plan return data, plan expenses and the potential to outperform market index returns. The weighted-average expected long-term rate of return on plan assets was 2.8% for both fiscal years ended December 29, 2019 and December 30, 2018.

A significant factor in estimating future per capita cost of covered healthcare benefits for retirees is the healthcare cost trend rate assumption. The rate used as of December 29, 2019 was 6.7% trending down to 4.5% in 2036. Increasing or decreasing the healthcare cost trend rates by one percentage point would not result in a material increase or decrease in annual costs or benefit obligations.

Anticipated contributions to defined benefit plans

For funded plans, our policy is to fund amounts for defined benefit plans sufficient to meet minimum requirements set forth in applicable benefit and local tax laws. Based upon the same assumptions used to measure the defined benefit obligations at December 29, 2019, the Company expects to contribute $1.9 million to defined benefit plans in fiscal year 2020. No plan assets are expected to be returned to the Company in fiscal year 2020.

Estimated future benefit payments

The following table reflects the total benefit payments expected to be made for defined benefit plans and other long-term postemployment benefits:



	Defined benefits		Other postemployment benefits
Fiscal 2020	$	1.6	$	1.5
Fiscal 2021		1.7		2.0
Fiscal 2022		1.9		2.5
Fiscal 2023		2.3		2.6
Fiscal 2024		3.0		2.6
Fiscal 2025-2029		11.3		8.7

F-55

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Plan assets

The tables below present the fair value of the defined benefit pension plans by level within the fair value hierarchy, as described in Note 3—Summary of Significant Accounting Policies, at December 29, 2019 and December 30, 2018.



	Fair value measurements at December 29, 2019
	Total		Level 1		Level 2		Level 3
US equity securities	$	3.0	$	3.0	$	—	$	—
Japan equity securities		4.9		4.9		—		—
Other international equity securities		2.0		2.0		—		—
US government bonds		—		—		—		—
Japan government bonds		0.6		0.6		—		—
Other international government bonds		1.1		1.1		—		—
Cash and cash equivalents		7.9		7.9		—		—
Insurance contracts		3.6		—		—		3.6

Total	$	23.1	$	19.5	$	—	$	3.6



	Fair value measurements at December 30, 2018
	Total		Level 1		Level 2		Level 3
US equity securities	$	2.7	$	2.7	$	—	$	—
Japan equity securities		4.7		4.7		—		—
Other international equity securities		2.3		2.3		—		—
US government bonds		—		—		—		—
Japan government bonds		6.5		6.5		—		—
Other international government bonds		2.3		2.3		—		—
Cash and cash equivalents		0.6		0.6		—		—
Insurance contracts		3.1		—		—		3.1

Total	$	22.2	$	19.1	$	—	$	3.1

The Company has funded defined benefit plans in Japan, Belgium and Switzerland. The Japanese plan asset consists primarily of Japan equity and government bond securities, U.S. equity and government bond securities, other international equity and debt securities and cash and cash equivalents. The plan assets are invested in assets with quoted prices in active markets and therefore are classified as Level 1 assets. The Belgium and Switzerland plan assets consist solely of insurance contracts that are pledged on behalf of employees with benefits in certain countries and are classified as Level 3 assets.

F-56

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The table below presents a rollforward of activity for these assets for the fiscal years ended December 29, 2019 and December 30, 2018.



Balance at December 31, 2017	$	4.1
Net purchases and settlements		(0.8	)
Currency translation adjustment		(0.2	)

Balance at December 30, 2018		3.1
Net purchases and settlements		0.4
Currency translation adjustment		0.1

Balance at December 29, 2019	$	3.6

Defined contribution plans

The Company offers defined contribution plans to eligible employees primarily in the U.S., whereby employees contribute a portion of their compensation. Company matching and other Company contributions are also provided to the plans. Once Company matching contributions have been paid, the Company has no further payment obligations. The Company’s contributions for its employees totaled approximately $16 million, $20 million and $19 million for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively, which are recognized as expense as incurred in the consolidated statements of operations.

(16) Other financial information

The following provides components of certain captions in the consolidated statements of operations.

Other operating expense, net



	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Joint Business operating expense	$	39.5	$	39.0	$	45.7
Refinancing costs		—		18.5		2.0
Restructuring costs (credits)		0.2		3.6		(1.4	)
Equity investment impairment charge		—		—		20.2
Other(1)		9.1		10.1		13.0

Total other operating expense, net	$	48.8	$	71.2	$	79.5

(1)

This line item includes merger and acquisition-related costs, Carlyle management fees, bad debt expense, settlement proceeds on disputed matters and other operating income and expenses. See Note 21 - Related Party Transactions for additional detail on Carlyle management fees.

Other expense (income), net

Other expense, net was $5.7 million for the fiscal year ended December 29, 2019 and primarily related to $16.0 million of fair value losses on interest rate caps that did not qualify for hedge accounting, partially offset

F-57

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

by $10.5 million of net foreign currency gains, of which $18.1 million was unrealized. The unrealized foreign currency gains are mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries.

Other expense, net was $61.6 million for the fiscal year ended December 30, 2018 and primarily related to $53.0 million of net foreign currency losses, of which $43.3 million was unrealized and fair value losses of $2.7 million on interest rate caps that did not qualify for hedge accounting. The unrealized foreign currency losses are mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries.

Other income, net was $66.1 million for the fiscal year ended December 31, 2017 and primarily related to $69.2 million of net foreign currency gains, of which $66.9 million was unrealized, mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries.

(17) Income taxes

The applicable tax rate for Bermuda is zero percent; however, the U.S. statutory rate has been used as management believes it is more meaningful to the Company.

U.S. and foreign components of earnings (loss) before provision for income taxes



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
U.S.	$	(179.7	)	$	(138.2	)	$	(39.1	)
Foreign		(1.1	)		(79.4	)		24.8

Total	$	(180.8	)	$	(217.6	)	$	(14.3	)

Provision for (benefit from) income taxes



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017

Current
U.S.	$	(27.2	)	$	11.7		$	124.6
Foreign		10.2			24.8			10.1

Total Current	$	(17.0	)	$	36.5		$	134.7


Deferred
U.S.	$	0.3		$	1.0		$	(29.5	)
Foreign		(7.2	)		(6.3	)		(3.2	)

Total Deferred	$	(6.9	)	$	(5.3	)	$	(32.7	)

Provision for (benefit from) income taxes	$	(23.9	)	$	31.2		$	102.0

F-58

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law which made significant changes to the Internal Revenue Code. Changes include, but are not limited to: (1) a corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017; (2) the transition of U.S. international taxation from a worldwide to a territorial system; and (3) revision of the rules governing net operating losses and interest expense dis-allowance. These changes became effective in 2018.

As a result of the TCJA, as of December 31, 2017, the Company revalued its deferred tax liabilities at the new federal rate of 21%, resulting in a $15.3 million decrease and a corresponding tax benefit. The Company also scheduled out reversals of its deferred tax assets and liabilities, determining that their reversal would create future indefinite-lived net operating losses and interest expense utilization under the TCJA. As such the Company’s 2017 valuation allowance was reduced relating to the remaining indefinite-lived federal deferred tax liabilities balance, leading to an additional income tax benefit of $19.8 million. The Company’s deferred tax asset balance as of December 31, 2017 was also revalued at the new 21% rate resulting in a $136.4 million decrease in the balance with a corresponding decrease to the valuation allowance.

The Company has finalized its assessment of the TCJA and all amounts have been recorded as of December 30, 2018. However, the Company’s amounts recorded as a result of the TCJA remain subject to developing interpretations of the provisions of the TCJA including U.S. Treasury regulations and state government adoption.

F-59

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Reconciliation to U.S. statutory rate

The applicable tax rate for Bermuda is zero percent however; the U.S. statutory rate has been used as management believes it is more meaningful to the Company. A comparison of the provision for taxes on income at the U.S. statutory rate of 21% for the fiscal years ended December 29, 2019, and December 30, 2018 and 35% for the fiscal year ended December 31, 2017 to the effective tax rate is as follows:



	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
U.S. Statutory rate		21.0%		21.0%		35.0%
U.S. state and local		(0.2)%		(0.4)%		18.0%
Foreign income taxed at rates other than the applicable U.S. rate		17.9%		8.6%		185.8%
Tax credits		1.1%		0.7%		14.8%
Change in valuation allowance		(33.0)%		(30.5)%		561.6%
Tax goodwill adjustment		0.0%		0.0%		2.4%
Foreign tax rate change		(2.9)%		(0.0)%		(12.9)%
Domestic tax rate change		0.0%		0.0%		(871.3)%
Change in uncertain tax positions		17.3%		(7.8)%		(867.3)%
Foreign exchange gain/loss		(1.5)%		(1.0)%		(30.9)%
Indemnification income		(3.4)%		1.1%		303.9%
Withholding Tax		(1.5)%		(1.3)%		(17.0)%
Other—net		(1.5)%		(4.7)%		(35.4)%

Effective tax rate		13.3%		(14.3)%		(713.3)%

The effective tax rate for the fiscal year ended December 29, 2019 differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance, (2) a decrease in the Company’s pre-Acquisition state and non-U.S. reserves for uncertain tax positions due to the settlement of certain tax matters, (3) an increase in the Company’s interest expense on prior year reserves for uncertain tax positions and (4) non-U.S. earnings being taxed at rates that are different than the U.S statutory rate. Deferred tax assets are reduced by valuation allowances when, based on available evidence, it is more likely than not that the tax benefit of loss carryforwards (or other deferred tax assets) will not be realized in the future. In periods when entities subject to a valuation allowance generate pre-tax earnings or losses, the corresponding increase or decrease in the valuation allowance has an overall impact on the effective tax rate.

The effective tax rate for the fiscal year ended December 30, 2018 differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance, (2) an increase in the Company’s reserves for uncertain tax positions, (3) an increase in the Company’s interest expense on prior year reserves for uncertain tax positions and (4) non-U.S. earnings being taxed at rates that are different than the U.S statutory rate.

F-60

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The effective tax rate for the fiscal year ended December 31, 2017 differs from the U.S. federal statutory rate primarily due to (1) the recordation of certain tax reserves in connection with the pre-Acquisition state tax gain on the sale of assets, (2) the tax benefit associated with the revaluation of certain deferred tax liabilities in connection with the rate reduction and revision of net operating loss and interest expense limitation rules promulgated in the TCJA, (3) the impact of operating losses in certain subsidiaries not being benefited due to the establishment of a valuation allowance and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

Deferred tax balances



	December 29, 2019			December 30, 2018

Deferred tax assets
Tax loss and credit carry forwards	$	480.1		$	416.4
Allowances and reserves		21.6			21.8
Accrued liabilities		4.6			7.9
Deferred lease liability		11.2			—
Employee related obligations		20.2			17.2
Capitalized transaction costs		8.0			8.8
Other		15.1			14.4

Total deferred tax assets	$	560.8		$	486.5

Less: Valuation Allowance		(484.1	)		(419.7	)

Net, Deferred tax assets	$	76.7		$	66.8


Deferred tax liabilities
Goodwill and intangibles		(73.4	)		(76.0	)
Depreciation		(31.1	)		(24.3	)
Right-of-use asset		(11.1	)		—
Unrealized (gain)/loss		(17.9	)		(26.6	)
Other		(2.1	)		(2.8	)

Total deferred tax liabilities	$	(135.6	)	$	(129.7	)

Net, Deferred tax liability	$	(58.9	)	$	(62.9	)



	December 29, 2019			December 30, 2018
Non-current deferred tax asset	$	6.1		$	4.0
Non-current deferred tax liability		(65.0	)		(66.9	)

Net, Deferred tax liability	$	(58.9	)	$	(62.9	)

As of December 29, 2019, the Company had a deferred tax asset for tax losses and credit carryforwards of $480.1 million. This amount consists of $313.3 million of net operating loss carryforwards, $28.5 million of credit carryforwards and $138.3 million of interest deduction limitation carryforwards, net of uncertain tax positions.

F-61

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

As of December 29, 2019, the Company had $695.4 million of U.S. federal net operating loss carryforwards; of which $473.0 million are subject to expiration through 2037 and $222.4 million are not subject to expiration. In addition, the Company has $401.1 million of state net operating loss, which will expire in years 2020 through 2039. As of December 29, 2019, Company had $8.3 million of U.S. general business credit carryforwards which will begin to expire in 2034 and $25.6 million state business credit carryforwards which will begin to expire in 2029. As of December 29, 2019, the Company had $488.2 million of net operating loss carryforwards in certain non-U.S. jurisdictions, net of uncertain tax positions. Of these, $278.2 million have no expiration and the remaining $210.0 million will expire in years through 2039.

The Company had valuation allowances that primarily related to the realization of recorded tax benefits on tax loss carryforwards from operations in the United States and Luxembourg of $484.1 million as of December 29, 2019 and $419.7 million as of December 30, 2018.

Total gross unrecognized tax benefits

The following table summarizes the activity related to gross unrecognized tax benefits:



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Balance at beginning of year	$	143.4		$	137.3		$	38.1
Increase related to positions taken on items from prior years		—			6.2			99.5
Decrease related to positions taken on items from prior years		(29.9	)		—			(0.2	)
Increase related to positions taken on items in current years		0.2			—			—
Decrease due to settlements		(3.1	)
Decrease due to expiration of statutes of limitations		(0.2	)		(0.1	)		(0.1	)

Balance at end of year	$	110.4		$	143.4		$	137.3

As of December 29, 2019, the total amount of unrecognized tax benefits was $110.4 million ($143.4 million as of December 30, 2018), of which $106.9 million would impact the effective tax rate, if recognized ($139.9 million as of December 30, 2018). As of December 29, 2019, the amount of tax indemnification that would impact earnings (loss) before provisions for taxes on income if recognized would be $90.8 million ($120.7 million as of December 30, 2018). The net decrease in the balance from the beginning of the year relates to the resolution of certain pre-Acquisition state tax positions taken in prior years. The Company estimates that within the next twelve months, its uncertain tax positions, excluding interest, could decrease by as much as $21.3 million primarily as a result of the resolution of the U.S. tax matters arising from pre-Acquisition periods.

The Company is subject to income tax in approximately 34 jurisdictions outside the U.S. The Company’s most significant operations outside the U.S. are located in China, France, Japan and the United Kingdom. For these jurisdictions for which the Company has significant operations, the statute of limitations varies by jurisdiction, with 2010 being the oldest tax year still open. The Company is currently under audit in certain jurisdictions for tax years under the responsibility of Johnson & Johnson. Pursuant to the Acquisition Agreement, all tax liabilities related to these tax years will be indemnified by Johnson & Johnson.

F-62

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The Company includes interest expense and penalties related to unrecognized tax benefits as part of the provision for taxes on income. The Company recognized a benefit related to interest and penalties associated with unrecognized tax benefits of $1.5 million for the fiscal year ended December 29, 2019 and tax expense for interest and penalties associated with unrecognized tax benefits of $12.0 million and $25.3 million for the fiscal years ended December 30, 2018 and December 31, 2017, respectively. The Company’s accrual for interest and penalties was $41.3 million and $42.8 million as of December 29, 2019 and December 30, 2018, respectively. The Company classifies liabilities for unrecognized tax benefits and related accrued interest and penalties as either “Accrued Liabilities” or “Other liabilities” depending upon expected payment date. The Company includes the offset for interest and penalties related to unrecognized tax benefits to be reimbursed by Johnson & Johnson pursuant to the indemnification provisions in the Acquisition Agreement in Other operating expense, net.

As of December 29, 2019, the Company had $151.7 million of unrecognized tax benefits, including interest and penalties. Due to the high degree of uncertainty regarding future timing of cash flows associated with these liabilities, the Company is unable to estimate the years in which settlement will occur with the respective taxing authorities. The Acquisition Agreement includes indemnification provisions with respect to tax liabilities, including reserves for unrecognized tax benefits existing at the Day 1 Closing Date. The Acquisition Agreement generally provided that Johnson & Johnson retained all income tax liabilities accrued as of the date of the Acquisition, including reserves for unrecognized tax benefits. As of December 29, 2019, the indemnification receivable from Johnson & Johnson totaled $130.6 million, of which $29.3 million was included in “Other current assets” and $101.3 million was included in “Other assets.” As of December 30, 2018, the indemnification receivable from Johnson & Johnson totaled $162.0 million, of which $28.3 million was included in “Other current assets” and $133.7 million was included in “Other assets.”

Income taxes paid during the fiscal year ended December 29, 2019, December 30, 2018 and December 31, 2017 were $8.4 million, $13.4 million and $9.1 million, respectively.

The following table summarizes the changes to the valuation allowance for the fiscal year ended December 29, 2019, December 30, 2018 and December 31, 2017:


	Beginning Balance		Additions (deductions) charged to provision for income taxes			Currency translation/ other			Ending Balance

Deferred tax valuation allowance
Year ended December 29, 2019	$	419.7	$	64.7		$	(0.3	)	$	484.1
Year ended December 30 2018	$	349.1	$	76.4		$	(5.8	)	$	419.7
Year ended December 31, 2017	$	406.2	$	(59.9	)(a)	$	2.8		$	349.1

(a)

Primarily reflects release of valuation allowance due to enactment of Tax Cuts and Jobs Act of 2017 (“TCJA”).

F-63

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(18) Stock-based compensation

During the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, the Company recognized $18.6 million, $5.9 million and $4.4 million, respectively, in stock-based compensation which was recorded as components of Cost of revenue, Selling, marketing and administrative expenses and Research and development expense.

Description of equity incentive plan

On October 22, 2014, Bermuda Holdco’s Board of Directors approved the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan (the “2014 Plan”) which reserved an aggregate of 9,533,317 shares of common stock of the Company for issuance to employees, directors and consultants (“Options”). The 2014 Plan provides for the issuance of stock options, restricted stock and other stock-based awards. Options and restricted shares granted must be authorized by the Board of Directors of Bermuda Holdco or a designated committee thereof (the “Plan Administrator”). The terms of the options may vary with each grant and are determined by the Plan Administrator within the guidelines of the 2014 Plan. In December 2019, the Company increased the number of shares reserved under the 2014 Plan to 12,775,415.

Stock options

Options granted under the 2014 Plan provide for time-based vesting for a portion of the Options, performance-based vesting for a portion of the Options and liquidity event vesting for a portion of the Options. The time-based Options generally vest ratably over three to five years and upon the occurrence of a Liquidity Event (as defined in the 2014 Plan), the liquidity-based Options vest immediately prior to the Liquidity Event. The performance-based Options vest and become exercisable based upon achievement of either minimum earnings targets or share price.

On January 11, 2019, the Board of Directors approved the Amendment to the Stock Option Agreement, whereby performance-based options that did not vest based on applicable minimum earnings targets will vest over a specified period of time. The Company accounted for this as a modification and recognized additional compensation expense of approximately $14.7 million during fiscal year 2019.

F-64

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

A summary of stock option activity for the fiscal year ended December 29, 2019 is presented below:



	Number of shares			Weighted average exercise price		Weighted average grant date fair value		Weighted average remaining contractual life (years)

Number of shares under option:
Outstanding as of December 30, 2018		7,794,263		$	10.80	$	4.81		6.56
Granted		3,704,612			19.96		7.62
Canceled		(669,573	)		11.83		6.29
Exercised		(1,278,200	)		10.12		5.17

Outstanding as of December 29, 2019		9,551,102		$	14.37	$	5.75		3.82

Exercisable as of December 29, 2019		4,536,343			10.37		5.06		2.82
Expected to vest as of December 29, 2019		2,862,976			17.19		7.37		4.66

Total vested and expected to vest as of December 29, 2019		7,399,319		$	13.01	$	5.95		3.53

During the fiscal year ended December 29, 2019, the Company granted under the 2014 Plan, 1,914,290 time-based stock options at a weighted average exercise price of $19.93 per share and a weighted average grant date fair value of $6.57 per option and 1,790,322 performance-based stock options at a weighted average exercise price of $19.99 per share and a weighted average grant date fair value of $4.59 per option.

The Black-Scholes option price model and Monte Carlo Simulation were used to estimate the fair value of the time-based and performance-based options, respectively, as of the date of the grant. Expected volatility is determined based on a number of factors, including management’s estimates and comparable companies. The expected term of the options is calculated as the mid-point between the expected time to vest and the maturity of the options. The yield interpolated from U.S. Constant Maturity Treasury rates for a period commensurate with the expected term assumption is used as the risk-free interest rate.

Information related to the assumptions used to estimate the grant fair value of shares using the Black-Scholes option price model follows:

Fiscal year ended

December 29, 2019

December 30, 2018

December 31, 2017

Grant date fair value of common stock, per share

19.00 – $20.00

18.50

12.45 – $18.50

Weighted-average expected term

1.00 – 6.14

6.10 – 6.50

6.06 – 6.50

Weighted-average volatility

45% – 55%

40%

40% – 45%

Weighted-average dividend rate

Weighted-average risk free rate

1.50% – 2.56%

2.16% – 2.20%

1.88% – 2.20%

F-65

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

During December 2019, certain performance-based awards at the date of grant were estimated using the Monte-Carlo simulation model with the following assumptions:



	Fiscal year ended December 29, 2019
Grant date fair value of common stock, per share	$	20.00
Expected Volatility		37.5% – 55%
Expected annual dividend yield		0%
Risk-free interest rate		1.52% – 1.92%

The Company estimated the per share fair value of its common stock using a contemporaneous valuation. In conducting this valuation, the Company considered all objective and subjective factors believed to be relevant, including its best estimate of the Company’s business condition, prospects and operating performance. Within this contemporaneous valuation, a range of factors, assumptions and methodologies were used. The significant factors included:

•

the fact that the Company is a private company with illiquid securities;

•

historical operating results;

•

discounted future cash flows, based on projected operating results;

•

financial information of comparable public companies; and

•

the risk involved in the investment, as related to earnings stability, capital structure, competition and market potential.

For the contemporaneous valuation of the common stock, management estimated, as of the issuance date, the Company’s enterprise value on a continuing operations basis, using both the income approach and the market approach, with equal weights assigned to each. The income approach utilized the discounted cash flow (“DCF”) methodology based on our financial forecasts and projections, as detailed below. For the DCF methodology, we prepared annual projections of future cash flows. These projected cash flows were projected at long-term sustainable growth rates consistent with long-term inflationary and industry expectations. Our projections of future cash flows were based on our estimated net debt-free cash flows and were discounted to the valuation date using a weighted-average cost of capital estimated based on market participant assumptions. When selecting comparable companies, consideration was given to industry similarity, their specific products offered, financial data availability and capital structure. Under the market approach, the Company’s enterprise value is based on trading multiples of these comparable companies.

As of December 29, 2019, the Company had $14.2 million of unrecognized compensation expense relating to outstanding unvested stock options. Compensation expense is recognized for the fair value of the stock options over the requisite service period of the awards using the straight-line method. This expense is expected to be recognized over a weighted-average period of 3.1 years.

F-66

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Restricted stock

A summary of all restricted stock activity during the fiscal year ended December 29, 2019 is as follows:



	Number of shares			Weighted average grant date fair value
Restricted Stock Outstanding as of December 30, 2018		20,677		$	17.23
Granted		215,197			19.98
Vested		(18,091	)		17.10

Outstanding as of December 29, 2019		217,783		$	19.96

The recipients of the restricted stock have all the rights of a stockholder with respect to the restricted shares of stock, including the right to receive any cash or stock dividend or other distribution paid to be made with respect to the restricted share of stock. These shares of restricted stock vest based on the terms as determined by the Executive Committee of the Board of Directors. Any unvested restricted shares are forfeited in the event of termination. As of December 29, 2019, the Company had $4.3 million of unrecognized compensation expense relating to outstanding unvested restricted stock awards.

(19) Noncash investing and financing activities

During the fiscal years ended December 31, 2017 and January 1, 2017, the Company completed the acquisition of Day 2 Countries and entered into distribution agreements with third parties to transition the businesses of certain Day 2 Countries. The consideration for the purchase of all of the Day 1 Countries and the Day 2 Countries (with the exception of any purchase price adjustment as of the respective Day 2 Closing Date) was previously paid on the Day 1 Closing Date. See Note 4—Acquisition of Ortho-Clinical Diagnostics for further information regarding the net assets acquired in connection with these Day 2 Closings and the corresponding reduction in the prepaid consideration asset.

During the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, the Company made noncash transfers of instrument inventories from “Inventories” to “Property, Plant and Equipment” of $118.6 million, $93.0 million and $101.5 million, respectively.

As of December 29, 2019, December 30, 2018 and December 31, 2017, accounts payable and accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized computer software and development costs of $14.1 million, $17.2 million and $13.0 million, respectively. The changes in these balances are excluded from changes in accounts payable and accrued liabilities.

During the fiscal year ended December 31, 2017, the Company entered into a capital lease in connection with a new warehouse. The capital lease asset and related capital lease obligation at the inception of the capital lease was $2.2 million.

(20) Segments and geographic information

The Company is engaged in the design, development, manufacturing, marketing, distribution and sale of diagnostic instruments and assays for hospitals, laboratories and blood and plasma centers worldwide. The

F-67

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Company manages its business by geographic location. The Company has six operating segments which consist of North America, EMEA, Greater China, Japan, Asia- Pacific (ASPAC) and Latin America (LATAM). The Company’s reportable segments consist of North America, EMEA, and Greater China. Although the reportable segments provide similar products and services, each one is managed separately to better align with the market dynamics of each geographic region. Japan, ASPAC and LATAM are immaterial operating segments not considered as reportable segments and are included in “Other.”

Our Chief Executive Officer (“CEO”) is the chief operating decision maker (“CODM”). The CODM evaluates segment profitability using Net revenue and Management EBITDA. Net revenue for geographic segments are generally based on the location of customers and sales through the Company’s operations located in those geographic locations. Management EBITDA for each segment is defined as segment net loss, plus interest expense, income taxes, depreciation and amortization and management adjustments.

Net revenue by segment is as follows:



	Fiscal Year Ended
	December 29, 2019		December 30, 2018		December 31, 2017
North America	$	896.6	$	901.3	$	915.2
EMEA		251.5		263.6		286.6
Greater China		242.5		224.3		205.7
Other		410.9		398.1		374.2

Net Revenue	$	1,801.5	$	1,787.3	$	1,781.7

Management EBITDA by segment is as follows:



	Fiscal Year Ended
	December 29, 2019			December 30, 2018			December 31, 2017
North America	$	367.9		$	379.9		$	391.7
EMEA		44.1			40.9			61.3
Greater China		116.3			102.3			93.1
Other		113.6			102.2			94.1
Corporate (1)		(139.3	)		(139.8	)		(153.2	)

Management EBITDA	$	502.6		$	485.5		$	487.0

(1)

Corporate primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing, and information technology, which benefit the enterprise as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies, and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. Our Corporate function also includes debt and stock-based employee compensation expense associated with all employee stock-based awards.

F-68

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

The reconciliation of Management EBITDA is as follows:



	Fiscal Year Ended
	December 29, 2019			December 30, 2018			December 31, 2017
Net loss	$	(156.9	)	$	(248.8	)	$	(116.3	)
Interest expense, net		231.4			235.6			239.8
Depreciation and amortization		327.5			332.2			333.3
(Benefit from) provision for income taxes		(23.9	)		31.2			102.0
Unrealized foreign currency exchange (gains) losses		(19.6	)		46.5			(58.8	)
Stock based compensation		18.6			5.9			4.4
Restructuring and severance related costs		36.0			38.3			51.5
Tax indemnification expense (income)		29.2			(13.1	)		(124.1	)
Debt refinancing costs and loss on extinguishment of debt		—			20.6			2.0
Impairment of equity investment		—			—			20.2
Intangible asset impairment		—			—			11.0
Impact on acquisition accounting and acquisition-related costs		—			—			2.4
Other adjustments		35.2			19.4			10.2
Management adjustments and realized foreign exchange losses (gains)		25.1			17.7			9.4

Management EBITDA	$	502.6		$	485.5		$	487.0

The CODM does not review capital expenditures, total depreciation and amortization or total assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics.

Net revenues by geographic location were as follows:



	Fiscal year ended
	December 29, 2019		December 30, 2018		December 31, 2017
Net revenues
United States	$	855.1	$	859.2	$	872.7
Greater China		242.5		224.3		205.7
Other countries		703.9		703.8		703.3

Total net revenues	$	1,801.5	$	1,787.3	$	1,781.7

F-69

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Property, plant and equipment, net and Right-of-use assets by geographic location were as follows:



	December 29, 2019		December 30, 2018
Long-lived assets
United States	$	550.8	$	570.4
United Kingdom		101.1		94.8
Other countries		236.6		200.9

Total long-lived assets	$	888.5	$	866.1

(21) Related party transactions

Carlyle

The Company entered into consulting services agreements with Carlyle Investment Management, L.L.C. (“CIM”), pursuant to which the Company pays CIM a fee for advisory, consulting and other services to be provided to the Company. Pursuant to the consulting services agreement, which has an initial term of ten years, the Company pays an annual management fee to CIM of $3.0 million (the “Management Fee”). The Management Fee is payable on a quarterly basis. The Company will also reimburse CIM’s reasonable out-of-pocket expenses incurred in connection with services provided pursuant to the consulting services agreement, and the Company may pay CIM additional fees associated with other future transactions or in consideration of any additional services provided to the Company under the consulting services agreement. During the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017, the Company recorded $3.1 million, $3.0 million and $3.1 million of Management Fee expense and other out-of-pocket expenses, respectively.

During fiscal year 2017, the Company entered into agreements to sell products and provide services to health care diagnostic companies that are portfolio companies of funds affiliated with Carlyle. During the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017 the Company recognized revenues of $3.5 million, $1.2 million and $4.0 million from these affiliates, respectively.

Portfolio companies of funds affiliated with Carlyle provide IT services to the Company. During the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017 the Company incurred IT service fees of $0.6 million, $2.6 million and $1.7 million, respectively.

A portfolio company of a fund that became affiliated with Carlyle in the fourth quarter of fiscal year 2017 provided consulting services to the Company. During the fiscal years ended December 29, 2019 and December 30, 2018 the Company incurred consulting fees of $0.8 million and $0.6 million, respectively. During the fiscal year ended December 31, 2017, consulting fees provided to the Company were not material.

Other

A pharmacy benefit management organization affiliated with a member of our Board of Directors provides pharmacy services to the Company. During the fiscal years ended December 30, 2018 and December 31, 2017, the Company incurred fees related to pharmacy services provided of $6.3 million and $6.6 million, respectively. During the fiscal year ended December 29, 2019 the pharmacy benefit management organization was no longer affiliated with the Company.

F-70

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(22) Commitments and contingencies

At times, the entities that carry out the Company’s business are the subject of governmental investigations and various legal actions and claims from governmental agencies and other parties. The outcomes of these matters are not within the Company’s complete control and may not be known for prolonged periods of time. The Company records a liability in the consolidated financial statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from these matters are inherently difficult to predict.

(23) Fair value accounting

Assets measured at fair value on a nonrecurring basis

The Acquisition was accounted for under the acquisition method of accounting, which requires the acquired assets, including separately identifiable intangible assets, and assumed liabilities to be recorded as of the acquisition date at their respective fair values.

Fair value of financial instruments

Cash and cash equivalents—The carrying amount of cash equivalents approximates fair value because the original maturity is less than 90 days.

Accounts receivable—The carrying amount of current accounts receivable approximates fair value because of their short outstanding terms. For payments expected from customers over periods longer than one year, receivables have been discounted to reflect the estimated period of time for collection and are presented as a component of “Other assets” in the consolidated balance sheets.

Accounts payable—The carrying amount of accounts payable approximates fair value because of their short outstanding terms.

Short-term borrowings—The carrying amount of short-term borrowings approximates fair value because of their short outstanding terms.

Long-term borrowings—The fair value of the Notes as of December 29, 2019 and December 30, 2018 was $1,293.5 million and $1,158.9 million, respectively. The estimated fair value of these notes was based on recent trades as reported by a third party bond pricing service. Due to the infrequency of trades of the Notes, these inputs are considered to be Level 2 inputs.

The fair value of the Term Loan as of December 29, 2019 and December 30, 2018 was $2,214.2 million and $2,129.8 million, respectively. The estimated fair value of the Term Loan was based on recent trades as reported by a third party bond pricing service. Due to the infrequency of trades of the Term Loan, these inputs are considered to be Level 2 inputs.

F-71

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(24) Derivative and other hedging instruments

The Company selectively uses derivative instruments to reduce market risk associated with changes in interest rates and foreign currency. The use of derivatives is intended for hedging purposes only and the Company does not enter into derivative instruments for speculative purposes.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Interest rate hedging

The Company entered into a series of interest rate cap agreements to hedge our interest rate exposures related to our variable rate borrowings under the Senior Secured Credit Facilities. On July 19, 2019, the Company entered into an interest rate swap agreement, which fixed a portion of the variable interest due on the Company’s variable rate debt on September 27, 2019.

The following table summarizes the interest rate derivative agreements as of December 29, 2019:

Effective date

Expiration date

Interest rate

cap amount

Notional amount

Hedge
designation

December 31, 2020

December 31, 2023

3.5%

1,500,000,000

Not designated

June 30, 2017

December 31, 2020

1.8%

1,500,000,000

Not designated

Effective date

Expiration
date

Description

Fixed
rate

Floating
rate

Notional
amount(a)

Hedge
description

September 27, 2019

December 31,
2023

Pay fixed,
receive float

1.635%

1-month
LIBOR rate

700,000,000

Cash Flow
hedge

(b)

The Notional value of this instrument is expected to be $1,500 million in fiscal 2021, $1,000 million in fiscal 2022 and $500 million in fiscal 2023.

During the quarter ended September 29, 2019, the Company de-designated its 3.5% interest rate cap upon entering into the interest rate swap agreement that hedges a portion of the Company’s borrowings under the Senior Secured Credit Facilities. Accordingly, the Company recorded the activity related to the hedge through the date of the de-designation as a cash flow hedge, and subsequently recorded the activity related to the interest rate cap as mark to market, with the impact recorded to other income, net. The impact of the de-designation was not material to the consolidated statement of operations for the fiscal year ended December 29, 2019. As of December 29, 2019, the remaining loss of $9.3 million was included in OCI related to this de-designated hedge and will be amortized to interest expense over the remaining term of the interest rate swap when the hedged transaction affects earnings, of which an immaterial amount is expected to be reclassified to earnings in the next 12 months due to the fact that the underlying instrument is not effective until December 31, 2020.

During the quarter ended April 1, 2018, the Company changed from a 3-month LIBOR index to a 1-month LIBOR index for its Senior Secured Credit Facilities, in accordance with the terms of the agreement. The interest rate

F-72

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

caps are based on a 3-month LIBOR index. As the critical terms of the interest rate cap no longer match the hedged transactions, they do not qualify for hedge accounting, which resulted in their de-designation. Accordingly, the Company recorded the activity related to the hedges through the date of the de-designation as cash flow hedges, as well as a $5.3 million gain related to ineffectiveness, which was recorded in interest expense, net, in the consolidated statement of operations for the fiscal year ended December 30, 2018. Subsequent to the de-designation, the Company recorded the activity related to the hedges as mark to market, with the impact recorded to “Other expense (income), net”. As of December 29, 2019, the remaining gain of $8.5 million included in OCI related to the de-designated hedges is expected to be reclassified to earnings in the next 12 months.

Foreign currency hedging

The Company has currency risk exposures relating primarily to foreign currency denominated monetary assets and liabilities and forecasted foreign currency denominated intercompany and third-party transactions. The Company uses foreign currency forward and option contracts to manage its currency risk exposures. The following table provides details of the foreign currency forward and option contracts outstanding as of December 29, 2019:



Description(a)	Notional amount		Hedge designation
Forward Foreign Currency Contracts	$	173.7		Cash Flow Hedge
Forward Foreign Currency Contracts	$	76.9		Not designated
Option Foreign Currency Contracts	$	44.8		Not designated

(a)

The Company’s forward currency foreign exchange contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Swiss Franc and the Thai Baht. The Company’s foreign currency option contracts are denominated in Chinese Yuan/Renminbi (offshore).

The foreign-currency forward contracts that qualified and were designated as cash flow hedges are recorded at their fair value as of December 29, 2019 and the unrealized gain of $2.7 million is reported as a component of OCI, all of which is expected to be reclassified to earnings in the next 12 months. Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions occur.

F-73

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Fair value gains and losses of derivative contracts and interest rate derivatives, as determined using Level 2 inputs, that are designated and qualify as cash flow hedges during the fiscal years ended December 29, 2019 and December 30, 2018, are recorded as follows:



Derivatives in cash flow hedging relationships	Amount of loss (gain) recognized in OCI on derivatives			Location of loss reclassified from accumulated OCI into income		Amount of loss (gain) reclassified from accumulated OCI into income

Fiscal Year Ended December 29, 2019
Foreign currency forward contracts	$	(3.1	)		Cost of Revenue	$	(1.0	)
Interest rate derivatives		9.8			Interest expense		(7.8	)

Fiscal Year Ended December 30, 2018
Foreign currency forward contracts	$	(2.0	)		Cost of Revenue	$	0.6
Interest rate derivatives		(6.9	)		Interest expense		(2.8	)

The following table presents the effect of the Company’s derivative instruments on the statements of operations and comprehensive loss:



	Fiscal year ended December 29, 2019						Fiscal year ended December 30, 2018
	Interest expense			Cost of revenue			Interest expense			Cost of revenue
Total amounts of financial statement line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded	$	231.4		$	922.4		$	235.6		$	930.5

The effects of cash flow hedging
Loss (Gain) on cash flow hedging relationships:
Foreign currency forward contracts
Amount of Loss (Gain) Reclassified from Accumulated OCI Into Income		N/A		$	(1.0	)		N/A		$	0.6
Amount Reclassified from Accumulated OCI into Income due to a Forecast Transaction That is No Longer Probable of Occurring		N/A		$	—			N/A		$	(0.1	)

Interest Rate Derivatives
Amount of Loss (Gain) Reclassified from Accumulated OCI Into Income	$	(7.8	)		N/A		$	(2.8	)		N/A
Amount Excluded From the Assessment of Effectiveness Recognized In Earnings Based on Changes in Fair Value	$	—			N/A		$	(5.1	)		N/A

F-74

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in earnings as follows:



			Fiscal year ended
Derivatives not designated as hedging instruments under ASC 815	Location of loss recognized in earnings on derivatives		December 29, 2019			December 30, 2018		December 31, 2017
Interest rate derivatives		Other (income) expense, net	$	16.0		$	2.7	$	—
Foreign currency derivatives		Other (income) expense, net		(1.8	)		0.1		0.4

The following table presents the location and fair values using Level 2 inputs of derivative instruments that qualify and have been designated as cash flow hedges included in the consolidated balance sheet:



	December 29, 2019			December 30, 2018

Interest rate derivatives:
Other long-term liabilities	$	(4.4	)	$	(4.7	)

Foreign currency forward contracts:
Other current assets		6.8			4.7
Accrued liabilities		(4.0	)		(5.1	)

The following table presents the location and fair values using Level 2 inputs of derivative instruments that have not been designated as hedges included in the consolidated balance sheet:



	December 29, 2019			December 30, 2018

Interest rate derivatives:
Other current assets	$	0.0		$	0.1
Other assets		—			20.1
Accrued liabilities		(2.3	)		—
Other long-term liabilities		(10.4	)		—

Foreign currency derivative contracts:
Other current assets		1.5			0.7
Accrued liabilities		(0.5	)		(0.1	)

F-75

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(25) Accumulated other comprehensive income (loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) (“AOCI”), net of tax:



	Pension and other postemployment benefits			Foreign currency derivatives			Interest rate cap derivatives			Unrealized foreign currency translation adjustments			Accumulated other comprehensive loss
Balance at January 1, 2017	$	(13.7	)	$	2.8		$	11.4		$	(67.7	)	$	(67.2	)
Current period deferrals		2.2			(10.7	)		(5.1	)		25.3			11.7
Amounts reclassified to net loss		2.7			5.9			1.4			—			10.0

Net change		4.9			(4.8	)		(3.7	)		25.3			21.7

Balance at December 31, 2017		(8.8	)		(2.0	)		7.7			(42.4	)		(45.5	)
Current period deferrals		1.1			2.0			6.9			(21.2	)		(11.2	)
Amounts reclassified to net loss		6.7			0.6			(2.8	)		—			4.5

Net change		7.8			2.6			4.1			(21.2	)		(6.7	)

Balance at December 30, 2018		(1.0	)		0.6			11.8			(63.6	)		(52.2	)
Current period deferrals		(2.3	)		3.1			(9.6	)		(0.9	)		(9.7	)
Amounts reclassified to net loss		(1.0	)		(1.0	)		(7.8	)		—			(9.8	)
Cumulative effect of change in accounting standard		—			—			(0.2	)		—			(0.2	)

Net change		(3.3	)		2.1			(17.6	)		(0.9	)		(19.7	)

Balance at December 29, 2019	$	(4.3	)	$	2.7		$	(5.8	)	$	(64.5	)	$	(71.9	)

Reclassifications from AOCI to net income for the fiscal year ended December 29, 2019, December 30, 2018 and December 31, 2017 included $0.0, $0.8 million and $2.4 million, respectively, of amortization of prior service cost related to the accumulated benefit obligation on the initiation of the Company’s replacement retiree health care reimbursement plan for certain U.S. employees. Additionally, the fiscal year ended December 30, 2018 includes the release of AOCI related to the U.S. plan curtailment of $7.5 million. See further discussion of the AOCI related to pension and other postemployment benefits and the U.S. plan curtailment in Note 15—Long-Term Employee Benefits. Reclassifications from AOCI to income for the fiscal year ended December 29, 2019, December 30, 2018 and December 31, 2017 also included $1.0 million of gains and $0.6 million and $5.9 million of losses upon settlement of foreign currency forward contracts, respectively, which were recorded as a component of cost of revenue.

The income tax related to the change in pension and other postemployment benefits for the fiscal year ended December 29, 2019, December 30, 2018 and December 31, 2017 was $0.0 million, $0.1 million and $0.2 million, respectively. Foreign currency translation is not adjusted for income taxes relating to permanent investments in foreign subsidiaries.

F-76

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

(26) Financial Information of Registrant (Parent Company Only)

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

(Parent Company Only)

Statements of operations and comprehensive loss

(In millions)



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017
Equity in loss of subsidiaries	$	(156.9	)	$	(248.8	)	$	(116.3	)

Net loss		(156.9	)		(248.8	)		(116.3	)
Equity in other comprehensive (loss) income of subsidiaries		(19.7	)		(6.7	)		21.7

Total comprehensive loss	$	(176.6	)	$	(255.5	)	$	(94.6	)

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

(Parent Company Only)

Balance sheets

(In millions, except share and per share data)



	December 29, 2019			December 30, 2018

Assets

Current assets:
Cash and cash equivalents	$	—		$	3.6
Receivables from subsidiaries		0.2			0.2
Loans receivable from subsidiaries		3.2			—

Total assets	$	3.4		$	3.8


Liabilities and Stockholders’ Equity
Payables to subsidiaries		0.8			0.8
Investments in subsidiaries		815.4			657.7

Total liabilities		816.2			658.5

Common stock, $0.00001 par, 1,000,000,000 shares authorized, 91,902,564 and 91,109,238 shares issued and outstanding as of December 29, 2019 and December 30, 2018, respectively		—			—
Additional paid-in capital		964.7			946.4
Other Stockholders’ deficit		(1,777.5	)		(1,601.1	)

Total stockholders’ deficit		(812.8	)		(654.7	)

Total liabilities and stockholders’ deficit	$	3.4		$	3.8

F-77

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

(Parent Company Only)

Statements of cash flows

(In million)



	Fiscal year ended
	December 29, 2019			December 30, 2018			December 31, 2017

Cash Flows from Operating activities:
Net loss	$	(156.9	)	$	(248.8	)	$	(116.3	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Equity loss in subsidiaries		156.9			248.8			116.3
Changes in operating assets and liabilities, net of effects of acquisitions:		—			—			0.5

Cash used in operating activities		—			—			0.5


Cash Flows from Investing activities:
Loans to subsidiaries		(3.3	)		—			—

Cash used in investing activities		(3.3	)		—			—


Cash Flows from Financing activities:
Repurchase of common stock		(0.3	)		(0.5	)		—
Proceeds from exercise of stock options		—			0.2			3.2

Cash (used in) provided by financing activities		(0.3	)		(0.3	)		3.2

Effect of exchange rate changes on cash		—			—			—

Decrease in cash, cash equivalents and restricted cash		(3.6	)		(0.3	)		3.7
Cash, cash equivalents and restricted cash at beginning of year		3.6			3.9			0.2

Cash, cash equivalents and restricted cash at end of year	$	—		$	3.6		$	3.9

Note to Registrant’s Condensed Financial Statements (Parent Company Only)

Basis of Presentation

These condensed Ortho-Clinical Diagnostics Bermuda Co. Ltd. (“Ortho” or “Parent Company”) only financial statements have been prepared in accordance with Rule 12-04 of Regulation S-X, as the restricted net assets of the subsidiaries of the Parent Company exceed 25% of the consolidated net assets of the Parent Company as stipulated by Rule 5-04, Section I from Regulation S-X. The ability of the Parent Company’s operating subsidiaries to pay dividends is restricted due to the terms of the subsidiaries’ Credit Agreement and indentures as defined in Note 10, “Borrowings,” to the consolidated financial statements.

F-78

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

Ortho is a holding company that conducts substantially all of its business operations through its subsidiaries. These condensed Parent Company only financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the Parent Company accounts for investments in its subsidiaries using the equity method. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes thereto.

(27) Subsequent events

These consolidated financial statements reflect management’s evaluation of subsequent events, through March 11, 2020, the date the consolidated financial statements were available to be issued.

(28) Subsequent events (unaudited)

In connection with the reissuance of the financial statements, management has evaluated subsequent events through October 16, 2020, the date the consolidated financial statements were available to be reissued.

On June 12, 2020 the Company used the net proceeds from the issuance of the 2025 Notes, after payments of fees and expenses, to fund the redemption and discharge of the remaining $300 million of 2022 Notes.

On September 4, 2020, Ortho and Quotient entered into a binding letter agreement (the “Letter Agreement”)

pursuant to which the Company and Quotient agreed:

•

to confirm the termination of the parties’ prior Distribution and Supply Agreement and various related contracts (Prior Quotient Agreement);

•

to end the parties’ disputes regarding the Prior Ortho Agreement by executing mutual releases and terminating their pending arbitration proceeding related to the Prior Quotient Agreement; and

•

to negotiate in good faith, and use their respective reasonable best efforts to execute, a new distribution agreement (the “New Distribution Agreement”) based on the terms set forth in the Letter Agreement, but if for any reason no such definitive agreement is reached, the Letter Agreement will govern the parties’ respective rights and obligations as a binding contract.

Pursuant to the Letter Agreement, the Company made an initial, non-refundable milestone payment of

$7.5 million to Quotient on the date of the Letter Agreement. In addition to the initial $7.5 million milestone

payment, Ortho will be required to make up to another $60 million of additional “milestone” payments upon

achievement of certain regulatory milestones and commercial sales benchmarks, including up to $25 million

upon the achievement by Ortho of certain cumulative gross revenue hurdles.

F-79

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

December 29, 2019

(Dollars in millions, unless otherwise stated)

In the Letter Agreement, the Company and Quotient have agreed that the Company will have the right to exclusively distribute in the United States, the European Economic Area, UK and Switzerland a transfusion diagnostic patient immunohematology microarray (“PIM”), intended for use with Quotient’s MosaiQ Instruments, on which multiple compounds are placed which, when exposed to human blood samples, generate reactions that indicate the presence or absence of certain blood characteristics and antigens and is intended for immuno-hematological testing of the blood of medical patients during the course of their care or treatment.

F-80

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of operations

(Unaudited)

(In millions, except share and per share data)



	Fiscal nine months ended
	September 27, 2020			September 29, 2019
Net revenue	$	1,249.6		$	1,327.8
Cost of revenue, excluding amortization of intangible assets		650.2			684.0

Gross profit		599.4			643.8
Selling, marketing and administrative expenses		347.9			379.5
Research and development expense		82.1			73.7
Amortization of intangible assets		98.7			98.7
Other operating expense, net		22.8			36.7

Income from operations		47.9			55.2
Interest expense, net		148.6			177.7
Tax indemnification expense (income), net		11.6			31.4
Other expense, net		61.1			34.5

Loss before benefit from income taxes		(173.4	)		(188.4	)
Benefit from income taxes		(2.4	)		(29.9	)

Net loss	$	(171.0	)	$	(158.5	)

Basic and diluted net loss per common share	$	(1.86	)	$	(1.73	)
Basic and diluted weighted-average common shares outstanding		91,855,752			91,358,259
Unaudited pro forma basic and diluted net loss per common share
Unaudited pro forma basic and diluted weighted-average common shares outstanding

The accompanying notes are an integral part of these consolidated financial statements.

F-81

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of comprehensive loss

(Unaudited)

(In millions)



	Fiscal nine months ended
	September 27, 2020			September 29, 2019
Net loss	$	(171.0	)	$	(158.5	)

Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		1.7			(7.0	)
Foreign currency derivatives		(2.3	)		0.5
Interest rate derivatives		(49.0	)		(21.5	)

Other comprehensive loss, before tax		(49.6	)		(28.0	)
Income tax provision related to items of other comprehensive loss		—			—

Other comprehensive loss, net of tax		(49.6	)		(28.0	)

Comprehensive loss	$	(220.6	)	$	(186.5	)

The accompanying notes are an integral part of these consolidated financial statements.

F-82

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated balance sheets

(Unaudited)

(In millions, except share and per share data)



	September 27, 2020			December 29, 2019

Assets
Current assets:
Cash and cash equivalents	$	68.6		$	72.0
Accounts receivable (net of allowance for doubtful accounts of $7.8 and $7.5, respectively)		308.7			348.5
Inventories		287.4			253.9
Other current assets		159.5			147.0

Total current assets		824.2			821.4
Property, plant and equipment, net		803.7			848.2
Goodwill		558.9			567.3
Intangible assets, net		1,030.9			1,134.5
Deferred income taxes		6.0			6.1
Other assets		110.9			211.7

Total assets	$	3,334.6		$	3,589.2


Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	148.3		$	198.4
Accrued liabilities		252.9			291.3
Deferred revenue		27.3			36.3
Current portion of borrowings		161.0			156.7

Total current liabilities		589.5			682.7
Long-term borrowings		3,552.7			3,442.4
Employee-related obligations		39.2			36.9
Other liabilities		111.2			175.0
Deferred income taxes		69.0			65.0

Total liabilities		4,361.6			4,402.0

Commitments and contingencies (Note 17)
Stockholders’ Deficit:
Common stock, $0.00001 par, 1,000,000,000 shares authorized, 91,994,814 and 91,902,564 shares issued and outstanding as of September 27, 2020 and December 29, 2019, respectively		—			—
Additional paid-in capital		971.1			964.7
Accumulated deficit		(1,876.6	)		(1,705.6	)
Accumulated other comprehensive loss		(121.5	)		(71.9	)

Total stockholders’ deficit		(1,027.0	)		(812.8	)

Total liabilities and stockholders’ deficit	$	3,334.6		$	3,589.2

The accompanying notes are an integral part of these consolidated financial statements.

F-83

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statement of changes in stockholders’ deficit

(Unaudited)

(In millions)



	Common stock shares issued		Common stock par value		Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive loss			Total
Balance as of June 28, 2020		91,979,611	$	—	$	968.7	$	(1,848.1	)	$	(127.1	)	$	(1,006.5	)
Net loss		—		—		—		(28.5	)		—			(28.5	)
Exercise of stock options		13,426		—		—		—			—			—
Restricted stock grant, net of shares retained for taxes		1,777		-		-		-			-			-
Recognition of stock-based compensation		—		—		2.4		—			—			2.4
Foreign currency derivatives, net of tax of $0.0		—		—		—		—			(3.5	)		(3.5	)
Interest rate derivatives, net of tax of $0.0		—		—		—		—			1.0			1.0
Foreign currency translation adjustments		—		—		—		—			8.1			8.1

Balance as of September 27, 2020		91,994,814	$	—	$	971.1	$	(1,876.6	)	$	(121.5	)	$	(1,027.0	)



	Common stock shares issued		Common Stock par value		Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive loss			Total
Balance as of June 30, 2019		91,504,764	$	—	$	960.1	$	(1,655.1	)	$	(60.7	)	$	(755.7	)
Net loss		—		—		—		(52.1	)		—			(52.1	)
Exercise of stock options		184,713		—		—		—			—			—
Recognition of stock-based compensation		—		—		2.1		—			—			2.1
Foreign currency derivatives, net of tax of $0.0		—		—		—		—			2.8			2.8
Interest rate derivatives, net of tax of $0.0		—		—		—		—			(12.8	)		(12.8	)
Foreign currency translation adjustments		—		—		—		—			(9.5	)		(9.5	)

Balance as of September 29, 2019		91,689,477	$	—	$	962.2	$	(1,707.2	)	$	(80.2	)	$	(825.2	)

The accompanying notes are an integral part of these consolidated financial statements

F-84

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statement of changes in stockholders’ deficit

(Unaudited)

(In millions)



	Common stock shares issued		Common stock par value		Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive loss			Total
Balance as of December 29, 2019		91,902,564	$	—	$	964.7	$	(1,705.6	)	$	(71.9	)	$	(812.8	)
Net loss		—		—		—		(171.0	)		—			(171.0	)
Exercise of stock options		90,473		—		0.2		—			—			0.2
Restricted stock grant, net of shares retained for taxes		1,777		—		—		—			—			—
Recognition of stock-based compensation		—		—		6.2		—			—			6.2
Foreign currency derivatives, net of tax of $0.0		—		—		—		—			(2.3	)		(2.3	)
Interest rate derivatives, net of tax of $0.0		—		—		—		—			(49.0	)		(49.0	)
Foreign currency translation adjustments		—		—		—		—			1.7			1.7

Balance as of September 27, 2020		91,994,814	$	—	$	971.1	$	(1,876.6	)	$	(121.5	)	$	(1,027.0	)



	Common stock shares issued			Common stock par value		Additional paid-in capital			Accumulated deficit			Accumulated Other comprehensive loss			Total
Balance as of December 30, 2018		91,109,238		$	—	$	946.4		$	(1,548.9	)	$	(52.2	)	$	(654.7	)
Net loss		—			—		—			(158.5	)		—			(158.5	)
Exercise of stock options		595,729			—		—			—			—			—
Restricted stock grant, net of shares retained for taxes		3,947			—		—			—			—			—
Share repurchases		(19,437	)		—		(0.4	)		—			—			(0.4	)
Recognition of stock-based compensation		—			—		16.2			—			—			16.2
Impact from adoption of ASU 2017-12		—			—		—			0.2			(0.2	)		—
Foreign currency derivatives, net of tax of $0.0													0.5			0.5
Interest rate derivatives, net of tax of $0.0		—			—		—			—			(21.3	)		(21.3	)
Foreign currency translation adjustments		—			—		—			—			(7.0	)		(7.0	)

Balance as of September 29, 2019		91,689,477		$	—	$	962.2		$	(1,707.2	)	$	(80.2	)	$	(825.2	)

The accompanying notes are an integral part of these consolidated financial statements.

F-85

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Consolidated statements of cash flows

(Unaudited)

(Dollars in millions)



	Fiscal nine months ended
	September 27, 2020			September 29, 2019

Cash Flows from Operating activities:
Net loss	$	(171.0	)	$	(158.5	)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization		239.6			245.2
Unrealized foreign exchange losses (gains), net		51.1			16.9
Loss on extinguishment of 2022 Notes		12.6			—
Amortization of deferred financing costs and original issue discount		8.0			9.2
Stock-based compensation		6.2			16.2
Deferred tax provision		4.3			(0.6	)
Provision for doubtful accounts		1.4			2.9
Other non-cash, net		1.4			12.4
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		34.5			(4.0	)
Inventories		(126.9	)		(85.7	)
Other current and non-current assets		(27.6	)		(36.9	)
Accounts payable and accrued liabilities		(75.8	)		77.4
Deferred revenue		(9.3	)		(3.1	)
Other current and non-current liabilities		2.9			5.6

Cash (used in) provided by operating activities		(48.6	)		97.0


Cash Flows from Investing activities:
Purchase of property, plant and equipment		(28.4	)		(45.2	)
Milestone payments and others		0.9			(2.3	)

Cash used in investing activities		(27.5	)		(47.5	)


Cash Flows from Financing activities:
Proceeds from other long-term borrowings		1,421.0			2.0
Payments on long-term borrowings		(1,347.7	)		(37.3	)
Proceeds from (payments on) short-term borrowings, net		(2.2	)		(16.2	)
Proceeds from exercise of stock options		0.2			—
Repurchase of common stock		—			(0.4	)

Cash provided by (used in) financing activities		71.3			(51.9	)

Effect of exchange rate changes on cash		0.5			(0.8	)

Decrease in cash		(4.3	)		(3.2	)
Cash, cash equivalents and restricted cash at beginning of period		84.0			74.6

Cash, cash equivalents and restricted cash at end of period	$	79.7		$	71.4



	September 27, 2020		September 29, 2019
Reconciliation to amounts within the consolidated balance sheets:
Cash and cash equivalents	$	68.6	$	54.2
Restricted cash included in Other assets		11.1		17.2

Cash, cash equivalents and restricted cash	$	79.7	$	71.4

The accompanying notes are an integral part of these financial statements.

F-86

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(1) General and description of the business

Ortho Clinical Diagnostics Bermuda Co. Ltd. (“Bermuda Holdco” or the “Company”), a Bermuda exempted limited liability company formed at the direction of The Carlyle Group L.P. (“Carlyle”), was incorporated on January 8, 2014 for the purpose of consummating the acquisition of Ortho Clinical Diagnostics (“Ortho”), a business formerly owned by Johnson & Johnson, including certain assets of Ortho and all the capital stock of certain entities engaged in the Ortho business (the “Acquisition”). On January 16, 2014, Bermuda Holdco entered into an acquisition agreement (the “Acquisition Agreement”) with Johnson & Johnson pursuant to which, among other things, Bermuda Holdco would acquire Ortho.

Bermuda Holdco is a holding company with no business operations or assets other than cash, intercompany receivables, guarantees of certain obligations of Ortho-Clinical Diagnostics, Inc. (“Ortho U.S.”) and 100% of its ownership interest of Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., which itself is a holding company with no operations or assets other than cash, intercompany receivables, miscellaneous administrative costs and its ownership of 100% of the capital stock of Ortho-Clinical Diagnostics S.A. (“LuxCo”). LuxCo, together with its indirect wholly owned subsidiary, Ortho-Clinical Diagnostics, Inc. (“Ortho U.S.”), are co-borrowers under the Senior Secured Credit Facilities and co-issuers of the Notes (each as defined below). The Company’s global operations are conducted by indirect wholly owned subsidiaries.

Both the Company’s domestic and international operations have been and continue to be affected by the ongoing global pandemic of a novel strain of coronavirus (“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S. and international markets. In March 2020, the World Health Organization declared COVID-19 a pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, President Trump announced a National Emergency relating to the disease. The COVID-19 pandemic has caused significant volatility and uncertainty in the U.S. and international markets, which could result in a prolonged economic downturn that has disrupted and is expected to continue to disrupt the Company’s business. The Company has a direct commercial presence in more than 30 countries, including many of the regions most impacted by the COVID-19 pandemic.

As a result of the COVID-19 pandemic, during the fiscal nine months ended September 27, 2020 the Company has experienced decreased demand from customers for certain of its products, and it is expected that the negative impact to revenues will continue for the remainder of fiscal year 2020. The extent of the negative impact on revenues is uncertain and will depend on the length and extent of the pandemic, its consequences, and containment measures. Any prolonged material disruption of the Company’s employees, suppliers, manufacturing, or customers could materially impact its consolidated financial position, results of operations or cash flows.

F-87

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

liabilities and commitments in the normal course of business. As shown in the consolidated financial statements, the Company has total cash and cash equivalents of $68.6 million and an accumulated deficit of $1,876.6 million as of September 27, 2020. The Company has generated U.S. GAAP losses since the acquisition from Johnson & Johnson and reported a net loss of $171.0 million and used $48.6 million of cash from operations during the fiscal nine months ended September 27, 2020. The Company’s primary future cash needs will be to meet debt service requirements, working capital needs and capital expenditures. Management is required to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued and, if so, disclose that fact.

The Company’s debt agreements contain various covenants that may restrict the Company’s ability to borrow on available credit facilities and future financing arrangements and require the Company to remain below a specific credit coverage threshold. The Company’s credit agreement has a financial covenant (First Lien Net Leverage Ratio (as defined in the credit agreement) not to exceed 6-to-1, subject to two 50 basis point step-downs on June 30, 2021 and September 30, 2022) that is tested when borrowings under the Revolving Credit Facility exceed $105 million at any period end reporting date. As of September 27, 2020, the Company had no outstanding borrowings outstanding under its Revolving Credit Facility. The Company believes that it has complied and will continue to comply with the financial covenant for the next 12 months. In the event the Company does not comply with the financial covenant of the Revolving Credit Facility, the lenders will have the right to call on all of the borrowings under the revolving facility. If the lenders on the revolving facility terminate their commitments and accelerate the loans, this would become a cross default to other material indebtedness.

(2) Basis of presentation of the consolidated financial statements

The interim unaudited consolidated financial statements for the Company include the accounts of Bermuda Holdco and its subsidiaries. All intercompany accounts and transactions have been eliminated. These

F-88

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and are consistent with Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Results for interim periods should not be considered indicative of results for a full year or any subsequent period. The interim unaudited consolidated financial statements do not represent complete financial statements and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended December 29, 2019.

The Company follows the concept of a fiscal year which ends on the Sunday nearest to the end of the month of December, and fiscal quarters which end on the Sunday nearest to the end of the months of March, June, and September. Each fiscal quarter presented consists of 13 weeks.

(3) Summary of significant accounting policies

There have been no material changes to the significant accounting policies previously disclosed in the Company’s consolidated financial statements for the fiscal year ended December 29, 2019 except for the following:

Accounts receivable and allowance for doubtful accounts

Accounts receivable are recognized net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected credit losses resulting from the collectability of customer accounts. The Company establishes a reserve based on historical losses, the age of receivables, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts, and specific allowances for large or risky accounts. Receivables from federal and state government customers as well as large corporate customers have historically been less susceptible to collectability risk. Amounts later determined to be uncollectible are charged or written off against this allowance.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the periods and disclosures. The extent to which the COVID-19 pandemic impacts the Company’s accounting estimates, business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of the COVID-19 pandemic, the extent to which it will impact worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic as of September 27, 2020 and through the date of this report. The Company bases its estimates on historical experience and on various other assumptions that the Company believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts, inventory and related reserves and the carrying value of the goodwill and other long-lived assets. The Company’s future

F-89

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Net loss per share

Basic net loss per share attributable to the Company’s common shareholders is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock that have been issued but are not yet vested. Diluted net loss per share attributable to the Company’s common shareholders is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period when the effect is dilutive. Common equivalent shares result from the assumed exercise of outstanding stock options (the proceeds of which are then assumed to have been used to repurchase outstanding stock using the treasury stock method) and the vesting of unvested restricted shares of common stock. Common stock equivalent shares have not been included in the net loss per common share calculation because the effect would have been anti-dilutive. Total potential gross common equivalent shares consisted of the following.



	Fiscal nine months ended
	September 27, 2020		September 29, 2019
Stock options		10,151,145		7,293,112
Unvested restricted shares		209,868		8,561

		10,361,013		7,301,673

Recently adopted pronouncements

Reference rate reform (Topic 848)

In March 2020, the FASB issued ASC Update No. 2020-04 Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the fiscal second quarter ended September 27, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. The application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements.

Financial instruments—credit losses (Topic 326)

In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring

F-90

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The Company adopted this guidance on December 30, 2019 using the modified retrospective approach and the adoption did not have a material effect on the consolidated financial statements.

Cloud computing

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted the standards on a prospective basis on December 30, 2019. The adoption did not have a material impact on the Company’s consolidated financial statements.

Recent accounting pronouncements not yet adopted

Income taxes (Topic 740), simplifying the accounting for income taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intraperiod tax allocations, interim-period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim period tax accounting. The guidance is effective for fiscal years beginning after December 15, 2020. Early adoption permitted. The Company is in the process of evaluating the impact that the adoption of this standard may have on its consolidated financial statements.

(4) Revenue

The Company generates revenue primarily from the sale of in-vitro diagnostics instruments, assays, reagents and other consumables, accessories and service contracts. The Company generally recognizes revenue when the customer obtains control of the products, which occurs at a point in time. For instruments, the Company generally recognizes revenue upon installation and customer acceptance. The Company has determined that

F-91

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

the installation services do not constitute a separate performance obligation. For assays, reagents and other consumables, the Company recognizes revenue upon shipment or delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time using a time-based model, which is consistent with the pattern in which we provide the services.

A portion of the Company’s product revenue includes revenue earned under reagent rental programs which provide customers the right to use instruments at no separate cost to the customer in consideration for a multi-year agreement to purchase reagents, assays and consumables. The Company allocates a portion of the revenue from the future consumable sale to the instrument based on the customers’ minimum volume commitment and recognizes revenue at the time of the future sale of reagents, assays and consumables. The cost of the instrument is capitalized within property and equipment, and is charged to cost of revenue on a straight-line basis over the term of the minimum purchase agreement. Revenue earned from operating leases is recognized over the lease term, normally five to seven years. Revenue earned under sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease. Revenue is recognized when control has transferred for the reagents, assays and consumables. Costs related to product sales are recognized at time of delivery.

The Company recognizes product revenues at the net sales price, which includes estimates of variable consideration related to rebates and volume discounts. Rights of return are generally not included in the Company’s arrangements with customers. Management’s estimates of rebates and discounts are determined using the expected value method and take into consideration historical experience, contractual and statutory requirements, and other relevant information such as forecasted activity. These reserves reflect the Company’s best estimate of the amount of consideration to which it is entitled. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant future reversal of cumulative revenue under the contract.

Contract balances

Timing of revenue recognition may differ from timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (“contract asset”). Contract assets are included within other current assets or other assets in the Company’s consolidated balance sheet and are transferred to accounts receivable when the right to payment becomes unconditional. The balance of contract assets recorded in our consolidated balance sheets were as follows:



	September 27, 2020		December 29, 2019
Other current assets	$	39.5		31.5
Other assets		6.5		2.0

Total contract assets	$	46.0	$	33.5

F-92

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

The contract asset balance consists of the following components:

•

A customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $18.9 million and $13.8 million as of September 27, 2020 and December 29, 2019, respectively, of which $6.5 million and $2.0 million was recorded in other assets as of September 27, 2020 and December 29, 2019, respectively.

•

Contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents, however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract, which allows the Company to record the related revenue. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $24.0 million and $14.1 million as of September 27, 2020 and December 29, 2019, respectively.

•

One of the Company’s contract manufacturing agreements where revenue is recognized as the products are manufactured. The balance of the contract asset related to this arrangement was $3.1 million and $5.6 million as of September 27, 2020 and December 29, 2019, respectively.

The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts. Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts. No credit losses related to contract assets were recognized during the fiscal nine months ended September 27, 2020 and September 29, 2019, respectively.

The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). The Company’s contract liabilities consist of deferred revenue primarily related to customer service contracts. The Company classifies deferred revenue as current or noncurrent based on the timing of the transfer of control or performance of the service. The balance of the Company’s current deferred revenue was $27.3 million and $36.3 million as of September 27, 2020 and December 29, 2019, respectively. The Company has one arrangement with a customer that is expected to be recognized beyond one year. The balance of the deferred revenue included in long term liabilities was $6.8 million and $6.9 million as of September 27, 2020 and December 29, 2019, respectively, and was included in other liabilities in the consolidated balance sheet. The amount of deferred revenue as of December 29, 2019 that was recorded in revenue during the fiscal nine months ended September 27, 2020 was $33.2 million.

Disaggregation of revenue

The Company generates product revenue in the following lines of business:

•

Clinical Laboratories—Focused on clinical chemistry and immunoassay instruments and tests to detect and monitor disease progression across a broad spectrum of therapeutic areas.

F-93

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

•

Other Product Revenue—Our other product revenue includes revenues primarily from contract manufacturing.

The Company also enters into collaboration and license agreements pursuant to which the Company derives collaboration and royalty revenues. During the fiscal third quarter ended September 27, 2020, the Company entered into two agreements with the Biomedical Advanced Research and Development Authority (BARDA), a division of the U.S. Department of Health and Human Services (HHS), for two awards of up to $13.6 million to develop and submit Emergency Use Authorizations and 510k applications to the FDA for our COVID-19 antigen and antibody tests. During the fiscal nine months ended September 27, 2020, the Company recognized $2.5 million of grant revenue related to these grants based upon project milestones completed to date.

The following table summarizes net revenue by line of business for the fiscal nine months ended September 27, 2020 and September 29, 2019:



	Fiscal nine months ended
	September 27, 2020		September 29, 2019
Clinical Laboratories	$	816.7	$	845.5
Transfusion Medicine		414.5		439.6
Other Product Revenue		3.7		26.6

Total Product Revenue		1,234.9		1,311.7
Collaborations and Other Revenue		14.7		16.1

Net Revenue	$	1,249.6	$	1,327.8

(5) Inventories

The Company’s inventories were as follows:



	September 27, 2020		December 29, 2019
Raw materials and supplies	$	80.8	$	70.9
Goods in process		33.8		36.7
Finished goods		172.8		146.3

Total Inventories	$	287.4	$	253.9

F-94

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(6) Goodwill

Changes in goodwill by segment were as follows:



	Fiscal nine months ended September 27, 2020
	North America			EMEA			Greater China			Other			Total
Balance at the beginning of the year	$	330.8		$	36.7		$	116.6		$	83.2		$	567.3
Foreign currency translation		(0.3	)		(1.3	)		(4.0	)		(2.8	)	$	(8.4	)

Balance as of the end of the period		330.5			35.4			112.6			80.4			558.9

On December 30, 2019, the Company established new reporting units aligned to our geographically-based reportable segments. The balance at the beginning of the year in the table above shows how goodwill was allocated to the reporting unit on a relative fair value basis.

(7) Other assets

The components of other assets were as follows:



	September 27, 2020		December 29, 2019
Indemnity receivables	$	7.3	$	101.3
Right-of-use asset		30.2		40.3
Equity investments		20.7		20.1
Indirect tax benefit		16.3		16.8
Restricted cash		11.1		12.0
Contract asset		6.5		2.0
Deposits and advances		6.3		5.2
Lease receivable		3.6		6.3
Other		8.9		7.7

Total Other Assets	$	110.9	$	211.7

F-95

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(8) Borrowings

As of September 27, 2020 and December 29, 2019, the components of borrowings were as follows:



	September 27, 2020			December 29, 2019

Senior Secured Credit Facilities
Dollar Term Loan Facility	$	2,200.0		$	2,243.6
Euro Term Loan Facility		390.4			—
Revolving Credit Facility		—			—
2028 Notes		675.0			—
2025 Notes		400.0			—
2022 Notes		—			1,300.0
Accounts Receivable Financing		75.0			75.0
Sale and Leaseback Financing		20.5			20.5
Capital lease obligation		1.0			2.6
Other short-term borrowings		2.1			1.0
Other long-term borrowings		4.2			4.6
Unamortized deferred financing costs		(42.7	)		(34.6	)
Unamortized original issue discount		(11.8	)		(13.6	)

Total borrowings		3,713.7			3,599.1
Less: Current portion		(161.0	)		(156.7	)

Long-term borrowings	$	3,552.7		$	3,442.4

Senior secured credit facilities

On June 30, 2014, LuxCo, as “Lux Borrower”, and its indirect wholly owned subsidiary, Ortho U.S., as “US Borrower,” entered into the Senior Secured Credit Facilities comprising a $2,175.0 million senior secured U.S. dollar denominated term loan (the “Term Loan”) and a $350.0 million senior secured multi-currency revolving facility (the “Revolving Credit Facility”). On June 6, 2017, the Company amended its Term Loan to provide for an additional loan of $200.0 million (the “Incremental Term Loan”). The net proceeds of $197.6 million were used primarily to reduce the outstanding borrowings on the Company’s existing Revolving Credit Facility and general corporate purposes.

On June 8, 2018, the Company entered into a second amendment of its Senior Secured Credit Facilities. The amended Senior Secured Credit Facilities refinanced the existing Term Loan, increased the Term Loan balance to $2,325.0 million and extended the maturity date from June 30, 2021 to June 30, 2025. The amendment also extended the maturity of the Revolving Credit Facility from June 30, 2021 to June 30, 2023. Certain terms of the financial covenant were also amended. In addition, the amendment also lowered the applicable interest rates on the Term Loan and Revolving Credit Facility.

On January 7, 2020, the Company entered into a third amendment of its Senior Secured Credit Facilities, which amended the financial covenant contained in the credit agreement governing such Senior Secured Credit Facilities. After giving effect to the amendment, the financial covenant is tested when borrowings under the

F-96

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

Revolving Credit Facility exceed $105 million at any period end reporting date and provides that Holdings will not permit the First Lien Net Leverage Ratio as of the end of such fiscal quarter of the Lux Borrower and its Restricted Subsidiaries to be greater than (i) 6.00:1.00 for each fiscal quarter ending after the Third Amendment Effective Date and on or prior to June 30, 2021, (ii) 5.50:1.00 for each fiscal quarter ending after June 30, 2021 and on or prior to September 30, 2022 and (iii) 5.00:1:00 for each fiscal quarter ending thereafter.

On January 27, 2020, the Company entered into a fourth amendment of its Senior Secured Credit Facilities, where the Company entered into a Euro-denominated senior secured term loan facility in an amount equal to the Euro-equivalent of $375 million, which bears interest at a rate of Euribor + 350 basis points per annum. The Euro Term Loan Facility will mature on June 30, 2025. The Euro Term Loan Facility is being amortized in equal quarterly installments in an amount equal to 1.00% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity. The Company incurred deferred financing costs of $5.4 million related to the Euro Term Loan Facility, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the Euro Term Loan Facility.

As of September 27, 2020 and December 29, 2019, the remaining balance of deferred financing costs related to the Dollar Term Loan Facility was $18.2 million and $20.9 million, respectively. As of September 27, 2020, the remaining balance of deferred financing costs related to the Euro Term Loan Facility was $4.8 million. As of September 27, 2020 and December 29, 2019, the remaining unamortized balance related to the Revolving Credit Facility was $3.7 million and $4.8 million, respectively. The effective interest rate of the Dollar Term Loan Facility as of September 27, 2020 is 5.65%.

As of September 27, 2020, there was no outstanding balance under the Revolving Credit Facility and letters of credit issued under the Revolving Credit Facility totaled $35.6 million, which reduced the availability under the Revolving Credit Facility to $314.4 million. The Senior Secured Credit Facilities are subject to various covenants that may restrict the Company’s ability to borrow on available credit facilities and future financing arrangements or require the Company to remain below a specific credit coverage threshold as indicated in our debt agreements. The Company was in compliance with the covenants as of September 27, 2020.

2025 Notes

On June 11, 2020, the Lux Borrower, as “Lux Issuer,” and Ortho U.S., as “U.S. Issuer” (collectively, the “Issuers”), issued $400 million aggregate principal amount of the 2025 Notes, which bear interest at a rate of 7.375% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2020. The 2025 Notes will mature on June 1, 2025. The 2025 Notes are the Issuers’ senior unsecured obligations and the 2025 Notes and the guarantees thereof rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2028 Notes. The 2025 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities and the Financing Program, to the extent of the value of the assets securing such debt. In addition, the 2025 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Issuers’ non-guarantor subsidiaries. The Company incurred deferred financing costs of

F-97

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

$7.5 million related to the 2025 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2025 Notes. As of September 27, 2020, the remaining unamortized balance was $7.3 million. The effective interest rate on the Notes is 8.03%.

On or after June 1, 2022, the Issuers have the option to redeem all or part of the 2025 Notes at the following redemption prices (expressed as percentages of principal amount):



Year	Price
2022		103.688%
2023		101.844%
2024 and thereafter		100.000%

Notwithstanding the foregoing, at any time and from time to time prior to June 1, 2022, the Issuers may at their option redeem in the aggregate up to 100% of the original aggregate principal amount of the 2025 Notes plus accrued and unpaid interest, if any to, but not including, the date of redemption, plus a “make-whole premium”. The Issuers may also, at their option, redeem up to 40% of the principal amount of the 2025 Notes with the net cash proceeds of certain equity offerings at a redemption price of 107.375% of the principal amount of the 2025 Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

2028 Notes

On January 27, 2020, the Issuers, issued $675 million aggregate principal amount of the 2028 Notes, which bear interest at a rate of 7.250% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 2020. The 2028 Notes will mature on February 1, 2028. The 2028 Notes are the Issuers’ senior unsecured obligations and the 2028 Notes and the guarantees thereof rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2025 Notes. The 2028 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities and the Financing Program, to the extent of the value of the assets securing such debt. In addition, the 2028 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Issuers’ non-guarantor subsidiaries. The Company incurred deferred financing costs of $12.9 million related to the 2028 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2028 Notes. As of September 27, 2020, the remaining unamortized balance was $12.2 million. The effective interest rate on the Notes is 7.76%.

On or after February 1, 2023, the Issuers have the option to redeem all or part of the 2028 Notes at the following redemption prices (expressed as percentages of principal amount):



Year	Price
2023		103.625%
2024		101.813%
2025 and thereafter		100.000%

F-98

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

Notwithstanding the foregoing, at any time and from time to time prior to February 1, 2023, the Issuers may at their option redeem in the aggregate up to 100% of the original aggregate principal amount of the 2028 Notes plus accrued and unpaid interest, if any to, but not including, the date of redemption, plus a “make-whole premium”. The Issuers may also, at their option, redeem up to 40% of the principal amount of the 2028 Notes with the net cash proceeds of certain equity offerings at a redemption price of 107.25% of the principal amount of the 2028 Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

Concurrent with the issuance of the $675 million aggregate principal amount of 2028 Notes, the Company entered into U.S. Dollar to Japanese Yen cross currency swaps for a total notional amount of $350 million at a weighted average interest rate of 5.56%, with a five-year term in order to lower interest expense on the 2028 Notes.

2022 Notes

On May 16, 2014, the Issuers issued the 2022 Notes and related guarantees thereof and the proceeds were placed into escrow. On the Day 1 Closing Date, the proceeds of the 2022 Notes were released from escrow and, together with the Equity Contribution and the proceeds from borrowings under the Term Loan Facility, were used to fund the Acquisition. The 2022 Notes were sold at par and are due May 15, 2022. The 2022 Notes bear interest at 6.625% and interest is payable semi-annually on May 15 and November 15. Costs related to the issuance of the 2022 Notes of $36.8 million are recorded as a reduction of the principal amount of the borrowings and are amortized using the effective interest rate method as a component of interest expense over the life of the Notes.

On January 28, 2020, the Company used the net proceeds from the issuance of the Euro Term Loan Facility and 2028 Notes, after payment of fees and expenses, to fund the redemption and discharge of $1.0 billion of the 2022 Notes. On June 12, 2020 the Company used the net proceeds from the issuance of the 2025 Notes, after payments of fees and expenses, to fund the redemption and discharge of the remaining $300 million of 2022 Notes. The redemption of the 2022 Notes was accounted for as an extinguishment of debt. During the fiscal nine months ended September 27, 2020, the Company recorded a $12.6 million loss on extinguishment of debt, primarily related to the unamortized deferred financings costs on the redeemed 2022 Notes, included as a component of other expense, net. As of December 29, 2019, the remaining unamortized balance of the deferred financing cost was $13.4 million.

Sale and leaseback financing

F-99

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

intends to negotiate with the Buyer-lessor the purchase of the property and equipment at the end of the initial term and have had discussions on negotiating the repurchase price for the property and equipment. The Company and the Buyer-lessor have been unable to agree on a repurchase price for the property and equipment and are currently involved in legal proceedings with respect to the lease arrangement. According to the wording of the agreement and subject to certain legal interpretations, if the parties do not reach an agreement to purchase the property and equipment at the end of the initial term, the lease will automatically renew for another year, afterwards the lease will automatically be renewed for successive 6-month periods, provided that each of the Company and the Buyer-lessor have a right to terminate the lease 30 days prior to the end of each 6-month renewal period. A security deposit for the leaseback was retained by the third-party financing company and will be refunded to the Company at the end of the lease term. The balance of the security deposit was $9.1 million as of September 27, 2020 and December 29, 2019, and was included in other current assets in the consolidated balance sheet. The transaction did not meet the criteria for sale-leaseback accounting as the security deposit constitutes a continuing involvement. Therefore, the Company is accounting for this arrangement as a financing and recorded a financing obligation amounting to $36.3 million at inception. As a result of the Company’s adoption of ASC Topic 842 on December 31, 2018, the Company reassessed its accounting treatment of this arrangement and concluded that this arrangement continues to be recorded as a financing obligation.

Accounts receivable financing

In September 2016, the Company entered into a three-year accounts receivable financing program (the “Financing Program”) with a financial institution. The Financing Program is secured by receivables from the Company’s U.S. business that are sold or contributed to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary’s sole business consists of the purchase or receipt of the receivables and subsequent granting of a security interest to the financial institution under the program, and its assets are available first to satisfy obligations and are not available to pay creditors of the Company’s other legal entities. Under the Financing Program, the Company may borrow up to the lower of $75 million or 85% of the accounts receivable borrowing base. At September 27, 2020, the accounts receivable borrowing base was $73.7 million.

Interest on outstanding borrowing under the Financing Program is charged based on a per annum rate equal to LIBOR Rate (with a floor of zero percent and as defined in the agreement) plus the LIBOR Rate Margin (2.25 percentage points) if the related loan is a LIBOR Rate Loan. Otherwise, the per annum rate is equal to a Base Rate (as defined in the agreement) plus the Base Rate Margin (1.25 percentage points). Interest is due and payable, in arrears, on the first day of each month. The Financing Program is also subject to termination under standard events of default as defined.

In addition to customary representations, warranties and affirmative and negative covenants, the program is subject to interest coverage and minimum liquidity covenants. As of September 27, 2020, the Company was in full compliance with all debt covenant requirements.

F-100

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

The following table provides the detail of interest expense, net for the fiscal nine months ended September 27, 2020 and September 29, 2019:



	Fiscal nine months ended
	September 27, 2020			September 29, 2019

Interest expense:
Dollar Term Loan Facility	$	68.6		$	98.3
Euro Term Loan Facility		9.0			—
Revolving Credit Facility		3.4			3.6
2028 Notes		32.8			—
2025 Notes		8.8			—
2022 Notes		14.1			64.4
Accounts Receivable Financing		3.7			4.4

Amortization of:
Deferred financing costs		6.5			7.5
Original issue discount		1.8			1.7
Derivative instruments and other		(0.1	)		(2.1	)
Less: Capitalized interest		—			(0.1	)

Interest expense, net	$	148.6		$	177.7

Future repayments

Below is a schedule of required future repayments of all borrowings outstanding on September 27, 2020:


Remainder of 2020	$	113.8
2021		63.3
2022		63.2
2023		62.8
2024		62.5
Thereafter		3,402.6

	$	3,768.2

F-101

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(9) Accrued liabilities

Accrued liabilities included in current liabilities consist of the following:



	September 27, 2020		December 29, 2019
Accrued compensation and employee-related obligations	$	90.3	$	96.7
Accrued interest		31.1		46.1
Income taxes payable		31.1		37.9
Current portion of operating lease liabilities		16.9		16.3
Accrued commissions and rebates		18.0		18.8
Accrued taxes other than income		9.7		14.2
Other accrued liabilities		55.8		61.3

Total Accrued Liabilities	$	252.9	$	291.3

(10) Restructuring costs

Restructuring costs for the fiscal nine months ended September 27, 2020 and September 29, 2019 are presented in the consolidated statements of operations in the following captions.



	Fiscal nine months ended
	September 27, 2020			September 29, 2019
Cost of revenue	$	0.5		$	10.3
Other operating expense, net		(0.6	)		0.2

Total restructuring costs	$	(0.1	)	$	10.5

The following table summarizes the activities related to restructuring reserves and costs for the fiscal nine months ended September 27, 2020:



	Severance and employee benefits			Other			Total
Balance at December 29, 2019	$	2.4		$	6.0		$	8.4
Restructuring costs (credits)		(0.6	)		0.5			(0.1	)
Payments made		(1.6	)		(6.3	)		(7.9	)

Balance at September 27, 2020	$	0.2		$	0.2		$	0.4

The Company has several initiatives intended to strengthen operational performance and to support building capabilities to enable us to win in the marketplace. These restructuring activities to improve operational performance are primarily cost reduction and productivity improvement initiatives in procurement, manufacturing, supply chain and logistics.

During the fiscal year ended January 3, 2016, the Company announced that it will outsource its equipment manufacturing operations in its Rochester, New York facility and refurbishment operations in Neckargemund,

F-102

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

Germany to a third-party contract manufacturing company. During the fiscal year ended January 1, 2017, the Company also initiated other restructuring activities at several other locations. These initiatives were completed during fiscal year 2019, with total charges incurred of $75.4 million. The Company made cash payments of $6.4 million during the fiscal nine months ended September 27, 2020 and has made cumulative cash payments of $70.9 million to date, respectively, related to these initiatives. The majority of the remaining cash payments are expected to be made during fiscal year 2020.

During the fiscal year ended December 30, 2018, the Company announced that it will transfer certain production lines among facilities in order to achieve operational and cost efficiencies. The Company anticipates these initiatives will be substantially completed during fiscal 2021 and will result in total pre-tax charges of approximately $22.0 million, comprised of approximately $12.0 million in accelerated depreciation, $5.0 million in severance charges and $5.0 million in other facility-related costs. The Company incurred net charges of $0.0 million in the fiscal nine months ended September 27, 2020 and $18.9 million of charges cumulative to date. The Company made cash payments of $1.5 million during the fiscal nine months ended September 27, 2020 and has made cumulative cash payments of $5.5 million, respectively, related to these initiatives. The majority of the remaining cash payments are expected to be made during fiscal year 2021.

The Company currently estimates payments of $0.3 million will be made over the following twelve months and are included as a component of “Accrued liabilities” in the consolidated balance sheet as of September 27, 2020.

(11) Collaborations and other relationships

Grifols / Novartis Vaccines and Diagnostics, Inc.

In 1989, Ortho Diagnostics Systems Inc. (now Ortho U.S.) and Chiron Corporation, a predecessor in interest to Novartis Vaccines and Diagnostics, Inc. (“Novartis”), entered into a 50-year collaboration arrangement (the “Joint Business”) to pursue income generating opportunities through the development of certain intellectual properties (“IP”). In January 2014, Novartis transferred its interest in the Joint Business to Grifols Diagnostic Solutions, Inc. (“Grifols”). The transfer to Grifols has not altered the existing structure or operations of the Joint Business. The Company’s portion of the pre-tax net profit shared under the Joint Business was $35.9 million during the fiscal nine months ended September 27, 2020. The Company’s portion of the pre-tax net profit shared under the Joint Business was $52.1 million during the fiscal nine months ended September 29, 2019.

Quotient Limited

F-103

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

customers. The Company has exclusive rights to distribute MosaiQ^™ for the global patient testing market (for blood grouping) and the donor testing market in the developing world and Japan (for blood grouping and serological disease screening). Quotient retains all rights to commercialize MosaiQ^™ in the developed world (excluding Japan) for the donor testing market. On November 27, 2019, Quotient sent the Company a notice purporting to terminate the Agreement effective December 27, 2019. The Company disputes Quotient’s right to terminate the Agreement between Ortho and Quotient and has commenced an arbitration challenging the termination. Under the Agreement, the Company is obligated to make payments to Quotient as certain milestones are achieved in the amount of $59 million. The Company does not anticipate making any such payments in 2020 and the future timing of when such payments would be made, if ever, is unclear at this time.

On December 23, 2019, Ortho and Quotient entered into an agreement under which both parties agreed, while the arbitration is pending, not to enter into any agreement under which Quotient would grant rights to commercialize products that overlap with Ortho’s rights under the agreement without thirty days’ prior written notice to Ortho. Such thirty-day notice will give Ortho the ability to file for injunctive relief should Quotient intend to enter into an agreement with a third party that would limit Ortho’s bargained for rights under the agreement.

On September 4, 2020, Ortho and Quotient entered into a binding letter agreement (the “Letter Agreement”) pursuant to which the Company and Quotient agreed:

•

to confirm the termination of the parties’ prior Distribution and Supply Agreement and various related contracts (the “Prior Quotient Agreement”);

•

to end the parties’ disputes regarding the Prior Quotient Agreement by executing mutual releases and terminating their pending arbitration proceeding related to the Prior Quotient Agreement; and

•

Pursuant to the Letter Agreement, the Company made an initial, non-refundable upfront payment of $7.5 million to Quotient on the date of the Letter Agreement, and recorded a corresponding $7.5 million charge to research and development expense for the fiscal third quarter ended September 27, 2020. In addition to the initial $7.5 million upfront payment, Ortho may be required to make up to an additional $60 million of payments upon achievement of certain regulatory milestones and commercial sales benchmarks, which include up to $25 million of payments upon the achievement by Ortho of certain cumulative revenue milestones. The Company does not anticipate making any such payments in fiscal year 2021.

In the Letter Agreement, the Company and Quotient have agreed that the Company will have the right to exclusively distribute in the United States, the European Economic Area, the UK and Switzerland a transfusion diagnostic patient immunohematology microarray (“PIM”), intended for use with Quotient’s MosaiQ Instruments, on which multiple compounds are placed which, when exposed to human blood samples, generate reactions that indicate the presence or absence of certain blood characteristics and antigens and is intended for immuno-hematological testing of the blood of medical patients during the course of their care or treatment.

F-104

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

During the fiscal nine months ended September 27, 2020, the Company purchased inventories from Quotient amounting to $17.1 million. The Company also purchased inventories from Quotient amounting to $15.7 million during the fiscal nine months ended September 29, 2019.

During the fiscal nine months ended September 27, 2020, the Company recognized $0.2 million in sales to Quotient. During the fiscal nine months ended September 29, 2019, the Company recognized $0.2 million in sales to Quotient.

(12) Income taxes

During the fiscal nine months ended September 27, 2020, the Company incurred a loss before provision for income taxes of $173.4 million and recognized an income tax benefit of $2.4 million resulting in an effective tax rate of 1.4%. The effective tax rate for the period differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefitted due to the establishment of a valuation allowance (2) a decrease in the Company’s pre-Acquisition state reserves for uncertain tax positions due to the settlement of certain tax matters, (3) an increase in the Company’s interest expense on prior year reserves for uncertain tax positions, (4) the tax expense associated with the revaluation of certain deferred tax liabilities in connection with changes in foreign tax rates due to enactment of tax legislation, and (5) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

During the fiscal nine months ended September 29, 2019, the Company incurred a loss before provision for income taxes of $188.4 million and recognized an income tax benefit of $29.9 million resulting in an effective tax rate of 15.9%. The effective tax rate for the period differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefitted due to the establishment of a valuation allowance (2) a decrease in the Company’s pre-Acquisition state and non-U.S. reserves for uncertain tax positions due to the settlement of certain tax matters, (3) an increase in the Company’s interest expense on prior year reserves for uncertain tax positions, and (4) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

The balance of unrecognized tax benefits at September 27, 2020, not including interest and penalties, was $43.1 million, of which $39.2 million would affect the effective income tax rate in future periods, if recognized. The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense. At September 27, 2020, the Company had approximately $14.8 million of interest and penalties accrued related to unrecognized tax benefits. During the period, the Company’s uncertain tax positions, excluding interest, decreased by net $67.3 million as a result of the resolution of state tax matters arising from pre-Acquisition periods. The Company estimates that within the next twelve months, its uncertain tax positions, excluding interest, could decrease by as much as $21.3 million primarily as a result of the resolution of U.S. tax matters arising from pre-Acquisition periods.

Coronavirus Aid, Relief and Economic Security Act

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020. The CARES Act includes significant economic and tax provisions to provide aid to businesses impacted by the pandemic. The CARES Act temporarily lifts certain limitations on

F-105

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

corporate deductions originally imposed by the Tax Cuts and Jobs Act of 2017 including elimination of the 80% taxable income limitation on the utilization of NOL carryforwards for the 2018 – 2020 tax years and an increase in the deductibility of interest expense from 30% to 50% of adjusted taxable income for the 2019 and 2020 tax years.

In addition, among the other significant corporate tax provisions, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision for the fiscal nine months ended September 27, 2020, or to the Company’s deferred tax asset balance as of September 27, 2020, and no material impact is expected in fiscal year 2020. The Company will continue to monitor the tax impacts of the CARES Act and the COVID-19 pandemic on its business.

Indemnification assets

The Acquisition Agreement includes indemnification provisions with respect to tax liabilities. The Acquisition Agreement generally provided that Johnson & Johnson retained all income tax liabilities accrued as of the date of the Acquisition, including reserves for unrecognized tax benefits. The indemnification receivable from Johnson & Johnson totaled $37.5 million and $130.6 million as of September 27, 2020 and December 29, 2019, respectively. The decrease in the indemnification receivable is due to the resolution of certain state tax matters during the period. The Company recorded $6.6 million of interest and penalties during the fiscal nine months ended September 27, 2020. These receivables are included as a component of “Other current assets” and “Other assets.”

(13) Stock-based compensation

Stock-based compensation for the fiscal nine months ended September 27, 2020 and September 29, 2019 are presented in the consolidated statements of operations in the following captions.



	Fiscal nine months ended
	September 27, 2020		September 29, 2019
Cost of revenue	$	0.6	$	1.6
Selling, marketing and administrative expenses		5.4		14.2
Research and development expense		0.2		0.4

Total stock-based compensation	$	6.2	$	16.2

During the fiscal first quarter ended March 31, 2019, the Board of Directors approved a modification of certain performance-based options that did not vest based on applicable minimum earnings targets to vest over a specified period of time. As a result of the modification, the Company recorded additional stock-based compensation expense of $13.3 million during the fiscal nine months ended September 29, 2019, respectively. The stock-based compensation expense is recorded as a component of cost of revenue, selling, marketing and administrative expenses and research and development expense. As of December 29, 2019, this expense was fully recognized.

F-106

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(14) Segment and geographic information

In the fiscal first quarter ended March 29, 2020, the company changed the financial information that was regularly reviewed by the Chief Operating Decision Maker, which resulted in three geographically-based reportable segments: North America, EMEA and Greater China. Although all three segments are engaged in the marketing, distribution and sale of diagnostic instruments and assays for hospitals, laboratories and/or blood and plasma centers worldwide, each region is managed separately to better align with the market dynamics of the specific geographic region. Japan, ASPAC and LATAM are immaterial operating segments not considered as reportable segments and are included in “Other.”

Net revenue by segment is as follows:



	Fiscal nine months ended
	September 27, 2020		September 29, 2019
North America	$	668.8	$	662.6
EMEA		168.2		178.5
Greater China		162.3		179.8
Other		250.3		306.9

Net Revenue	$	1,249.6	$	1,327.8

Management EBITDA by segment is as follows:



	Fiscal nine months ended
	September 27, 2020			September 29, 2019
North America	$	321.6		$	284.3
EMEA		36.7			38.8
Greater China		79.3			88.3
Other		77.5			94.7
Corporate(1)		(148.4	)		(144.5	)

Management EBITDA	$	366.7		$	361.6

(1)

F-107

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

The reconciliation of Management EBITDA is as follows:



	Fiscal nine months ended
	September 27, 2020			September 29, 2019
Net loss	$	(171.0	)	$	(158.5	)
Interest expense, net		148.6			177.7
Benefit from income taxes		(2.4	)		(29.9	)
Depreciation and amortization		239.6			245.2
Unrealized foreign currency exchange losses		46.0			15.3
Loss on extinguishment of debt		12.6			—
Tax indemnification expense		11.6			31.4
Restructuring and severance-related costs		9.3			23.5
Quotient upfront payment		7.5			—
Stock based compensation		6.2			16.2
Other adjustments		14.4			27.5
Management adjustments and realized foreign exchange losses-net		44.3			13.2

Management EBITDA	$	366.7		$	361.6

Net revenues by geographic location were as follows:



	Fiscal nine months ended
	September 27, 2020		September 29, 2019
United States	$	640.9	$	631.4
Greater China		162.3		179.8
Other countries		446.4		516.6

Total net revenues	$	1,249.6	$	1,327.8

Property, plant and equipment, net and Right-of-use assets by geographic location were as follows:



	September 27, 2020		December 29, 2019
United States	$	511.3	$	550.8
United Kingdom		94.6		101.1
Other countries		228.0		236.6

Total long-lived assets	$	833.9	$	888.5

F-108

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(15) Noncash investing activities

During the fiscal nine months ended September 27, 2020 and September 29, 2019, the Company made noncash transfers of instrument inventories from “Inventories” to “Property, plant and equipment” of $91.5 million and $82.7 million, respectively.

As of September 27, 2020 and December 29, 2019, accounts payable and accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs of $3.5 million and $14.1 million, respectively. As of September 29, 2019 and December 30, 2018, accounts payable and accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs of $6.8 million and $17.2 million, respectively. The changes in these balances are excluded from changes in accounts payable and accrued liabilities in the statements of cashflows.

(16) Related party transactions

The Company entered into consulting services agreements with Carlyle Investment Management, L.L.C. (“CIM”), pursuant to which the Company pays CIM a fee for advisory, consulting and other services to be provided to the Company. Pursuant to the consulting services agreement, which has an initial term of ten years, the Company pays an annual management fee to CIM of $3.0 million (the “Management Fee”). The Management Fee is payable on a quarterly basis. The Company will also reimburse CIM’s reasonable out-of-pocket expenses incurred in connection with services provided pursuant to the consulting services agreement, and the Company may pay CIM additional fees associated with other future transactions or in consideration of any additional services provided to the Company under the consulting services agreement. During the, fiscal nine months ended September 27, 2020 the Company recorded $2.3 million of Management Fee and other out-of-pocket expenses. During the fiscal nine months ended September 29, 2019, the Company recorded $2.3 million of Management Fee and other out-of-pocket expenses.

The Company, as part of the normal course of business, entered into agreements to sell products and provide services to health care diagnostics companies that are portfolio companies of a fund affiliated with Carlyle. During the fiscal nine months ended September 27, 2020 the Company recognized revenues of $1.3 million. During the fiscal nine months ended September 29, 2019, the Company recognized revenues of $2.5 million.

Portfolio companies of funds affiliated with Carlyle provide IT services to the Company. During the fiscal nine months ended September 27, 2020 the Company incurred IT service fees of $0.2 million. During the fiscal nine months ended September 29, 2019, the Company incurred IT service fees of $0.3 million.

A portfolio company of a fund affiliated with Carlyle provides consulting services to the Company. During the fiscal nine months ended September 27, 2020 the Company incurred consulting fees of $0.7 million. During the fiscal nine months ended September 29, 2019, the Company incurred consulting fees of $0.5 million.

A pharmacy benefit management organization affiliated with Carlyle started to provide pharmacy services to the Company in fiscal year 2020. During the fiscal nine months ended September 27, 2020 the Company incurred fees related to pharmacy services of $4.6 million.

As part of the normal course of business, the Company may purchase from or sell to portfolio companies of funds affiliated with Carlyle or the Company’s officers and directors. These purchases and sales are not expected to be material.

F-109

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(17) Commitments and contingencies

(18) Fair value accounting

Fair value of financial instruments

Cash and cash equivalents—The carrying amount of cash equivalents approximates fair value because the original maturity is less than 90 days.

Accounts receivable—The carrying amount of current accounts receivable approximates fair value because of their short outstanding terms. For payments expected from customers over periods longer than one year, receivables have been discounted to reflect the estimated period of time for collection and are presented as a component of “Other assets” in the consolidated balance sheets.

Accounts payable—The carrying amount of accounts payable approximates fair value because of their short outstanding terms.

Short-term borrowings—The carrying amount of short-term borrowings approximates fair value because of their short outstanding terms.

Long-term borrowings—The estimated fair values of long-term borrowings were based on trades as reported by a third party bond pricing service. Due to the infrequency of trades of the Notes and Term Loans, these inputs are considered to be Level 2 inputs. The following table presents the fair value of long-term borrowings:



	September 27, 2020		December 29, 2019

Long-term borrowings:
Dollar Term Loan Facility	$	2,446.7	$	2,214.2
Euro Term Loan Facility		373.8		—
2028 Notes		685.1		—
2025 Notes		407.0		—
2022 Notes		—		1,293.5

F-110

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

(19) Derivative instruments and hedging activities

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Interest rate hedging

The Company entered into a series of interest rate cap agreements to hedge our interest rate exposures related to our variable rate borrowings under the Senior Secured Credit Facilities. The Company entered into an interest rate swap agreement, which fixed a portion of the variable interest due on the Company’s variable rate debt.

The following tables summarize interest rate derivative agreements as of September 27, 2020:

Effective date

Expiration date

Interest rate

cap amount

Notional amount

Hedge designation

December 31, 2020

December 31, 2023

3.5%

1,500,000,000

Not designated

June 30, 2017

December 31, 2020

1.8%

1,500,000,000

Not designated

Effective date

Expiration date

Description

Fixed rate

Floating rate

Notional amount(a)

Hedge
designation

September 27,

2019

December 31,

2023

Pay fixed, receive float

1.635%

1-month LIBOR rate

700,000,000

Cash Flow Hedge

(a)

The notional value of this instrument is expected to be $1,500 million in fiscal 2021, $1,000 million in fiscal 2022 and $500 million in fiscal 2023.

During the fiscal nine months ended September 29, 2019, the Company de-designated its 3.5% interest rate cap upon entering into the interest rate swap agreement that hedges a portion of the Company’s borrowings under the Senior Secured Credit Facilities. Accordingly, the Company recorded the activity related to the hedge through the date of the de-designation as a cash flow hedge, and subsequently recorded the activity related to the interest rate cap as mark to market, with the impact recorded to other income, net. As of September 27, 2020, the remaining loss of $9.3 million was included in OCI related to this de-designated hedge and will be amortized to interest expense over the remaining term of the interest rate swap when the hedged transaction affects earnings.

Foreign currency hedging

F-111

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)

Company uses foreign currency forward, option contracts and cross currency swaps to manage its currency risk exposures. Concurrent with the issuance of the $675 million aggregate principal amount of 2028 Notes, the Company entered into U.S. Dollar to Japanese Yen cross currency swaps for total notional of $350 million at a weighted average interest rate of 5.56%, with five-year term to lower interest expense on the 2028 notes. These cross currency swaps were not designated for hedge accounting, and consequently, changes in their fair value are recorded to other income, net.

The following table provides details of the foreign currency forward, option contracts and cross currency swaps outstanding as of September 27, 2020:



Description(a)	Notional amount		Hedge designation
Forward Foreign Currency Contracts	$	175.6	Cash Flow Hedge
Forward Foreign Currency Contracts	$	55.3	Not designated
Option Foreign Currency Contracts	$	14.3	Not designated

Effective Date

Expiration date

Interest rate
received

Interest rate paid

Notional amount

Hedge designation

January 27, 2020

February 1, 2025

7.25%

5.548%—5.556%

$350 million USD swapped to 5.5 billion JPY

Not designated

(a)

The foreign-currency forward contracts that qualified and were designated as cash flow hedges are recorded at their fair value as of September 27, 2020 and the unrealized gain of $0.4 million is reported as a component of OCI, all of which is expected to be reclassified to earnings in the next 12 months. Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions occur.

Fair value gains and losses of foreign currency contracts and interest rate derivatives, as determined using Level 2 inputs, that are designated and qualify as cash flow hedges during the fiscal nine months ended September 27, 2020 and September 29, 2019 were recorded as follows:



Derivatives in cash flow hedging relationships	Amount of Loss (gain) recognized in OCI on derivatives			Location of loss reclassified from accumulated OCI into income	Amount of loss (gain) reclassified from accumulated OCI into income

Fiscal Nine Months Ended September 27, 2020
Foreign currency forward contracts	$	(2.2	)	Cost of Revenue	$	(4.5	)
Interest rate derivatives		47.1		Interest expense		(1.9	)

F-112

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)



Derivatives in cash flow hedging relationships	Amount of loss (gain) recognized in OCI on derivatives			Location of loss reclassified from accumulated OCI into income	Amount of loss (gain) reclassified from accumulated OCI into income

Fiscal Nine Months Ended September 29, 2019
Foreign currency forward contracts	$	(1.6	)	Cost of Revenue	$	(1.1	)
Interest rate derivatives		15.7		Interest expense		(5.6	)

The following table presents the effect of the Company’s derivative instruments on the statements of operations and comprehensive loss:



	Fiscal nine months ended September 27, 2020						Fiscal nine months ended September 29, 2019
	Interest expense			Cost of revenue			Interest expense			Cost of revenue
Total amounts of financial statement line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded	$	148.6		$	650.2		$	177.7		$	684.0

The effects of cash flow hedging

Loss (Gain) on cash flow hedging relationships:

Foreign currency forward contracts
Amount of Loss (Gain) Reclassified from Accumulated OCI Into Income		N/A		$	(4.5	)		N/A		$	(1.1	)
Amount Reclassified from Accumulated OCI into Income due to a Forecast Transaction That is No Longer Probable of Occurring		N/A		$	(0.2	)		N/A		$	0.4

Interest Rate Derivatives
Amount of Loss (Gain) Reclassified from Accumulated OCI Into Income	$	(1.9	)		N/A		$	(5.6	)		N/A
Amount Excluded From the Assessment of Effectiveness Recognized In Earnings Based on Changes in Fair Value	$	—			N/A		$	0.3			N/A

Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment were recorded in earnings as follows:



Derivatives not designated as hedging instruments under ASC 815	Location of loss recognized in earnings on derivatives	Fiscal nine months ended
		September 27, 2020			September 29, 2019
Interest rate derivatives	Other (income) expense, net	$	1.3		$	14.8
Foreign currency derivatives	Other (income) expense, net		3.1			(2.7	)
Cross currency swaps	Other (income) expense, net		(2.6	)		—

F-113

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)



	September 27, 2020		December 29, 2019

Interest rate derivatives:
Other long-term liabilities	$	47.1	$	4.4

Foreign currency forward contracts:
Other current assets		3.8		6.8
Other assets		0.4		—
Accrued liabilities		4.6		4.0
Other long-term liabilities		0.6		—

The following table presents the location and fair values using Level 2 inputs of derivative instruments that have not been designated as hedges included in the consolidated balance sheets:



	September 27, 2020		December 29, 2019

Interest rate derivatives:
Other current assets	$	—	$	0.1
Accrued liabilities		1.0		2.3
Other long-term liabilities		11.0		10.4

Foreign currency derivative contracts:
Other current assets		0.2		1.5
Accrued liabilities		1.0		0.5

Cross currency swaps:
Other current assets		0.8		—
Other long-term liabilities		1.0		—

(20) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The balances of accumulated other comprehensive income (loss), net of tax, were as follows for the nine months ended September 27, 2020 and September 29, 2019:



	Pension and Other Postemployment Benefits			Foreign Currency Derivatives			Interest Rate Cap Derivatives			Unrealized Foreign Currency Translation Adjustments			Accumulated Other Comprehensive Loss
Balance at December 29, 2019	$	(4.3	)	$	2.7		$	(5.8	)	$	(64.5	)	$	(71.9	)
Current period deferrals		—			2.2			(47.1	)		1.7			(43.2	)
Amounts reclassified to net loss		—			(4.5	)		(1.9	)		—			(6.4	)

Net change		—			(2.3	)		(49.0	)		1.7			(49.6	)

Balance at September 27, 2020	$	(4.3	)	$	0.4		$	(54.8	)	$	(62.8	)	$	(121.5	)

F-114

Ortho-Clinical Diagnostics Bermuda Co. Ltd.

Notes to consolidated financial statements

September 27, 2020

(Dollars in millions, unless otherwise stated)



	Pension and Other Postemployment Benefits			Foreign Currency Derivatives			Interest Rate Cap Derivatives			Unrealized Foreign Currency Translation Adjustments			Accumulated Other Comprehensive Loss
Balance at December 30, 2018	$	(1.0	)	$	0.6		$	11.8		$	(63.6	)	$	(52.2	)
Current period deferrals		—			1.6			(15.7	)		(7.0	)		(21.1	)
Amounts reclassified to net loss		—			(1.1	)		(5.6	)		—			(6.7	)
Cumulative effect of change in accounting standard		—			—			(0.2	)		—			(0.2	)

Net change		—			0.5			(21.5	)		(7.0	)		(28.0	)

Balance at September 29, 2019	$	(1.0	)	$	1.1		$	(9.7	)	$	(70.6	)	$	(80.2	)

(21) Other expense, net

Other expense, net was $34.5 million for the fiscal nine months ended September 29, 2019 and was comprised primarily of $20.2 million of net foreign currency losses, of which $16.9 million was unrealized, mainly related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries, and fair value losses of $14.8 million from interest rate caps.

(22) Subsequent events

These consolidated financial statements reflect management’s evaluation of subsequent events through November 24, 2020, the date the interim unaudited consolidated financial statements were available to be issued.

F-115

LOGO



J.P. Morgan	BofA Securities	Goldman Sachs & Co. LLC

Barclays		Morgan Stanley

Citigroup	Credit Suisse	UBS Investment Bank

Evercore ISI		Piper Sandler


ING	Macquarie Capital	Nomura	TCG Capital Markets L.L.C.

Drexel Hamilton	H.C. Wainwright & Co.	Ramirez & Co., Inc.	Siebert Williams Shank

Part II

Information not required in prospectus

Item 13. Other expenses of issuance and distribution

The following table sets forth the costs and expenses, other than the underwriting discount, payable by the registrant in connection with the sale and distribution of the securities being registered. All amounts are estimated except the Securities and Exchange Commission (“SEC”) registration fee, the Financial Industry Regulatory Authority (“FINRA”) filing fee and exchange listing fee.



	Amount to be paid
SEC Registration Fee	$	*
FINRA Filing Fee		*
Exchange Listing Fee		*
Legal Fees and Expenses		*
Accounting Fees and Expenses		*
Printing Fees and Expenses		*
Blue Sky Fees and Expenses		*
Transfer Agent and Registrar Fees		*
Miscellaneous Expenses		*

Total	$	*

To be provided by amendment.

Item 14. Indemnification of directors and officers

Every director, officer or former director or officer of our group may be indemnified against all costs, charges, losses, expenses and liabilities incurred by him in connection with any negligence, default, breach of duty or breach of trust by him in relation to us or in connection with our activities as a trustee of an occupational pension scheme, in the actual or purported exercise of his powers or duties or otherwise as our officer, to the extent permitted under the U.K. Companies Act 2006 and the General Corporation Law of the State of Delaware.

The underwriting agreement the registrant will enter into in connection with the offering being registered hereby provides that the underwriters will indemnify, under certain conditions, the registrant’s board of directors and its officers against certain liabilities arising in connection with the offering.

Item 15. Recent sales of unregistered securities

Since January 2, 2017, we have granted under our 2014 Equity Incentive Plan (i) stock options to purchase an aggregate of 6,206,288 shares of our common stock, which options had exercise prices per share ranging between $12.50 and $22.50 when issued, and (ii) an aggregate of 486,930 shares of restricted common stock and 200,000 restricted stock units to our employees and directors.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. Individuals who purchased shares as described above represented their intention to acquire the ordinary shares for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates issued in such transactions, if applicable.

II-1

Item 16. Exhibits and financial statement schedules

(a) Exhibits. See Exhibit Index immediately preceding the signature page hereto, which is incorporated by reference as if fully set forth herein.

(b) Financial Statement Schedules. None.

Item 17. Undertakings

(1) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(2) The undersigned registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus as filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(b) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-2

Exhibit index



Exhibit number		Description

1.1*		Form of Underwriting Agreement

3.1		Form of Articles of Association of Ortho Clinical Diagnostics Holdings plc

4.1		Indenture, dated as of January 27, 2020, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A. and Wilmington Trust, National Association, as trustee

4.2		Indenture, dated as of June 11, 2020, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A. and Wilmington Trust, National Association, as trustee

5.1		Opinion of Latham & Watkins LLP

10.1		Amended and Restated Consulting Services Agreement, dated as of October 15, 2020

10.2		Form of Principal Shareholders Agreement

10.3*		Form of Amended and Restated Shareholders Agreement

10.4†		Credit Agreement, dated as of June 30, 2014, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A., Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., the lenders party thereto and Barclays Bank PLC, as administrative agent and collateral agent

10.5†		Amendment No. 1 to the Credit Agreement, dated as of June 6, 2017, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A., Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., the lenders party thereto and Barclays Bank PLC, as administrative agent, collateral agent and first amendment incremental term lender

10.6†		Amendment No. 2 to the Credit Agreement, dated as of June 8, 2018, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A., Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., the lenders party thereto and Barclays Bank PLC, as administrative agent and collateral agent

10.7		Amendment No. 3 to the Credit Agreement, dated as of January 7, 2020, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A., Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., the lenders party thereto and Barclays Bank PLC, as administrative agent and collateral agent

10.8†		Amendment No. 4 to the Credit Agreement, dated as of January 27, 2020, by and among Ortho-Clinical Diagnostics, Inc., Ortho-Clinical Diagnostics S.A., Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., the lenders party thereto and Barclays Bank PLC, as administrative agent and collateral agent

10.9		Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan

10.10		Form of Stock Option Agreement for awards granted before December 2019 under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan

10.11		Form of Stock Option Agreement for awards granted on and after December 2019 under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan

10.12		Form of Restricted Stock Agreement for awards granted to non-employee directors under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan

10.13		Restricted Stock Agreement under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan, dated December 12, 2019 between Ortho-Clinical Diagnostics Bermuda Co. Ltd. and Christopher Smith

II-3



Exhibit number		Description

10.14		Restricted Stock Agreement under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan, dated September 30, 2020 between Ortho-Clinical Diagnostics Bermuda Co. Ltd. and Christopher Smith

10.15		Restricted Stock Unit Agreement under the Ortho-Clinical Diagnostics Bermuda Co. Ltd. 2014 Equity Incentive Plan, dated December 15, 2020 between Ortho-Clinical Diagnostics Bermuda Co. Ltd. and Robert Yates

10.16		Form of Ortho Clinical Diagnostics Holdings plc 2021 Omnibus Incentive Award Plan

10.17		Amended and Restated Employment Agreement, dated September 30, 2020, by and between Ortho-Clinical Diagnostics Bermuda Co. Ltd. and Christopher Smith

10.18		Offer Letter, dated June 30, 2020, by and between Ortho-Clinical Diagnostics, Inc. and Joseph Busky

10.19		Enhanced Minimum Severance Letter, dated June 30, 2020, from Ortho-Clinical Diagnostics, Inc. to Joseph Busky

10.20		Offer Letter, dated August 13, 2015, by and between Ortho-Clinical Diagnostics, Inc. and Michael Iskra

10.21		Offer Letter, dated January 24, 2020, by and between Ortho-Clinical Diagnostics, Inc. and Chockalingam Palaniappan

10.22		Enhanced Minimum Severance Letter from Ortho-Clinical Diagnostics, Inc. to Chockalingam Palaniappan

10.23		Employment Agreement, dated May 22, 2014, by and between Ortho-Clinical Diagnostics Bermuda Co. Ltd (f/k/a Crimson Bermuda Co. Ltd.) and Michael Schlesinger

10.24		Ortho Clinical Diagnostics Excess Plan

10.25		First Amendment to Ortho Clinical Diagnostics Excess Plan

10.26		Form of Director and Officer Deed of Indemnity of Ortho Clinical Diagnostics Holdings plc

10.27*		Form of Director and Officer Indemnification Agreement of U.S. Crimson Acquisition Inc.

21.1*		Subsidiaries of the Registrant

23.1		Consent of Latham & Watkins LLP (included in Exhibit 5.1)

23.2		Consent of PricewaterhouseCoopers LLP

24.1		Power of Attorney (included in the signature page to the Registration Statement)

To be filed by amendment.

†

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

II-4

Signatures

Pursuant to the requirements of the Securities Act, we have duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Raritan, New Jersey, on January 4, 2021.


Ortho Clinical Diagnostics Holdings plc

By:		/s/Chris Smith

Name:		Chris Smith

Title:		Chairman and Chief Executive Officer

The undersigned directors and officers of Ortho Clinical Diagnostics Holdings plc hereby constitute and appoint Chris Smith the individual’s true and lawful attorney in fact and agent, with full power of substitution and resubstitution, for the person and in his name, place and stead, in any and all capacities, to sign this registration statement and any or all amendments, including post effective amendments to the Registration Statement, including a prospectus or an amended prospectus therein and any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act, and all other documents in connection therewith to be filed with the SEC, granting unto said attorney in fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney in fact as agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereto.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated on January 4, 2021.



Signature		Title

/s/ Chris Smith		Chairman and Chief Executive Officer (Principal Executive Officer)
Chris Smith

/s/ Joseph M. Busky		Chief Financial Officer and Authorized Representative in the United States (Principal Financial Officer and Principal Accounting Officer)
Joseph M. Busky

/s/ Robert Yates		Director
Robert Yates

/s/ Karen H. Bechtel		Director
Karen H. Bechtel

/s/ Allan Holt		Director
Allan Holt

/s/ Carl Hull		Director
Carl Hull

II-5



Signature		Title

/s/ Ron Labrum		Director
Ron Labrum

/s/ Thomas Mac Mahon		Director
Thomas Mac Mahon

/s/ David Perez		Director
David Perez

/s/ Robert R. Schmidt		Director
Robert R. Schmidt

/s/ Stephen H. Wise		Director
Stephen H. Wise

II-6

Exhibit 3.1

COMPANY NUMBER: 13084624

[ Date ]

COMPANIES ACT 2006

A PUBLIC COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

Ortho Clinical Diagnostics Holdings plc

LOGO

99 Bishopsgate

London EC2M 3XF

United Kingdom

Tel: +44.20.7710.1000

www.lw.com

CONTENTS


Clause		Page

1.	PRELIMINARY		1

2.	SHARE CAPITAL AND LIMITED LIABILITY		3

3.	VARIATION OF RIGHTS		5

4.	SHARE CERTIFICATES		6

5.	LIEN		6

6.	CALLS ON SHARES		7

7.	FORFEITURE AND SURRENDER		8

8.	TRANSFER OF SHARES		9

9.	TRANSMISSION OF SHARES		10

10.	ALTERATION OF SHARE CAPITAL		11

11.	GENERAL MEETINGS		12

12.	NOTICE OF GENERAL MEETINGS		12

13.	LIST OF MEMBERS FOR VOTING AT GENERAL MEETINGS		15

14.	PROCEEDINGS AT GENERAL MEETINGS		15

15.	PROPOSED SHAREHOLDER RESOLUTIONS		17

16.	VOTES OF MEMBERS		20

17.	PROXIES AND CORPORATE REPRESENTATIVES		22

18.	NUMBER OF DIRECTORS		25

19.	APPOINTMENT OF DIRECTORS		26

20.	POWERS OF THE BOARD		28

21.	CHANGE OF THE COMPANY’S NAME		28

22.	DELEGATION OF POWERS OF THE BOARD		28

23.	DISQUALIFICATION AND REMOVAL OF DIRECTORS		29

24.	NON-EXECUTIVE DIRECTORS		30

25.	DIRECTORS’ EXPENSES		30

26.	EXECUTIVE DIRECTORS		30

27.	DIRECTORS’ INTERESTS		31

28.	GRATUITIES, PENSIONS AND INSURANCE		33

29.	PROCEEDINGS OF THE BOARD		34

30.	SECRETARY		37

31.	MINUTES		37

32.	THE SEAL		37

33.	REGISTERS		37

34.	DIVIDENDS		38

35.	CAPITALISATION OF PROFITS AND RESERVES		42


Clause		Page

36.	RECORD DATES		43

37.	ACCOUNTS		43

38.	COMMUNICATIONS		44

39.	DESTRUCTION OF DOCUMENTS		46

40.	UNTRACED MEMBERS		47

41.	WINDING UP		48

42.	INDEMNITY		49

43.	AMENDMENT OF ARTICLES		49

44.	DISPUTE RESOLUTION		49

1.	PRELIMINARY

1.1	Relevant model articles

The regulations in the relevant model articles shall not apply to the Company.

1.2	Definitions

In these Articles, except where the subject or context otherwise requires:

“Act” means the Companies Act 2006 including any modification or re-enactment of it for the time being in force;

“Affiliates” means, in respect of the Investor, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the Investor; provided, that the Company, its Subsidiaries and the Company’s other controlled Affiliates will not be deemed to be Affiliates of any of the Investor;

“Articles” means these articles of association as altered from time to time by special resolution;

“auditors” means the auditors of the Company;

“beneficial ownership” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security. The terms “beneficially own” and “beneficial owner” shall have a correlative meaning.

“board” means the directors or any of them acting as the board of directors of the Company;

“certificated share” means a share in the capital of the Company which is held in physical certificated form and references in these Articles to a share being held in “certificated form” shall be construed accordingly;

“clear days” in relation to the sending of a notice means the period excluding the day on which a notice is given or deemed to be given and the day for which it is given or on which it is to take effect;

“Control,” with respect to the relationship between or among two or more Persons, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or any other means, and “Controlling”, “Controlled by” and “under common Control” shall be construed accordingly.

“Depositary” means any depositary, custodian or nominee approved by the board that holds legal title to shares in the capital of the Company for the purposes of facilitating beneficial ownership of such shares by other individuals;

“director” means a director of the Company;

“dividend” means dividend or bonus;

“entitled by transmission” means, in relation to a share in the capital of the Company, entitled as a consequence of the death or bankruptcy of the holder or otherwise by operation of law;

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time;

“Investor” means Carlyle Partners VI Cayman Holdings, L.P. and any Permitted Transferee or Affiliate of Carlyle Partners VI Cayman Holdings, L.P. that is issued shares or becomes the beneficial owner of any shares or is Transferred any shares by any other Person;

“Investor Director” means a director appointed to the board in accordance with Article 19.1;

“holder” in relation to a share in the capital of the Company means the member whose name is entered in the register as the holder of that share;

“member” means a member of the Company;

“office” means the registered office of the Company;

“paid” means paid or credited as paid;

“Permitted Transferee” means, with respect to any Investor, (i) any Affiliate of such Investor, (ii) any director, officer or employee of any Affiliate of such Investor, (iii) any direct or indirect member or general or limited partner of such Investor that is the transferee of shares pursuant to a pro rata distribution of shares by such Investor to its partners or members, as applicable (or any subsequent transfer of such shares by the transferee to another Permitted Transferee) or (iv) any other Transferee designated as a Permitted Transferee by the Investor;

“Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, government (or agency or political subdivision thereof) or any other entity or group (as defined in Section 13(d) of the Exchange Act);

“register” means the register of members of the Company;

“seal” means the common seal of the Company and includes any official seal kept by the Company by virtue of section 49 or 50 of the Act;

“secretary” means the secretary of the Company and includes a joint, assistant, deputy or temporary secretary and any other person appointed to perform the duties of the secretary;

“shares” means the ordinary shares of $0.00001 each in the capital of the Company from time to time;

“Transfer” means any direct or indirect transfer, donation, sale, assignment, pledge, hypothecation, grant of a security interest in or other disposal or attempted disposal of all or any portion of a security, any interest or rights in a security;

“uncertificated share” means a share in the capital of the Company which is not held in physical certificated form and references in these Articles to a share being held in “uncertificated form” shall be construed accordingly; and

“United Kingdom” means Great Britain and Northern Ireland.

1.3	Construction

(a)

References to a document or information being “sent”, “supplied” or “given” to or by a person mean such document or information, or a copy of such document or information, being sent, supplied, given, delivered, issued or made available to or by, or served on or by, or deposited with or by that person by any method authorised by these Articles, and “sending”, “supplying” and “giving” shall be construed accordingly.

(b)

References to “writing” mean the representation or reproduction of words, symbols or other information in a visible form by any method or combination of methods, whether in electronic form or otherwise, and “written” shall be construed accordingly.

(c)

Words denoting the singular number include the plural number and vice versa; words denoting the masculine gender include the feminine gender; and words denoting persons include corporations.

(d)

Words or expressions contained in these Articles which are not defined in Article 1.2 but are defined in the Act have the same meaning as in the Act (but excluding any modification of the Act not in force at the date these Articles took effect) unless inconsistent with the subject or context.

(e)

Subject to the preceding two paragraphs, references to any provision of any enactment or of any subordinate legislation (as defined by section 21(1) of the Interpretation Act 1978) include any modification or re-enactment of that provision for the time being in force.

(f)

Headings and marginal notes are inserted for convenience only and do not affect the construction of these Articles.

(g)

In these Articles, (a) powers of delegation shall not be restrictively construed but the widest interpretation shall be given to them; (b) the word “board” in the context of the exercise of any power contained in these Articles includes any committee consisting of one or more directors, any director, any other officer of the Company and any local or divisional board, manager or agent of the Company to which or, as the case may be, to whom the power in question has been delegated; (c) no power of delegation shall be limited by the existence or, except where expressly provided by the terms of delegation, the exercise of that or any other power of delegation; and (d) except where expressly provided by the terms of delegation, the delegation of a power shall not exclude the concurrent exercise of that power by any other body or person who is for the time being authorised to exercise it under these Articles or under another delegation of the power.

2.	SHARE CAPITAL AND LIMITED LIABILITY

2.1	Limited liability

The liability of the members is limited to the amount, if any, unpaid on the shares held by them.

2.2	Shares with special rights

Subject to the provisions of the Act and without prejudice to any rights attached to any existing shares or class of shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine or, if no such resolution is in effect or so far as the resolution does not make specific provision, as the board shall determine.

2.3	Classes of share

The Company may issue ordinary shares. Each share shall be issued with one voting right attached to it for voting purposes in respect of all matters on which shares in the capital of the Company have voting rights and shall form a single class with the other shares in the capital of the Company for such purposes. The share shall rank equally with all other shares in the capital of the Company for any dividend declared and for any distribution made on a winding up of the Company. The holders of shares shall, in respect of the shares held by them, be entitled to receive notice of, attend and speak at and vote at, general meetings of the Company.

2.4	Uncertificated shares

The board may permit the holding of shares in any class of shares in uncertificated form.

2.5	Not separate class of shares

Shares in the capital of the Company that fall within a certain class shall not form a separate class of shares from other shares in that class because any share in that class is held in uncertificated form.

2.6	Exercise of Company’s entitlements in respect of uncertificated share

Where the Company is entitled under any provision of the Act or these Articles to sell, transfer or otherwise dispose of, forfeit, re-allot, accept the surrender of, or otherwise enforce a lien over, a share held in uncertificated form, the Company shall be entitled, subject to the provisions of the Act and these Articles:

(a)

to require the holder of that uncertificated share by notice to change that share into certificated form within the period specified in the notice and to hold that share in certificated form so long as required by the Company; and

(b)

to take any action that the board considers appropriate to achieve the sale, transfer, disposal, forfeiture, re-allotment or surrender of that share, or otherwise to enforce a lien in respect of that share.

2.7	Authority to allot shares

Subject to these Articles, in addition to any similar authority which has not been fully utilised, the board shall be generally and unconditionally authorised pursuant to section 551 of the Act to:

(a)

exercise all of the powers of the Company to allot shares in the Company, and to grant rights to subscribe for or to convert any security into shares in the Company, up to a maximum aggregate amount of 1,000,000,000 shares (in addition to any authority to allot that has not yet expired granted to the board prior to the date of the adoption of these Articles) for a period expiring (unless previously renewed, varied or revoked by the Company in a general meeting) on the date which is five years from the date of the shareholder resolution to adopt these Articles by the Company; and

(b)

make an offer or agreement which would or might require shares to be allotted, or rights to subscribe for or convert any security into shares to be granted, after expiry of the authority described in this Article 2.7 and the board may allot shares and grant rights in pursuance of that offer or agreement as if this authority had not expired.

2.8	Section 561 disapplication

(a)

Subject to these Articles, the board shall be generally empowered pursuant to section 570 and 573 of the Act to allot equity securities (as defined in the Act) for cash, pursuant to the authority conferred by Article 2.7 as if section 561 of the Act did not apply to any such allotment.

(b)

Subject to the provisions of the Act relating to authority to allot shares and the disapplication of pre-emption rights or otherwise and of any resolution of the Company in a general meeting passed pursuant to those provisions, and, in the case of redeemable shares, the provisions of Article 2.10:

(i)

all shares for the time being in the capital of the Company shall be at the disposal of the board; and

(ii)

the board may reclassify, allot (with or without conferring a right of renunciation), grant options over, or otherwise dispose of them to such persons on such terms and conditions and at such times as it thinks fit.

2.9	Redeemable shares

Subject to the provisions of the Act, and without prejudice to any rights attached to any existing shares or class of shares, shares may be issued which are to be redeemed or are to be liable to be redeemed at the option of the Company or the holder. The board may determine the terms, conditions and manner of redemption of shares provided that it does so before the shares are allotted.

2.10	Commissions

The Company may exercise all powers of paying commissions or brokerage conferred or permitted by the Act. Subject to the provisions of the Act, any such commission or brokerage may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one way and partly in the other.

2.11	Trusts not recognised

Except as required by law, the Company shall recognise no person as holding any share on any trust and (except as otherwise provided by these Articles or by law) the Company shall not be bound by or recognise any interest in any share (or in any fractional part of a share) except the holder’s absolute right to the entirety of the share (or fractional part of the share).

3.	VARIATION OF RIGHTS

3.1	Method of varying rights

Subject to the provisions of the Act, if at any time the capital of the Company is divided into different classes of shares, the rights attached to any class may (unless otherwise provided by the terms of allotment of the shares of that class) be varied or abrogated, whether or not the Company is being wound up, either:

(a)

with the written consent of the holders of three-quarters in nominal value of the issued shares of the class, which consent shall be in hard copy form or in electronic form sent to such address (if any) for the time being specified by or on behalf of the Company for that purpose, or in default of such specification to the office, and may consist of several documents, each executed or authenticated in such manner as the board may approve by or on behalf of one or more holders, or a combination of both; or

(b)

with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class,

but not otherwise.

3.2	When rights deemed to be varied

For the purposes of Article 3.1, if at any time the capital of the Company is divided into different classes of shares, unless otherwise expressly provided by the rights attached to any share or class of shares, those rights shall be deemed to be varied by:

(a)

the reduction of the capital paid up on that share or class of shares otherwise than by a purchase or redemption by the Company of its own shares; and

(b)

the allotment of another share ranking in priority for payment of a dividend or in respect of capital or which confers on its holder voting rights more favourable than those conferred by that share or class of shares,

but shall not be deemed to be varied by the creation or issue of another share ranking equally with, or subsequent to, that share or class of shares or by the purchase or redemption by the Company of its own shares.

4.	SHARE CERTIFICATES

4.1	Members’ rights to certificates

Every member, on becoming the holder of a share shall be entitled, without payment, to one certificate for all the shares of each class held by them (and, on transferring a part of their holding of shares of any class, to a certificate for the balance of their holding of shares). They may elect to receive one or more additional certificates for any of their shares if they pay a reasonable sum determined from time to time by the board for every certificate after the first. Every certificate shall:

(a)

be executed under the seal or otherwise in accordance with Article 32.2 or in such other manner as the board may approve; and

(b)

specify the number, class and distinguishing numbers (if any) of the shares to which it relates and the amount or respective amounts paid up on the shares.

The Company shall not be bound to issue more than one certificate for shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. Shares of different classes may not be included in the same certificate.

4.2	Replacement certificates

If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and payment of any exceptional out-of-pocket expenses reasonably incurred by the Company in investigating evidence and preparing the requisite form of indemnity as the board may determine but otherwise free of charge, and (in the case of defacement or wearing out) on delivery up of the old certificate.

LIEN

5.1	Company to have lien on shares

The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys payable to the Company (whether presently or not) in respect of that share. The board may at any time (generally or in a particular case) waive any lien or declare any share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a share shall extend to any amount (including without limitation dividends) payable in respect of it.

5.2	Enforcement of lien by sale

The Company may sell, in such manner as the board determines, any share on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within 14 clear days after notice has been sent to the holder of the share, or to the person entitled to it by transmission, demanding payment and stating that if the notice is not complied with the share may be sold.

5.3	Giving effect to sale

To give effect to that sale the board may authorise any person to execute an instrument of transfer in respect of the share sold to, or in accordance with the directions of, the buyer. If the share is an uncertificated share, the board may exercise any of the powers of the Company under Article 2.6 to effect the sale of the share. The buyer shall not be bound to see to the application of the purchase money and their title to the share shall not be affected by any irregularity in or invalidity of the proceedings in relation to the sale.

5.4	Application of proceeds

The net proceeds of the sale, after payment of the costs, shall be applied in or towards payment or satisfaction of so much of the sum in respect of which the lien exists as is presently payable. Any residue shall (if the share sold is a certificated share, on surrender to the Company for cancellation of the certificate in respect of the share sold and, whether the share sold is a certificated share or an uncertificated share, subject to a like lien for any moneys not presently payable as existed on the share before the sale) be paid to the person entitled to the share at the date of the sale.

6.	CALLS ON SHARES

6.1	Power to make calls

Subject to the terms of allotment, the board may from time to time make calls on the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium). Each member shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made) pay to the Company the amount called on their shares as required by the notice. A call may be required to be paid by instalments. A call may be revoked in whole or part and the time fixed for payment of a call may be postponed in whole or part as the board may determine. A person on whom a call is made shall remain liable for calls made on them even if the shares in respect of which the call was made are subsequently transferred.

6.2	Time when call made

A call shall be deemed to have been made at the time when the resolution of the board authorising the call was passed.

6.3	Liability of joint holders

The joint holders of a share shall be jointly and severally liable to pay all calls in respect of it.

6.4	Interest payable

If a call or any instalment of a call remains unpaid in whole or in part after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid. Interest shall be paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, the rate

determined by the board, not exceeding 15 per cent. per annum, or, if higher, the appropriate rate (as defined in the Act), but the board may in respect of any individual member waive payment of such interest wholly or in part.

6.5	Deemed calls

An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call duly made and notified and payable on the date so fixed or in accordance with the terms of the allotment. If it is not paid the provisions of these Articles shall apply as if that amount had become due and payable by virtue of a call duly made and notified.

6.6	Differentiation on calls

Subject to the terms of allotment, the board may make arrangements on the issue of shares for a difference between the allottees or holders in the amounts and times of payment of calls on their shares.

6.7	Payment of calls in advance

The board may, if it thinks fit, receive from any member all or any part of the moneys uncalled and unpaid on any share held by them. Such payment in advance of calls shall extinguish the liability on the share in respect of which it is made to the extent of the payment. The Company may pay on all or any of the moneys so advanced (until they would but for such advance become presently payable) interest at such rate agreed between the board and the member not exceeding (unless the Company by ordinary resolution otherwise directs) 15 per cent. per annum or, if higher, the appropriate rate (as defined in the Act).

7.	FORFEITURE AND SURRENDER

7.1	Notice requiring payment of call

If a call or any instalment of a call remains unpaid in whole or in part after it has become due and payable, the board may give the person from whom it is due not less than 14 clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any costs, charges and expenses incurred by the Company by reason of such non-payment. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited.

7.2	Forfeiture for non-compliance

If that notice is not complied with, any share in respect of which it was sent may, at any time before the payment required by the notice has been made, be forfeited by a resolution of the board. The forfeiture shall include all dividends or other moneys payable in respect of the forfeited share which have not been paid before the forfeiture. When a share has been forfeited, notice of the forfeiture shall be sent to the person who was the holder of the share before the forfeiture. An entry shall be made promptly in the register opposite the entry of the share showing that notice has been sent, that the share has been forfeited and the date of forfeiture. No forfeiture shall be invalidated by the omission or neglect to send that notice or to make those entries.

7.3	Sale of forfeited shares

Subject to the provisions of the Act, a forfeited share shall be deemed to belong to the Company and may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the

board determines, either to the person who was the holder before the forfeiture or to any other person. At any time before sale, re-allotment or other disposal, the forfeiture may be cancelled on such terms as the board thinks fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person, the board may authorise any person to execute an instrument of transfer of the share to that person. Where for the purposes of its disposal a forfeited share held in uncertificated form is to be transferred to any person, the board may exercise any of the powers of the Company under Article 2.6. The Company may receive the consideration given for the share on its disposal and may register the transferee as holder of the share.

7.4	Liability following forfeiture

A person shall cease to be a member in respect of any share which has been forfeited and shall, if the share is held in certificated form, surrender the certificate for any forfeited share to the Company for cancellation. The person shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by them to the Company in respect of that share with interest on that amount at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the rate determined by the board, not exceeding 15 per cent. per annum or, if higher, the appropriate rate (as defined in the Act), from the date of forfeiture until payment. The board may waive payment wholly or in part or enforce payment without any allowance for the value of the share at the time of forfeiture or for any consideration received on its disposal.

7.5	Surrender

The board may accept the surrender of any share which it is in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered share shall be treated as if it had been forfeited.

7.6	Extinction of rights

The forfeiture of a share shall involve the extinction at the time of forfeiture of all interest in and all claims and demands against the Company in respect of the share and all other rights and liabilities incidental to the share as between the person whose share is forfeited and the Company, except only those rights and liabilities expressly saved by these Articles, or as are given or imposed in the case of past members by the Act.

7.7	Evidence of forfeiture or surrender

A statutory declaration by a director or the secretary that a share has been duly forfeited or surrendered on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share. The declaration shall (subject if necessary to the execution of an instrument of transfer) constitute a good title to the share. The person to whom the share is disposed of shall not be bound to see to the application of the purchase money, if any, and their title to the share shall not be affected by any irregularity in, or invalidity of, the proceedings in reference to the forfeiture, surrender, sale, re-allotment or disposal of the share.

8.	TRANSFER OF SHARES

8.1	Form and execution of transfer of share

Without prejudice to any power of the Company to register as shareholder a person to whom the right to any share has been transmitted by operation of law, the instrument of transfer may be in any usual form or in any other form which the board may approve. An instrument of transfer shall be signed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. An instrument of transfer need not be under seal.

8.2	Transfers of partly paid shares

The board may, in its absolute discretion, refuse to register the transfer of a share which is not fully paid, provided that the refusal does not prevent dealings in shares in the Company from taking place on an open and proper basis.

8.3	Invalid transfers of shares

The board may also refuse to register the transfer of a share:

(a)

unless the instrument of transfer:

(i)

is lodged, duly stamped (if stampable), at the office or at another place appointed by the board accompanied by the certificate for the share to which it relates and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer;

(ii)

is in respect of only one class of shares; or

(iii)

is in favour of not more than four transferees;

(b)

if it is with respect to a share on which the Company has a lien and a sum in respect of which the lien exists is presently payable and is not paid within 14 clear days after notice has been sent to the holder of the share in accordance with Article 5.2; or

(c)

if it is a certificated share and is not presented for registration together with the share certificate and such evidence of title as the Company reasonably requires.

8.4	Notice of refusal to register

If the board refuses to register a transfer of a share, it shall send the transferee notice of its refusal within two months after the date on which the instrument of transfer was lodged with the Company, together with reasons for the refusal.

8.5	No fee payable on registration

No fee shall be charged for the registration of any instrument of transfer or other document relating to or affecting the title to a share.

8.6	Retention of transfers

The Company shall be entitled to retain an instrument of transfer which is registered, but an instrument of transfer which the board refuses to register shall be returned to the person lodging it when notice of the refusal is sent.

9.	TRANSMISSION OF SHARES

9.1	Transmission

If a member dies, the survivor or survivors where they were a joint holder, and their personal representatives where they were a sole holder or the only survivor of joint holders, shall be the only persons recognised by the Company as having any title to their interest. Nothing in these Articles shall release the estate of a deceased member (whether a sole or joint holder) from any liability in respect of any share held by them.

9.2	Elections permitted

A person becoming entitled by transmission to a share may, on production of any evidence as to their entitlement properly required by the board, elect either to become the holder of the share or to have another person nominated by them registered as the transferee. If they elect to become the holder they shall send notice to the Company to that effect. If they elect to have another person registered and the share is a certificated share, they shall execute an instrument of transfer of the share to that person. If they elect to have themselves or another person registered and the share is an uncertificated share, they shall take any action the board may require (including without limitation the execution of any document) to enable themselves or that person to be registered as the holder of the share. All the provisions of these Articles relating to the transfer of shares apply to that notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member or other event giving rise to the transmission had not occurred.

9.3	Elections required

The board may at any time send a notice requiring any such person to elect either to be registered himself or to transfer the share. If the notice is not complied with within 60 days, the board may after the expiry of that period withhold payment of all dividends or other moneys payable in respect of the share until the requirements of the notice have been complied with.

9.4	Rights of persons entitled by transmission

A person becoming entitled by transmission to a share shall, on production of any evidence as to their entitlement properly required by the board and subject to the requirements of Article 9.2, have the same rights in relation to the share as they would have had if they were the holder of the share, subject to Article 34.8. That person may give a discharge for all dividends and other moneys payable in respect of the share, but they shall not, before being registered as the holder of the share, be entitled in respect of it to receive notice of, or to attend or vote at, any meeting of the Company or to receive notice of, or to attend or vote at, any separate meeting of the holders of any class of shares in the capital of the Company.

10.

ALTERATION OF SHARE CAPITAL

10.1	New shares subject to these Articles

All shares created by increase of the Company’s share capital (unless otherwise provided by the terms of allotment of the shares of that class), by consolidation, division or sub-division of its share capital or the conversion of stock into paid-up shares shall be subject to all the provisions of these Articles, including without limitation provisions relating to payment of calls, lien, forfeiture, transfer and transmission.

10.2	Fractions arising

Whenever any fractions arise as a result of a consolidation or sub-division of shares, the board may on behalf of the members deal with the fractions as it thinks fit. In particular, without limitation, the board may sell shares representing fractions to which any members would otherwise become entitled to any person (including, subject to the provisions of the Act, the Company) and distribute the net proceeds of sale in due proportion among those members. Where the shares to be sold are held in certificated form the board may authorise some person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the buyer. Where the shares to be sold are held in uncertificated form, the board may do all acts and things it considers necessary or expedient to effect the transfer of the shares to, or in accordance with the directions of, the buyer. The buyer shall not be bound to see to the application of the purchase moneys and their title to the shares shall not be affected by any irregularity in, or invalidity of, the proceedings in relation to the sale.

11.

GENERAL MEETINGS

11.1	Annual general meetings

The board shall convene and the Company shall hold general meetings as annual general meetings in accordance with the requirements of the Act.

11.2	Class meetings

All provisions of these Articles relating to general meetings of the Company shall, mutatis mutandis, apply to every separate general meeting of the holders of any class of shares in the capital of the Company, except that:

(a)

the necessary quorum at any such meeting (or adjournment thereof) shall be members of that class who together represent at least the majority of the voting rights of all the members of that class entitled to vote, present in person or by proxy, at the relevant meeting;

(b)

all votes shall be taken on a poll; and

(c)

each holder of shares of the class shall, on a poll, have one vote in respect of every share of the class held by them.

11.3	Convening general meetings

The board may call general meetings whenever and at such times and places as it shall determine. On the requisition of members pursuant to the provisions of the Act, the board shall promptly convene a general meeting in accordance with the requirements of the Act.

12.

NOTICE OF GENERAL MEETINGS

12.1	Period of notice

An annual general meeting shall be called by not less than 21 clear days’ notice and no more than 60 days’ notice. Subject to the provisions of the Act, all other general meetings may be called by not less than 14 clear days’ notice and no more than 60 days’ notice.

12.2	Recipients of notice

Subject to the provisions of the Act, to the provisions of these Articles and to any restrictions imposed on any shares, the notice shall be sent to every member and every director. The auditors are entitled to receive all notices of, and other communications relating to, any general meeting which any member is entitled to receive.

12.3	Contents of notice: general

Subject to the provisions of the Act, the notice shall specify the time, date and place of the meeting (including without limitation any satellite meeting place arranged for the purposes of Article 12.6, which shall be identified as such in the notice) and the general nature of the business to be dealt with.

12.4	Contents of notice: additional requirements

In the case of an annual general meeting, the notice shall specify the meeting as such. In the case of a meeting to pass a special resolution, the notice shall specify the intention to propose the resolution as a special resolution.

12.5	Article 12.8 arrangements

The notice shall include details of any arrangements made for the purpose of Article 12.8 (making clear that participation in those arrangements will not amount to attendance at the meeting to which the notice relates).

12.6	General meetings at more than one place

The board may resolve to enable persons entitled to attend a general meeting to do so by simultaneous attendance and participation at a satellite meeting place anywhere in the world or by means of electronic facility or facilities. The members present in person or by proxy at satellite meeting places and/or by means of the electronic facility or facilities shall be counted in the quorum for, and entitled to vote at, the general meeting in question, and that meeting shall be duly constituted and its proceedings valid if the chair of the general meeting is satisfied that adequate facilities are available throughout the general meeting to ensure that members attending at all the meeting places are able to:

(a)

participate in the business for which the meeting has been convened;

(b)

hear and see all persons who speak (whether by the use of microphones, loudspeakers, audio-visual communications equipment or otherwise) in the principal meeting place and any satellite meeting place or electronic facility or facilities; and

(c)

be heard and seen by all other persons so present in the same way.

The chair of the general meeting shall be present at, and the meeting shall be deemed to take place at, the principal meeting place. The ability to hold meetings by means of electronic facility or facilities shall be allowed to the fullest extent permitted under applicable law.

12.7	Interruption or adjournment where facilities inadequate

If it appears to the chair of the general meeting that the facilities at the principal meeting place or any satellite meeting place have become inadequate for the purposes referred to in Article 12.6, then the chair may, without the consent of the meeting, interrupt or adjourn the general meeting. All business conducted at that general meeting up to the time of that adjournment shall be valid. The provisions of Article 14.6 shall apply to that adjournment.

12.8	Other arrangements for viewing and hearing proceedings

The board may make arrangements for persons entitled to attend a general meeting or an adjourned general meeting to be able to view and hear the proceedings of the general meeting or adjourned general meeting and to speak at the meeting (whether by the use of microphones, loudspeakers, audio-visual communications equipment or otherwise) by attending at a venue anywhere in the world not being a satellite meeting place. Those attending at any such venue shall not be regarded as present at the general meeting or adjourned general meeting and shall not be entitled to vote at the meeting at or from that venue. The inability for any reason of any member present in person or by proxy at such a venue to view or hear all or any of the proceedings of the meeting or to speak at the meeting shall not in any way affect the validity of the proceedings of the meeting.

12.9	Controlling level of attendance

The board may from time to time make any arrangements for controlling the level of attendance at any venue for which arrangements have been made pursuant to Article 12.8 (including without limitation the issue of tickets or the imposition of some other means of selection) it in its absolute discretion considers appropriate, and may from time to time change those arrangements. If a member, pursuant to those arrangements, is not entitled to attend in person or by proxy at a particular venue, they shall be entitled to attend in person or by proxy at any other venue for which arrangements have been made pursuant to Article 12.8. The entitlement of any member to be present at such venue in person or by proxy shall be subject to any such arrangement then in force and stated by the notice of meeting or adjourned meeting to apply to the meeting.

12.10

Change in place and/or time of meeting

If, after the sending of notice of a general meeting but before the meeting is held, or after the adjournment of a general meeting but before the adjourned meeting is held (whether or not notice of the adjourned meeting is required), the board decides that it is impracticable or unreasonable, for a reason beyond its control, to hold the meeting at the declared place (or any of the declared places, in the case of a meeting to which Article 12.6 applies) and/or time, it may change the place (or any of the places, in the case of a meeting to which Article 12.6 applies) and/or postpone the time at which the meeting is to be held. If such a decision is made, the board may then change the place (or any of the places, in the case of a meeting to which Article 12.6 applies) and/or postpone the time again if it decides that it is reasonable to do so. In either case:

(a)

no new notice of the meeting need be sent, but the board shall, if practicable, advertise the date, time and place of the meeting by public announcement and in two newspapers with national circulation in the United Kingdom and shall make arrangements for notices of the change of place and/or postponement to appear at the original place and/or at the original time; and

(b)

a proxy appointment in relation to the meeting may, if by means of a document in hard copy form, be delivered to the office or to such other place within the United Kingdom as may be specified by or on behalf of the Company in accordance with Article 17.4(a) or, if in electronic form, be received at the address (if any) specified by or on behalf of the Company in accordance with Article 17.4(b).

For the purposes of this Article 12.10, “public announcement” shall mean disclosure in a press release reported by Reuters, the Dow Jones News Service, Associated Press or a comparable news service or other method of public announcement as the board may deem appropriate in the circumstances.

12.11

Meaning of participate

For the purposes of Articles 12.6, 12.7, 12.8, 12.9 and 12.10, the right of a member to participate in the business of any general meeting shall include without limitation the right to speak, vote on a poll, be represented by a proxy and have access to all documents which are required by the Act or these Articles to be made available at the meeting.

12.12

Accidental omission to send notice etc.

The accidental omission to send a notice of a meeting or resolution, or to send any notification where required by the Act or these Articles in relation to the publication of a notice of meeting on a website, or to send a form of proxy where required by the Act or these Articles, to any person entitled to receive it, or the non-receipt for any reason of any such notice, resolution or notification or form of proxy by that person, whether or not the Company is aware of such omission or non-receipt, shall not invalidate the proceedings at that meeting.

12.13

Security

The board and, at any general meeting, the chair may make any arrangement and impose any requirement or restriction it or they consider appropriate to ensure the security of a general meeting including, without limitation, requirements for evidence of identity to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken into the meeting place. The board and, at any general meeting, the chair are entitled to refuse entry to a person who refuses to comply with these arrangements, requirements or restrictions.

13.

LIST OF MEMBERS FOR VOTING AT GENERAL MEETINGS

13.1	Preparation of shareholder list

At least ten days before every general meeting, the secretary shall prepare a complete list of the members entitled to vote at the meeting. Such list shall be:

(a)

be arranged in alphabetical order;

(b)

show the address of each member entitled to vote at the meeting; and

(c)

show the number of shares registered in the name of each member.

13.2	Shareholder list to be available for inspection

The list of members prepared in accordance with Article 13 shall be available during ordinary business hours for a period of at least ten days before the meeting for inspection by any member for any purpose relevant to the meeting. The notice of the meeting may specify the place where the list of members may be inspected. If the notice of the meeting does not specify the place where members may inspect the list of members, the list of members shall be available for inspection (at the discretion of the board) at either the Company’s registered office or on a website. The list of members shall be available for inspection by any member who is present at the meeting, at the place and for the duration, of the meeting.

14.

PROCEEDINGS AT GENERAL MEETINGS

14.1	Quorum

No business shall be dealt with at any general meeting unless a quorum is present, but the absence of a quorum shall not preclude the choice or appointment of a chair, which shall not be treated as part of the business of the meeting. Save as otherwise provided by these Articles, two qualifying persons entitled to vote shall be a quorum.

For the purposes of this article, a “qualifying person” means (a) an individual who is a member of the Company, (b) a person authorised to act as the representative of a corporation in relation to the meeting, or (c) a person appointed as a proxy of a member in relation to the meeting.

14.2	If quorum not present

If such a quorum is not present within five minutes (or such longer time not exceeding 30 minutes as the chair of the meeting may decide to wait) from the time appointed for the meeting, or if during a meeting such a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved, and in any other case shall stand adjourned to such time and place as the chair of the meeting may, subject to the provisions of the Act, determine. The adjourned meeting shall be dissolved if a quorum is not present within 15 minutes after the time appointed for holding the meeting.

14.3

Chair

The chair, if any, of the board or, in their absence, any deputy chair of the Company or, in their absence, some other director nominated by the board, shall preside as chair of the meeting. If neither the chair, deputy chair nor such other director (if any) is present within five minutes after the time appointed for holding the meeting or is not willing to act as chair, the directors present shall elect one of their number to be chair. If there is only one director present and willing to act, such director shall be chair. If no director is willing to act as chair, or if no director is present within five minutes after the time appointed for holding the meeting, the members present in person or by proxy and entitled to vote shall choose a member present in person or a proxy of a member or a person authorised to act as a representative of a corporation in relation to the meeting to be chair.

14.4	Directors entitled to speak

A director shall, notwithstanding that they are not a member, be entitled to attend and speak at any general meeting and at any separate meeting of the holders of any class of shares in the capital of the Company.

14.5	Adjournment: chair’s powers

The chair may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place. No business shall be dealt with at an adjourned meeting other than business which might properly have been dealt with at the meeting had the adjournment not taken place. In addition (and without prejudice to the chair’s power to adjourn a meeting conferred by Article 12.7), the chair may adjourn the meeting to another time and place without such consent if it appears to them that:

(a)

it is likely to be impracticable to hold or continue that meeting because of the number of members wishing to attend who are not present; or

(b)

the unruly conduct of persons attending the meeting prevents or is likely to prevent the orderly continuation of the business of the meeting; or

(c)

an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.

14.6	Adjournment: procedures

Any such adjournment may, subject to the provisions of the Act, be for such time and to such other place (or, in the case of a meeting held at a principal meeting place and a satellite meeting place, such other places) as the chair may, in their absolute discretion determine, notwithstanding that by reason of such adjournment some members may be unable to be present at the adjourned meeting. Any such member may nevertheless appoint a proxy for the adjourned meeting either in accordance with Article 17.4 or by means of a document in hard copy form which, if delivered at the meeting which is adjourned to the chair or the secretary or any director, shall be valid even though it is given at less notice than would otherwise be required by Article 17.4(a). When a meeting is adjourned for 30 days or more or for an indefinite period, notice shall be sent at least seven clear days before the date of the adjourned meeting specifying the time and place (or places, in the case of a meeting to which Article 12.6 applies) of the adjourned meeting and the general nature of the business to be transacted. Otherwise it shall not be necessary to send any notice of an adjournment or of the business to be dealt with at an adjourned meeting.

14.7	Amendments to resolutions

If an amendment is proposed to any resolution under consideration but is in good faith ruled out of order by the chair, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. With the consent of the chair, an amendment may be withdrawn by its proposer before it is voted on. No amendment to a resolution duly proposed as a special resolution may be considered or voted on (other than a mere clerical amendment to correct a patent error). No amendment to a resolution duly proposed as an ordinary resolution may be considered or voted on (other than a mere clerical amendment to correct a patent error) unless either:

(a)

at least 48 hours before the time appointed for holding the meeting or adjourned meeting at which the ordinary resolution is to be considered (which, if the board so specifies, shall be calculated taking no account of any part of a day that is not a working day), notice of the terms of the amendment and the intention to move it has been delivered in hard copy form to the office or to such other place as may be specified by or on behalf of the Company for that purpose, or received in electronic form at such address (if any) for the time being specified by or on behalf of the Company for that purpose, or

(b)

the chair in their absolute discretion decides that the amendment may be considered and voted on.

14.8	Methods of voting – Poll voting entrenched

A resolution put to the vote of a general meeting shall be decided on a poll. This requirement for poll voting on resolutions at a general meeting of the Company may only be removed, amended or varied by resolution of the members passed unanimously at a general meeting of the Company.

14.9	Conduct of poll

Subject to Article 14.10, a poll shall be taken as the chair directs and they may, and shall if required by the meeting, appoint scrutineers (who need not be members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

14.10

When poll to be taken

A poll on the election of a chair or on a question of adjournment shall be taken immediately. A poll on any other question shall be taken at either the meeting or at such time and place as the chair directs not being more than 30 days after the meeting.

14.11

Effectiveness of special resolutions

Where for any purpose an ordinary resolution of the Company is required, a special resolution shall also be effective.

15.

PROPOSED SHAREHOLDER RESOLUTIONS

15.1	Content of member requests for requisitioned resolution and general meetings

(a)

Where a member or members, in accordance with the provisions of the Act, request the Company to: (i) call a general meeting for the purposes of bringing a resolution before

the meeting; or (ii) give notice of a resolution to be proposed at an annual general meeting, such request must, in each case and in addition to the requirements of the Act contain the following:

(i)

to the extent that that request relates to the nomination of a director, as to each person whom the member(s) propose(s) to nominate for election or re-election as a director, all information relating to such person that is 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, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, and the regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected;

(ii)

to the extent that that request relates to any business other than the nomination of a director that the member(s) propose(s) to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such member(s) and any Member Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the member(s) or the Member Associated Person therefrom; and

(iii)

as to the member(s) giving the notice and the Member Associated Person, if any, on whose behalf the nomination or proposal is made:

(A)

the name and address of such member(s), as they appear on the Company’s books, and of such Member Associated Persons, if any;

(B)

the class and number of shares of the Company which are owned beneficially and of record by such member(s) and such Member Associated Persons, if any;

(C)

whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of stock price changes for, or to increase or decrease the voting power of, such member(s) or any such Member Associated Persons with respect to any shares of the Company (which information shall be updated by such member(s) as of the record date of the meeting not later than ten days after the record date for the meeting);

(D)

a description of all agreements, arrangements and understandings between such member and such Member Associated Persons, if any, each proposed nominee and any other person or persons (including their names) in connection with the nomination of a director or the proposal of any other business by such member(s) or such Member Associated Person, if any;

(E)

any other information relating to such member or such beneficial owner 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 Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and

(F)

to the extent known by the member(s) giving the notice, the name and address of any other member supporting the nominee for election or reelection as a director or the proposal of other business on the date of such request.

(b)

For purposes of this Article 15.1, a “Member Associated Person” of any member shall mean: (i) any person controlling, directly or indirectly, or acting in concert with, such member; (ii) any beneficial owner of shares of stock of the Company owned of record or beneficially by such member; and (iii) any person controlling, controlled by or under common control with such Member Associated Person.

(c)

If a request made in accordance with Article 15.1(a) does not include the information specified in that Article, or if a request made in accordance with Article 15.1(a) is not received in the time and manner indicated in Article 15.2, in respect of the shares which the relevant member(s) hold (the “member default shares”) the relevant member(s) shall not be entitled to vote, either personally or by proxy at a general meeting or at a separate meeting of the holders of that class of shares (or at an adjournment of any such meeting), the member default shares with respect to the matters detailed in the request made in accordance with Article 15.1(a).

15.2	Time for receiving requests

(a)

Without prejudice the rights of any member under the Act, a member who makes a request to which Article 15.1(a) relates, must deliver any such request in writing to the secretary at the Company’s registered office not earlier than the close of business on the one hundred and twentieth (120th) calendar day nor later than the close of business on the ninetieth (90th) calendar day prior to the date of the first anniversary of the preceding year’s annual general meeting; provided, however, that in the event that the date of an annual meeting is more than thirty (30) calendar days before or more than sixty (60) calendar days after the date of the first anniversary of the preceding year’s annual general meeting, notice by the member must be so delivered in writing not earlier than the close of business on the one hundred and twentieth (120th) calendar day prior to such annual general meeting and not later than the close of business on the later of (i) the ninetieth (90th) calendar day prior to such annual general meeting and (ii) the 10th calendar day after the day on which public announcement of the date of such annual general meeting is first made by the Company. In no event shall any adjournment or postponement of an annual general meeting or the public announcement thereof commence a new time period for the giving of a member’s notice as described in this Article.

(b)

Notwithstanding anything in the foregoing provisions of this Article 15.2 to the contrary, in the event that the number of directors to be elected to the board is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased board of directors made by the Company at least one hundred (100) calendar days prior to the date of the first anniversary of the preceding year’s annual general meeting, a member’s notice required by this Article 15.2 shall also be considered as validly delivered in accordance with Article 15.2, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the Company’s registered not later than 5.00p.m., local time, on the tenth (10th) calendar day after the day on which such public announcement is first made by the Company.

(c)

For purposes of this Article 15.2, “public announcement” shall mean disclosure in a press release reported by Reuters, the Dow Jones News Service, Associated Press or a comparable news service or in a document publicly filed by the Company with the U.S. Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(d)

Notwithstanding the provisions of Article 15.1(a) or Article 15.1(c) or the foregoing provisions of this Article 15.2, a member shall also comply with all applicable requirements of the Act and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in Article 15.1(a) or Article 15.1(c) and this Article 15.2. Nothing in Article 15.1(a) or Article 15.1(c) or this Article 15.2 shall be deemed to affect any rights of members to request inclusion of proposals in, nor the right of the Company to omit proposals from, the Company’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act.

16.

VOTES OF MEMBERS

16.1	Right to vote on a poll

Subject to any rights or restrictions attached to any shares, on a vote on a resolution on a poll every member present in person or by proxy shall have one vote for every share of which they are the holder.

16.2	Votes of joint holders

In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority shall be determined by the order in which the names of the holders stand in the register.

16.3	Member under incapacity

A member in respect of whom an order has been made by a court or official having jurisdiction (whether in the United Kingdom or elsewhere) in matters concerning mental disorder may vote by their receiver, curator bonis or other person authorised for that purpose appointed by that court or official. That receiver, curator bonis or other person may vote by proxy. The right to vote shall be exercisable only if evidence satisfactory to the board of the authority of the person claiming to exercise the right to vote has been delivered to the office, or another place specified in accordance with these Articles for the delivery of proxy appointments, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which the right to vote is to be exercised provided that the Company may specify, in any case, that in calculating the period of 48 hours, no account shall be taken of any part of a day that is not a working day.

16.4	Calls in arrears

No member shall be entitled to vote at a general meeting or at a separate meeting of the holders of any class of shares in the capital of the Company, either in person or by proxy, in respect of any share held by them unless all moneys presently payable by them in respect of that share have been paid.

16.5	Members in default of section 793 of the Act

If at any time the board is satisfied that any member, or any other person appearing to be interested in shares held by such member, has been duly served with a notice under section 793 of the Act (a “section 793 notice”) and is in default for the prescribed period in supplying to the Company the information thereby required, or, in purported compliance with such a notice, has made a statement which is false or inadequate in a material particular, then the board may, in its absolute discretion at any time thereafter by notice (a “direction notice”) to such member direct that:

(a)

in respect of the shares in relation to which the default occurred (the “default shares”, which expression includes any shares issued after the date of the section 793 notice in respect of those shares) the member shall not be entitled to attend or vote either personally or by proxy at a general meeting or at a separate meeting of the holders of that class of shares or on a poll; and

(b)

in respect of the default shares:

(i)

no payment shall be made by way of dividend and no share shall be allotted pursuant to Article 34.6; and

(ii)

no transfer of any default share shall be registered unless:

(A)

the member is not himself in default as regards supplying the information requested and the transfer when presented for registration is accompanied by a certificate by the member in such form as the board may in its absolute discretion require to the effect that after due and careful enquiry the member is satisfied that no person in default as regards supplying such information is interested in any of the shares the subject of the transfer; or

(B)

the transfer is an approved transfer.

16.6	Copy of notice to interested persons

The Company shall send the direction notice to each other person appearing to be interested in the default shares, but the failure or omission by the Company to do so shall not invalidate such notice.

16.7	When restrictions cease to have effect

Any direction notice shall cease to have effect not more than seven days after the earlier of receipt by the Company of:

(a)

a notice of an approved transfer, but only in relation to the shares transferred; or

(b)

all the information required by the relevant section 793 notice, in a form satisfactory to the board.

16.8	Board may cancel restrictions

The board may at any time send a notice cancelling a direction notice.

16.9	Conversion of uncertificated shares

The Company may exercise any of its powers under Article 2.6 in respect of any default share that is held in uncertificated form.

16.10

Supplementary provisions

For the purposes of this Article and Articles 16.5, 16.6, 16.7, 16.8 and 16.9:

(a)

a person shall be treated as appearing to be interested in any shares if the member holding such shares has sent to the Company a notification under section 793 of the Act which either (i) names such person as being so interested or (ii) fails to establish the identities of all those interested in the shares, and (after taking into account the said notification and any other relevant section 793 notification) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares;

(b)

the prescribed period is 14 days from the date of service of the section 793 notice; and

(c)

a transfer of shares is an approved transfer if:

(i)

it is a transfer of shares pursuant to an acceptance of a takeover offer (within the meaning of section 974 of the Act); or

(ii)

the board is satisfied that the transfer is made pursuant to a sale of the whole of the beneficial ownership of the shares the subject of the transfer to a party unconnected with the member and with any other person appearing to be interested in the shares; or

(iii)

the transfer results from a sale made through a recognised investment exchange as defined in the Financial Services and Markets Act 2000 or any other stock exchange outside the United Kingdom on which the Company’s shares are normally traded.

16.11

Section 794 of the Act

Nothing contained in Article 16.5, 16.6, 16.7, 16.8, 16.9 or 16.10 limits the power of the Company under section 794 of the Act.

16.12

Errors in voting

If any votes are counted which ought not to have been counted, or might have been rejected, the error shall not vitiate the result of the voting unless it is pointed out at the same meeting, or at any adjournment of the meeting, and, in the opinion of the chair, it is of sufficient magnitude to vitiate the result of the voting.

16.13

Objection to voting

No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting or poll at which the vote objected to is tendered. Every vote not disallowed at such meeting shall be valid and every vote not counted which ought to have been counted shall be disregarded. Any objection made in due time shall be referred to the chair whose decision shall be final and conclusive.

16.14

Voting: additional provisions

On a poll, a member entitled to more than one vote need not, if they vote, use all their votes or cast all the votes they use in the same way.

17.

PROXIES AND CORPORATE REPRESENTATIVES

17.1	Appointment of proxy: form

The appointment of a proxy shall be:

(a)

in the case of a proxy relating to shares in the capital of the Company held in the name of a Depositary, in a form or manner of communication approved by the board, which may include, without limitation, a voter instruction form to be provided to the Company by certain third parties on behalf of the Depositary. Subject thereto, the appointment of a proxy may be:

(i)

in hard copy form; or

(ii)

in electronic form, to the electronic address provided by the Company for this purpose; or

(b)

in the case of a proxy relating to shares to which Article 17.1(a) does not apply:

(i)

in any usual form or in any other form or manner of communication which the board may approve. Subject thereto, the appointment of a proxy may be:

(A)

in hard copy form; or

(B)

in electronic form, to the electronic address provided by the Company for this purpose.

17.2	Execution of proxy

The appointment of a proxy, whether made in hard copy form or in electronic form, shall be executed in such manner as may be approved by or on behalf of the Company from time to time. Subject thereto, the appointment of a proxy shall be executed by the appointer or any person duly authorised by the appointer or, if the appointer is a corporation, executed by a duly authorised person or under its common seal or in any other manner authorised by its constitution.

17.3	Proxies: other provisions

The board may, if it thinks fit, but subject to the provisions of the Act, at the Company’s expense send hard copy forms of proxy for use at the meeting and issue invitations in electronic form to appoint a proxy in relation to the meeting in such form as may be approved by the board. The appointment of a proxy shall not preclude a member from attending and voting in person at the meeting or poll concerned. A member may appoint more than one proxy to attend on the same occasion, provided that each such proxy is appointed to exercise the rights attached to a different share or shares held by that member.

17.4	Delivery/receipt of proxy appointment

Without prejudice to Article 12.10(b) or to the second sentence of Article 14.6, the appointment of a proxy shall:

(a)

if in hard copy form, be delivered by hand or by post to the office or such other place within the United Kingdom as may be specified by or on behalf of the Company for that purpose:

(i)

in the notice convening the meeting; or

(ii)

in any form of proxy sent by or on behalf of the Company in relation to the meeting,

by the time specified by the board (as the board may determine, in compliance with the provisions of the Act) in any such notice or form of proxy.

(b)

if in electronic form, be received at any address to which the appointment of a proxy may be sent by electronic means pursuant to a provision of the Act or to any other address specified by or on behalf of the Company for the purpose of receiving the appointment of a proxy in electronic form:

(i)

in the notice convening the meeting; or

(ii)

in any form of proxy sent by or on behalf of the Company in relation to the meeting; or

(iii)

in any invitation to appoint a proxy issued by the Company in relation to the meeting; or

(iv)

on a website that is maintained by or on behalf of the Company and identifies the Company,

by the time specified by the board (as the board may determine, in compliance with the provisions of the Act) in any such method of notification.

The board may specify, when determining the dates by which proxies are to be lodged, that no account need be taken of any part of a day that is not a working day.

17.5	Authentication of proxy appointment not made by holder

Subject to the provisions of the Act, where the appointment of a proxy is expressed to have been or purports to have been made, sent or supplied by a person on behalf of the holder of a share:

(a)

the Company may treat the appointment as sufficient evidence of the authority of that person to make, send or supply the appointment on behalf of that holder; and

(b)

that holder shall, if requested by or on behalf of the Company at any time, send or procure the sending of reasonable evidence of the authority under which the appointment has been made, sent or supplied (which may include, without limitation, a copy of such authority certified notarially or in some other way approved by the board), to such address and by such time as may be specified in the request and, if the request is not complied with in any respect, the appointment may be treated as invalid.

17.6	Validity of proxy appointment

Subject to Article 17.5, a proxy appointment which is not delivered or received in accordance with Article 17.4 shall be invalid. When two or more valid proxy appointments are delivered or received in respect of the same share for use at the same meeting, the one that was last delivered or received shall be treated as replacing or revoking the others as regards that share, provided that if the Company determines that it has insufficient evidence to decide whether or not a proxy appointment is in respect of the same share, it shall be entitled to determine which proxy appointment (if any) is to be treated as valid. Subject to the Act, the Company may determine at its discretion when a proxy appointment shall be treated as delivered or received for the purposes of these Articles.

17.7	Rights of proxy

A proxy appointment shall be deemed to entitle the proxy to exercise all or any of the appointing member’s rights to attend and to speak and vote at a meeting of the Company in respect of the shares to which the proxy appointment relates. The proxy appointment shall, unless it provides to the contrary, be valid for any adjournment of the meeting as well as for the meeting to which it relates.

17.8	Company not required to check proxy votes

The Company shall not be required to check that a proxy or corporate representative votes in accordance with any instructions given by the member by whom they are appointed. Any failure to vote as instructed shall not invalidate the proceedings on the resolution.

17.9	Corporate representatives

Any corporation which is a member of the Company (in this Article the “grantor”) may, by resolution of its directors or other governing body, authorise such person or persons as it thinks fit to act as its representative or representatives at any meeting of the Company or at any separate meeting of the holders of any class of shares. A director, the secretary or other person authorised for the purpose by the secretary may require all or any of such persons to produce a certified copy of the resolution of authorisation before permitting them to exercise their powers. Such person is entitled to exercise (on behalf of the grantor) the same powers as the grantor could exercise if it were an individual member of the Company. Where a grantor authorises more than one person:

(a)

where more than one authorised person purport to exercise a power in respect of the same shares:

(i)

if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; and

(ii)

if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.

17.10

Revocation of authority

The termination of the authority of a person to act as a proxy or duly authorised representative of a corporation does not affect:

(a)

whether they count in deciding whether there is a quorum at a meeting;

(b)

the validity of anything they do as chair of a meeting;

(c)

the validity of a poll demanded by them at a meeting; or

(d)

the validity of a vote given by that person,

unless notice of the termination was either delivered or received as mentioned in the following sentence at least 24 hours before the start of the relevant meeting or adjourned meeting or (in the case of a poll taken otherwise than on the same day as the meeting or adjourned meeting) the time appointed for taking the poll. Such notice of termination shall be either by means of a document in hard copy form delivered to the office or to such other place within the United Kingdom as may be specified by or on behalf of the Company in accordance with Article 17.4(a) or in electronic form received at the address specified by or on behalf of the Company in accordance with Article 17.4(b), regardless of whether any relevant proxy appointment was effected in hard copy form or in electronic form.

17.11

Duration of general authority

A proxy given in the form of a power of attorney or similar authorisation granting power to a person to vote on behalf of a member at forthcoming meetings in general shall not be treated as valid for a period of more than three years, unless a contrary intention is stated in it.

18.

NUMBER OF DIRECTORS

18.1	Composition

As at the date of the adoption of these Articles, the initial board of directors of the Company shall comprise (A) one Chief Executive Officer, (B) two additional directors (as defined in Article 19.2), and (C) seven Investor Directors.

18.2	Limits on number of directors

The number of directors shall be as the board may determine from time to time, but shall be not less than two and no more than fifteen, provided that for so long as the Investor has the right to appoint an Investor Director under Article 19.1, the prior written consent of the Investor shall be required in order to increase the number of directors to a number exceeding eleven.

18.3	Classes

The directors shall be divided into 3 classes designated as class I, class II and class III, respectively. Directors shall initially be assigned to each class as described in Annex A hereto. At the first annual general meeting of members, the term of office of the class I directors (other than an Investor Director that is a class I director) shall expire and class I directors (other than an Investor Director that is a class I director) shall be elected for a full term of 3 years. At the second annual general meeting of members, the term of office of the class II directors (other than an Investor Director that is a class II director) shall expire and class II directors (other than an Investor Director that is a class II director) shall be elected for a full term of 3 years. At the third annual general meeting of members, the term of office of the class III directors (other than an Investor Director that is a class III director) shall expire and class III directors (other than an Investor Director that is a class III director) shall be elected for a full term of 3 years. At each succeeding annual general meeting of members, directors (other than Investor Directors) shall be elected for a full term of 3 years to succeed the directors of the class whose terms expire at such annual general meeting. Notwithstanding the foregoing provisions of this Article, each director shall hold office until the expiration of his term, until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of directors constituting the directors shall shorten the term of any incumbent director.

19.

APPOINTMENT OF DIRECTORS

19.1	Investor Directors

For so long as the Investor beneficially owns, in the aggregate, not less than thirty-five percent (35%) of the ordinary shares of the Company, the Investor shall have the right to nominate for appointment and maintain in office up to eight (8) natural persons, from time to time, to be directors of the Company, and to remove any director so appointed, and upon their removal whether by the Investor or otherwise, to nominate for appointment another director in their place; provided, that (A) the number of Investor Directors to be appointed by the Investor shall be reduced to six (6) directors at such time as the Investor beneficially owns less than thirty-five percent (35%) of the then outstanding shares, (B) the number of Investor Directors to be appointed by the Investor shall be reduced to four (4) directors at such time as the Investor beneficially owns less than twenty-five percent (25%) of the then outstanding shares, (C) the number of Investor Directors to be appointed by the Investor shall be reduced to two (2) directors at such time as the Investor beneficially owns less than fifteen-percent (15%) of the then outstanding shares, and (D) the Investor shall have no right to appoint any directors pursuant to this Article 19.1 at such time as the Investor beneficially owns less than five percent (5%) of the then-outstanding shares. Each person holding office pursuant to this Article 19.1 is referred to in these Articles as an “Investor Director”. Any appointment, replacement or removal under this Article 19.1 shall be made by notice in writing by the Investor and delivered at the registered office for the time being of the Company or delivered to a meeting of the board. The Company shall as soon as practicable, and in any event within five (5) business days, after the date of the notice from the Investor, ensure that the person so nominated is appointed or reappointed (as the case may be) as a director.

In the event that the Investor ceases to have the right to appoint an individual to serve as a director pursuant to this Article 19.1, (i) that number of directors for which the Investor ceases to have the right to appoint to serve as directors shall cease to be Investor Directors upon the

expiry of such directors’ term of service on the board in order of expiry (each a “Departing Director”), provided that (A) in lieu of such Departing Director (each an “Investor Continuing Director”) ceasing to be an Investor Director, the Investor may instead designate any other Investor Director previously appointed by the Investor to cease to be an Investor Director at the expiration of the original Departing Director’s term, with such Investor Continuing Director continuing as a director, and with the Company ensuring that the Investor Continuing Director is reappointed for an additional term and (B) if multiple Investor Directors’ terms of service on the board expire simultaneously, the Investor may designate which such Investor Directors shall cease to be Investor Directors, and (ii) such Departing Directors will retire from office and be eligible for re-election as provided in these Articles.

19.2	Eligibility for election

Each director elected shall hold office until their successor is elected or until their earlier resignation or removal in accordance with Article 19.1, Article 23.1 or Article 23.2.

Other than for Investor Directors, no person shall be appointed a director at any general meeting unless:

(a)

they are recommended by the board; or

(b)

notice in respect of that person is given by a member qualified to vote at the meeting has been received by the Company in accordance with Article 15.1(a) and Article 15.2 or section 338 of the Act of the intention to propose that person for appointment stating the particulars which would, if they were so appointed, be required to be included in the Company’s register of directors, together with notice by that person of their willingness to be appointed.

19.3	Separate resolutions on appointment

Except as otherwise authorised by the Act, a motion for the appointment of two or more persons as directors by a single resolution shall not be made unless a resolution that it should be so made has first been agreed to by the meeting without any vote being given against it.

19.4	Additional powers of the Company

Subject to Article 18.2, Article 19.1, Article 19.2, for directors other than the Investor Directors, the Company may by ordinary resolution or the board may, at a meeting of the board by way of resolution of the board or by a written resolution of the directors, appoint a person who is willing to act to be a director either to fill a vacancy or as an additional director. Any vacancy caused by an Investor Director resigning or being removed from office shall only be filled by a director nominated for appointment by the Investor in accordance with Article 19.1. The appointment of a person to fill a vacancy or as an additional director shall take effect from the end of the meeting.

19.5	Appointment by board

The board may appoint a person who is willing to act to be a director, either to fill a vacancy or as an additional director and in either case whether or not for a fixed term, provided that any vacancy caused by an Investor Director resigning or being removed from office shall only be filled by a director appointed by the Investor in accordance with Article 19.1. Any director so appointed shall hold office until their successor is elected or until their earlier resignation or removal in accordance with Article 23.1 or Article 23.2.

19.6	No share qualification

A director shall not be required to hold any shares in the capital of the Company by way of qualification.

20.

POWERS OF THE BOARD

20.1	Business to be managed by board

Subject to the provisions of the Act and these Articles and to any directions given by special resolution, the business of the Company shall be managed by the board which may pay all expenses incurred in forming and registering the Company and may exercise all the powers of the Company, including without limitation the power to dispose of all or any part of the undertaking of the Company. No alteration of the Articles and no such direction shall invalidate any prior act of the board which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this Article shall not be limited by any special power given to the board by these Articles. A meeting of the board at which a quorum is present may exercise all powers exercisable by the board.

20.2	Exercise by Company of voting rights

The board may exercise the voting power conferred by the shares in any body corporate held or owned by the Company in such manner in all respects as it thinks fit (including without limitation the exercise of that power in favour of any resolution appointing its members or any of them directors of such body corporate, or voting or providing for the payment of remuneration to the directors of such body corporate).

21.

CHANGE OF THE COMPANY’S NAME

The Company’s name may be changed by resolution of the board.

22.

DELEGATION OF POWERS OF THE BOARD

22.1	Committees of the board

The board may delegate any of its powers to any committee consisting of one or more directors. The board may also delegate to any director holding any executive office such of its powers as the board considers desirable to be exercised by them. Any such delegation shall, in the absence of express provision to the contrary in the terms of delegation, be deemed to include authority to sub-delegate to one or more directors (whether or not acting as a committee) or to any employee or agent of the Company all or any of the powers delegated and may be made subject to such conditions as the board may specify, and may be revoked or altered.

Subject to any conditions imposed by the board, the proceedings of a committee with two or more members shall be governed by these Articles regulating the proceedings of directors so far as they are capable of applying.

22.2	Local boards etc.

The board may establish local or divisional boards or agencies for managing any of the affairs of the Company, either in the United Kingdom or elsewhere, and may appoint any persons to be members of the local or divisional boards, or any managers or agents, and may fix their remuneration. The board may delegate to any local or divisional board, manager or agent any of the powers, authorities and discretions vested in or exercisable by the board, with power to sub-delegate, and may authorise the members of any local or divisional board, or any of them, to fill any vacancies and to act notwithstanding vacancies. Any appointment or delegation made

pursuant to this Article may be made on such terms and subject to such conditions as the board may decide. The board may remove any person so appointed and may revoke or vary the delegation but no person dealing in good faith and without notice of the revocation or variation shall be affected by it.

22.3	Agents

The board may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes, with such powers, authorities and discretions (not exceeding those vested in the board) and on such conditions as the board determines, including without limitation authority for the agent to delegate all or any of their powers, authorities and discretions, and may revoke or vary such delegation.

22.4	Offices including title “director”

The board may appoint any person to any office or employment having a designation or title including the word “director” or attach to any existing office or employment with the Company such a designation or title and may terminate any such appointment or the use of any such designation or title. The inclusion of the word “director” in the designation or title of any such office or employment shall not imply that the holder is a director of the Company, and the holder shall not thereby be empowered in any respect to act as, or be deemed to be, a director of the Company for any of the purposes of these Articles.

23.

DISQUALIFICATION AND REMOVAL OF DIRECTORS

23.1	Disqualification as a director

A person ceases to be a director as soon as:

(a)

that person ceases to be a director by virtue of any provision of the Act or is prohibited from being a director by law;

(b)

a bankruptcy order is made against that person;

(c)

a composition is made with that person’s creditors generally in satisfaction of that person’s debts;

(d)

a registered medical practitioner who is treating that person gives a written opinion to the Company stating that that person has become physically or mentally incapable of acting as a director and may remain so for more than three months;

(e)

by reason of that person’s mental health, a court makes an order which wholly or partly prevents that person from personally exercising any powers or rights which that person would otherwise have;

(f)

notification is received by the Company from the director that the director is resigning or retiring from office, and such resignation or retirement has taken effect in accordance with its terms; or

(g)

that person dies.

23.2	Power of Company to remove director

The Company may, without prejudice to the provisions of the Act, by ordinary resolution remove any director from office (notwithstanding any provision of these Articles or of any agreement between the Company and such director, but without prejudice to any claim they may have for damages for breach of any such agreement). No special notice need be given of

any resolution to remove a director in accordance with this Article and no director proposed to be removed in accordance with this Article has any special right to protest against their removal. Other than for the Investor Directors, the Company may, by ordinary resolution, appoint another person in place of a director removed from office in accordance with this Article.

23.3	Removal of the Investor Directors

If an Investor Director is disqualified in accordance with Article 23.1 or removed in accordance with Article 23.2, the board shall appoint such replacement to serve as a director as notified in writing by the Investor (which for the avoidance of doubt, may be the same person who has been removed in accordance with Article 23.2, but not a person who has been disqualified in accordance with Article 23.1) and lodged at the registered office for the time being of the Company or delivered to a meeting of the board. The Company shall as soon as practicable, and in any event within five (5) business days after the date of the notice from the Investor, ensure that the person so nominated is proposed for appointment or re-appointment (as the case may be) as a director, at a meeting of the board by way of resolution of the board or by a written resolution of the directors.

24.

NON-EXECUTIVE DIRECTORS

24.1	Arrangements with non-executive directors

Subject to the provisions of the Act, the board may enter into, vary and terminate an agreement or arrangement with any director who does not hold executive office for the provision of their services to the Company. Any such agreement or arrangement may be made on such terms as the board determines.

24.2	Ordinary remuneration

Each non-executive director shall be paid a fee for their services (which shall be deemed to accrue on a quarterly basis) at such rate as may from time to time be determined by the board.

24.3	Additional remuneration for special services

Any director who does not hold executive office and who performs special services which in the opinion of the board are outside the scope of the ordinary duties of a director, may be paid such extra remuneration by way of additional fee, salary, commission or otherwise as the board may determine.

25.

DIRECTORS’ EXPENSES

25.1	Directors may be paid expenses

The directors may be paid all travelling, hotel, and other expenses properly incurred by them in connection with their attendance at meetings of the board or committees of the board, general meetings or separate meetings of the holders of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties.

26.

EXECUTIVE DIRECTORS

26.1	Appointment to executive office

Subject to the provisions of the Act, the board may appoint one or more of its body to be the holder of any executive office (including, without limitation, to hold office as president, chief executive officer and/or treasurer, but excluding that of auditor) in the Company and may enter into an agreement or arrangement with any such director for their employment by the Company or for the provision by them of any services outside the scope of the ordinary duties of a director.

Any such appointment, agreement or arrangement may be made on such terms, including without limitation terms as to remuneration, as the board determines. The board may revoke or vary any such appointment but without prejudice to any rights or claims which the person whose appointment is revoked or varied may have against the Company because of the revocation or variation.

26.2	Termination of appointment to executive office

Any appointment of a director to an executive office shall terminate if they cease to be a director but without prejudice to any rights or claims which they may have against the Company by reason of such cessation. A director appointed to an executive office shall not cease to be a director merely because their appointment to such executive office terminates.

26.3	Emoluments to be determined by the board

The emoluments of any director holding executive office for their services as such shall be determined by the board, and may be of any description, including without limitation admission to, or continuance of, membership of any scheme (including any share acquisition scheme) or fund instituted or established or financed or contributed to by the Company for the provision of pensions, life assurance or other benefits for employees or their dependants, or the payment of a pension or other benefits to them or their dependants on or after retirement or death, apart from membership of any such scheme or fund.

27.

DIRECTORS’ INTERESTS

27.1	Authorisation under section 175 of the Act

For the purposes of section 175 of the Act, the board may authorise any matter proposed to it in accordance with these Articles which would, if not so authorised, involve a breach of duty by a director under that section, including, without limitation, any matter which relates to a situation in which a director has, or can have, an interest which conflicts, or possibly may conflict, with the interests of the Company. Any such authorisation will be effective only if:

(a)

any requirement as to quorum at the meeting at which the matter is considered is met without counting the director in question or any other interested director; and

(b)

the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.

The board may (whether at the time of the giving of the authorisation or subsequently) make any such authorisation subject to any limits or conditions it expressly imposes but such authorisation is otherwise given to the fullest extent permitted. The board may vary or terminate any such authorisation at any time.

For the purposes of the Articles, a conflict of interest includes a conflict of interest and duty and a conflict of duties, and interest includes both direct and indirect interests.

27.2	Director may contract with the Company and hold other offices etc

Provided that they have disclosed to the board the nature and extent of their interest (unless the circumstances referred to in section 177(5) or section 177(6) of the Act apply, in which case no such disclosure is required) a director notwithstanding their office:

(a)

may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise (directly or indirectly) interested;

(b)

may act by themselves or their firm in a professional capacity for the Company (otherwise than as auditor) and they shall be entitled to remuneration for professional services as if they were not a director; and

(c)

may be a director or other officer of, or employed by, or a party to a transaction or arrangement with, or otherwise interested in, any body corporate:

(i)

in which the Company is (directly or indirectly) interested as shareholder or otherwise; or

(ii)

with which they have such a relationship at the request or direction of the Company.

27.3	Remuneration, benefits etc.

A director shall not, by reason of their office, be accountable to the Company for any remuneration or other benefit which they derive from any office or employment or from any transaction or arrangement or from any interest in any body corporate:

(a)

the acceptance, entry into or existence of which has been approved by the board pursuant to Article 27.1 (subject, in any such case, to any limits or conditions to which such approval was subject); or

(b)

which they are permitted to hold or enter into by virtue of paragraph (a), (b) or (c) of Article 27.2;

nor shall the receipt of any such remuneration or other benefit constitute a breach of their duty under section 176 of the Act.

27.4	Notification of interests

Any disclosure required by Article 27.2 may be made at a meeting of the board, by notice in writing or by general notice or otherwise in accordance with section 177 of the Act.

27.5	Duty of confidentiality to another person

A director shall be under no duty to the Company with respect to any information which they obtain or have obtained otherwise than as a director of the Company and in respect of which they owe a duty of confidentiality to another person. However, to the extent that their relationship with that other person gives rise to a conflict of interest or possible conflict of interest, this Article applies only if the existence of that relationship has been approved by the board pursuant to Article 27.1. In particular, the director shall not be in breach of the general duties they owe to the Company by virtue of sections 171 to 177 of the Act because they fail:

(a)

to disclose any such information to the board or to any director or other officer or employee of the Company; and/or

(b)

to use or apply any such information in performing their duties as a director of the Company.

27.6	Consequences of authorisation

Where the existence of a director’s relationship with another person has been approved by the board pursuant to Article 27.1 and their relationship with that person gives rise to a conflict of interest or possible conflict of interest, the director shall not be in breach of the general duties they owe to the Company by virtue of sections 171 to 177 of the Act because they:

(a)

absent themselves from meetings of the board at which any matter relating to the conflict of interest or possible conflict of interest will or may be discussed or from the discussion of any such matter at a meeting or otherwise; and/or

(b)

makes arrangements not to receive documents and information relating to any matter which gives rise to the conflict of interest or possible conflict of interest sent or supplied by the Company and/or for such documents and information to be received and read by a professional adviser,

for so long as they reasonably believe such conflict of interest or possible conflict of interest subsists.

27.7	Without prejudice to equitable principles or rule of law

The provisions of Articles 27.5 and 27.6 are without prejudice to any equitable principle or rule of law which may excuse the director from:

(a)

disclosing information, in circumstances where disclosure would otherwise be required under these Articles; or

(b)

attending meetings or discussions or receiving documents and information as referred to in Article 27.6, in circumstances where such attendance or receiving such documents and information would otherwise be required under these Articles.

28.

GRATUITIES, PENSIONS AND INSURANCE

28.1	Gratuities and pensions

The board may (by establishment of, or maintenance of, schemes or otherwise) provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any past or present director or employee of the Company or any of its subsidiary undertakings or any body corporate associated with, or any business acquired by, any of them, and for any member of their family (including a spouse, a civil partner, a former spouse and a former civil partner) or any person who is or was dependent on them, and may (as well before as after they cease to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit.

28.2	Insurance

Without prejudice to the provisions of Article 42.1, the board may exercise all the powers of the Company to purchase and maintain insurance for or for the benefit of any person who is or was:

(a)

a director, officer or employee of the Company, or any body which is or was the holding company or subsidiary undertaking of the Company, or in which the Company or such holding company or subsidiary undertaking has or had any interest (whether direct or indirect) or with which the Company or such holding company or subsidiary undertaking is or was in any way allied or associated; or

(b)

a trustee of any pension fund in which employees of the Company or any other body referred to in paragraph (a) of this Article are or have been interested,

including without limitation insurance against any liability incurred by such person in respect of any act or omission in the actual or purported execution or discharge of their duties or in the exercise or purported exercise of their powers or otherwise in relation to their duties, powers or offices in relation to the relevant body or fund.

28.3	Directors not liable to account

No director or former director shall be accountable to the Company or the members for any benefit provided pursuant to these Articles. The receipt of any such benefit shall not disqualify any person from being or becoming a director of the Company.

28.4	Section 247 of the Act

The board may make provision for the benefit of any persons employed or formerly employed by the Company or any of its subsidiaries other than a director or former director or shadow director in connection with the cessation or the transfer of the whole or part of the undertaking of the Company or any subsidiary. Any such provision shall be made by a resolution of the board in accordance with section 247 of the Act.

29.

PROCEEDINGS OF THE BOARD

29.1	Convening meetings

Subject to the provisions of these Articles, the board may regulate its proceedings as it thinks fit. Any two directors (which, for so long as the Investor has the right to appoint at least 4 Investor Directors, shall include an Investor Director) may, and the secretary at the request of such directors shall, call a meeting of the board by giving notice of the meeting to each director. Notice of a board meeting shall be deemed to be given to a director if it is given to them personally or by word of mouth or sent in hard copy form to them at their last known address or such other address (if any) as may for the time being be specified by them or on their behalf to the Company for that purpose, or sent in electronic form to such address (if any) for the time being specified by them or on their behalf to the Company for that purpose. Questions arising at a meeting shall be decided by a majority of votes. Any director may waive notice of a meeting and any such waiver may be retrospective. Any notice pursuant to this Article need not be in writing if the board so determines and any such determination may be retrospective.

29.2	Quorum

The quorum for the transaction of the business of the board may be fixed by the board and unless so fixed at any other number shall be a majority of the directors then in office. Any director who ceases to be a director at a board meeting may continue to be present and to act as a director and be counted in the quorum until the termination of the board meeting if no director objects.

29.3	Powers of directors if number falls below minimum

The continuing directors or a sole continuing director may act notwithstanding any vacancies in their number, but if the number of directors is less than the number fixed as the quorum the continuing directors or director may act only for the purpose of filling vacancies or of calling a general meeting.

29.4	Chair and deputy chair

The board may appoint one of their number to be the chair, and one of their number to be the deputy chair, of the board and may at any time remove either of them from such office. Unless they are unwilling to do so, the director appointed as chair, or in their stead the director appointed as deputy chair, shall preside at every meeting of the board at which they are present. If there is no director holding either of those offices, or if neither the chair nor the deputy chair is willing to preside or neither of them is present within five minutes after the time appointed for the meeting, the directors present may appoint one of their number to be chair of the meeting.

29.5	Validity of acts of the board

All acts done by a meeting of the board, or of a committee of the board, or by a person acting as a director, shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any director or any member of the committee or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a director and had been entitled to vote.

29.6	Resolutions in writing

A resolution in writing agreed to by all the directors entitled to vote at a meeting of the board or of a committee of the board (not being less than the number of directors required to form a quorum of the board) shall be as valid and effectual as if it had been passed at a meeting of the board or (as the case may be) a committee of the board duly convened and held. For this purpose:

(a)

a director signifies their agreement to a proposed written resolution when the Company receives from them a document indicating their agreement to the resolution authenticated in the manner permitted by the Act for a document in the relevant form; and

(b)

the director may send the document in hard copy form or in electronic form to such address (if any) for the time being specified by the Company for that purpose.

29.7	Meetings by telephone etc.

Without prejudice to the first sentence of Article 29.1, a person entitled to be present at a meeting of the board or of a committee of the board shall be deemed to be present for all purposes if they are able (directly or by electronic communication) to speak to and be heard by all those present or deemed to be present simultaneously. A director so deemed to be present shall be entitled to vote and be counted in a quorum accordingly. Such a meeting shall be deemed to take place where it is convened to be held or (if no director is present in that place) where the largest group of those participating is assembled, or, if there is no such group, where the chair of the meeting is. The word “meeting” in these Articles shall be construed accordingly.

29.8	Directors’ power to vote on contracts in which they are interested

Except as otherwise provided by these Articles, a director shall not vote at a meeting of the board or a committee of the board on any resolution of the board concerning a matter in which they have an interest (other than by virtue of their interests in shares or debentures or other securities of, or otherwise in or through, the Company) which can reasonably be regarded as likely to give rise to a conflict with the interests of the Company, unless their interest arises only because the resolution concerns one or more of the following matters:

(a)

(b)

(c)

(d)

a contract, arrangement, transaction or proposal concerning any other body corporate in which they or any person connected with them is interested, directly or indirectly, and whether as an officer, shareholder, creditor or otherwise, if they and any persons connected with them do not to their knowledge hold an interest (as that term is used in sections 820 to 825 of the Act) representing one per cent. or more of either any class of the equity share capital of such body corporate (or any other body corporate through which their interest is derived) or of the voting rights available to members of the relevant body corporate (any such interest being deemed for the purpose of this Article to be likely to give rise to a conflict with the interests of the Company in all circumstances);

(e)

(f)

a contract, arrangement, transaction or proposal concerning any insurance which the Company is empowered to purchase or maintain for, or for the benefit of, any directors of the Company or for persons who include directors of the Company.

(g)

The Company may by ordinary resolution suspend or relax to any extent, either generally or in respect of any particular matter, any provision of these Articles prohibiting a director from voting at a meeting of the board or of a committee of the board.

29.9	Division of proposals

Where proposals are under consideration concerning the appointment (including without limitation fixing or varying the terms of appointment) of two or more directors to offices or employments with the Company or any body corporate in which the Company is interested, the proposals may be divided and considered in relation to each director separately. In such cases each of the directors concerned shall be entitled to vote in respect of each resolution except that concerning their own appointment.

29.10

Decision of chair final and conclusive

If a question arises at a meeting of the board or of a committee of the board as to the entitlement of a director to vote, the question may, before the conclusion of the meeting, be referred to the chair of the meeting and their ruling in relation to any director other than himself shall be final and conclusive except in a case where the nature or extent of the interests of the director concerned have not been fairly disclosed. If any such question arises in respect of the chair of the meeting, it shall be decided by resolution of the board (on which the chair shall not vote) and such resolution will be final and conclusive except in a case where the nature and extent of the interests of the chair have not been fairly disclosed.

30.

SECRETARY

30.1	Appointment and removal of secretary

Subject to the provisions of the Act, the secretary shall be appointed by the board for such term, at such remuneration and on such conditions as it may think fit. Any secretary so appointed may be removed by the board, but without prejudice to any claim for damages for breach of any contract of service between them and the Company.

31.

MINUTES

31.1	Minutes required to be kept

The board shall cause minutes to be recorded for the purpose of:

(a)

all appointments of officers made by the board; and

(b)

all proceedings at meetings of the Company, the holders of any class of shares in the capital of the Company, the board and committees of the board, including the names of the directors present at each such meeting.

31.2	Conclusiveness of minutes

Any such minutes, if purporting to be authenticated by the chair of the meeting to which they relate or of the next meeting, shall be sufficient evidence of the proceedings at the meeting without any further proof of the facts stated in them.

32.

THE SEAL

32.1	Authority required for execution of deed

The seal shall only be used by the authority of a resolution of the board. The board may determine who shall sign any document executed under the seal. If they do not, it shall be signed by at least one director and the secretary or by at least two directors. Any document may be executed under the seal by impressing the seal by mechanical means or by printing the seal or a facsimile of it on the document or by applying the seal or a facsimile of it by any other means to the document. A document executed, with the authority of a resolution of the board, in any manner permitted by section 44(2) of the Act and expressed (in whatever form of words) to be executed by the Company has the same effect as if executed under the seal.

32.2	Certificates for shares and debentures

The board may by resolution determine either generally or in any particular case that any certificate for shares or debentures or representing any other form of security may have any signature affixed to it by some mechanical or electronic means, or printed on it or, in the case of a certificate executed under the seal, need not bear any signature.

33.

REGISTERS

33.1	Overseas and local registers

Subject to the provisions of the Act, the Company may keep an overseas or local or other register in any place, and the board may make, amend and revoke any regulations it thinks fit about the keeping of that register.

33.2	Authentication and certification of copies and extracts

Any director or the secretary or any other person appointed by the board for the purpose shall have power to authenticate and certify as true copies of and extracts from:

(a)

any document comprising or affecting the constitution of the Company, whether in hard copy form or electronic form;

(b)

any resolution passed by the Company, the holders of any class of shares in the capital of the Company, the board or any committee of the board, whether in hard copy form or electronic form; and

(c)

any book, record and document relating to the business of the Company, whether in hard copy form or electronic form (including without limitation the accounts).

If certified in this way, a document purporting to be a copy of a resolution, or the minutes or an extract from the minutes of a meeting of the Company, the holders of any class of shares in the capital of the Company, the board or a committee of the board, whether in hard copy form or electronic form, shall be conclusive evidence in favour of all persons dealing with the Company in reliance on it or them that the resolution was duly passed or that the minutes are, or the extract from the minutes is, a true and accurate record of proceedings at a duly constituted meeting.

34.

DIVIDENDS

34.1	Declaration of dividends

Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the board.

34.2	Interim dividends

Subject to the provisions of the Act, the board may pay interim dividends if it appears to the board that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the board may:

(a)

pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividends as well as on shares which confer preferential rights with regard to dividends, but no interim dividend shall be paid on shares carrying deferred or non-preferred rights if, at the time of payment, any preferential dividend is in arrear; and

(b)

pay at intervals settled by it any dividend payable at a fixed rate if it appears to the board that the profits available for distribution justify the payment.

If the board acts in good faith it shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights.

34.3	Declaration and payment in different currencies

Dividends may be declared and paid in any currency or currencies that the board shall determine. The board may also determine the exchange rate and the relevant date for determining the value of the dividend in any currency.

34.4	Apportionment of dividends

Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid; but no amount paid on a share in advance of the date on which a call is payable shall be treated for the purpose of this Article as paid on the share. All dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid; but, if any share is allotted or issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly.

34.5	Dividends in specie

A general meeting declaring a dividend may, on the recommendation of the board, by ordinary resolution direct that it shall be satisfied wholly or partly by the distribution of assets, including without limitation paid up shares or debentures of another body corporate. The board may make any arrangements it thinks fit to settle any difficulty arising in connection with the distribution, including without limitation (a) the fixing of the value for distribution of any assets, (b) the payment of cash to any member on the basis of that value in order to adjust the rights of members, and (c) the vesting of any asset in a trustee.

34.6	Scrip dividends: authorising resolution

The board may, if authorised by an ordinary resolution of the Company (the “Resolution”), offer any holder of shares the right to elect to receive shares, credited as fully paid, instead of cash in respect of the whole (or some part, to be determined by the board) of all or any dividend specified by the Resolution. The offer shall be on the terms and conditions and be made in the manner specified in Article 34.7 or, subject to those provisions, specified in the Resolution.

34.7	Scrip dividends: procedures

The following provisions shall apply to the Resolution and any offer made pursuant to it and Article 34.6.

(a)

The Resolution may specify a particular dividend, or may specify all or any dividends declared within a specified period.

(b)

Each holder of shares shall be entitled to that number of new shares as are together as nearly as possible equal in value to (but not greater than) the cash amount (disregarding any tax credit) of the dividend that such holder elects to forgo (each a “new share”). For this purpose, the value of each new share shall be:

(i)

equal to the “average quotation” for the Company’s shares, that is, the average of the middle market quotations for those shares on the New York Stock Exchange or other exchange or quotation service on which the Company’s shares are listed or quoted as derived from such source as the board may deem appropriate, on the day on which such shares are first quoted ex the relevant dividend and the four subsequent business days; or

(ii)

calculated in any other manner specified by the Resolution,

but shall never be less than the par value of the new share.

A certificate or report by the auditors as to the value of a new share in respect of any dividend shall be conclusive evidence of that value.

(c)

On or as soon as practicable after announcing that any dividend is to be declared or recommended, the board, if it intends to offer an election in respect of that dividend, shall also announce that intention. If, after determining the basis of allotment, the board decides to proceed with the offer, it shall notify the holders of shares of the terms and conditions of the right of election offered to them, specifying the procedure to be followed and place at which, and the latest time by which, elections or notices amending or terminating existing elections must be delivered in order to be effective.

(d)

The board shall not proceed with any election unless the board has sufficient authority to allot shares and sufficient reserves or funds that may be appropriated to give effect to it after the basis of allotment is determined.

(e)

The board may exclude from any offer any holders of shares where the board believes the making of the offer to them would or might involve the contravention of the laws of any territory or that for any other reason the offer should not be made to them.

(f)

The dividend (or that part of the dividend in respect of which a right of election has been offered) shall not be payable in cash on shares in respect of which an election has been made (the “elected shares”) and instead such number of new shares shall be allotted to each holder of elected shares as is arrived at on the basis stated in paragraph (b) of this Article. For that purpose the board shall appropriate out of any amount for the time being standing to the credit of any reserve or fund (including without limitation the profit and loss account), whether or not it is available for distribution, a sum equal to the aggregate nominal amount of the new shares to be allotted and apply it in paying up in full the appropriate number of new shares for allotment and distribution to each holder of elected shares as is arrived at on the basis stated in paragraph (b) of this Article.

(g)

The new shares when allotted shall rank equally in all respects with the fully paid shares of the same class then in issue except that they shall not be entitled to participate in the relevant dividend.

(h)

No fraction of a share shall be allotted. The board may make such provision as it thinks fit for any fractional entitlements including without limitation payment in cash to holders in respect of their fractional entitlements, provision for the accrual, retention or accumulation of all or part of the benefit of fractional entitlements to or by the Company or to or by or on behalf of any holder or the application of any accrual, retention or accumulation to the allotment of fully paid shares to any holder.

(i)

The board may do all acts and things it considers necessary or expedient to give effect to the allotment and issue of any share pursuant to this Article or otherwise in connection with any offer made pursuant to this Article and may authorise any person, acting on behalf of the holders concerned, to enter into an agreement with the Company providing for such allotment or issue and incidental matters. Any agreement made under such authority shall be effective and binding on all concerned.

(j)

The board may, at its discretion, amend, suspend or terminate any offer pursuant to this Article.

34.8	Permitted deductions and retentions

The board may deduct from any dividend or other moneys payable to any member in respect of a share any moneys presently payable by them to the Company in respect of that share. Where a person is entitled by transmission to a share, the board may retain any dividend payable in respect of that share until that person (or that person’s transferee) becomes the holder of that share.

34.9	Procedure for payment to holders and others entitled

Any dividend or other moneys payable in respect of a share may be paid:

(a)

in cash; or

(b)

by cheque or warrant made payable to or to the order of the holder or person entitled to payment; or

(c)

by any direct debit, bank or other funds transfer system to the holder or person entitled to payment or, if practicable, to a person designated by notice to the Company by the holder or person entitled to payment; or

(d)

by any other method approved by the board and agreed (in such form as the Company thinks appropriate) by the holder or person entitled to payment.

34.10

Joint entitlement

If two or more persons are registered as joint holders of any share, or are entitled by transmission jointly to a share, the Company may:

(a)

pay any dividend or other moneys payable in respect of the share to any one of them and any one of them may give effectual receipt for that payment; and

(b)

for the purpose of Article 34.9, rely in relation to the share on the written direction, designation or agreement of, or notice to the Company by, any one of them.

34.11

Payment by post

A cheque or warrant may be sent by post:

(a)

where a share is held by a sole holder, to the registered address of the holder of the share; or

(b)

if two or more persons are the holders, to the registered address of the person who is first named in the register; or

(c)

if a person is entitled by transmission to the share, as if it were a notice to be sent under Article 38.7; or

(d)

in any case, to such person and to such address as the person entitled to payment may direct by notice to the Company.

34.12

Discharge to Company and risk

Payment of a cheque or warrant by the bank on which it was drawn or the transfer of funds by the bank instructed to make the transfer shall be a good discharge to the Company. Every cheque or warrant sent or transfer of funds made by the relevant bank or system in accordance with these Articles shall be at the risk of the holder or person entitled. The Company shall have no responsibility for any sums lost or delayed in the course of payment by any method used by the Company in accordance with Article 34.9.

34.13

Interest not payable

No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share.

34.14

Forfeiture of unclaimed dividends

Any dividend which has remained unclaimed for 12 years from the date when it became due for payment shall, if the board so resolves, be forfeited and cease to remain owing by the Company. The payment of any unclaimed dividend or other moneys payable in respect of a share may (but need not) be paid by the Company into an account separate from the Company’s own account. Such payment shall not constitute the Company a trustee in respect of it. The Company shall be entitled to cease sending dividend warrants and cheques by post or otherwise to a member if those instruments have been returned undelivered, or left uncashed by that member, on at least two consecutive occasions, or, following one such occasion, reasonable enquiries have failed to establish the member’s new address. The entitlement conferred on the Company by this Article in respect of any member shall cease if the member claims a dividend or cashes a dividend warrant or cheque.

35.

CAPITALISATION OF PROFITS AND RESERVES

35.1	Power to capitalise

The board may with the authority of an ordinary resolution of the Company:

(a)

subject to the provisions of this Article, resolve to capitalise any undistributed profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of any reserve or other fund, including without limitation the Company’s share premium account and capital redemption reserve, if any;

(b)

appropriate the sum resolved to be capitalised to the members or any class of members on the record date specified in the relevant resolution who would have been entitled to it if it were distributed by way of dividend and in the same proportions;

(c)

apply that sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full shares, debentures or other obligations of the Company of a nominal amount equal to that sum but the share premium account, the capital redemption reserve, and any profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up shares to be allotted to members credited as fully paid;

(d)

allot the shares, debentures or other obligations credited as fully paid to those members, or as they may direct, in those proportions, or partly in one way and partly in the other;

(e)

where shares or debentures become, or would otherwise become, distributable under this Article in fractions, make such provision as they think fit for any fractional entitlements including without limitation authorising their sale and transfer to any person, resolving that the distribution be made as nearly as practicable in the correct proportion but not exactly so, ignoring fractions altogether or resolving that cash payments be made to any members in order to adjust the rights of all parties;

(f)

authorise any person to enter into an agreement with the Company on behalf of all the members concerned providing for either:

(i)

the allotment to the members respectively, credited as fully paid, of any shares, debentures or other obligations to which they are entitled on the capitalisation; or

(ii)

the payment up by the Company on behalf of the members of the amounts, or any part of the amounts, remaining unpaid on their existing shares by the application of their respective proportions of the sum resolved to be capitalised,

and any agreement made under that authority shall be binding on all such members; and

(g)

generally do all acts and things required to give effect to the ordinary resolution.

36.

RECORD DATES

36.1	Record dates for dividends etc.

Notwithstanding any other provision of these Articles, and subject to the Act, the Company or the board may:

(a)

fix any date as the record date for any dividend, distribution, allotment or issue, which may be on or at any time before or after any date on which the dividend, distribution, allotment or issue is declared, paid or made;

(b)

for the purpose of determining which persons are entitled to attend and vote at a general meeting of the Company, or a separate general meeting of the holders of any class of shares in the capital of the Company, and how many votes such persons may cast, specify in the notice of meeting a time by which a person must be entered on the register in order to have the right to attend or vote at the meeting; changes to the register after the time specified by virtue of this Article 36.1 shall be disregarded in determining the rights of any person to attend or vote at the meeting; and

(c)

for the purpose of sending notices of general meetings of the Company, or separate general meetings of the holders of any class of shares in the capital of the Company, under these Articles, determine that persons entitled to receive such notices are those persons entered on the register at the close of business on a day determined by the Company or the board, which day may not be more than 21 days before the day that notices of the meeting are sent.

37.

ACCOUNTS

37.1	Rights to inspect records

No member shall (as such) have any right to inspect any accounting records or other book or document of the Company except as conferred by statute or authorised by the board or by ordinary resolution of the Company or order of a court of competent jurisdiction.

37.2	Sending of annual accounts

Subject to the Act, a copy of the Company’s annual accounts and reports for that financial year shall, at least 21 clear days before the date of the meeting at which copies of those documents are to be laid in accordance with the provisions of the Act, be sent to every member and to every holder of the Company’s debentures, and to every person who is entitled to receive notice of meetings from the Company under the provisions of the Act or of these Articles or, in the case of joint holders of any share or debenture, to one of the joint holders. A copy need not be sent to a person for whom the Company does not have a current address.

37.3	Summary financial statements

Subject to the Act, the requirements of Article 37.2 shall be deemed satisfied in relation to any person by sending to the person, instead of such copies, a summary financial statement derived from the Company’s annual accounts and the directors’ report, which shall be in the form and containing the information prescribed by the Act and any regulations made under the Act.

38.

COMMUNICATIONS

38.1	When notice required to be in writing

Any notice to be sent to or by any person pursuant to these Articles (other than a notice calling a meeting of the board) shall be in writing.

38.2	Methods of Company sending notice

Subject to Article 38.1 and unless otherwise provided by these Articles, the Company shall send or supply a document or information that is required or authorised to be sent or supplied to a member or any other person by the Company by a provision of the Act or pursuant to these Articles or to any other rules or regulations to which the Company may be subject in such form and by such means as it may in its absolute discretion determine provided that the provisions of the Act which apply to sending or supplying a document or information required or authorised to be sent or supplied by the Act shall, the necessary changes having been made, also apply to sending or supplying any document or information required or authorised to be sent by these Articles or any other rules or regulations to which the Company may be subject.

38.3	Methods of member etc. sending document or information

Subject to Article 38.1 and unless otherwise provided by these Articles, a member or a person entitled by transmission to a share shall send a document or information pursuant to these Articles to the Company in such form and by such means as it may in its absolute discretion determine provided that:

(a)

the determined form and means are permitted by the Act for the purpose of sending or supplying a document or information of that type to a company pursuant to a provision of the Act; and

(b)

unless the board otherwise permits, any applicable condition or limitation specified in the Act, including without limitation as to the address to which the document or information may be sent, is satisfied.

Unless otherwise provided by these Articles or required by the board, such document or information shall be authenticated in the manner specified by the Act for authentication of a document or information sent in the relevant form.

38.4	Notice to joint holders

In the case of joint holders of a share any document or information shall be sent to the joint holder whose name stands first in the register in respect of the joint holding and any document or information so sent shall be deemed for all purposes sent to all the joint holders.

38.5	Deemed receipt of notice

A member present, either in person or by proxy, at any meeting of the Company or of the holders of any class of shares in the capital of the Company shall be deemed to have been sent notice of the meeting and, where requisite, of the purposes for which it was called.

38.6	Terms and conditions for electronic communications

The board may from time to time issue, endorse or adopt terms and conditions relating to the use of electronic means for the sending of notices, other documents and proxy appointments by the Company to members or persons entitled by transmission and by members or persons entitled by transmission to the Company.

38.7	Notice to persons entitled by transmission

A document or information may be sent or supplied by the Company to the person or persons entitled by transmission to a share by sending it in any manner the Company may choose authorised by these Articles for the sending of a document or information to a member, addressed to them by name, or by the title of representative of the deceased, or trustee of the bankrupt or by any similar description at the address (if any) as may be supplied for that purpose by or on behalf of the person or persons claiming to be so entitled. Until such an address has been supplied, a document or information may be sent in any manner in which it might have been sent if the death or bankruptcy or other event giving rise to the transmission had not occurred.

38.8	Transferees etc. bound by prior notice

Every person who becomes entitled to a share shall be bound by any notice in respect of that share which, before their name is entered in the register, has been sent to a person from whom they derive their title.

38.9	Proof of sending/when notices etc. deemed sent by post

Proof that a document or information was properly addressed, prepaid and posted shall be conclusive evidence that the document or information was sent or supplied. A document or information sent by the Company to a member by post shall be deemed to have been received:

(a)

if sent by first class post or special delivery post from an address in the United Kingdom to another address in the United Kingdom, or by a postal service similar to first class post or special delivery post from an address in another country to another address in that other country, on the day following that on which the document or information was posted;

(b)

in any other case, on the second day following that on which the document or information was posted.

38.10

When notices etc. deemed sent by hand

A document or information sent by the Company to a member by hand shall be deemed to have been received by the member when it is handed to the member or left at their registered address.

38.11

Proof of sending/when notices etc. deemed sent by electronic means

Proof that a document or information sent or supplied by electronic means was properly addressed shall be conclusive evidence that the document or information was sent or supplied. A document or information sent or supplied by the Company to a member in electronic form shall be deemed to have been received by the member on the day following that on which the document or information was sent to the member. Such a document or information shall be deemed received by the member on that day notwithstanding that the Company becomes aware that the member has failed to receive the relevant document or information for any reason and notwithstanding that the Company subsequently sends a hard copy of such document or information by post to the member.

38.12

When notices etc. deemed sent by website

A document or information sent or supplied by the Company to a member by means of a website shall be deemed to have been received by the member:

(a)

when the document or information was first made available on the website; or

(b)

if later, when the member is deemed by Article 38.9, 38.10 or 38.11 to have received notice of the fact that the document or information was available on the website. Such a document or information shall be deemed received by the member on that day notwithstanding that the Company becomes aware that the member has failed to receive the relevant document or information for any reason and notwithstanding that the Company subsequently sends a hard copy of such document or information by post to the member.

38.13

No entitlement to receive notice etc if Company has no current address

A member shall not be entitled to receive any document or information that is required or authorised to be sent or supplied to them by the Company by a provision of the Act or pursuant to these Articles or to any other rules or regulations to which the Company may be subject if documents or information sent or supplied to that member by post in accordance with the Articles have been returned undelivered to the Company:

(a)

on at least two consecutive occasions; or

(b)

on one occasion and reasonable enquiries have failed to establish the member’s address.

Without prejudice to the generality of the foregoing, any notice of a general meeting of the Company which is in fact sent or purports to be sent to such member shall be ignored for the purpose of determining the validity of the proceedings at such general meeting.

A member to whom this Article applies shall become entitled to receive such documents or information when they have given the Company an address to which they may be sent or supplied.

39.

DESTRUCTION OF DOCUMENTS

39.1	Power of Company to destroy documents

The Company shall be entitled to destroy:

(a)

all instruments of transfer of shares which have been registered, and all other documents on the basis of which any entry is made in the register, at any time after the expiration of six years from the date of registration;

(b)

all dividend mandates, variations or cancellations of dividend mandates, and notifications of change of address at any time after the expiration of two years from the date of recording;

(c)

all share certificates which have been cancelled at any time after the expiration of one year from the date of the cancellation;

(d)

all paid dividend warrants and cheques at any time after the expiration of one year from the date of actual payment;

(e)

all proxy appointments which have been used for the purpose of a poll at any time after the expiration of one year from the date of use; and

(f)

all proxy appointments which have not been used for the purpose of a poll at any time after one month from the end of the meeting to which the proxy appointment relates and at which no poll was demanded.

39.2	Presumption in relation to destroyed documents

It shall conclusively be presumed in favour of the Company that:

(a)

every entry in the register purporting to have been made on the basis of an instrument of transfer or other document destroyed in accordance with Article 39.1 was duly and properly made;

(b)

every instrument of transfer destroyed in accordance with Article 39.1 was a valid and effective instrument duly and properly registered;

(c)

every share certificate destroyed in accordance with Article 39.1 was a valid and effective certificate duly and properly cancelled; and

(d)

every other document destroyed in accordance with Article 39.1 was a valid and effective document in accordance with its recorded particulars in the books or records of the Company,

but:

(e)

the provisions of this Article and Article 39.1 apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties) to which the document might be relevant;

(f)

nothing in this Article or Article 39.1 shall be construed as imposing on the Company any liability in respect of the destruction of any document earlier than the time specified in Article 39.1 or in any other circumstances which would not attach to the Company in the absence of this Article or Article 39.1; and

(g)

any reference in this Article or Article 39.1 to the destruction of any document includes a reference to its disposal in any manner.

40.

UNTRACED MEMBERS

40.1	Power to dispose of shares of untraced members

The Company shall be entitled to sell, at the best price reasonably obtainable, the shares of a member or the shares to which a person is entitled by transmission if:

(a)

during the period of 12 years before the date of the publication of the advertisements referred to in paragraph (b) of this Article (or, if published on different dates, the first date) (the “relevant period”) at least three dividends in respect of the shares in question have been declared and all dividend warrants and cheques which have been sent in the manner authorised by these Articles in respect of the shares in question have remained uncashed;

(b)

the Company shall as soon as practicable after expiry of the relevant period have inserted advertisements both in a national daily newspaper and in a newspaper circulating in the area of the last known address of such member or other person giving notice of its intention to sell the shares; and

(c)

during the relevant period and the period of three months following the publication of the advertisements referred to in paragraph (b) of this Article (or, if published on different dates, the first date) the Company has received no indication either of the whereabouts or of the existence of such member or person.

40.2	Transfer on sale

To give effect to any sale pursuant to Article 40.1, the board may (a) authorise any person to execute an instrument of transfer of the shares to, or in accordance with the directions of, the buyer; or (b) where the shares are held in uncertificated form, do all acts and things it considers necessary and expedient to effect the transfer of the shares to, or in accordance with the directions of, the buyer.

40.3	Effectiveness of transfer

An instrument of transfer executed by that person in accordance with Article 40.2 shall be as effective as if it had been executed by the holder of, or person entitled by transmission to, the shares. An exercise by the Company of its powers in accordance with Article 40.2(b) shall be as effective as if exercised by the registered holder of or person entitled by transmission to the shares. The transferee shall not be bound to see to the application of the purchase money, and their title to the shares shall not be affected by any irregularity in, or invalidity of, the proceedings in reference to the sale.

40.4	Proceeds of sale

The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled for an amount equal to the proceeds. The Company shall enter the name of such former member or other person in the books of the Company as a creditor for that amount. In relation to the debt, no trust is created and no interest is payable. The Company shall not be required to account for any money earned on the net proceeds of sale, which may be used in the Company’s business or invested in such a way as the board from time to time thinks fit.

41.

WINDING UP

41.1	Liquidator may distribute in specie

If the Company is wound up, the liquidator may, with the sanction of a special resolution of the Company and any other sanction required by the Insolvency Act 1986:

(a)

divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division shall be carried out as between the members or different classes of members;

(b)

vest the whole or any part of the assets in trustees for the benefit of the members; and

(c)

determine the scope and terms of those trusts,

but no member shall be compelled to accept any asset on which there is a liability.

41.2	Disposal of assets by liquidator

The power of sale of a liquidator shall include a power to sell wholly or partially for shares or debentures or other obligations of another body corporate, either then already constituted or about to be constituted for the purpose of carrying out the sale.

42.

INDEMNITY

42.1	Indemnity to directors and officers

Subject to the provisions of the Act, but without prejudice to any indemnity to which the person concerned may otherwise be entitled, every director or other officer of the Company (other than any person (whether an officer or not) engaged by the Company as auditor) shall be indemnified out of the assets of the Company against any liability incurred by them for negligence, default, breach of duty or breach of trust in relation to the affairs of the Company, provided that this Article shall be deemed not to provide for, or entitle any such person to, indemnification to the extent that it would cause this Article, or any element of it, to be treated as void under the Act.

43.

AMENDMENT OF ARTICLES

Except as otherwise provided herein or by law, the Articles may be amended from time to time by a special resolution of the shareholders at a general meeting, provided that for so long as the Investor has the right to appoint an Investor Director under Article 19.1, any amendments to Article 18, Article 19, Article 23 and Article 43 contained herein (including the amendment of any definitions related thereto) shall be made only with the prior written consent of the Investor.

44.

DISPUTE RESOLUTION

44.1	Exclusive jurisdiction of English courts

The courts of England and Wales shall have exclusive jurisdiction to determine any and all disputes brought by a member in that member’s capacity as such against the Company and/or the board and/or any of the directors individually or collectively, arising out of or in connection with these Articles or any non-contractual obligations arising out of or in connection with these Articles.

44.2	Governing law

The governing law of these Articles is the law of England and these Articles shall be interpreted in accordance with English law.

For the purposes of Articles 44.1 and 44.2 “director” shall be read so as to include each and any director of the Company from time to time in their capacity as such or as an employee of the Company and shall include any former director of the Company.

Annex A

Directors shall initially be assigned to each class as described below.

Class I:

Karen Bechtel

David Perez

Robert Schmidt

Class II:

Carl Hull

Ron Labrum

Tom Mac Mahon

Stephen Wise

Class III:

Allan Holt

Chris Smith

Robert Yates

Exhibit 4.1

Execution Version

ORTHO-CLINICAL DIAGNOSTICS, INC. and

ORTHO-CLINICAL DIAGNOSTICS S.A.,

as Issuers

and

the Guarantors party hereto from time to time

INDENTURE

Dated as of January 27, 2020

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

TABLE OF CONTENTS


Page
ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.	Definitions	1
SECTION 1.2.	Other Definitions	46
SECTION 1.3.	Rules of Construction	47
SECTION 1.4.	Measuring Compliance	48

ARTICLE II

THE NOTES

SECTION 2.1.	Form and Dating	50
SECTION 2.2.	Form of Execution and Authentication	54
SECTION 2.3.	Registrar and Paying Agent	55
SECTION 2.4.	Paying Agent to Hold Money in Trust	56
SECTION 2.5.	Lists of Holders of the Notes	56
SECTION 2.6.	Transfer and Exchange	56
SECTION 2.7.	Replacement Notes	66
SECTION 2.8.	Outstanding Notes	66
SECTION 2.9.	Treasury Notes	66
SECTION 2.10.	Temporary Notes	67
SECTION 2.11.	Cancellation	67
SECTION 2.12.	Payment of Interest; Defaulted Interest	67
SECTION 2.13.	CUSIP and ISIN Numbers	68
SECTION 2.14.	[Reserved.]	68
SECTION 2.15.	Additional Amounts	68
SECTION 2.16.	Conversion of Currency	71

ARTICLE III

COVENANTS

SECTION 3.1.	Payment of Notes	71
SECTION 3.2.	Reports and Other Information	72
SECTION 3.3.	Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock	75
SECTION 3.4.	Limitation on Restricted Payments	83
SECTION 3.5.	Liens	91
SECTION 3.6.	Dividend and Other Payment Restrictions Affecting Subsidiaries	93
SECTION 3.7.	Asset Sales	95
SECTION 3.8.	Transactions with Affiliates	99
SECTION 3.9.	Change of Control	103
SECTION 3.10.	Maintenance of Insurance	105
SECTION 3.11.	Future Guarantors	105
SECTION 3.12.	Compliance Certificate; Statement by Officers as to Default	106

-i-

Page


SECTION 3.13.	[Reserved]	106
SECTION 3.14.	Designation of Restricted and Unrestricted Subsidiaries	106
SECTION 3.15.	Covenant Suspension	107
SECTION 3.16.	Stay, Extension and Usury Laws	108

ARTICLE IV

MERGER, CONSOLIDATION, AMALGAMATION OR SALE OF ASSETS

SECTION 4.1.	When the Issuers May Merge, Amalgamate or Otherwise Dispose of Assets	108

ARTICLE V

REDEMPTION OF NOTES

SECTION 5.1.	Optional Redemption	111
SECTION 5.2.	Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions	112
SECTION 5.3.	Selection by Trustee of Notes to Be Redeemed	112
SECTION 5.4.	Notice of Redemption	112
SECTION 5.5.	Deposit of Redemption Price	113
SECTION 5.6.	Notes Payable on Redemption Date	114
SECTION 5.7.	Notes Redeemed in Part	114
SECTION 5.8.	Offer to Repurchase	114
SECTION 5.9.	Redemption for Taxation Reasons	116

ARTICLE VI

DEFAULTS AND REMEDIES

SECTION 6.1.	Events of Default	117
SECTION 6.2.	Acceleration	118
SECTION 6.3.	Other Remedies	118
SECTION 6.4.	Waiver of Past Defaults	119
SECTION 6.5.	Control by Majority	119
SECTION 6.6.	Limitation on Suits	119
SECTION 6.7.	Rights of Holders to Receive Payment	120
SECTION 6.8.	Collection Suit by Trustee	120
SECTION 6.9.	Trustee May File Proofs of Claim	120
SECTION 6.10.	Priorities	120
SECTION 6.11.	Undertaking for Costs	121

ARTICLE VII

TRUSTEE

SECTION 7.1.	Duties of Trustee	121
SECTION 7.2.	Rights of Trustee	122
SECTION 7.3.	Individual Rights of Trustee	124
SECTION 7.4.	Disclaimer	124
SECTION 7.5.	Notice of Defaults	124
SECTION 7.6.	Compensation and Indemnity	124

-ii-


Page
SECTION 7.7.	Replacement of Trustee	125
SECTION 7.8.	Successor Trustee by Merger	126
SECTION 7.9.	Eligibility; Disqualification	126
SECTION 7.10.	Limitation on Duty of Trustee	126
SECTION 7.11.	Preferential Collection of Claims Against the Issuers	126

ARTICLE VIII

DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.1.	Discharge of Liability on Notes; Defeasance	126
SECTION 8.2.	Conditions to Defeasance	128
SECTION 8.3.	Application of Trust Money	129
SECTION 8.4.	Repayment to Issuers	129
SECTION 8.5.	Indemnity for U.S. Government Obligations	129
SECTION 8.6.	Reinstatement	129

ARTICLE IX

AMENDMENTS

SECTION 9.1.	Without Consent of Holders	130
SECTION 9.2.	With Consent of Holders	131
SECTION 9.3.	Effect of Consents and Waivers	132
SECTION 9.4.	Notation on or Exchange of Notes	133
SECTION 9.5.	Trustee To Sign Amendments	133

ARTICLE X

GUARANTEES

SECTION 10.1.	Guarantees	133
SECTION 10.2.	Limitation on Liability; Termination, Release and Discharge	136
SECTION 10.3.	Right of Contribution	138
SECTION 10.4.	No Subrogation	138

ARTICLE XI

INTENTIONALLY OMITTED

ARTICLE XII

MISCELLANEOUS

SECTION 12.1.	Notices	138
SECTION 12.2.	Certificate and Opinion as to Conditions Precedent	140
SECTION 12.3.	Statements Required in Certificate or Opinion	140
SECTION 12.4.	Prescription	140
SECTION 12.5.	Rules by Trustee, Paying Agent and Registrar	140
SECTION 12.6.	Days Other than Business Days	141
SECTION 12.7.	Governing Law	141

-iii-


Page
SECTION 12.8.	Jurisdiction and Service	141
SECTION 12.9.	Waiver of Jury Trial	141
SECTION 12.10.	No Recourse Against Others	141
SECTION 12.11.	Successors	141
SECTION 12.12.	Multiple Originals	141
SECTION 12.13.	Variable Provisions	142
SECTION 12.14.	Table of Contents; Headings	142
SECTION 12.15.	Force Majeure	142
SECTION 12.16.	USA Patriot Act	142
SECTION 12.17.	[Reserved]	142
SECTION 12.18.	Communication by Holders with Other Holders	142

EXHIBITS


EXHIBIT A		Form of Note
EXHIBIT B		Form of Certificate of Transfer
EXHIBIT C		Form of Certificate of Exchange
EXHIBIT D		Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited Investors
EXHIBIT E		Form of Supplemental Indenture

-iv-

INDENTURE, dated as of January 27, 2020, as amended or supplemented from time to time (this “Indenture”), among ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer, the “Issuers”), the Guarantors (as defined herein) from time to time party hereto, and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (in such capacity, the “Trustee”).

Recitals of the Issuers

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined herein) of the Notes (as defined herein):

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.1. Definitions.

“144A Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend, deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, and issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

“Acquired Indebtedness” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged, amalgamated or consolidated with or into or becomes a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is Incurred in connection with, or in contemplation of, such other Person merging, amalgamating or consolidating with or into, or becoming a Restricted Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Acquisition” means the acquisition of the entities and assets comprising the business known as Ortho-Clinical Diagnostics, including both the Day 1 Acquisition and Day 2 Acquisition, pursuant to the Acquisition Agreement.

“Acquisition Agreement” means that certain stock and asset purchase agreement, including all exhibits and schedules thereto, dated as of January 16, 2014, by and among Johnson & Johnson and Bermuda Holdco, and all side letters and other agreements related thereto, in each case, as amended up to and including the Day 1 Closing Date.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Agent” means any Registrar, Paying Agent, co-registrar or additional paying agent.

“Alternative Currencies” means (a) Canadian Dollars, Japanese yen, Euros, Pounds Sterling and (b) any other currency that is a lawful currency that is freely transferable and convertible into Dollars.

“Applicable Premium” means, with respect to any Note on any applicable Redemption Date, as calculated by the Issuers, the greater of:

(1) 1% of the then outstanding principal amount of the Note; and

(2) the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of the Note at February 1, 2023, in the case of the Initial Notes, or at such first optional redemption date as may be specified by the Issuers in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes, in each case, as set forth in Section 5.1(a), plus (ii) all required interest payments due on such Note through February 1, 2023 (excluding accrued but unpaid interest to (but not including) the Redemption Date), in the case of each of clauses (i) and (ii) above, computed using a discount rate equal to the Treasury Rate, plus 50 basis points; over (b) the then outstanding principal amount of the Note.

The Trustee shall have no duty to calculate or verify the Issuers’ calculation of the Applicable Premium.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and/or Clearstream that apply to such transfer or exchange.

“Asset Sale” means:

(1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets of the Lux Co-Issuer or any Restricted Subsidiary, or

(2) the issuance or sale of Equity Interests (other than preferred stock and Disqualified Stock of Restricted Subsidiaries issued in compliance with Section 3.3 and directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) of any Restricted Subsidiary of the Lux Co-Issuer (other than to the Lux Co-Issuer or another Restricted Subsidiary) (whether in a single transaction or a series of related transactions),

(each of the foregoing referred to in this definition as a “disposition”). Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(a) a sale, exchange or other disposition of cash, Cash Equivalents or Investment Grade Securities, or of obsolete, damaged, unnecessary, unsuitable or worn out equipment or other assets in the ordinary course of business, or dispositions of property no longer used, useful or economically practicable to maintain in the conduct of the business of the Lux Co-Issuer and its Restricted Subsidiaries (including allowing any registrations or any applications for registration of any intellectual property or other intellectual property rights to lapse or become abandoned);

-2-

(b) any disposition in compliance with Section 4.1 or any disposition that constitutes a Change of Control;

(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary, in a single transaction or series of related transactions, with an aggregate Fair Market Value of less than or equal to $40 million;

(e) any transfer or disposition of property or assets or issuance or sale of Equity Interests by a Restricted Subsidiary to the Lux Co-Issuer or by the Lux Co-Issuer or a Restricted Subsidiary to another Restricted Subsidiary;

(f) the creation of any Lien permitted under this Indenture;

(g) any issuance, sale, pledge or other disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(h) the sale, lease, assignment, license or sublease of inventory, equipment, accounts receivable, notes receivable or other current assets held for sale in the ordinary course of business or the conversion of accounts receivable and related assets to notes receivable or dispositions of accounts receivable and related assets in connection with the collection or compromise thereof;

(i) the lease, assignment, license, sublicense or sublease of any real or personal property in the ordinary course of business;

(j) a sale, assignment or other transfer of Receivables Assets, or participations therein, and related assets (i) to a Receivables Subsidiary in a Qualified Receivables Financing or (ii) to any other Person in a Qualified Receivables Factoring;

(k) a sale, assignment or other transfer of Receivables Assets, or participations therein and related assets by a Receivables Subsidiary in a Qualified Receivables Financing;

(l) any exchange of assets for Related Business Assets (including a combination of Related Business Assets and a de minimis amount of cash or Cash Equivalents) of comparable or greater market value than the assets exchanged, as determined in good faith by the Lux Co-Issuer;

(m) (i) non-exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles and (ii) exclusive licenses, sublicenses or cross-licenses of intellectual property, other intellectual property rights or other general intangibles in the ordinary course of business of the Lux Co-Issuer and the Restricted Subsidiaries of the Lux Co-Issuer;

(n) any transfer in a Sale/Leaseback Transaction of any property acquired or built after the Issue Date; provided that such sale is for at least Fair Market Value (as determined on the date on which a definitive agreement for such Sale/Leaseback Transaction was entered into);

(o) the surrender or waiver of obligations of trade creditors or customers or other contract rights that were incurred in the ordinary course of business of the Lux Co-Issuer or any Restricted Subsidiary of the Lux Co-Issuer, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or compromise, settlement, release or surrender of a contract, tort or other litigation claim, arbitration or other disputes;

-3-

(p) dispositions arising from foreclosures, condemnations, eminent domain, seizure, nationalization or any similar action with respect to assets, dispositions of property subject to casualty events;

(q) dispositions of Investments (including Equity Interests) in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements or rights of first refusal between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(r) to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(s) the issuance of directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law;

(t) dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is purchased within 90 days of such disposition or (ii) the proceeds of such Asset Sale are applied within 90 days of such disposition to the purchase price of such replacement property (which replacement property is purchased within 90 days of such disposition);

(u) a sale or transfer of equipment receivables, or participations therein, and related assets; and

(v) the disposition of assets acquired pursuant to any Permitted Investment, which assets are not used or useful to the core or principal business of the Lux Co-Issuer and the Restricted Subsidiaries; and (ii) the disposition of assets that are necessary or advisable, in the good faith judgment of the Lux Co-Issuer, in order to obtain the approval of any Governmental Authority to consummate or avoid the prohibition or other restrictions on the consummation of any Permitted Investment or acquisition.

For the avoidance of doubt, the unwinding of Swap Contracts shall not be deemed to constitute an Asset Sale.

“Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.

“beneficial owner” has the meaning given to that term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, in each case as in effect on January 16, 2020, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act, as in effect on January 16, 2020), such “person” will not be deemed to have beneficial ownership of any securities that such “person” has the right to acquire or vote only upon the happening of any future event or contingency (including the passage of time) that is outside the control of the holder and that has not yet occurred. The terms “beneficial ownership,” “beneficially owns” and “beneficially owned” have a corresponding meaning.

-4-

“Bermuda Holdco” means Ortho-Clinical Diagnostics Bermuda Co. Ltd. (f/k/a Crimson Bermuda Co. Ltd.), a Bermuda exempted limited liability company, and its successors.

“Board of Directors” means as to any Person, the board of directors, board of managers, sole member or managing member or other governing body of such Person, or if such Person is owned or managed by a single entity or has a general partner, the board of directors, board of managers, sole member or managing member or other governing body of such entity or general partner, or in each case, any duly authorized committee thereof, and the term “directors” means members of the Board of Directors.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law or regulation to close in the State of New York or, with respect to any payments to be made under this Indenture, the place of payment. If the due date for any payment (including in connection with a redemption or repurchase) in respect of any Notes is not a Business Day, the holder thereof will not be entitled to payment of the amount due until the next succeeding Business Day, and will not be entitled to any further interest on such payment as a result of any such delay.

“Capital Stock” means:

(1) in the case of a corporation or company, corporate stock or share capital;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person (it being understood and agreed, for the avoidance of doubt, that “cash-settled phantom appreciation programs” in connection with employee benefits that do not require a dividend or distribution shall not constitute Capital Stock).

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease or operating lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.

“Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of an Issuer or any Guarantor (other than from a Restricted Subsidiary) and designated as a “Cash Contribution Amount” as described in the definition of “Contribution Indebtedness.”

“Cash Equivalents” means:

(1) Dollars, Alternative Currencies or the national currency of the United Kingdom or any participating member state of the European Union and, with respect to any Non-U.S. Subsidiaries, other currencies held by such Non-U.S. Subsidiary in the ordinary course of business;

(2) securities issued or directly, guaranteed or insured by the government of the United States, the United Kingdom or any country that is a member state of the European Union or any agency or instrumentality thereof in each case with maturities not exceeding two years from the date of acquisition;

-5-

(3) money market deposits, certificates of deposit, time deposits and eurodollar time deposits with maturities of two years or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding two years, and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250 million in the case of domestic banks or $100 million (or the Dollar Equivalent thereof) in the case of foreign banks;

(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above and clause (6) below entered into with any financial institution or securities dealers of recognized national standing meeting the qualifications specified in clause (3) above;

(5) commercial paper or variable or fixed rate notes issued by a corporation or other Person (other than an Affiliate of the Lux Co-Issuer) rated at least “A-2” or “P-2” or the equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) and in each case maturing within two years after the date of acquisition;

(6) readily marketable direct obligations issued by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition;

(7) Indebtedness issued by Persons (other than the Sponsor) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition, and marketable short-term money market and similar securities having a rating of at least “A-2” or “P-2” from either S&P or Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency);

(8) investment funds investing at least 95% of their assets in investments of the types described in clauses (1) through (7) above and (9) and (10) below;

(9) Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency); and

(10) in the case of investments by any Non-U.S. Subsidiary or investments made in a country outside the United States of America, other investments of comparable tenor and credit quality to those described in the foregoing clauses (1) through (9) customarily utilized in the countries where such Non-U.S. Subsidiary is located or in which such investment is made.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (1) above; provided that such amounts are converted into any currency listed in clause (1) above as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

“Cash Management Services” means any of the following to the extent not constituting a line of credit (other than an overnight draft facility that is not in default): automated clearing house transactions, treasury and/or cash management services, including, without limitation, treasury, depository, overdraft, credit, purchasing or debit card, non-card e-payable services, electronic funds transfer, treasury management services (including controlled disbursement services, overdraft automatic clearing house fund transfer services, return items and interstate depository network services), other demand deposit or operating account relationships, foreign exchange facilities and merchant services.

-6-

“CFC” means any Subsidiary of the U.S. Co-Issuer (or of any Guarantor that is organized under the laws of the United States, any state thereof or the District of Columbia) that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

“CFC Holdco” means any Subsidiary of the U.S. Co-Issuer (or of any Guarantor that is organized under the laws of the United States, any state thereof or the District of Columbia) (i) that is organized under the laws of the United States of America, any state thereof or the District of Columbia and (ii) that owns no material assets other than Equity Interests and/or indebtedness of one or more CFCs and/or one or more other CFC Holdcos.

“Change of Control” means the occurrence of any of the following events:

(i) any person or “group” (within the meaning of Rule 13d-5 under the Exchange Act, as in effect on January 16, 2020, but excluding any employee benefit plan and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders, acquires beneficial ownership of more than 50% of the Voting Stock (measured by reference to voting power) of the Lux Co-Issuer (determined on a fully diluted basis); or

(ii) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Lux Co-Issuer and its Subsidiaries, taken as a whole, to any Person other than one or more Permitted Holders.

“Clearstream” means Clearstream Banking, S.A., or any successor securities clearing agency.

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

“Company Order” means a written request or order signed in the name of each of the Issuers by any Officer of each of the Issuers.

“Consolidated EBITDA” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of such Person for such period:

(1) increased, in each case to the extent deducted and not added back in calculating such Consolidated Net Income (and without duplication), by:

(a) provision for taxes based on income, profits or capital, including federal, state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued, including any penalties and interest with respect thereto, and state taxes in lieu of business fees (including business license fees) and payroll tax credits, income tax credits and similar tax credits and including an amount equal to the amount of tax distributions actually made to the holders of Equity Interests of such Person or its Restricted Subsidiaries or any direct or indirect parent of such Person or its Restricted Subsidiaries in respect of such period (in each case, to the extent attributable to the operations of such Person and its Subsidiaries), which shall be included as though such amounts had been paid as income taxes directly by such Person or its Restricted Subsidiaries; provided that Day 2 Country Payments shall be increased to the extent of local statutory taxes affecting the amount of any such Day 2 Country Payments; plus

(b) Consolidated Interest Expense; plus

-7-

(d) all depreciation and amortization charges and expenses, including amortization for upfront payments related to any contract signing and signing bonus and incentive payments; plus

(e) the amount of any interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any Restricted Subsidiary of such Person that is not a wholly owned Restricted Subsidiary of such Person; plus

(f) the amount of management, monitoring, consulting, transaction and advisory fees (including termination fees) and related indemnities, charges and expenses paid or accrued to or on behalf of any direct or indirect parent of the Lux Co-Issuer or any of the Permitted Holders (or any other Person who becomes a beneficial owner in the common equity of the Lux Co-Issuer (or a Permitted Parent) after the Issue Date), in each case, to the extent permitted under Section 3.8; plus

(g) earn-out obligations incurred in connection with any acquisition or other Investment and paid or accrued during the applicable period; plus

(h) all charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of equity interests held by management and all losses, charges and expenses related to payments made to holders of options or other derivative equity interests in the common equity of such Person or any direct or indirect parent of the Lux Co-Issuer in connection with, or as a result of, any distribution being made to equityholders of such Person or any of its direct or indirect parents, which payments are being made to compensate such option holders as though they were equityholders at the time of, and entitled to share in, such distribution; plus

(i) all non-cash losses, charges and expenses, including any write-offs or writedowns; provided that if any such non-cash charge represents an accrual or reserve for potential cash items in any future four-fiscal quarter period, (i) such Person may determine not to add back such non-cash charge in the period for which Consolidated EBITDA is being calculated and (ii) to the extent such Person does decide to add back such non-cash charge, the cash payment in respect thereof in such future four-fiscal quarter period will be subtracted from Consolidated EBITDA for such future four-fiscal quarter period; plus

(j) all costs and expenses in connection with pre-opening and opening and closure and/or consolidation of facilities that were not already excluded in calculating such Consolidated Net Income; plus

(k) restructuring charges, accruals or reserves and business optimization expense, including any restructuring costs and integration costs incurred in connection with the Transactions and acquisitions after the Issue Date, project start-up costs, costs related to the closure, relocation, reconfiguration and/or consolidation of facilities and costs to relocate employees, integration and transaction costs, retention charges, severance, contract termination costs, recruiting and signing bonuses and expenses, future lease commitments, systems establishment costs, conversion costs and excess pension charges and consulting fees, expenses attributable to the implementation of costs savings initiatives, costs associated with tax projects/audits and costs consisting of professional consulting or other fees relating to any of the foregoing; plus

(l) Pro Forma Cost Savings; plus

-8-

(m) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” and “Pro Forma Adjusted EBITDA” (or similar pro forma non-GAAP measures) as set forth in the “Summary” section in the Offering Memorandum relating to the offering of the Notes that contains a reconciliation of net income to such measure to the extent such adjustments continue to be applicable during the period in which Consolidated EBITDA is being calculated; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Basis”;

(n) [reserved]; plus

(o) the amount of loss or discount on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Financing; plus

(p) with respect to any joint venture that is not a Restricted Subsidiary, an amount equal to (i) such Person’s or such Restricted Subsidiary’s proportionate share of the net income of such joint venture that is excluded from Consolidated Net Income as a result of clause (h)(i) of the definition of Consolidated Net Income and (ii) the proportion of those items described in clauses (a), (b) and (d) above relating to such joint venture corresponding to such Person’s and the Restricted Subsidiaries’ proportionate share of such joint venture’s Consolidated Net Income (determined as if such joint venture were a Restricted Subsidiary) solely to the extent Consolidated Net Income was reduced thereby;

(2) decreased (without duplication and to the extent increasing such Consolidated Net Income for such period) by (i) non-cash gains or income, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that were deducted (and not added back) in the calculation of Consolidated EBITDA for any prior period ending after the Issue Date and (ii) the amount of any minority interest income consisting of a Subsidiary loss attributable to minority equity interest of third parties in any non-Wholly Owned Subsidiary (to the extent not deducted from Consolidated Net Income for such period);

(3) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any net realized gains and losses relating to (i) amounts denominated in foreign currencies resulting from the application of FASB ASC 830 (including net realized gains and losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains or losses from related Swap Contracts (entered into in the ordinary course of business or consistent with past practice)) or (ii) any other amounts denominated in or otherwise trued-up to provide similar accounting as if it were denominated in foreign currencies; and

(4) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any gain or loss relating to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice).

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

-9-

cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, fees and expenses and expensing of any bridge, commitment or other financing fees, and all discounts, commissions, fees and other charges associated with any Receivables Financing); plus

(b) consolidated capitalized interest of the referent Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

provided that (a) when determining Consolidated Interest Expense in respect of any four-quarter period ending prior to the first anniversary of the Issue Date, Consolidated Interest Expense will be calculated by multiplying the aggregate Consolidated Interest Expense accrued since the Issue Date by 365 and then dividing such product by the number of days from and including the Issue Date to and including the last day of such period and (b) in the case of any Person that became a Restricted Subsidiary of such Person after the commencement of such four-quarter period, the interest expense of such Person paid in cash prior to the date on which it became a Restricted Subsidiary of such Person will be disregarded. For purposes of this definition, interest on Capitalized Lease Obligations will be deemed to accrue at the interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligations in accordance with GAAP.

“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the net income (or loss) of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with GAAP; provided that (without duplication):

(a) all net after-tax extraordinary, nonrecurring or unusual gains, losses, income, expenses and charges, and in any event including, without limitation, all restructuring, severance, relocation, consolidation, integration or other similar charges and expenses, contract termination costs, system establishment charges (including the SAP implementation contemplated in connection with the Transactions), start-up or closure or transition costs, expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, fees, expenses or charges relating to curtailments or modifications to pension and post-retirement employee benefit plans in connection with the Transactions or any acquisition or Permitted Investment, expenses associated with strategic initiatives, facilities shutdown and opening costs, and any fees, expenses, charges or change in control payments related to the Transactions or any acquisition or Permitted Investment (including any transition-related expenses (including retention or transaction-related bonuses) incurred before, on or after the Issue Date), will be excluded;

(b) all (i) losses, charges and expenses relating to the Transactions, (ii) transaction fees, costs and expenses incurred in connection with the consummation of any equity issuances, investments, acquisitions, dispositions, recapitalizations, mergers, option buyouts and the Incurrence, modification or repayment of Indebtedness permitted to be Incurred hereunder (including any Refinancing Indebtedness in respect thereof) or any amendments, waivers or other modifications under the agreements relating to such Indebtedness or similar transactions, and (iii) without duplication of any of the foregoing, non-operating or non-recurring professional fees, costs and expenses for such period will be excluded;

-10-

(c) all net after-tax income, loss, expense or charge from abandoned, closed or discontinued operations and any net after-tax gain or loss on the disposal of abandoned, closed or discontinued operations (and all related expenses) other than in the ordinary course of business (as determined in good faith by such Person) will be excluded;

(d) all net after-tax gain, loss, expense or charge attributable to business dispositions and asset dispositions, including the sale or other disposition of any Equity Interests of any Person, other than in the ordinary course of business (as determined in good faith by such Person) will be excluded;

(e) all net after-tax income, loss, expense or charge attributable to the early extinguishment or cancellation of Indebtedness, Swap Contracts or other derivative instruments (including deferred financing costs written off and premiums paid) will be excluded;

(f) all non-cash gains, losses, expenses or charges attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments will be excluded;

(g) any non-cash or unrealized currency translation gains and losses related to changes in currency exchange rates (including remeasurements of Indebtedness and any net loss or gain resulting from Swap Contracts for currency exchange risk), will be excluded;

(h) (i) the net income for such period of any Person that is not a Restricted Subsidiary of the referent Person or that is accounted for by the equity method of accounting, will be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period and (ii) the net income for such period will include any ordinary course dividends, distributions or other payments in cash (or converted into cash) received from any such Person during such period in excess of the amounts included in subclause (i) above;

(i) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period will be excluded;

(j) the effects of purchase accounting, fair value accounting or recapitalization accounting adjustments (including the effects of such adjustments pushed down to the referent Person and its Restricted Subsidiaries) resulting from the application of purchase accounting, fair value accounting or recapitalization accounting in relation to the Transactions or any acquisition consummated before or after the Day 1 Closing Date, and the amortization, write-down or write-off of any amounts thereof, net of taxes, will be excluded;

(k) all non-cash impairment charges and asset write-ups, write-downs and write-offs, in each case pursuant to GAAP, will be excluded;

(l) all non-cash expenses realized in connection with or resulting from stock option plans, employee benefit plans or agreements or post-employment benefit plans or agreements, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other similar rights will be excluded;

(m) any costs or expenses incurred in connection with the payment of dividend equivalent rights to option holders pursuant to any management equity plan, stock option plan or any other management or employee benefit plan or agreement or post-employment benefit plan or agreement will be excluded;

-11-

(n) accruals and reserves for liabilities or expenses that are established or adjusted as a result of the Transactions within 24 months after the Day 1 Closing Date will be excluded;

(o) all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, fees and expenses and expensing of any bridge, commitment or other financing fees (including in connection with a transaction undertaken but not completed), will be excluded;

(p) all discounts, commissions, fees and other charges (including interest expense) associated with any Receivables Financing will be excluded;

(q) (i) the non-cash portion of “straight-line” rent expense will be excluded and (ii) the cash portion of “straight-line” rent expense that exceeds the amount expensed in respect of such rent expense will be included;

(r) expenses and lost profits with respect to liability or casualty events or business interruption will be disregarded to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer, but only to the extent that such amount (i) has not been denied by the applicable carrier in writing and (ii) is in fact reimbursed within 365 days of the date on which such liability was discovered or such casualty event or business interruption occurred (with a deduction for any amounts so added back that are not reimbursed within such 365-day period); provided that any proceeds of such reimbursement when received will be excluded from the calculation of Consolidated Net Income to the extent the expense or lost profit reimbursed was previously disregarded pursuant to this clause (r);

(s) to the extent not included in (or deducted from) net income, each Day 2 Country Payment will be included (to the extent received or accrued as a receivable) or deducted (to the extent paid or accrued as a liability), as the case may be;

(t) losses, charges and expenses that are covered by indemnification or other reimbursement provisions in connection with any asset disposition will be excluded to the extent actually reimbursed, or, so long as such Person has made a determination that a reasonable basis exists for indemnification or reimbursement, but only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days);

(u) non-cash charges for deferred tax asset valuation allowances will be excluded;

(v) cash dividends or returns of capital from Investments, in each case received during such period, to the extent not otherwise included in Consolidated Net Income for that period or any prior period subsequent to the Issue Date will be included;

(w) solely for the purpose of determining the amount available for Restricted Payments under Section 3.4(a)(C) and without duplication of provisions under Section 3.4(a)(C) with respect to returns on Investments, the net income (or loss) for such period of any Restricted Subsidiary (other than a Guarantor) will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary is not at the date of determination

-12-

permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to such Person or any of its Restricted Subsidiaries in respect of such period, to the extent not already included therein (subject, in the case of a dividend to another Restricted Subsidiary (other than a Guarantor), to the limitation contained in this clause (w)); and

(x) any Initial Public Company Costs will be included as an add back.

For the purpose of Section 3.4 only, there shall be excluded from Consolidated Net Income any income arising from the sale or other disposition of Restricted Investments, from repurchases or redemptions of Restricted Investments, from repayments of loans or advances which constituted Restricted Investments or from any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries, in each case to the extent such amounts increase the amount of Restricted Payments permitted under Sections 3.4(a)(C)(5) or 3.4(a)(C)(6).

“Consolidated Senior Secured Debt Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Total Indebtedness of the Lux Co-Issuer that is secured by a Lien as of such date and not subordinated in right of payment to the Notes minus (y) the amount of unrestricted cash and Cash Equivalents that would be stated on the balance sheet of the Lux Co-Issuer and its Restricted Subsidiaries for which internal financial statements are available immediately preceding such date and held by the Lux Co-Issuer and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Lux Co-Issuer for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis. For purposes of calculating the Consolidated Senior Secured Debt Ratio with respect to any revolving Indebtedness, the Lux Co-Issuer may elect, at the time of the initial borrowing under such revolving Indebtedness, to either (x) give pro forma effect to the Incurrence of the entire committed amount of such Indebtedness, in which case such committed amount may thereafter be borrowed or reborrowed, in whole or in part, from time to time, without further compliance with the Consolidated Senior Secured Debt Ratio component of any provision hereunder, or (y) give pro forma effect to the Incurrence of the actual amount drawn under such revolving Indebtedness, in which case, the ability to Incur the amounts committed to under such Indebtedness will be subject to the Consolidated Senior Secured Debt Ratio (to the extent being Incurred pursuant to such ratio) at the time of each such Incurrence.

“Consolidated Total Debt Ratio” means, as of any date of determination, the ratio of (1) (x) Consolidated Total Indebtedness of the Lux Co-Issuer as of such date minus (y) the amount of unrestricted cash and Cash Equivalents that would be stated on the balance sheet of the Lux Co-Issuer and its Restricted Subsidiaries for which internal financial statements are available immediately preceding such date and held by the Lux Co-Issuer and its Restricted Subsidiaries as of such date of determination, and in each case, calculated on a Pro Forma Basis to (2) the Consolidated EBITDA of the Lux Co-Issuer for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date, calculated on a Pro Forma Basis.

-13-

“Consolidated Total Indebtedness” means, as of any date of determination, an amount equal to (1) the aggregate principal amount of Indebtedness of the Lux Co-Issuer and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis, to the extent required to be recorded on a balance sheet in accordance with GAAP, consisting of funded Indebtedness for borrowed money (other than Indebtedness with respect to Cash Management Services and intercompany indebtedness or that are otherwise removed in consolidation) and (2) the aggregate amount of all outstanding Disqualified Stock of the Lux Co-Issuer and all Disqualified Stock and Preferred Stock of its Restricted Subsidiaries on a consolidated basis, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and Maximum Fixed Repurchase Prices, in each case determined on a consolidated basis in accordance with GAAP, in each case of clauses (1) and (2) above, based on internal financial statements that are available immediately preceding such date and calculated on a Pro Forma Basis.

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds:

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.

“Contribution Indebtedness” means Indebtedness of the Lux Co-Issuer or any Restricted Subsidiary in an aggregate principal amount not greater than the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Lux Co-Issuer or any Restricted Subsidiary (other than, in the case of such Restricted Subsidiary, contributions by the Lux Co-Issuer or any other Restricted Subsidiary to its capital) after the Issue Date and designated as a Cash Contribution Amount.

“Corporate Trust Office” shall be at the address of the Trustee specified in Section 12.1 or such other address as to which the Trustee may give notice to the Issuers or Holders pursuant to the procedures set forth in Section 12.1.

“Credit Agreement” means (i) the Senior Credit Agreement and (ii) whether or not the Senior Credit Agreement remains outstanding, if designated by the Issuers to be included in the definition of “Credit Agreement,” one or more (A) debt facilities, indentures or commercial paper facilities providing for revolving credit loans, term loans, notes, debentures, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables)

-14-

or letters of credit, (B) debt securities, notes, mortgages, guarantees, collateral documents, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other Indebtedness, Preferred Stock or Disqualified Stock, in each case, with the same or different borrowers or issuers and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, increased (provided, that such increase in borrowings is permitted under this Indenture other than with respect to Refinancing Expenses, which shall be permitted without being deemed to increase the Indebtedness), replaced or refunded in whole or in part from time to time and whether by the same or any other agent, lender or investor or group of lenders or investors.

“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

“Data Download Program” means the interactive electronic interface made available by the Board of Governors of the Federal Reserve System or any successor information system.

“Day 1 Acquisition” means the acquisition by Bermuda Holdco and certain of its direct and indirect subsidiaries of the Day 1 Countries and the payment of the purchase price for Ortho.

“Day 1 Closing Date” means the date of the consummation of the Day 1 Acquisition, which was June 30, 2014.

“Day 1 Countries” means (a) certain assets and liabilities and (b) all of the equity interests and substantially all of the assets and liabilities of certain entities which, together with their subsidiaries, were acquired from Johnson & Johnson on the Day 1 Closing Date. These assets, liabilities and equity interests are associated with Austria, Belgium, Canada, the Czech Republic, France, Germany, Italy, Japan, Mexico, the Netherlands, Portugal, Spain, Switzerland, the United Kingdom and the United States.

“Day 2 Acquisition” means the acquisition by Bermuda Holdco and certain of its direct and indirect subsidiaries of the Day 2 Countries.

“Day 2 Countries” means certain assets and liabilities, which were acquired from Johnson & Johnson following the Day 1 Closing Date. These assets and liabilities are associated with Argentina, Australia, Brazil, Chile, China, Colombia, the Commonwealth of Puerto Rico, Denmark, the Dominican Republic, Ecuador, Hong Kong, India, Indonesia, Malaysia, New Zealand, Norway, Panama, Peru, the Philippines, Poland, Russia, Singapore, South Korea, Sweden, Taiwan, Thailand, Uruguay, Venezuela and Vietnam.

“Day 2 Country Payments” means amounts equal to the amount received, paid, owed to or by or accrued by the Issuers or any Restricted Subsidiary in respect of the EBITDA, net of local statutory tax, of each Day 2 Country.

“Default” means any event that is, or after notice or the passage of time or both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.6 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

-15-

“Depositary” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Issuers.

“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by the Lux Co-Issuer or any of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-cash Consideration.

“Designated Preferred Stock” means Preferred Stock of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, as applicable (other than Excluded Equity), that is issued after the Issue Date for cash and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate, on the issuance date thereof, the cash proceeds of which are contributed to the capital of the Lux Co-Issuer (if issued by Holdings or any other direct or indirect parent of the Lux Co-Issuer) and excluded from the calculation set forth in Section 3.4(a)(C).

“Disqualified Stock” means, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is puttable, redeemable or exchangeable), in each case, at the option of the holder thereof or upon the happening of any event:

(1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Equity Interests than the asset sale and change of control provisions applicable to the Notes and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the Notes (including the purchase of any Notes tendered pursuant thereto)),

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock, or

(3) is redeemable at the option of the holder thereof, in whole or in part,

in each case prior to the date that is 91 days after the earlier of the maturity date of the Notes and the date the Notes are no longer outstanding; provided that only the portion of Equity Interests that so mature or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Lux Co-Issuer or its Subsidiaries or a direct or indirect parent of the Lux Co-Issuer or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Lux Co-Issuer or its Subsidiaries or a direct or indirect parent of the Lux Co-Issuer in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided, further, that any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

“Dollar” and “$” mean lawful money of the United States.

-16-

“Dollar Equivalent” means with respect to any monetary amount in a currency other than Dollars, at any time for the determination thereof, the amount of Dollars obtained by converting such foreign currency involved in such computation into Dollars at the spot rate for the purchase of Dollars with the applicable foreign currency as published by the Federal Reserve Board on the date of such determination.

“Equity Contribution” means the cash equity contributions to the Lux Co-Issuer made, either directly or indirectly, by the Sponsor in order to provide the Lux Co-Issuer with capital, when taken together with the proceeds of the Existing Notes and the borrowings under the Senior Credit Agreement, sufficient to consummate the Day 1 Acquisition on the Day 1 Closing Date.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any Capital Stock that arises only by reason of the happening of a contingency that is outside the control of the holder of such Capital Stock or any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means any public or private sale on or after the Issue Date of Capital Stock or Preferred Stock of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, as applicable (other than Disqualified Stock), other than:

(1) public offerings with respect to the Lux Co-Issuer’s or such direct or indirect parent’s common stock registered on Form S-4 or Form S-8 or any successor form thereto;

(2) issuances to any Subsidiary of the Lux Co-Issuer; and

(3) any such public or private sale that constitutes an Excluded Contribution or Refunding Capital Stock.

“Euro” and “€” mean the single currency of the participating member states introduced in accordance with the provisions of Article 109(i)4 of the EU Treaty.

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Exchange Rate” means, on any day, the rate at which the currency other than Dollars may be exchanged into Dollars at approximately 11:00 a.m., New York City time, on such date on the Bloomberg Key Cross Currency Rates Page for the relevant currency. In the event that such rate does not appear on any Bloomberg Key Cross Currency Rate Page, the Exchange Rate shall be determined by the Issuers in good faith.

“Excluded Contributions” means the Net Cash Proceeds and Cash Equivalents, or the Fair Market Value of other assets, received by the Lux Co-Issuer after the Day 1 Closing Date from:

(1) contributions to its common equity capital, and

(2) the sale of Capital Stock (other than Excluded Equity) of the Lux Co-Issuer,

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate, or that are utilized to make a Restricted Payment pursuant to Section 3.4(b)(2). Excluded Contributions will be excluded from the calculation set forth in Section 3.4(a)(C).

-17-

“Excluded Equity” means (i) Disqualified Stock, (ii) any Equity Interests issued or sold to a Restricted Subsidiary or any employee stock ownership plan or trust established by the Lux Co-Issuer or any of its Subsidiaries or a direct or indirect parent of the Lux Co-Issuer (to the extent such employee stock ownership plan or trust has been funded by the Lux Co-Issuer or any Subsidiary or a direct or indirect parent of the Lux Co-Issuer), (iii) any Equity Interest that has already been used or designated (x) as (or the proceeds of which have been used or designated as) a Cash Contribution Amount, Designated Preferred Stock, an Excluded Contribution or Refunding Capital Stock, or (y) to increase the amount available under Section 3.4(b)(iv)(a) or clause (14) of the definition of “Permitted Investments” or is proceeds of Indebtedness referred to in Section 3.4(b)(xiii)(b) and (iv) the Equity Contribution.

“Exempted Indebtedness” means, as of any particular time, all then outstanding Indebtedness of the Lux Co-Issuer and Principal Property Subsidiaries incurred after the Issue Date and secured by any mortgage, security interest, pledge or lien other than those permitted by Section 3.5(b).

“Existing Indenture” means the indenture governing the Existing Notes, as amended, restated, supplemented, waived, renewed or otherwise modified from time to time, and as replaced (whether or not upon termination, and whether with the original holders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time.

“Existing Notes” means the 6.625% Senior Notes due 2022 issued by the Issuers.

“Factoring Transaction” means any transaction or series of transactions that may be entered into by the Lux Co-Issuer or any Restricted Subsidiary pursuant to which the Lux Co-Issuer or such Restricted Subsidiary may sell, convey, assign or otherwise transfer Receivables Assets (which may include a backup or precautionary grant of security interest in such Receivables Assets so sold, conveyed, assigned or otherwise transferred or purported to be so sold, conveyed, assigned or otherwise transferred) to any Person that is not a Restricted Subsidiary; provided that any such person that is a Subsidiary meets the qualifications in clauses (1)-(3) of the definition of “Receivables Subsidiary.”

“Fair Market Value” means, with respect to any asset or property, the price that could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction (as determined in good faith by the senior management or the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer, whose determination will be conclusive for all purposes under this Indenture and the Notes).

“Fitch” means Fitch Ratings, Inc. or any successor to the rating agency business thereof.

“Fixed Charge Coverage Ratio” means, with respect to any Person as of any date, the ratio of (1) Consolidated EBITDA of such Person for the most recently ended Test Period immediately preceding the date on which such calculation of the Fixed Charge Coverage Ratio is made, calculated on a Pro Forma Basis for such period to (2) the Fixed Charges of such Person for such period calculated on a Pro Forma Basis. In the event that the Lux Co-Issuer or any of its Restricted Subsidiaries Incurs or redeems or repays any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing or other receivables financing unless the related commitments have been terminated and such Indebtedness has been permanently repaid and has not been replaced) or issues or redeems Preferred Stock or Disqualified Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to, substantially simultaneously with, or in connection with, the event for which the calculation of the Fixed Charge Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated on a Pro Forma Basis.

-18-

“Fixed Charges” means, with respect to any Person for any period, the sum of (without duplication):

(1) Consolidated Interest Expense of such Person for such period, and

(2) the product of (a) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries for such period and (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person and its Restricted Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“Fixed GAAP Date” means the Issue Date; provided that at any time and from time to time after the Issue Date, the Lux Co-Issuer may by written notice to the Trustee elect to change the Fixed GAAP Date (with respect to all or any subset of the Fixed GAAP Terms) to be the date specified in such notice, and upon such notice, the Fixed GAAP Date shall be such date for all periods beginning on and after the date specified in such notice.

“Fixed GAAP Terms” means (a) the definitions of the terms “Capitalized Lease Obligation,” “Consolidated Interest Expense,” “Consolidated Net Income,” “Consolidated Senior Secured Debt Ratio,” “Consolidated Total Debt Ratio,” “Consolidated Total Indebtedness,” “Consolidated EBITDA” and “Indebtedness,” (b) all defined terms in this Indenture to the extent used in or relating to any of the foregoing definitions, and all ratios and computations based on any of the foregoing definitions, and (c) any other term or provision of this Indenture or the Notes that, at the Lux Co-Issuer’s election, may be specified by the Lux Co-Issuer by written notice to the Trustee from time to time; provided that the Lux Co-Issuer may elect to remove any term from constituting a Fixed GAAP Term.

“GAAP” means generally accepted accounting principles in the United States of America as applied by the Issuers as in effect on the Fixed GAAP Date (for purposes of the Fixed GAAP Terms) and as in effect from time to time (for all other purposes of this Indenture), including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession (but excluding the policies, rules and regulations of the SEC applicable only to public companies); provided that the Lux Co-Issuer may at any time elect by written notice to the Trustee to use IFRS in lieu of GAAP for financial reporting purposes and, upon any such notice, references herein to GAAP shall thereafter be construed to mean (a) for periods beginning on and after the date specified in such notice, IFRS as in effect on the date specified in such notice (for purposes of the Fixed GAAP Terms) and as in effect from time to time (for all other purposes of this Indenture) and (b) for prior periods, GAAP as defined in the first sentence of this definition. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP.

“Global Note Legend” means the legend set forth in Section 2.1(b) hereof, which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Section 2.1 or 2.6 hereof.

-19-

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including any applicable supranational bodies (such as the European Union or the European Central Bank).

“guarantee” means, as to any Person, a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“Guarantee” means any guarantee of the Obligations of the Issuers under this Indenture and the Notes in accordance with the provisions of this Indenture.

“Guarantors” means, collectively, each Restricted Subsidiary of the Lux Co-Issuer (other than the U.S. Co-Issuer) that executes (or otherwise becomes a party to) this Indenture on the Issue Date and each other Restricted Subsidiary of the Lux Co-Issuer that Incurs a Guarantee of the Notes; provided that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person automatically ceases to be a Guarantor.

“Holder” or “noteholder” means the Person in whose name a Note is registered on the Registrar’s books.

“Holdings” means Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., a société à responsabilité limitée organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 89C, rue Pafebruch, L—8308 Capellen, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies’ register (Registre de Commerce et des Sociétés de Luxembourg) under number B185679, and its successors.

“IAI Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, and issued in a denomination equal to the outstanding principal amount of the Notes resold to IAIs.

“IFRS” means the International Financial Reporting Standards as issued by the International Accounting Standards Board.

“Incur” or “incur” means, with respect to any Indebtedness, Capital Stock or Lien, to issue, assume, guarantee, incur or otherwise become liable for, such Indebtedness, Capital Stock or Lien, as applicable; provided that any Indebtedness, Capital Stock or Lien of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

“Indebtedness” means, with respect to any Person, without duplication:

(1) the principal of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, (d) in respect of Capitalized Lease Obligations, or (e) representing any Swap Contracts, in each case, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Swap Contracts) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

-20-

(2) to the extent not otherwise included, any guarantee by such Person of the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and

(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness shall be the lesser of: (a) the Fair Market Value of such asset on the date such Indebtedness was Incurred or, at the option of such Person, at such date of determination, and (b) the amount of such Indebtedness of such other Person.

The term “Indebtedness” shall not include any lease, concession or license of property (or Guarantee thereof) that would be considered an operating lease under GAAP as in effect on the Issue Date, any prepayments of deposits received from clients or customers in the ordinary course of business or consistent with past practices, or obligations under any license, permit or other approval (or Guarantees given in respect of such obligations) Incurred prior to the Issue Date or in the ordinary course of business or consistent with past practices.

Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

(i) Contingent Obligations Incurred in the ordinary course of business or consistent with past practices;

(ii) obligations under or in respect of Receivables Financings;

(iii) any balance that constitutes a trade payable, accrued expense or similar obligation to a trade creditor, in each case Incurred in the ordinary course of business;

(iv) intercompany liabilities that would be eliminated on the consolidated balance sheet of the Lux Co-Issuer and its consolidated Subsidiaries;

(v) prepaid or deferred revenue arising in the ordinary course of business;

(vi) Cash Management Services;

(vii) in connection with the purchase by the Lux Co-Issuer or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid in a timely manner;

(viii) obligations, to the extent such obligations would otherwise constitute Indebtedness, under any agreement that has been defeased or satisfied and discharged pursuant to the terms of such agreement;

(ix) for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or termination obligations, deferred compensatory or employee or director equity plans, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes; or

(x) Capital Stock (other than Disqualified Stock of the Lux Co-Issuer and Preferred Stock of a Non-Guarantor Subsidiary).

-21-

“Indenture” has the meaning set forth in the preamble hereto.

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of nationally recognized standing that is, in the good faith determination of the Lux Co-Issuer, qualified to perform the task for which it has been engaged.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Initial Notes” means the $675,000,000 in aggregate principal amount of 7.250% Senior Notes due 2028 of the Issuers issued under this Indenture on the Issue Date.

“Initial Public Company Costs” means, as to any Person, costs relating to compliance with the provisions of the Securities Act and the Exchange Act (or similar regulations applicable in other listing jurisdictions), as applicable to companies with equity securities held by the public, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes Oxley Act of 2002 (or similar non-U.S. regulations) and the rules and regulations promulgated in connection therewith (or similar regulations applicable in other listing jurisdictions), the rules of national securities exchange companies with listed equity, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees, in each case to the extent arising solely by virtue of the initial listing of such Person’s equity securities on a national securities exchange (or similar non-U.S. exchange); provided that any such costs arising from the costs described above in respect of the ongoing operation of such Person as a listed equity or its listed debt securities following the initial listing of such Person’s equity securities or debt securities, respectively, on a national securities exchange (or similar non-U.S. exchange) shall not constitute Initial Public Company Costs.

“Initial Purchasers” means J.P. Morgan Securities LLC, Barclays Capital Inc., Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, ING Financial Markets LLC, Macquarie Capital (USA) Inc., UBS Securities LLC, NatWest Markets Securities Inc. and Nomura Securities International, Inc.

“Interest Payment Date” means, in the case of the Initial Notes, February 1 and August 1 of each year, commencing on August 1, 2020 and, in the case of any Additional Notes, such interest payment dates as may be designated by the Issuers in accordance with the provisions of Section 2.2 hereof and, in each case, ending at the Stated Maturity of the Notes.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P and BBB- (or the equivalent) by Fitch, or an equivalent rating by any other Rating Agency.

“Investment Grade Securities” means:

(1) securities issued or directly guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),

(2) securities that have an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Lux Co-Issuer and its Subsidiaries,

-22-

(3) investments in any fund that invests at least 95% of its assets in investments of the type described in clauses (1) and (2) above and clause (4) below which fund may also hold immaterial amounts of cash pending investment and/or distribution, and

(4) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

“Investments” means, with respect to any Person, (i) all investments by such Person in other Persons (including Affiliates) in the form of (a) loans (including guarantees of Indebtedness), (b) advances or capital contributions (excluding accounts receivable, credit card and debit card receivables, trade credit and advances or other payments made to customers, dealers, suppliers and distributors and payroll, commission, travel and similar advances to officers, directors, managers, employees, consultants and independent contractors made in the ordinary course of business), and (c) purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any such other Person and (ii) investments that are required by GAAP to be classified on the balance sheet of the Lux Co-Issuer in the same manner as the other investments included in clause (i) of this definition to the extent such transactions involve the transfer of cash or other property; provided that Investments shall not include, in the case of the Lux Co-Issuer and the Restricted Subsidiaries, intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business. If the Lux Co-Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Lux Co-Issuer, the Lux Co-Issuer shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. In no event shall a guarantee of an operating lease of the Lux Co-Issuer or any Restricted Subsidiary be deemed an Investment. For purposes of the definition of “Unrestricted Subsidiary” and Section 3.4:

(1) “Investments” shall include the portion (proportionate to the Lux Co-Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Lux Co-Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Lux Co-Issuer shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Lux Co-Issuer’s “Investment” in such Subsidiary at the time of such redesignation, less

(b) the portion (proportionate to the Lux Co-Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

The amount of any Investment outstanding at any time (including for purposes of calculating the amount of any Investment outstanding at any time under any provision of Section 3.4 and otherwise determining compliance with Section 3.4) shall be the original cost of such Investment (determined, in the case of any Investment made with assets of the Lux Co-Issuer or any Restricted Subsidiary, based on the Fair Market Value of the assets invested and without taking into account subsequent increases or decreases in value), reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Lux Co-Issuer or a Restricted Subsidiary in respect of such Investment, and shall be net of any Investment by such Person in the Lux Co-Issuer or any Restricted Subsidiary.

-23-

“Issue Date” means January 27, 2020.

“Issuers” has the meaning set forth in the preamble hereto. “Joint Business” means the contractual joint venture operated pursuant to that certain Agreement, dated August 17, 1989, between Ortho-Clinical Diagnostics, Inc. (as successor-in-interest to Ortho Diagnostics Systems, Inc.) and Novartis Vaccines and Diagnostics, Inc. (as successor-in-interest to Chiron Corporation), as amended.

“joint venture” means any joint venture or similar arrangement (in each case, regardless of legal formation), including but not limited to the Joint Business, collaboration arrangements, profit sharing arrangements or other contractual arrangements.

“JV Distributions” means, at any time, the aggregate amount of all cash dividends or distributions received by the Lux Co-Issuer or any of its Restricted Subsidiaries as a return on an Investment in a permitted joint venture during the period from the Issue Date through the end of the fiscal quarter most recently ended immediately prior to such date for which financial statements are internally available; provided that the Lux Co-Issuer or any of its Restricted Subsidiaries are not required to reinvest such dividends or distributions in the permitted joint venture.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent or similar statutes) of any jurisdiction); provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

“Lux Co-Issuer” has the meaning set forth in the preamble hereto.

“Management Agreement” means that certain Consulting Services Agreement between the Lux Co-Issuer or any of its Affiliates, on the one hand, and the Sponsor, on the other hand entered into on or around the Day 1 Closing Date, as the same may be amended, restated, modified or replaced, from time to time, to the extent that, in the good faith judgment of the Board of Directors either of the Issuers or any direct or indirect parent of the Lux Co-Issuer, such amendment, modification or replacement is not less advantageous to the Holders in any material respect than the Consulting Services Agreement entered into on or around the Day 1 Closing Date.

“Market Capitalization” means an amount equal to (i) the total number of issued and outstanding shares of Equity Interests of the Lux Co-Issuer (or any successor entity) or any direct or indirect parent of the Lux Co-Issuer on the date of the declaration or making of the relevant Restricted Payment multiplied by (ii) the arithmetic mean of the closing prices per share of such Equity Interests for the 30 consecutive trading days immediately preceding the date of declaration or making of such Restricted Payment.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

-24-

“Net Cash Proceeds” means the aggregate cash proceeds (using the Fair Market Value of any Cash Equivalents) received by the Lux Co-Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, and including any proceeds received as a result of unwinding any related Swap Contracts in connection with such transaction but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct cash costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements related thereto), amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to Section 3.7(b)) to be paid as a result of such transaction, any costs associated with unwinding any related Swap Contracts in connection with such transaction and any deduction of appropriate amounts to be provided by the Lux Co-Issuer or any of its Restricted Subsidiaries as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Lux Co-Issuer or any of its Restricted Subsidiaries after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

“New Term Loan Facility” means a new euro-denominated senior secured term loan facility in an amount equal to the euro equivalent of $375.0 million to be entered into by Holdings, the Issuers and their consolidated subsidiaries.

“Non-Guarantor Subsidiary” means any Restricted Subsidiary of the Lux Co-Issuer (other than the U.S. Co-Issuer) that is not a Guarantor.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Non-U.S. Subsidiary” means any direct or indirect Subsidiary of the Lux Co-Issuer that is not a U.S. Subsidiary.

“Notes” means the Initial Notes and any Additional Notes, treated as a single class of securities except as otherwise provided in Section 2.2 and Section 9.2(a).

“Notes Custodian” means the custodian with respect to the Global Notes (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee.

“Obligations” means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness. “Offering Memorandum” means the offering memorandum related to the offering of Initial Notes, dated January 16, 2020.

-25-

“Officer” means, with respect to any Person, the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, the Secretary or director (or any Person serving the equivalent function of any of the foregoing) of such Person (or of any direct or indirect parent, general partner, managing member or sole member of such Person) or any individual designated as an “Officer” for purposes of this Indenture by the Board of Directors of such Person (or the Board of Directors of any direct or indirect parent or the general partner, managing member or sole member of such Person).

“Officer’s Certificate” means a certificate signed on behalf of one Issuer or any direct or indirect parent of the Lux Co-Issuer by an Officer of such Issuer or such parent entity that meets the requirements set forth in this Indenture.

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuers or any direct or indirect parent of the Lux Co-Issuer.

“Pari Passu Indebtedness” means:

(1) with respect to the Issuers, the Notes and any Indebtedness that ranks pari passu in right of payment to the Notes; and

(2) with respect to any Guarantor, its Guarantee and any Indebtedness that ranks pari passu in right of payment to such Guarantor’s Guarantee.

“Participant” means, with respect to the Depositary, Euroclear or Clearstream a Person who has an account with the Depositary, respectively (and, with respect to the Depositary, shall include Euroclear or Clearstream).

“Permanent Regulation S Global Note” means a permanent Global Note in the form of Exhibit A hereto, bearing the Global Note Legend and the Private Placement Legend, and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, and issued in a denomination equal to the outstanding principal amount of the Temporary Regulation S Global Note upon expiration of the Restricted Period.

“Permitted Asset Swap” means the purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the Lux Co-Issuer or any of its Restricted Subsidiaries and another Person; provided that such purchase and sale or exchange must occur within 90 days of each other and any cash or Cash Equivalents received must be applied in accordance with Section 3.7.

“Permitted Holders” means each of (a) the Sponsor, (b) managers and members of management of the Lux Co-Issuer (or any Permitted Parent (other than clause (c) of the definition thereof)) or its Subsidiaries that have ownership interests in the Lux Co-Issuer (or such Permitted Parent (other than clause (c) of the definition thereof)), (c) any other beneficial owner in the common equity of the Lux Co-Issuer (or such Permitted Parent (other than clause (c) of the definition thereof)) as of the Issue Date, (d) any group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of which any of the Persons described in clauses (a), (b) or (c) above are members; provided that, without giving effect to the existence of such group or any other group, any of the Persons described in clauses (a), (b) and (c), collectively, beneficially own Voting Stock representing 50% or more of the total voting power of the Voting Stock of the Lux Co-Issuer (or any Permitted Parent (other than clause (c) of the definition thereof)) then held by such group, and (e) any Permitted Parent. Any Person or group, together with its Affiliates, whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

-26-

“Permitted Investments” means:

(1) any Investment in cash and Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;

(2) any Investment in the Lux Co-Issuer (including the Notes) or any Restricted Subsidiary;

(3) any Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries;

(4) any Investment by the Lux Co-Issuer or any Restricted Subsidiary in a Person that is primarily engaged in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Lux Co-Issuer or a Restricted Subsidiary (and any Investment held by such Person that was not acquired by such Person in contemplation of so becoming a Restricted Subsidiary or in contemplation of such merger, consolidation, amalgamation, transfer, conveyance or liquidation);

(5) any Investment in securities or other assets received in connection with an Asset Sale made pursuant to Section 3.7 or any other disposition of assets not constituting an Asset Sale;

(6) any Investment (x) existing on the Issue Date, (y) made pursuant to binding commitments in effect on the Issue Date or (z) that replaces, refinances, refunds, renews, modifies, amends or extends any Investment described under either of the immediately preceding clauses (x) or (y), provided that any such Investment is in an amount that does not exceed the amount replaced, refinanced, refunded, renewed, modified, amended or extended, except as contemplated pursuant to the terms of such Investment in existence on the Issue Date or as otherwise permitted under this definition or under Section 3.4;

(7) loans and advances to, or guarantees of Indebtedness of, employees, directors, officers, managers, consultants or independent contractors in an aggregate amount, taken together with all other Investments made pursuant to this clause (7) that are at the time outstanding, not in excess of $20 million outstanding at any one time in the aggregate;

(8) loans and advances to officers, directors, employees, managers, consultants and independent contractors for business-related travel and entertainment expenses, moving and relocation expenses and other similar expenses, in each case in the ordinary course of business;

(9) any Investment (x) acquired by the Lux Co-Issuer or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Lux Co-Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization by the Lux Co-Issuer or any such Restricted Subsidiary of such other Investment or accounts receivable, or (b) as a result of a foreclosure or other remedial action by the Lux Co-Issuer or any of its Restricted Subsidiaries with respect to any Investment or

-27-

other transfer of title with respect to any Investment in default and (y) received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Lux Co-Issuer or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (B) litigation, arbitration or other disputes;

(10) Swap Contracts and Cash Management Services permitted under Section 3.3(b)(x);

(11) any Investment by the Lux Co-Issuer or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) in an aggregate amount, taken together with all other Investments made pursuant to this clause (11) that are at the time outstanding, not to exceed the greater of (x) $200 million and (y) 14.0% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (11) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (11) for so long as such Person continues to be a Restricted Subsidiary;

(12) additional Investments by the Lux Co-Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (12) that are at the time outstanding, not to exceed the greater of (x) $225 million and (y) 15.5% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (12) for so long as such Person continues to be a Restricted Subsidiary;

(13) any transaction to the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 3.8(b) (except transactions described in clause (ii), (iii), (iv), (viii), (ix), (xiii) or (xiv) of such Section 3.8(b));

(14) Investments the payment for which consists of Equity Interests (other than Excluded Equity) of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, as applicable; provided, however, that such Equity Interests shall not increase the amount available for Restricted Payments under Section 3.4(a)(C);

(15) Investments consisting of the leasing, licensing, sublicensing or contribution of intellectual property in the ordinary course of business or pursuant to joint marketing arrangements with other Persons;

(16) Investments consisting of purchases or acquisitions of inventory, supplies, materials and equipment or purchases, acquisitions, licenses, sublicenses or leases or subleases of intellectual property, or other rights or assets, in each case in the ordinary course of business;

(17) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness;

-28-

(18) Investments consisting of (v) Liens permitted under Section 3.5, (w) Indebtedness (including guarantees) permitted under Section 3.3, (x) mergers, amalgamations, consolidations and transfers of all or substantially all assets permitted under Section 4.1, (y) Asset Sales permitted under Section 3.7 or (z) Restricted Payments permitted under Section 3.4;

(19) repurchases of the Notes;

(20) guarantees of Indebtedness permitted to be Incurred under Section 3.3, and Obligations relating to such Indebtedness and guarantees (other than guarantees of Indebtedness) in the ordinary course of business;

(21) advances, loans or extensions of trade credit in the ordinary course of business by the Lux Co-Issuer or any of its Restricted Subsidiaries;

(22) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business;

(23) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers;

(24) intercompany current liabilities owed to Unrestricted Subsidiaries or joint ventures Incurred in the ordinary course of business in connection with the cash management operations of the Lux Co-Issuer and its Subsidiaries;

(25) Investments in joint ventures of the Lux Co-Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause (25) that are at the time outstanding, not to exceed the greater of (x) $125 million and (y) 8.5% of Consolidated Net Tangible Assets; provided that the Investments permitted pursuant to this clause (25) may, at the Lux Co-Issuer’s option, be increased by the amount of JV Distributions, without duplication of dividends or distributions increasing amounts available pursuant to clause (c) of the first paragraph of the covenant described under Section 3.4; provided, however, that if any Investment pursuant to this clause (25) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (25) for so long as such Person continues to be a Restricted Subsidiary;

(26) the Transactions and the Refinancing Transactions;

(27) accounts receivable, security deposits and prepayments and other credits granted or made in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and others, including in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, such account debtors and others, in each case in the ordinary course of business;

(28) Investments acquired as a result of a foreclosure by the Lux Co-Issuer or any Restricted Subsidiary with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;

(29) Investments resulting from pledges and deposits that are Permitted Liens;

-29-

(30) acquisitions of obligations of one or more officers or other employees of any direct or indirect parent of the Lux Co-Issuer, the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer in connection with such officer’s or employee’s acquisition of Equity Interests of any direct or indirect parent of the Lux Co-Issuer, so long as no cash is actually advanced by the Lux Co-Issuer or any Restricted Subsidiary to such officers or employees in connection with the acquisition of any such obligations;

(31) guarantees of operating leases (for the avoidance of doubt, excluding Capitalized Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case, entered into by the Lux Co-Issuer or any Restricted Subsidiary in the ordinary course of business;

(32) Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted by Section 3.4;

(33) non-cash Investments made in connection with tax planning and reorganization activities;

(34) Investments made by, or in, the Joint Business;

(35) Investments made pursuant to obligations entered into when the Investment would have been permitted hereunder so long as such Investment when made reduces the amount available under the clause under which the Investment would have been permitted; and

(36) Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client and customer contracts and loans or advances made to, and guarantees with respect to obligations of, distributors, suppliers, licensors and licensees in the ordinary course of business.

“Permitted Liens” means, with respect to any Person:

(1) Liens Incurred in connection with workers’ compensation laws, unemployment insurance laws or similar legislation, or in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or to secure public or statutory obligations of such Person or to secure surety, stay, customs or appeal bonds to which such Person is a party, or as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2) Liens imposed by law, such as carriers’, warehousemen’s, landlords’, materialmen’s, repairman’s, construction contractors’, mechanics’ or other like Liens, in each case for sums not yet overdue by more than 60 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review (or which, if due and payable, are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained, to the extent required by GAAP) or with respect to which the failure to make payment could not reasonably be expected to have a material adverse effect as determined in good faith by management of the Lux Co-Issuer or a direct or indirect parent of the Lux Co-Issuer;

(3) Liens for taxes, assessments or other governmental charges or levies (i) that are not yet overdue for 30 days or not yet due or payable or (ii) that are being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained to the extent required by GAAP, or for property taxes on property such Person or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge, levy or claim is to such property;

-30-

(4) Liens in favor of the issuers of performance and surety bonds, bid, indemnity, warranty, release, appeal or similar bonds or with respect to regulatory requirements or letters of credit or bankers’ acceptances issued and completion of guarantees provided for, in each case, pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and other similar purposes, reservations of rights or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely interfere with the ordinary conduct of the business of such Person;

(6) Liens Incurred to secure Obligations in respect of Indebtedness permitted to be Incurred pursuant to clause (i) or (iv) of the definition of “Permitted Debt” and obligations secured ratably thereunder; provided that, in the case of Liens securing Indebtedness permitted to be incurred pursuant to clause (iv) of such definition, such Lien extends only to the assets and/or Capital Stock, the acquisition, lease, construction, repair, replacement or improvement of which is financed thereby and any replacements, additions and accessions thereto and any income or profits thereof; provided further, that individual financings provided by a lender may be cross-collateralized to other financings provided by such lender or its affiliates;

(7) Liens of the Issuers or any of the Guarantors existing on the Issue Date or any Reversion Date (other than Liens Incurred to secure Obligations under the Senior Credit Agreement);

(8) Liens on assets of, or Equity Interests in, a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (8), if a Person becomes a Subsidiary, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Issuers, and any property or assets of such Person or any Subsidiary of such Person shall be deemed acquired by the Issuers at the time of such merger, amalgamation or consolidation;

(9) Liens on assets at the time the Lux Co-Issuer or any Restricted Subsidiary acquired the assets, including any acquisition by means of a merger, amalgamation or consolidation with or into the Lux Co-Issuer or such Restricted Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided, further, that such Liens are limited to all or a portion of the property or assets (and improvements on such property or assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (9), if, in connection with an acquisition by means of a merger, amalgamation or consolidation with or into either of the Issuers or any Restricted Subsidiary, a Person other than such Issuer or any Restricted Subsidiary is the Successor Company with respect thereto, any Subsidiary of such Person shall be deemed to become a Subsidiary of such Issuer or such Restricted Subsidiary, as applicable, and any property or assets of such Person or any such Subsidiary of such Person shall be deemed acquired by such Issuer or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;

-31-

(10) Liens securing Indebtedness or other obligations of an Issuer or a Guarantor owing to an Issuer or another Restricted Subsidiary permitted to be Incurred in accordance with Section 3.3;

(11) Liens securing Swap Contracts Incurred in compliance with Section 3.3;

(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit entered into in the ordinary course of business issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(13) leases, subleases, licenses, sublicenses, occupancy agreements or assignments of or in respect of real or personal property;

(14) Liens arising from, or from Uniform Commercial Code financing statement filings regarding operating leases or consignments entered into by the Issuers and the Guarantors in the ordinary course of business;

(15) Liens in favor of an Issuer or any Restricted Subsidiary;

(16) (i) Liens on Receivables Assets and related assets, or created in respect of bank accounts into which only the collections in respect of Receivables Assets have been, sold, conveyed, assigned or otherwise transferred or purported to be so sold, conveyed, assigned or otherwise transferred in connection with a Qualified Receivables Factoring and/or Qualified Receivables Financing and (ii) Liens securing Indebtedness or other obligations of any Receivables Subsidiary;

(17) deposits made or other security provided in the ordinary course of business to secure liability to insurance carriers or under self-insurance arrangements in respect of such obligations;

(18) Liens on the Equity Interests of Unrestricted Subsidiaries;

(19) grants of intellectual property, software and other technology licenses;

(20) judgment and attachment Liens not giving rise to an Event of Default pursuant to clauses (iv), (v), (vi) or (vii) of Section 6.1 and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

(21) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(22) Liens Incurred to secure Cash Management Services and other “bank products” (including those described in clauses (x) and (xxiii) of the definition of “Permitted Debt”);

-32-

(23) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in clauses (7), (8), (9), (11), (24) or (25) of this definition; provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured (or, under the written arrangements under which the original Lien arose, could secure) the original Lien (plus any replacements, additions, accessions and improvements on such property), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (7), (8), (9), (11), (24) or (25) of this definition at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any Refinancing Expenses, related to such refinancing, refunding, extension, renewal or replacement, and (z) any amounts incurred under this clause (23) as refinancing indebtedness of clause (25) of this definition shall reduce the amount available under such clause (25);

(24) Liens securing Pari Passu Indebtedness permitted to be Incurred pursuant Section 3.3; if at the time of any Incurrence of such Pari Passu Indebtedness and after giving pro forma effect thereto, the Consolidated Senior Secured Debt Ratio would be less than or equal to 5.00 to 1.00;

(25) other Liens securing obligations the principal amount of which does not exceed the greater of (x) $250 million and (y) 17.0% of Consolidated Net Tangible Assets at any one time outstanding;

(26) Liens on the Equity Interests or assets of a joint venture to secure Indebtedness of such joint venture Incurred pursuant to clause (xxi) of the definition of “Permitted Debt”;

(27) Liens on equipment of an Issuer or any Guarantor granted in the ordinary course of business to such Issuer’s or such Guarantor’s client at which such equipment is located;

(28) Liens created for the benefit of (or to secure) all of the Notes or the related Guarantees;

(29) Liens on property or assets used to redeem, repay, defease or to satisfy and discharge Indebtedness; provided that such redemption, repayment, defeasance or satisfaction and discharge is not prohibited by this Indenture;

(30) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation and exportation of goods in the ordinary course of business;

(31) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection; (ii) attaching to pooling, commodity trading accounts or other commodity brokerage accounts Incurred in the ordinary course of business; and (iii) in favor of banking or other financial institutions or entities, or electronic payment service providers, arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking or finance industry;

-33-

(32) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks or other Persons not given in connection with the issuance of Indebtedness; (ii) relating to pooled deposit or sweep accounts of the Issuers or any Guarantor to permit satisfaction of overdraft or similar obligations Incurred in the ordinary course of business of the Issuers and the Guarantors; or (iii) relating to purchase orders and other agreements entered into with customers of the Issuers or any Guarantor in the ordinary course of business;

(33) any encumbrance or restriction (including put and call arrangements) with respect to Equity Interests of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;

(34) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(35) Liens on vehicles or equipment of the Issuers or any of the Guarantors granted in the ordinary course of business;

(36) Liens on assets of Non-Guarantor Subsidiaries securing Indebtedness Incurred in accordance with clause (xx) of the definition of “Permitted Debt;”

(37) Liens disclosed by the title insurance policies delivered on or subsequent to the Issue Date and any replacement, extension or renewal of any such Liens (so long as the Indebtedness and other obligations secured by such replacement, extension or renewal Liens are permitted by this Indenture); provided that such replacement, extension or renewal Liens do not cover any property other than the property that was subject to such Liens prior to such replacement, extension or renewal;

(38) Liens arising solely by virtue of any statutory or common law provision or customary business provision relating to banker’s liens, rights of set-off or similar rights (including, for the avoidance of doubt, Liens arising under the general terms and conditions of banks or saving banks (Allgemeine Geschäftsbedingungen der Banken und Sparkassen));

(39) (a) Liens solely on any cash earnest money deposits made by the Lux Co-Issuer or any Restricted Subsidiary in connection with any letter of intent or other agreement in respect of any Permitted Investment, (b) Liens on advances of cash or Cash Equivalents in favor of the seller of any property to be acquired in a Permitted Investment to be applied against the purchase price for such Investment and (c) Liens on cash collateral in respect of letters of credit entered into in the ordinary course of business;

(40) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

(41) Liens on securities that are the subject of repurchase agreements constituting Cash Equivalents under clause (4) of the definition thereof;

(42) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts Incurred in the ordinary course of business and not for speculative purposes;

(43) rights reserved or vested in any Person by the terms of any lease, license, franchise, grant or permit held by the Lux Co-Issuer or any of its Restricted Subsidiaries or by a statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or periodic payments as a condition to the continuance thereof;

-34-

(44) restrictive covenants affecting the use to which real property may be put; provided that such covenants are complied with;

(45) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;

(46) zoning by-laws and other land use restrictions, including, without limitation, site plan agreements, development agreements and contract zoning agreements;

(47) Liens created pursuant to the general conditions of a bank operating in The Netherlands based on the general conditions drawn up by the Netherlands Bankers’ Association (Nederlandse Vereniging van Banken) and the Consumers Union (Consumentenbond) or pursuant to any other general conditions of, or any contractual arrangement with, any such bank to substantially the same effect;

(48) Liens required to be granted under mandatory law in favor of creditors as a consequence of a merger or conversion permitted under this Indenture due to §§ 22, 204 German Transformation Act (Umwandlungsgesetz—UmwG);

(49) Liens pursuant to (a) Section 8a of the German Partial Retirement Act (Altersteilzeitgesetz); (b) Section 7e of the German Social Law Act No. 4 (Sozialgesetzbuch IV); or (c) Section 1136 (alone or in conjunction with Section 1192(1)) of the German Civil Code (Bürgerliches Gesetzbuch); and

(50) Liens on cash proceeds of Indebtedness (and on the related escrow accounts) in connection with the issuance of such Indebtedness into (and pending the release from) a customary escrow arrangement, to the extent such Indebtedness is Incurred in compliance with the covenant described under Section 3.3.”

For purposes of determining compliance with this definition, (x) a Lien need not be Incurred solely by reference to one category of Permitted Liens described in this definition but may be Incurred under any combination of such categories (including in part under one such category and in part under any other such category), (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Permitted Liens, the Lux Co-Issuer shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition, and (z) in the event that a portion of Indebtedness secured by a Lien could be classified as secured in part pursuant to clause (6) or (24) above (giving effect to the Incurrence of such portion of such Indebtedness), the Lux Co-Issuer, in its sole discretion, may classify such portion of such Indebtedness (and any Obligations in respect thereof) as having been secured pursuant to clause (6) or (24) above and thereafter the remainder of the Indebtedness as having been secured pursuant to one or more of the other clauses of this definition.

In the event that the Lux Co-Issuer shall classify Indebtedness Incurred on the date of determination as secured in part pursuant to clause (24) of the definition of “Permitted Liens” and in part pursuant to one or more other clauses of such definition (other than Liens Incurred under clause (6) thereof in respect of Indebtedness Incurred under Section 3.3(b)(i)(E)) as provided in the preceding paragraph any calculation of Consolidated Total Indebtedness for purposes of clause (1)(x) of the Consolidated Senior Secured Debt Ratio on such date (but not in respect of any future calculation following such date) shall not include any such Indebtedness (and shall not give effect to any repayment, repurchase, redemption, defeasance or other acquisition, retirement or discharge of Indebtedness from the proceeds thereof) to the extent secured pursuant to any such other clause of this definition.

-35-

“Permitted Parent” means (a) any direct or indirect parent of the Lux Co-Issuer so long as a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof holds 50% or more of the Voting Stock of such direct or indirect parent of the Lux Co-Issuer, (b) Holdings, so long as such entity constitutes a Permitted Holder pursuant to clause (a), (b), (c) or (d) of the definition thereof and (c) any Public Company (or Wholly Owned Subsidiary of such Public Company) to the extent and until such time as any Person or group (other than a Permitted Holder under clause (a), (b), (c) or (d) of the definition thereof) is deemed to be or become a beneficial owner of Voting Stock of such Public Company representing more than 50% of the total voting power of the Voting Stock of such Public Company.

“Person” means any individual, corporation, company, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, government (or any agency or political subdivision thereof) or any other entity.

“Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

“Principal Property Subsidiary” means any Subsidiary that owns, operates or leases one or more Restricted Properties.

“Private Placement Legend” means the legend set forth in Section 2.1(c) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions hereof.

“Pro Forma Basis” and “pro forma effect” mean, with respect to the calculation of any test, financial ratio, basket or covenant under this Indenture, including the Consolidated Senior Secured Debt Ratio, the Consolidated Total Debt Ratio and the Fixed Charge Coverage Ratio and the calculation of Consolidated Net Tangible Assets, of any Person and its Restricted Subsidiaries, as of any date, that pro forma effect will be given to any acquisition, merger, amalgamation, consolidation, Investment, any issuance, Incurrence, assumption or repayment or redemption of Indebtedness (including Indebtedness issued, Incurred or assumed or repaid or redeemed as a result of, or to finance, any relevant transaction and for which any such test, financial ratio, basket or covenant is being calculated), any issuance or redemption of Preferred Stock or Disqualified Stock, all sales, transfers and other dispositions or discontinuance of any Subsidiary, line of business, division, segment or operating unit, any operational change (including the entry into any material contract or arrangement) or any designation of a Restricted Subsidiary to an Unrestricted Subsidiary or of an Unrestricted Subsidiary to a Restricted Subsidiary, in each case that have occurred during the four consecutive fiscal quarter period of such Person being used to calculate such test, financial ratio, basket or covenant (the “Reference Period”), or subsequent to the end of the Reference Period but prior to such date or prior to or substantially simultaneously with the event for which a determination under this definition is made (including (i) any such event occurring at a Person who became a Restricted Subsidiary of the subject Person or was merged, amalgamated or consolidated with or into the subject Person or any other Restricted Subsidiary of the subject Person after the commencement of the Reference Period and (ii) with respect to any proposed Investment or acquisition of the subject Person for which committed financing is or is sought to be obtained, the event for which a determination under this definition is made may occur after the date upon which the relevant determination or calculation is made), in each case, as if each such event occurred on the first day of the Reference Period; provided that (x) pro forma effect will be given to reasonably identifiable and quantifiable pro forma cost savings or expense reductions related to operational efficiencies (including the entry into or renegotiation of any material contract or arrangement), strategic initiatives or purchasing improvements and other cost savings, improvements or synergies, in each case, that have been realized, or are reasonably expected to be realized, by such Person and its Restricted Subsidiaries based upon actions to be taken within 24 months (or, in the case of the Transactions, 36 months) after the consummation of the action as if such cost savings, expense reductions, improvements and synergies occurred (or were realized) on the first day of the Reference Period and (y) no amount shall be added back pursuant to this definition to the extent duplicative of amounts that are otherwise included in computing Consolidated EBITDA for such Reference Period.

-36-

For purposes of making any computation referred to above:

(1) if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date for which a determination under this definition is made had been the applicable rate for the entire period (taking into account any Swap Contracts applicable to such Indebtedness if such Swap Contracts has a remaining term in excess of 12 months);

(2) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer, in his or her capacity as such and not in his or her personal capacity, of either Issuer or a direct or indirect parent of the Lux Co-Issuer to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP;

(3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Lux Co-Issuer may designate;

(4) interest on any Indebtedness under a revolving credit facility or a Qualified Receivables Financing computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period; and

(5) to the extent not already covered above, any such calculation may include adjustments calculated in accordance with Regulation S-X under the Securities Act.

Any pro forma calculation may include, without limitation, (1) adjustments calculated in accordance with Regulation S-X under the Securities Act, (2) adjustments calculated to give effect to any Pro Forma Cost Savings and (3) all adjustments of the type used in connection with the calculation of “Adjusted EBITDA” as set forth in footnote (1) in the section entitled “Summary—Summary Historical Consolidated Financial Information and Other Data” in the Offering Memorandum to the extent such adjustments, without duplication, continue to be applicable to the Reference Period; provided that any such adjustments that consist of reductions in costs and other operating improvements or synergies shall be calculated in accordance with, and satisfy the requirements specified in, the definition of “Pro Forma Cost Savings.”

-37-

that is expected to result in such cost savings, expense reductions, operating improvements or synergies; provided that no cost savings, operating expense reductions, operating improvements and synergies shall be added pursuant to this definition to the extent duplicative of any expenses or charges otherwise added to Consolidated Net Income or Consolidated EBITDA, whether through a pro forma adjustment, add back exclusion or otherwise, for such period.

“Public Company” means any Person with a class or series of Voting Stock that is traded on a stock exchange or in the over-the-counter market.

“QIB” means any “qualified institutional buyer” (as defined in Rule 144A).

“Qualified Receivables Factoring” means any Factoring Transaction that meets the following conditions:

(1) such Factoring Transaction is non-recourse to, and does not obligate, the Lux Co-Issuer or any Restricted Subsidiary, or their respective properties or assets (other than Receivables Assets) in any way other than pursuant to Standard Securitization Undertakings,

(2) all sales, conveyances, assignments and/or contributions of Receivables Assets by the Lux Co-Issuer or any Restricted Subsidiary are made at Fair Market Value in the context of a Factoring Transaction (as determined in good faith by the Lux Co-Issuer), and

(3) such Factoring Transaction (including financing terms, covenants, termination events (if any) and other provisions thereof) is on market terms at the time such Factoring Transaction is first entered into (as determined in good faith by the Lux Co-Issuer) and may include Standard Securitization Undertakings.

The grant of a security interest in any accounts receivable of the Lux Co-Issuer or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure any Credit Agreement shall not be deemed a Qualified Receivables Factoring.

“Qualified Receivables Financing” means any Receivables Financing that meets the following conditions:

(1) all sales, conveyances, assignments and/or contributions of Receivables Assets by the Lux Co-Issuer or any Restricted Subsidiary to any Receivables Subsidiary are made at Fair Market Value in the context of a Receivables Financing (as determined in good faith by the Lux Co-Issuer), and

(2) the financing terms, covenants, termination events and other provisions thereof shall be on market terms at the time such Receivables Financing is first entered into (as determined in good faith by the Lux Co-Issuer) and may include Standard Securitization Undertakings.

“Rating Agency” means (1) each of Fitch, Moody’s and S&P and (2) if Fitch, Moody’s or S&P ceases to rate the Notes for reasons outside of the Lux Co-Issuer’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3 under the Exchange Act selected by the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer as a replacement agency for Fitch, Moody’s or S&P, as the case may be.

-38-

“Receivables Assets” means accounts receivable (whether now existing or arising in the future) of the Lux Co-Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other payment support obligations (including, without limitation, letters of credit, promissory notes or trade credit insurance) in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with non-recourse, asset securitization or factoring transactions involving accounts receivable and any Swap Contracts entered into by the Lux Co-Issuer or any such Subsidiary in connection with such accounts receivable.

“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing or Factoring Transaction.

“Receivables Financing” means any transaction or series of transactions that may be entered into by the Lux Co-Issuer or any of its Subsidiaries pursuant to which the Lux Co-Issuer or any of its Subsidiaries may sell, contribute, convey, assign or otherwise transfer Receivables Assets to (a) a Receivables Subsidiary (in the case of a transfer by the Lux Co-Issuer or any of its Subsidiaries), and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), which in either case, may include a backup or precautionary grant of security interest in, such Receivables Assets so sold, contributed, conveyed, assigned or otherwise transferred.

“Receivables Repurchase Obligation” means (i) any obligation of a seller of receivables in a Qualified Receivables Factoring or Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller, or (ii) any right of a seller of receivables in a Qualified Receivables Factoring or Qualified Receivables Financing to repurchase defaulted receivables for the purposes of claiming sales tax bad debt relief.

“Receivables Subsidiary” means a Wholly Owned Restricted Subsidiary of the Lux Co-Issuer (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Lux Co-Issuer and/or one or more of its Subsidiaries (including, a special purpose securitization vehicle (or similar entity)) in which the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer or a direct or indirect parent of the Lux Co-Issuer makes an Investment (or which otherwise owes to the Lux Co-Issuer or one of its Subsidiaries any deferral of part of the purchase price of the Receivables Assets for the purpose of credit enhancement given under the Qualified Receivables Financing) and to which the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer or a direct or indirect parent of the Lux Co-Issuer sells, conveys, assigns or otherwise transfers Receivables Assets (which may include a backup or precautionary grant of security interest in such Receivables Assets sold, conveyed, assigned or otherwise transferred or purported to be so sold, conveyed, assigned or otherwise transferred)) which engages in no activities other than in connection with the purchase, acquisition or financing of Receivables Assets of the Lux Co-Issuer and its Subsidiaries or a direct or indirect parent of the Lux Co-Issuer and all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer (as provided below) as a Receivables Subsidiary and:

-39-

(a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Lux Co-Issuer or any Restricted Subsidiary of the Lux Co-Issuer (other than a Receivables Subsidiary, excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Lux Co-Issuer or any Restricted Subsidiary (other than a Receivables Subsidiary) in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Lux Co-Issuer or any Restricted Subsidiary (other than a Receivables Subsidiary), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

(b) with which neither the Lux Co-Issuer nor any Restricted Subsidiary (other than a Receivables Subsidiary) has any material contract, agreement, arrangement or understanding other than on terms which the Lux Co-Issuer reasonably believes to be no less favorable to the Lux Co-Issuer or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Lux Co-Issuer, and

(c) to which neither the Lux Co-Issuer nor any other Subsidiary of the Lux Co-Issuer has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

Any such designation by the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer shall be evidenced to the Trustee by delivering to the Trustee a certified copy of the resolution of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing conditions.

“Record Date” for the interest payable on any applicable Interest Payment Date means, in the case of the Initial Notes, January 15 and July 15 (whether or not a Business Day) and, in the case of any Additional Notes, such record date (whether or not a Business Day) as may be designated by the Issuers in accordance with the provisions Section 2.2, in each case, next preceding such Interest Payment Date.

“Refinancing Expenses” means in connection with any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock otherwise permitted by this Indenture, the aggregate principal amount of additional Indebtedness, Disqualified Stock or Preferred Stock Incurred to pay (1) accrued and unpaid interest, (2) the increased principal amount of any Indebtedness being refinanced resulting from the in-kind payment of interest on such Indebtedness (or in the case of Disqualified Stock or Preferred Stock being refinanced, additional shares of such Disqualified Stock or Preferred Stock); (3) the aggregate amount of original issue discount on the Indebtedness, Disqualified Stock or Preferred Stock being refinanced; (4) premiums (including tender premiums) and other costs associated with the redemption, repurchase, retirement, discharge or defeasance of Indebtedness, Disqualified Stock or Preferred Stock being refinanced, and (5) all fees and expenses (including underwriting discounts, commitment, ticking and similar fees, expenses and discounts) associated with the repayment of the Indebtedness, Disqualified Stock or Preferred Stock being refinanced and the incurrence of the Indebtedness, Disqualified Stock or Preferred Stock incurred in connection with such refinancing.

“Refinancing Transactions” means (i) the issuance of the Notes; (ii) the redemption of a portion of the Existing Notes; (iii) the entry into and effectiveness of the amendment to the Credit Agreement; (iv) borrowings under the New Term Loan Facility and (v) the payment of related transaction fees and expenses.

“Regulation S” means Regulation S promulgated under the Securities Act.

-40-

“Regulation S Global Note” means a Temporary Regulation S Global Note or Permanent Regulation S Global Note, as applicable, bearing the Global Note Legend and the Private Placement Legend, and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, and issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903.

“Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided that any assets received by the Lux Co-Issuer or a Restricted Subsidiary in exchange for assets transferred by the Lux Co-Issuer or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless such Person is, or upon receipt of the securities of such Person, such Person would become, a Restricted Subsidiary.

“Related Taxes” means any taxes, charges or assessments, including, but not limited to, sales, use, transfer, rental, ad valorem, value-added, stamp, property, consumption, franchise, license, capital, net worth, gross receipts, excise, occupancy, intangibles or similar taxes, charges or assessments (other than income taxes), required to be paid by Holdings or any other direct or indirect parent of the Lux Co-Issuer by virtue of its being incorporated or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Lux Co-Issuer, any of its Subsidiaries or any other direct or indirect parent of the Lux Co-Issuer), or being a holding company parent of the Lux Co-Issuer, any of its Subsidiaries or any other direct or indirect parent of the Lux Co-Issuer or receiving dividends from or other distributions in respect of the Capital Stock of the Lux Co-Issuer, any of its Subsidiaries or any other direct or indirect parent of the Lux Co-Issuer, or having guaranteed any obligations of the Lux Co-Issuer or any Subsidiary thereof, or having made any payment in respect of any of the items for which the Lux Co-Issuer or any of its Subsidiaries is permitted to make payments to any parent entity pursuant to Section 3.4 or acquiring, developing, maintaining, owning, prosecuting, protecting or defending its intellectual property and associated rights (including but not limited to receiving or paying royalties for the use thereof) relating to the business or businesses of the Lux Co-Issuer or any Subsidiary thereof.

“Replacement Assets” means (1) substantially all the assets of a Person primarily engaged in a Similar Business or (2) a majority of the Voting Stock of any Person primarily engaged in a Similar Business that shall become, on the date of acquisition thereof, a Restricted Subsidiary.

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Period” means, in relation to the Initial Notes, the 40 consecutive days beginning on and including the later of (A) the day on which the Initial Notes are offered to Persons other than distributors (as defined in Regulation S under the Securities Act) and (B) the Issue Date; and, in relation to any Additional Notes that bear the Private Placement Legend, the comparable period of 40 consecutive days.

“Restricted Property” means (a) any manufacturing facility, or portion thereof, owned or leased by the Lux Co-Issuer or any of its Subsidiaries and located within the continental United States, which, in the opinion of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer, is of material importance to the business of the Lux Co-Issuer and its Subsidiaries taken as a whole, but no such manufacturing facility, or portion thereof, shall be deemed of material importance if its gross book value (before deducting accumulated depreciation) is less than 5% of Consolidated Net Tangible Assets, or (b) any shares of capital stock of any Subsidiary owning any such manufacturing facility. As used in this definition, “manufacturing facility” means property, plant and equipment used for actual manufacturing such as quality assurance, engineering, maintenance, staging area for work in process materials, employees’ eating and comfort facilities and manufacturing administration, and it excludes sales offices, research facilities and facilities used only for warehousing or general administration.

-41-

“Restricted Subsidiary” means any Subsidiary of a Person other than an Unrestricted Subsidiary of such Person. Unless otherwise indicated in this Indenture, all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Lux Co-Issuer (including the U.S. Co-Issuer).

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, or any successor to the rating agency business thereof.

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Lux Co-Issuer or a Restricted Subsidiary whereby the Lux Co-Issuer or a Restricted Subsidiary transfers such property to a Person and the Lux Co-Issuer or such Restricted Subsidiary leases it from such Person, other than leases between the Lux Co-Issuer and a Restricted Subsidiary or between Restricted Subsidiaries.

“SEC” means the U.S. Securities and Exchange Commission or any governmental authority succeeding to any of its principal functions.

“Secured Indebtedness” means any Indebtedness secured by a Lien other than Indebtedness with respect to Cash Management Services.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Senior Credit Agreement” means the credit agreement, dated as of June 30, 2014, among the Lux Co-Issuer, the U.S. Co-Issuer, the guarantors from time to time party thereto, the financial institutions named therein and Barclays Bank PLC, as Administrative Agent, as described under “Description of Other Indebtedness—Senior Secured Credit Facilities” in the Offering Memorandum, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, as amended, restated, supplemented, waived, renewed or otherwise modified from time to time, and (if designated by the Lux Co-Issuer) as replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including (if designated by the Lux Co-Issuer) any agreement or indenture or commercial paper facilities with banks or other institutional lenders or investors extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder permitted by Section 3.3 of this Indenture or altering the maturity thereof or adding Restricted Subsidiaries as additional borrowers, issuers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders, investors or group of investors.

-42-

“Significant Subsidiary” means (i) any Restricted Subsidiary (other than the U.S. Co-Issuer) that would be a “significant subsidiary” of the Lux Co-Issuer within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC and (ii) the U.S. Co-Issuer.

“Similar Business” means any business engaged or proposed to be engaged in by the Issuers on the Issue Date and any business or other activities that are similar, ancillary, complementary, incidental or related thereto, or an extension, development or expansion of, the businesses in which the Issuers are engaged following the Issue Date.

“Specified Event of Default” means an Event of Default pursuant to Section 6.1(i), (ii) or (v).

“Sponsor” means Carlyle Partners VI Cayman Holdings, L.P. or one or more investment funds advised, managed or controlled by the foregoing and, in each case (whether individually or as a group), Affiliates of the foregoing (but excluding any operating portfolio companies of the foregoing).

“Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer which the Lux Co-Issuer has determined in good faith to be customary in a Factoring Transaction or Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

“Subordinated Indebtedness” means (a) with respect to the Issuers, any Indebtedness of the Issuers which is by its terms expressly subordinated in right of payment to the Notes, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms expressly subordinated in right of payment to its Guarantee.

“Subsidiary” means, with respect to any Person (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, (2) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity and (3) for purposes of Section 3.2, any Person that is consolidated in the consolidated financial statements of the specified Person in accordance with GAAP.

-43-

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any obligations or liabilities under any such master agreement.

“Temporary Regulation S Global Note” means a temporary Global Note in the form of Exhibit A hereof bearing the Global Note Legend, the Private Placement Legend, and the Temporary Regulation S Legend, deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, and issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903.

“Temporary Regulation S Legend” means the legend set forth in Section 2.1(d).

“Test Period” means the most recent period of four consecutive fiscal quarters of the Lux Co-Issuer ended on or prior to such time (taken as one accounting period) in respect of which financial statements for each such quarter or fiscal year in such period are internally available (as determined in good faith by the Lux Co-Issuer).

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the Issue Date.

“Transactions” means the transactions contemplated by the Acquisition Agreement and as described in the Offering Memorandum under “Day 1/Day 2 Financial Presentation,” including the borrowings under the Senior Credit Agreement and the issuance of the Existing Notes and the payment of any related fees and expenses.

“Treasury Rate” means the yield to maturity as of the date of the relevant redemption notice of the most recently issued United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (or is obtainable from the Federal Reserve System’s Data Download Program as of the date of such H.15) that has become publicly available at least two Business Days prior to such date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the date of such redemption notice to February 1, 2023; provided, however, that if the period from such date to February 1, 2023 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

“Trust Officer” means any officer within the corporate trust department of the Trustee, with direct responsibility for performing the Trustee’s duties under this Indenture and also means, with respect to a particular corporate trust matter relating to this Indenture, any other officer of the Trustee to whom such matter is referred because of such person’s knowledge of and familiarity with the particular subject.

“Trustee” has the meaning set forth in the preamble hereto.

“United States” or “U.S.” mean the United States of America.

“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

-44-

“Unrestricted Global Note” means a permanent Global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend.

“Unrestricted Subsidiary” means:

(1) any Subsidiary of the Lux Co-Issuer that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer pursuant to Section 3.14; and

(2) any Subsidiary of an Unrestricted Subsidiary.

“U.S. Co-Issuer” has the meaning set forth in the preamble hereto.

“U.S. Government Obligations” means securities that are:

(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,

which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.

“U.S. Subsidiary” means any Subsidiary of the Lux Co-Issuer that (1) is organized under the laws of the United States, any state thereof or the District of Columbia, (2) is not a Subsidiary of a CFC and (3) is not a CFC Holdco.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote (without regard to the occurrence of any contingency) in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock or Preferred Stock, as the case may be, at any date, the number of years (and/or portion thereof) obtained by dividing (1) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of such Indebtedness or redemption or similar payment, in respect of such Disqualified Stock or Preferred Stock, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness.

-45-

“Wholly Owned Restricted Subsidiary” means any Wholly Owned Subsidiary that is a Restricted Subsidiary.

“Wholly Owned Subsidiary” of any Person means a direct or indirect Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares or shares or interests required to be held by foreign nationals or other third parties to the extent required by applicable law) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

SECTION 1.2. Other Definitions.


Term		Defined in Section
“2002 Law”		10.1(m)(i)
“actual knowledge”		7.2(g)
“Additional Amounts”		2.15
“Additional Notes”		2.2
“Affiliate Transaction”		3.8(a)
“Agent Members”		2.1(d)
“Amount”		10.1(m)(i)
“Asset Sale Offer”		3.7(c)
“Auditor”		3.2(a)(i)
“Authentication Order”		2.2
“Certain Capital Markets Debt”		3.11
“Change in Tax Law”		5.9(b)
“Change of Control Offer”		3.9(b)
“Change of Control Payment”		3.9(a)
“Change of Control Payment Date”		3.9(b)(iii)
“covenant defeasance option”		8.1(c)
“Covenant Suspension Event”		3.15(a)
“Defaulted Interest”		2.12
“Directive”		2.3
“Election Date”		3.5(b)
“Event of Default”		6.1
“Excess Proceeds”		3.7(c)
“FATCA”		2.15(b)(vi)
“French Guarantor”		10.1(k)
“German Guarantor”		10.1(l)
“Guarantor Obligations”		10.1(a)
“IAIs”		2.2
“Increased Amount”		3.5(e)
“legal defeasance option”		8.1(c)
“Luxembourg Guarantor”		10.1(m)(i)
“Luxembourg Subordinated Debt”		10.1(m)(i)
“Maximum Fixed Repurchase Price”		1.4(e)
“Offer Amount”		5.8(a)
“Offer Period”		5.8(a)

-46-


Term		Defined in Section
“Offer to Repurchase”		5.8
“Paying Agent”		2.3
“Payor”		2.15
“Permitted Debt”		3.3(b)
“Purchase Date”		5.8(a)
“Qualified Reporting Subsidiary”		3.2(e)
“Ratio Debt”		3.3(a)
“Redemption Date”		5.4
“Refinancing Indebtedness”		3.3(b)(xiv)
“Refunding Capital Stock”		3.4(b)(ii)(a)
“Registrar”		2.3
“Relevant Taxing Jurisdiction”		2.15
“Resale Restriction Termination Date”		2.1(c) and (d)
“Restricted Payments”		3.4(a)
“Retired Capital Stock”		3.4(b)(ii)(a)
“Reversion Date”		3.15(b)
“Special Interest Payment Date”		2.12(a)
“Special Mandatory Redemption”		5.10
“Special Mandatory Redemption Date”		5.10
“Special Mandatory Redemption Event”		5.10
“Special Record Date”		2.12(a)
“Successor Company”		4.1(a)(i)
“Successor Guarantor”		4.1(b)(i)
“Suspended Covenants”		3.15(a)
“Suspension Period”		3.15(b)
“Special Redemption Notice”		5.10
“Taxes”		2.15
“Tax Redemption Date”		5.9
“Tested Transaction”		1.4(a)
“Testing Party”		1.4(a)
“Total Leverage Excess Proceeds”		3.7(c)
“Transaction Commitment Date”		1.4(a)
“Unpaid Amount”		3.4(b)(ii)(c)

SECTION 1.3. Rules of Construction. Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(d) “including” means including without limitation;

-47-

(e) words in the singular include the plural and words in the plural include the singular;

(f) (i) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; and (ii) Secured Indebtedness shall not be deemed to be subordinated or junior to any other Secured Indebtedness merely because it has a junior priority with respect to the same collateral;

(g) references to sections of, or rules under, the Securities Act or Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(h) unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture; and

(i) the words “herein,” “hereof” and “hereunder” and any other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision.

SECTION 1.4. Measuring Compliance.

(a) With respect to any (x) Restricted Payment, Investment, acquisition, merger, amalgamation or similar transaction and (y) repayment, repurchase or refinancing of Indebtedness, Disqualified Stock or Preferred Stock with respect to which a notice of repayment (or similar notice), which may be conditional, has been delivered (each transaction referred to in clause (x) and (y), a “Tested Transaction”), in each case for purposes of determining:

(1)

whether any Indebtedness (including Acquired Indebtedness) that is being Incurred or Disqualified Stock or Preferred Stock that is being issued in connection with such Tested Transaction is permitted to be Incurred in compliance with Section 3.3;

(2)

whether any Lien being Incurred in connection with such Tested Transaction or to secure any such Indebtedness is permitted to be Incurred in accordance with Section 3.5 or the definition of “Permitted Liens”;

(3)

whether any other transaction undertaken or proposed to be undertaken in connection with such Tested Transaction (including any Restricted Payments, dispositions, or designations of Restricted Subsidiaries or Unrestricted Subsidiaries) complies with the covenants or agreements contained in this Indenture or the Notes;

(4)

any calculation of the ratios, baskets or financial metrics, including Fixed Charge Coverage Ratio, Consolidated Total Debt Ratio, Consolidated Senior Secured Debt Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets, and/or Pro Forma Cost Savings and baskets determined by reference to Consolidated Net Income, Consolidated EBITDA or Consolidated Net Tangible Assets and, whether a Default or Event of Default exists in connection with such event or any of the foregoing; and

(5)

whether any condition precedent to the Incurrence of Indebtedness (including Acquired Indebtedness) or Liens, or issuance of Disqualified Stock or Preferred Stock, in each case that is being Incurred in connection with such Tested Transaction is satisfied,

-48-

at the option of the Lux Co-Issuer, any of its Restricted Subsidiaries, any direct or indirect parent of the Lux Co-Issuer, any successor entity of any of the foregoing or a third party (the “Testing Party”), the date of declaration of such Restricted Payment, the date that the definitive agreement for such Restricted Payment, Investment, acquisition, merger, amalgamation or similar transaction is entered into, the date a public announcement of such Restricted Payment, Investment, acquisition, merger, amalgamation or similar transaction is made or the date of any notice, which may be conditional, of such repayment, repurchase or refinancing of Indebtedness, Disqualified Stock or Preferred Stock is given to the holders of such Indebtedness, Disqualified Stock or Preferred Stock (any such date, the “Transaction Commitment Date”) may be used as the applicable date of determination, as the case may be, in each case with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of “Pro Forma Basis” or “Consolidated EBITDA.” For the avoidance of doubt, if the Testing Party elects to use the Transaction Commitment Date as the applicable date of determination in accordance with the foregoing, (a) any fluctuation or change in the (i) Fixed Charge Coverage Ratio, Consolidated Total Debt Ratio, Consolidated Senior Secured Debt Ratio, Consolidated Net Income, Consolidated EBITDA, Consolidated Net Tangible Assets and/or Pro Forma Cost Savings of the Lux Co-Issuer and (ii) the applicable exchange rate utilized in calculating compliance with any dollar-based provision of this Indenture, from the Transaction Commitment Date to the date of consummation of such Tested Transaction will not be taken into account for purposes of determining whether any Indebtedness or Lien that is being incurred in connection with such Tested Transaction, or in connection with compliance by the Lux Co-Issuer or any of its Restricted Subsidiaries with any other provision of this Indenture or the Notes or any other transaction undertaken in connection with such Tested Transaction, is permitted to be Incurred, (b) if financial statements for one or more subsequent fiscal quarters shall have become available, the Testing Party may elect, in its sole discretion, to re-determine all such baskets, ratios and financial metrics on the basis of such financial statements, in which case such date of redetermination shall thereafter be deemed to be the applicable Transaction Commitment Date for purposes of such baskets, ratios and financial metrics, (c) if any ratios or financial metrics improve or baskets increase as a result of such fluctuations, such improved ratios, financial metrics or baskets may be utilized, (d) until such Tested Transaction is consummated or such definitive agreements are terminated, such Tested Transaction and all transactions proposed to be undertaken in connection therewith (including the incurrence of Indebtedness, issuance of Disqualified Stock or Preferred Stock and Liens) will be given pro forma effect when determining compliance of other transactions (including the incurrence of Indebtedness, issuance of Disqualified Stock or Preferred Stock and Liens unrelated to such Tested Transaction) that are consummated after the Transaction Commitment Date and on or prior to the date of consummation of such Tested Transaction and any such transactions (including any incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock and the use of proceeds thereof) will be deemed to have occurred on the Transaction Commitment Date and deemed to be outstanding thereafter for purposes of calculating any baskets, ratios or financial metrics under this Indenture after the Transaction Commitment Date and before the date of consummation of such Tested Transaction and (e) Consolidated Interest Expense for purposes of the Fixed Charge Coverage Ratio will be calculated using an assumed interest rate based on the indicative interest rate as reasonably determined by the Lux Co-Issuer in good faith. In addition, this Indenture will provide that compliance with any requirement relating to the absence of a Default or Event of Default may be determined as of the Transaction Commitment Date and not as of any later date as would otherwise be required under this Indenture.

(b) Notwithstanding anything in this Indenture to the contrary unless the Lux Co-Issuer elects otherwise, if, on any date, the Lux Co-Issuer or its Restricted Subsidiaries (A) Incurs Indebtedness or any Lien, issues Disqualified Stock or Preferred Stock or undertakes any other transaction or series of transaction as permitted by a ratio-based or ratio-referent basket and (B) Incurs Indebtedness or any Lien, issues Disqualified Stock or Preferred Stock or undertakes any other transaction or series of related transactions under a non-ratio-based or ratio-referent basket, then the applicable ratio will be calculated on such date with respect to any Incurrence, issuance or transaction or series of related transactions under the applicable ratio-based or ratio-referent basket without giving effect to the Incurrence, issuance or transaction or series of related transactions under such non-ratio-based or non-ratio-referent basket.

-49-

(c) If Indebtedness originally incurred or Disqualified Stock or preferred stock originally issued in reliance upon a percentage of Consolidated EBITDA or under a ratio-based or ratio-referent basket of the definition of “Permitted Debt” is being refinanced under such ratio-based or ratio-referent basket and such refinancing would cause the maximum amount of Indebtedness, Disqualified Stock or preferred stock thereunder to be exceeded at such time, then such refinancing will nevertheless be permitted thereunder and such additional Indebtedness, Disqualified Stock or preferred stock will be deemed to have been incurred, and permitted to be incurred, under such ratio-based or ratio-referent basket so long as the principal amount or the liquidation preference of such refinancing Indebtedness, Disqualified Stock or preferred stock does not exceed an amount equal to the principal amount or liquidation preference of Indebtedness, Disqualified Stock or preferred stock being refinanced plus Refinancing Expenses in connection with such refinancing.

(d) For purposes of determining the maturity date of any Indebtedness, customary bridge loans that are subject to customary conditions (including no payment or bankruptcy event of default) that would either automatically be extended as, converted into or required to be exchanged for permanent refinancing shall be deemed to have the maturity date as so extended, converted or exchanged.

(e) For purposes hereof, the “Maximum Fixed Repurchase Price” of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined reasonably and in good faith by the Lux Co-Issuer.

(f) Notwithstanding anything to the contrary herein, so long as an action was taken (or not taken) in reliance upon a basket, ratio or financial metric that was calculated or determined in good faith by a responsible financial or accounting officer of a Testing Party based upon financial information available to such officer at such time and such action (or inaction) was permitted hereunder at the time of such calculation or determination, any subsequent restatement, modification or adjustments made to such financial information (including any restatement, modification or adjustment that would have caused such basket or ratio to be exceeded as a result of such action or inaction) shall not result in any Default or Event of Default.

(g) To the extent the date of any delivery of any document required to be delivered pursuant to any provision of this Indenture falls on a day that is not a Business Day, the applicable date of delivery shall be deemed to be the next succeeding Business Day.

ARTICLE II

The Notes

SECTION 2.1. Form and Dating.

(a) The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part hereof. The Notes may have notations, legends or endorsements approved as to form by the Issuers, and required by law, securities exchange rule, agreements to which the Issuers are subject or usage. Each Note shall be dated the date of its authentication. The Notes shall be issuable only in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

-50-

(b) The Notes shall initially be issued in the form of one or more Global Notes and the Depositary, its nominees, and their respective successors, shall act as the depositary with respect thereto. Each Global Note (i) shall be registered in the name of the Depositary for such Global Note or the nominee of such Depositary, (ii) shall be delivered by the Trustee to such Depositary or held by the Trustee as Notes Custodian for the Depositary pursuant to such Depositary’s instructions, and (iii) shall bear a Global Note Legend in substantially the following form:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”), TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

(c) Except as permitted by Section 2.6(g), any Note not registered under the Securities Act shall bear the following Private Placement Legend on the face thereof:

-51-

RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE)] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE ISSUERS OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF SECURITIES OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

-52-

“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE BY SUCH HOLDER WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAW, AND NONE OF THE ISSUERS, ANY INITIAL PURCHASER, ANY GUARANTOR OR ANY OF THEIR RESPECTIVE AFFILIATES IS ACTING AS ITS FIDUCIARY, OR IS BEING RELIED UPON BY IT FOR ANY INVESTMENT ADVICE, WITH RESPECT TO THE DECISION TO ACQUIRE AND HOLD THIS NOTE.

(d) The Temporary Regulation S Global Note shall bear a legend in substantially the following form:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S, ONLY (A) TO THE ISSUERS OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF SECURITIES OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF

-53-

AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

BY ITS ACQUISITION OF THIS NOTE, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS NOTE CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, “SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE BY SUCH HOLDER WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAW, AND NONE OF THE ISSUERS, ANY INITIAL PURCHASER, ANY GUARANTOR OR ANY OF THEIR RESPECTIVE AFFILIATES IS ACTING AS ITS FIDUCIARY, OR IS BEING RELIED UPON BY IT FOR ANY INVESTMENT ADVICE, WITH RESPECT TO THE DECISION TO ACQUIRE AND HOLD THIS NOTE.

Members of, or Participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian and the Depositary may be treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee as the absolute owner of the Global Note for all purposes whatsoever, including but not limited to notices and payments. Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. Notwithstanding anything to the contrary contained herein, any notice to be delivered to the Depositary (including, but not limited to, a notice of redemption) may be delivered electronically by the Trustee or the Issuers in accordance with the Applicable Procedures.

SECTION 2.2. Form of Execution and Authentication. An Officer shall sign the Notes for each of the Issuers by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid.

-54-

A Note shall not be entitled to any benefit under this Indenture or valid for any purpose until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate (i) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $675,000,000, and (ii) subject to compliance with Section 3.3, one or more series of Notes (“Additional Notes”) for original issue after the Issue Date (such Notes to be substantially in the form of Exhibit A) in an unlimited amount, in each case upon written order of each of the Issuers signed by an Officer of each of the Issuers (an “Authentication Order”), which Authentication Order shall, in the case of any issuance of Additional Notes, certify that such issuance is in compliance with Section 3.3. In addition, each such Authentication Order shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated, whether the securities are to be Initial Notes or Additional Notes and the aggregate principal amount of Notes outstanding on the date of authentication, and shall further specify the amount of such Notes to be issued as Global Notes or Definitive Notes. Such Notes shall initially be in the form of one or more Global Notes, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Notes to be issued, (ii) shall be registered in the name of the Depositary or its nominee and (iii) shall be held by the Trustee as Notes Custodian.

The Issuers shall have the right to designate the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Notes, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Initial Notes. Additional Notes that differ with respect to maturity date, interest rate or optional redemption provisions from the Initial Notes will constitute a different series of Notes from the Initial Notes. Additional Notes that have the same maturity date, interest rate and optional redemption provisions as the Initial Notes will be treated as the same series as the Initial Notes unless otherwise designated by the Issuers; provided that a separate CUSIP or ISIN will be issued for any Additional Notes unless the Initial Notes and such Additional Notes are treated as “fungible” for U.S. federal income tax purposes. Except as otherwise provided in Section 9.2(a), the Initial Notes and any Additional Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes shall have the right to vote or consent as a separate class on any matter. The Issuers shall also have, subject to the provisions of Section 9.2(a), the right to vary the application of the provisions of this Indenture to any series of Additional Notes.

The Initial Notes and any Additional Notes shall be resold initially only to (A) QIBs and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Notes and Additional Notes may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and institutional “accredited investors” (as defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who are not QIBs (“IAIs”) in accordance with Rule 501 of the Securities Act in accordance with the procedures described herein.

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuers or any Affiliate of the Issuers.

-55-

transfer and exchange and, upon written request from the Issuers, the Registrar shall provide the Issuers with a copy of such register to enable them to maintain a register of the Notes at their registered offices, and in particular for the Lux Co-Issuer to comply with article 470-1 of the Luxembourg law on commercial companies dated August 10, 1915, as amended. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent. The Issuers may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder. The Issuers shall notify the Trustee in writing and the Trustee shall notify the Holders of the name and address of any Agent not a party to this Indenture. The Issuers or any of their Subsidiaries may act as Paying Agent, Registrar or co-registrar. The Issuers shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions hereof that relate to such Agent. The Issuers shall notify the Trustee in writing of the name and address of any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.6.

The Issuers initially appoint the Trustee as Registrar and Paying Agent with respect to the Notes and as Notes Custodian with respect to the Global Notes.

SECTION 2.4. Paying Agent to Hold Money in Trust. The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, and interest on the Notes, and shall notify the Trustee in writing of any Default by the Issuers in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by such Paying Agent to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than either of the Issuers) shall have no further liability for the money delivered to the Trustee. If either of the Issuers acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes.

SECTION 2.5. Lists of Holders of the Notes. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, including the aggregate principal amount of the Notes held by each thereof, and the Issuers shall otherwise comply with TIA § 312(a).

SECTION 2.6. Transfer and Exchange.

-56-

Definitive Notes prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or (iii) upon request of the Trustee or Holders of a majority of the aggregate principal amount of outstanding Notes if there shall have occurred and be continuing an Event of Default with respect to the Notes. In any such case, the Issuers shall notify the Trustee in writing that, upon surrender by the Participants and Indirect Participants of their interests in such Global Note, certificated Notes shall be issued to each Person that such Participants, Indirect Participants and the Depositary jointly identify as being the beneficial owner of the related Notes. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.6(a). However, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.6(b) or (c) below.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions hereof and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth in this Indenture to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with the applicable subparagraphs below.

(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, no transfer of beneficial interests in a Temporary Regulation S Global Note may be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser) unless permitted by applicable law and made in compliance with Sections 2.6(b)(ii) and (iii) below. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.6(b)(i) unless specifically stated above.

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.6(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase, or (B) if Definitive Notes are at such time permitted to be issued pursuant to this Indenture, (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Temporary Regulation S Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.6(i) below.

-57-

(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.6(b)(ii) above and the Registrar (with a copy to the Trustee) receives the following:

(A) if the transferee shall take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transferee shall take delivery in the form of a beneficial interest in the Temporary Regulation S Global Note or the Permanent Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transferee shall take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, if applicable.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.6(b)(ii) above, and

(A) the Registrar (with a copy to the Trustee) receives the following:

(y) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(z) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuers so request or if the Applicable Procedures so require, an Opinion of Counsel of (or on behalf of) the Holder or the Issuers (except in the case the Issuers have so requested) in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to subparagraph (A) above at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (A) above.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

-58-

(i) Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes. Subject to Section 2.6(a), if any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then upon receipt by the Registrar (with a copy to the Trustee) of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, if applicable;

(F) if such beneficial interest is being transferred to the Issuers or any of their Subsidiaries, a certificate in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof;

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.6(i) below, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate a Restricted Definitive Note in the appropriate principal amount. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

-59-

(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.6(c)(1)(A) and (C) hereof, a beneficial interest in the Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(iii) Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Unrestricted Definitive Notes. Subject to Section 2.6(a), a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

(A) the Registrar (with a copy to the Trustee) receives the following:

(y) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(z) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof,

(iv) Transfer and Exchange of Beneficial Interests in Unrestricted Global Notes for Unrestricted Definitive Notes. Subject to Section 2.6(a), if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.6(b)(ii) above, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.6(i) below, and the Issuers shall execute and upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate and deliver to the Person designated in the certificate an Unrestricted Definitive Note in the appropriate principal amount. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Unrestricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(i) Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar (with a copy to the Trustee) of the following documentation:

-60-

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an IAI in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

(F) if such Restricted Definitive Note is being transferred to the Issuers or any of their Subsidiaries, a certificate in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.

(ii) Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

(A) the Registrar (with a copy to the Trustee) receives the following:

(y) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

-61-

(z) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.6(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Transfer and Exchange of Unrestricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from an Unrestricted Definitive Note or a Restricted Definitive Note, as the case may be, to a beneficial interest is effected pursuant to (d)(ii)(A) or (d)(iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Unrestricted Definitive Notes or Restricted Definitive Notes, as the case may be, so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.6(e).

(i) Transfer of Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer shall be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transfer shall be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

-62-

(C) if the transfer shall be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including, if the Issuers so request, a certification and/or Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act.

(ii) Transfer and Exchange of Restricted Definitive Notes for Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if

(A) the Registrar (with a copy to the Trustee) receives the following:

(y) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(z) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the applicable certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (A), if the Registrar or the Issuers so request, an Opinion of Counsel of (or on behalf of) the Holder or the Issuers (except in the case the Issuers so request) in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained in this Indenture and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(iii) Transfer of Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) Temporary Regulation S Global Note.

(i) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Temporary Regulation S Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided.

(ii) During the Restricted Period, beneficial ownership interests in Temporary Regulation S Global Notes may only be sold, pledged or transferred (A) to the Issuers, (B) in an offshore transaction in accordance with Rule 904 of Regulation S (other than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global Note) or (C) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States; and beneficial interests in a 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the Trustee a written certificate to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).

-63-

(iii) Within a reasonable period after expiration or termination of the Restricted Period, beneficial interests in each Temporary Regulation S Global Note shall be exchanged for beneficial interests in a Permanent Regulation S Global Note upon delivery to the Depositary of the certification of compliance and the transfer of applicable Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of the corresponding Permanent Regulation S Global Note, the Trustee shall cancel the corresponding Temporary Regulation S Global Note. The aggregate principal amount of a Temporary Regulation S Global Note and a Permanent Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(iv) Notwithstanding anything to the contrary in this Section 2.6, a beneficial interest in the Temporary Regulation S Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(g) Private Placement Legend.

(i) Except as permitted by subparagraph (ii) below, each Restricted Global Note and each Restricted Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the Private Placement Legend.

(ii) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.6 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(h) Global Note Legend. Each Global Note shall bear the Global Note Legend.

(i) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(j) General Provisions Relating to Transfers and Exchanges.

(i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.2 or at the Registrar’s request.

-64-

(ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.2, 2.10, 3.7, 3.9, 5.7, 5.8 and 9.4).

(iii) [Reserved].

(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits hereof, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(v) Neither the Registrar nor the Issuers shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business on a Business Day 15 days before the delivery of a notice of redemption of Notes and ending at the close of business on the day of such delivery, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2.

(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile or electronically.

(ix) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or Indirect Participants) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(x) Neither the Trustee, the Issuers nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.

-65-

or made only to or upon the order of the registered holders (which shall be the Depositary, or a nominee of the Depositary in the case of a Global Note). The rights of beneficial owners in a Global Note shall be exercised only through the Depositary, subject to the Applicable Procedures. The Trustee, the Paying Agent and the Registrar shall be entitled to rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. The Trustee, the Paying Agent and the Registrar shall be entitled to deal with the Depositary and any nominee thereof, that is the registered holder of any Global Note for all purposes of this Indenture relating to such Global Note (including the payment of principal, premium, if any, and interest and Additional Amounts, if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Note) as the sole holder of such Global Note and shall have no obligations to the beneficial owners thereof.

(xii) Affiliates of the Issuers, including investment funds affiliated with the Sponsor, may acquire, hold and dispose of the Notes and exercise voting, consent and other similar rights with respect to such Notes (subject to the express restrictions contained in this Indenture).

SECTION 2.7. Replacement Notes. If any mutilated Note is surrendered to the Trustee, or the Issuers and the Issuers and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements for replacements of Notes are met. The Holder must supply indemnity or security sufficient in the judgment of the Trustee (with respect to the Trustee) and the Issuers (with respect to the Issuers) to protect the Issuers, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced. The Issuers and the Trustee may charge for their fees and expenses in replacing a Note including amounts to cover any tax, assessment, fee or other governmental charge that may be imposed in relation thereto.

Every replacement Note is an obligation of the Issuers.

SECTION 2.8. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding.

If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

If the principal amount of any Note is considered paid under Section 3.1 hereof, it shall cease to be outstanding and interest on it shall cease to accrue.

Subject to Section 2.9, a Note does not cease to be outstanding because either of the Issuers, a Subsidiary of either of the Issuers or an Affiliate of either of the Issuers holds the Note.

SECTION 2.9. Treasury Notes. In determining whether the Holders of the requisite majority of outstanding Notes have concurred in any request, demand, authorization, direction, notice, waiver or consent (other than in respect of any action pursuant to Section 9.2(a), which requires the consent of each Holder of an affected Note), Notes owned by the Issuers, any Subsidiary of either of the Issuers or any Affiliate of either of the Issuers shall be disregarded and considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, waiver or consent, only Notes which a Trust Officer actually knows to be owned by the Issuers, any Subsidiary of either of the Issuers, or any Affiliate of either of the Issuers shall be considered as not outstanding. Upon request of the Trustee, the Issuers shall promptly furnish to the Trustee an Officer’s Certificate listing and identifying all Notes, if any, known by the Issuers to be owned or held by or for the account of any of the above-described persons, and the Trustee shall be entitled to accept such Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.

-66-

SECTION 2.10. Temporary Notes. Until Definitive Notes are ready for delivery, the Issuers may prepare and the Trustee shall upon receipt of an Authentication Order authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate Definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as Definitive Notes.

SECTION 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of all canceled Notes in its customary manner (subject to the record retention requirements of the Exchange Act and the Trustee), and upon the written request of the Issuers, the Trustee shall deliver certification of such cancellation to the Issuers. The Issuers may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation.

SECTION 2.12. Payment of Interest; Defaulted Interest. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the regular Record Date for such interest at the office or agency of the Issuers maintained for such purpose pursuant to Section 2.3.

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Issuers, at their election in each case, as provided in clause (a) or (b) below:

-67-

the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 12.1, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

(b) The Issuers may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Issuers to the Trustee of the proposed payment pursuant to this clause (b), such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13. CUSIP and ISIN Numbers. The Issuers in issuing the Notes may use “CUSIP” and/or “ISIN” numbers (if then generally in use). The Trustee shall not be responsible for the use of CUSIP or ISIN numbers, and the Trustee makes no representation as to their correctness as printed on any Note or notice to Holders. The Issuers shall promptly notify the Trustee in writing of any change in the CUSIP or ISIN numbers. A separate CUSIP or ISIN number will be issued for any Additional Notes, unless (i) the Initial Notes and such Additional Notes have the same maturity date, interest rate and optional redemption provisions and are treated as “fungible” for U.S. federal income tax purposes, (ii) both the Initial Notes and such Additional Notes are issued in the same series (as set forth in Section 2.2 without (or with less than a de minimis amount of) original issue discount for U.S. federal income tax purposes or (iii) another then-recognized identifier is used.

SECTION 2.14. [Reserved.]

SECTION 2.15. Additional Amounts. All payments made by any Issuer or any Guarantor or any successor in interest to any of the foregoing (each, a “Payor”) on or with respect to the Notes or any Guarantee will be made without withholding or deduction for, or on account of, any present or future tax, duty, levy, impost, assessment or other similar governmental charge (collectively, “Taxes”) unless such withholding or deduction is required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of:

(a) any jurisdiction (other than the United States or any political subdivision or governmental authority thereof or therein having the power to tax) from or through which payment on the Notes or any Guarantee is made by such Payor, or any political subdivision or governmental authority thereof or therein having the power to tax; or

(b) any other jurisdiction (other than the United States or any political subdivision or governmental authority thereof or therein having the power to tax) in which a Payor that actually makes a payment on the Notes or its Guarantee is organized, or otherwise considered to be a resident for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax

-68-

(each of clauses (a) and (b), a “Relevant Taxing Jurisdiction”), will at any time be required from any payments made with respect to the Notes or any Guarantee, including payments of principal, redemption price, interest or premium, if any, the Payor will pay (together with such payments) such additional amounts (the “Additional Amounts”) as may be necessary in order that the net amounts received in respect of such payments by the Holders, the Trustee or any Agent, as the case may be, after such withholding or deduction (including any such deduction or withholding from such Additional Amounts), will not be less than the amounts that would have been received in respect of such payments on the Notes or the Guarantees in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable for or on account of:

(i) any Taxes that would not have been so imposed or levied but for the existence of any present or former connection between the relevant Holder or beneficial owner of the Note (or between a fiduciary, settlor, beneficiary, partner, member or shareholder of, or possessor of power over, the relevant Holder, if such Holder is an estate, nominee, trust, partnership, limited liability company or corporation) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) but excluding, in each case, any connection arising solely from the acquisition, ownership or holding of such Notes or the receipt of any payment or exercise of any right in respect thereof;

(ii) any Taxes that would not have been so imposed or levied if the Holder or beneficial owner of the Note had complied with a request in writing of the Payor (such request being made at a time that would enable such holder acting reasonably to comply with that request) to make a declaration of nonresidence or any other claim or filing or satisfy any certification, identification, information or reporting requirement for exemption from, or reduction in the rate of, withholding to which it is entitled (provided that such declaration of nonresidence or other claim, filing or requirement is required by the applicable law, treaty, regulation or administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold all or a part of any such Taxes);

(iii) any Taxes that are payable otherwise than by withholding from a payment on the Notes or any Guarantee;

(iv) any estate, inheritance, gift, sales, excise, transfer, personal property or similar Taxes;

(v) any Taxes imposed pursuant to the Luxembourg law dated 23 December, 2005, introducing a withholding tax on certain interest payments made to Luxembourg resident individuals;

(vi) any Taxes payable under Sections 1471 through 1474 of the Code, as of the date of the Offering Memorandum (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant thereto, and any intergovernmental agreements implementing the foregoing (including any legislation or other official guidance relating to such intergovernmental agreements (“FATCA”); or

(vii) any combination of the above.

-69-

Such Additional Amounts will also not be payable (x) if the payment could have been made without such deduction or withholding if the beneficiary of the payment had presented the Note for payment (where presentation is required) within 30 days after the relevant payment was first made available for payment to the Holder or (y) where, had the beneficial owner of the Note been the Holder, such beneficial owner would not have been entitled to payment of Additional Amounts by reason of any of clauses (i) through (vii) inclusive above.

The Payor will (1) make any required withholding or deduction and (2) remit the full amount deducted or withheld to the relevant taxing authority of the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each relevant taxing authority of each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies to the Trustee. If, notwithstanding the efforts of such Payor to obtain such receipts, the same are not obtainable, such Payor will provide the Trustee with other reasonable evidence. Such receipts or other evidence will be made available by the Trustee to Holders on written request.

If any Payor will be obligated to pay Additional Amounts under or with respect to any payment made on the Notes, at least 30 days prior to the date of such payment, the Payor will deliver to the Trustee and the Paying Agent an Officer’s Certificate stating the fact that Additional Amounts will be payable and the amount so payable and such other information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant payment date (unless such obligation to pay Additional Amounts arises less than 45 days prior to the relevant payment date, in which case the Payor shall deliver such Officer’s Certificate and such other information as promptly as practicable after the date that is 30 days prior to the payment date, but no less than five Business Days prior thereto, and otherwise in accordance with the requirements of the Depositary). The Trustee shall be entitled to rely solely on such Officer’s Certificate as conclusive evidence that such payments are necessary.

Wherever in this Indenture, the Notes or any Guarantee there is mention of, in any context:

(1) the payment of principal;

(2) redemption prices or purchase prices in connection with a redemption or purchase of Notes;

(3) interest; or

(4) any other amount payable on or with respect to any of the Notes or any Guarantee;

such reference shall be deemed to include payment of Additional Amounts as described in this Section 2.15 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

The Payor will pay any present or future stamp, court or documentary Taxes, or any other excise, property or similar Taxes that arise in any Relevant Taxing Jurisdiction from the execution, delivery, issuance, initial resale, registration or enforcement of any Notes, this Indenture or any other document or instrument in relation thereto (other than a transfer of the Notes), except regarding Luxembourg registration duties (droit d’enregistrement) for any Luxembourg Taxes payable due to a registration, submission or filing by a party of any Notes, this Indenture or any other document or instrument in relation thereto where such registration, submission or filing is or was not required to maintain or preserve the rights of the party under such documents. The foregoing obligations will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for Tax purposes or any political subdivision or taxing authority or agency thereof or therein.

-70-

SECTION 2.16. Conversion of Currency. The Dollar is the sole currency of account and payment for all sums payable by the Issuers or any Guarantor under or in connection with the Notes, this Indenture and the Guarantees, including damages. Any amount with respect to the Notes, Indenture or Guarantees received or recovered in a currency other than Dollars, whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuers or any Guarantor or otherwise by any Holder or by the Trustee, in respect of any sum expressed to be due to it from the Issuers or any Guarantor will only constitute a discharge to the Issuers or any Guarantor to the extent of the Dollar amount that the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).

If that Dollar amount is less than the Dollar amount expressed to be due to the recipient or the Trustee under the Notes, the Issuers and each Guarantor will indemnify such recipient and/or the Trustee against any loss sustained by it as a result. In any event, the Issuers and each Guarantor will indemnify the recipient and/or the Trustee against the cost of making any such purchase. For the purposes of this currency indemnity provision, it will be prima facie evidence of the matter stated therein, for such recipient (with respect to itself), the holder of a Note (with respect to itself) or the Trustee (with respect to itself) to certify in a manner satisfactory to the Issuers (indicating the sources of information used) the loss it incurred in making any such purchase. These indemnities constitute a separate and independent obligation from the Issuers’ and each Guarantor’s other obligations, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any such recipient, such holder of a Note or the Trustee (other than a waiver of the indemnities set out herein) and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or to the Trustee. For the purposes of determining the amount in a currency other than Dollars, such amount shall be determined using the Exchange Rate then in effect.

ARTICLE III

Covenants

SECTION 3.1. Payment of Notes. The Issuers shall promptly pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if by 10:00 a.m. (New York City time) on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium, if any, and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

The Issuers shall pay interest on overdue principal at the rate specified therefor in the Notes.

Notwithstanding anything to the contrary contained in this Indenture, the Issuers may, to the extent they are required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal or interest payments hereunder. Either Issuer or any other Payor may withhold from any interest payment made on any Note to or for the benefit of any Person who is not a “United States person”, as such term is defined for U.S. federal income tax purposes, U.S. federal withholding tax (including any withholding imposed under FATCA), and pay such withheld amounts to the Internal Revenue Service, unless such Person provides documentation to such Issuer or other Payor such that an exemption from U.S. federal withholding tax (including any withholding imposed under FATCA) would apply to such payment if interest on such Note were treated entirely as income from sources within the United States for U.S. federal income tax purposes.

-71-

SECTION 3.2. Reports and Other Information.

(a) So long as any Notes are outstanding, the Lux Co-Issuer will provide to the Trustee and, upon request, to the Holders a copy of all of the information and reports referred to below:

(i) within 90 days after the end of each fiscal year (or such longer period as may be permitted by the SEC if the Lux Co-Issuer were then subject to SEC reporting requirements as a non-accelerated filer, including under Rule 12b-25 under the Exchange Act), annual audited financial statements for such fiscal year including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with respect to the periods presented and a report on the annual financial statements by the Lux Co-Issuer’s independent registered public accounting firm or the foreign analog thereof (the “Auditor”) (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the Offering Memorandum);

(ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year (or such longer period as may be permitted by the SEC if the Lux Co-Issuer were then subject to SEC reporting requirements as a non-accelerated filer, including under Rule 12b-25 under the Exchange Act), unaudited financial statements for the interim period as of, and for the period ending on, the end of such interim period including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the Offering Memorandum); and

(iii) within the time period specified for filing current reports on Form 8-K by the SEC, current reports that would be required to be filed with the SEC on Form 8-K if the Lux Co-Issuer were required to file such reports for any of the following events: (a) significant acquisitions or dispositions, (b) the bankruptcy of the Lux Co-Issuer or a Significant Subsidiary, (c) the acceleration of any Indebtedness of the Lux Co-Issuer or any Restricted Subsidiary having a principal amount in excess of $75 million, (d) a change in the Issuers’ Auditor, (e) the appointment or departure of the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Chief Operating Officer or President (or persons fulfilling similar duties) of Bermuda Holdco, (f) resignation of a director of Bermuda Holdco on disagreeable terms, (g) change in fiscal year, (h) non-reliance on previously issued financial statements, (i) change of control transactions, (j) entry into material agreements and (k) historical financial statements of an acquired business (relating to transactions required to be reported pursuant to Item 2.01 of Form 8-K to the extent and in the form available to the Lux Co-Issuer (as determined by the Lux Co-Issuer in good faith) if the Lux Co-Issuer were a reporting company under the Exchange Act); provided that no such current report will be required to be furnished if the Lux Co-Issuer determines in its good faith judgment that such event is not material to Holders or to the business, assets, operations, financial position or prospects of the Lux Co-Issuer and its Restricted Subsidiaries, taken as a whole, or if the Lux Co-Issuer determines in its good faith judgment that such disclosure would otherwise cause material competitive harm to the business, assets, operations, financial position or prospects of the Lux Co-Issuer and its Restricted Subsidiaries, taken as a whole; provided, further, that such non-disclosure shall be limited only to those specific provisions that would cause material competitive harm and not the occurrence of the event itself;

-72-

provided, further, however, that in addition to providing such information to the Trustee and upon request, to Holders, the Lux Co-Issuer will, to the extent the requirements set forth in Section 3.2(h) are satisfied, make available to the Holders, bona fide prospective investors in the Notes, bona fide market makers in the Notes affiliated with any Initial Purchaser and bona fide securities analysts (to the extent providing analysis of investment in the Notes) such information by (i) posting to the website of the Lux Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or on a non-public, password-protected website maintained by the Lux Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or a third party, in each case, within 15 days after the time the Lux Co-Issuer would be required to provide such information pursuant to clause (i), (ii) or (iii) above, as applicable, or (ii) otherwise providing substantially comparable availability of such reports (as determined by the Lux Co-Issuer in good faith) (it being understood that, without limitation, making such reports available on Bloomberg or another comparable private electronic information service shall constitute substantially comparable availability).

(b) Notwithstanding the foregoing and for the avoidance of doubt, (i) the Lux Co-Issuer will not be required to furnish any information, certificates or reports required by (A) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K or (B) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (ii) the information and reports referred to in Section 3.2(a) will not be required to contain the separate financial statements or other information contemplated by Rule 3-05, Rule 3-09, Rule 3-10 or Rule 3-16 of Regulation S-X, (iii) the information and reports referred to in Section 3.2(a) shall not be required to present compensation or beneficial ownership information, (iv) the information and reports referred to in Section 3.2(a) shall not be required to include any exhibits required by Item 15 of Form 10-K, Item 6 of Form 10-Q or Item 9.01 of Form 8-K, (v) trade secrets and other proprietary information may be excluded from any disclosures and (vi) no required report will be required to contain any “segment reporting”. If at any time the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer has made a good faith determination to file a registration statement with the SEC with respect to an Equity Offering of such entity’s Capital Stock, the Lux Co-Issuer will still be required to provide reports pursuant to this Section 3.2 but the content of such reports will not be required to disclose any information that, in the good faith view of the Lux Co-Issuer, would violate the securities laws or the SEC’s “gun jumping” rules or otherwise have an adverse effect on such Equity Offering.

(c) For so long as the Lux Co-Issuer has designated certain of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by Section 3.2 will include a reasonably detailed presentation (which need not be audited or reviewed by the Auditors, either on the face of the financial statements or in the footnotes thereto, or in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or other comparable section, of the financial condition and results of operations of the Lux Co-Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Lux Co-Issuer.

(d) In addition, to the extent not satisfied by the foregoing, the Lux Co-Issuer shall agree that, for so long as any Notes are outstanding, the Lux Co-Issuer shall furnish to Holders, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision).

-73-

the Lux Co-Issuer and its consolidated Subsidiaries (“Qualified Reporting Subsidiary”) or (iii) any direct or indirect parent of the Lux Co-Issuer; provided that, if the financial information so furnished relates to such Qualified Reporting Subsidiary of the Lux Co-Issuer or such direct or indirect parent of the Lux Co-Issuer, the same is accompanied by consolidating information, which may be posted to the website of the Lux Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or on a non-public, password-protected website maintained by the Lux Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or a third party, that explains in reasonable detail the differences between the information relating to such Qualified Reporting Subsidiary or such parent entity (as the case may be), on the one hand, and the information relating to the Lux Co-Issuer and its Restricted Subsidiaries on a standalone basis, on the other hand. For the avoidance of doubt, the consolidating information referred to in the proviso in the preceding sentence need not be audited or reviewed by the Auditors. We expect to rely upon the second preceding sentence to provide financial statements, information and other documents with respect to a direct or indirect parent of the Lux Co-Issuer for any fiscal period ending after the Issue Date.

(f) The Lux Co-Issuer will be deemed to have satisfied the information and reporting requirements of Section 3.2(a) if (i) the Lux Co-Issuer or any Qualified Reporting Subsidiary of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer has filed reports or registration statements containing such information (including the information required pursuant to the first sentence of Section 3.2(e), which, for the avoidance of doubt, need not be filed with the SEC via EDGAR to the extent it is otherwise provided to Holders pursuant to this covenant) with the SEC via the EDGAR (or successor) filing system within the applicable time periods after giving effect to any extensions permitted by the SEC and that are publicly available or (ii) with respect to Holders only, the Lux Co-Issuer or such Qualified Reporting Subsidiary or such parent entity has made such reports available electronically (including by posting to a non-public, password-protected website as provided above) pursuant to this covenant.

(g) So long as Notes are outstanding, the Lux Co-Issuer will also:

(i) promptly after providing the annual and quarterly reports required by Sections 3.2(a)(i) and (ii), hold a conference call to discuss such reports and the results of operations for the relevant reporting period; and

(ii) announce by press release or post to the website of the Lux Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or on a non-public, password-protected website maintained by the Lux Co-Issuer, the U.S. Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or a third party, which may require a confidentiality acknowledgment (but not restrict the recipients of such information from trading securities of the Issuers or their respective affiliates), prior to the date of the conference call required to be held in accordance with Section 3.2(g)(i), the time and date of such conference call and either all information necessary to access the call or informing the Holders, bona fide prospective investors in the Notes, bona fide market makers in the Notes affiliated with any Initial Purchaser and bona fide securities analysts (to the extent providing analysis of an investment in the Notes) how they can obtain such information, including, without limitation, the applicable password or other login information; provided, however, that the Lux Co-Issuer will be deemed to have satisfied the requirements of Section 3.2(a) if any direct or indirect parent of the Lux Co-Issuer holds a conference call to discuss such reports and the results of operations for the relevant reporting period.

-74-

(h) Any person who requests or accesses such financial information or seeks to participate in any conference calls required by this covenant may be required to provide its email address, employer name and other information reasonably requested by the Issuers and represent to the Issuers (to the Issuers’ reasonable good faith satisfaction) that:

(i) it is a Holder, a beneficial owner of the Notes, a bona fide prospective investor in the Notes, a bona fide market maker in the Notes affiliated with any Initial Purchaser or a bona fide securities analyst providing an analysis of investment in the Notes;

(ii) it will not use the information in violation of applicable securities laws or regulations;

(iii) it will keep such provided information confidential and will not communicate the information to any Person; and

(iv) it (a) will not use such information in any manner intended to compete with the business of the Lux Co-Issuer and its Subsidiaries and (b) is not a Person (which includes such Person’s Affiliates) that (i) is principally engaged in a Similar Business or (ii) derives a significant portion of its revenues from operating or owning a Similar Business.

(i) Delivery of reports, information and documents (including without limitation reports contemplated under this Section 3.2) to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including the Issuers’ compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

(j) Notwithstanding anything herein to the contrary, any failure to comply with this Section 3.2 shall be automatically cured if the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, as the case may be, provides all required reports to the Holders with a copy to the Trustee or files all required reports with the SEC via the EDGAR filing system.

SECTION 3.3. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.

(a) (1) The Lux Co-Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock, and (2) the Lux Co-Issuer will not permit any of its Non-Guarantor Subsidiaries to issue any shares of Preferred Stock; provided, however, that the Lux Co-Issuer and any Restricted Subsidiary may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Non-Guarantor Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio for the Lux Co-Issuer, as of the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued, is greater than or equal to 2.00 to 1.00 (“Ratio Debt”); provided, further, that the aggregate amount of Indebtedness (including Acquired Indebtedness) Incurred and Disqualified Stock or Preferred Stock that may be issued pursuant to the foregoing by Non-Guarantor Subsidiaries shall not exceed the greater of (x) $225 million and (y) 15.5% of Consolidated Net Tangible Assets, at any one time outstanding.

(b) The foregoing limitations will not apply to (collectively, “Permitted Debt”):

-75-

(i) the Incurrence by the Lux Co-Issuer or its Restricted Subsidiaries of Indebtedness under any Credit Agreement, the guarantees thereof and the issuance and creation of letters of credit and bankers’ acceptances and ancillary facilities thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate outstanding principal amount not to exceed the sum of (x) $3,325 million plus (y) an unlimited amount so long as the Consolidated Senior Secured Debt Ratio does not exceed 5.00 to 1.00 (with any Indebtedness Incurred under subclause (x) hereof on the date of determination of the Consolidated Senior Secured Debt Ratio not being included in the calculation of the Consolidated Senior Secured Debt Ratio under this subclause (y) on such date but not, for the avoidance of doubt, excluded from any such calculation made on any such subsequent date); provided that solely for the purpose of calculating the Consolidated Senior Secured Debt Ratio under this clause (i), any outstanding Indebtedness Incurred under this clause (i) that is unsecured or secured on a junior basis shall nevertheless be deemed to be secured by a Lien;

(ii) the Incurrence by the Issuers and the Guarantors of Indebtedness represented by the Notes (not including any Additional Notes) and the Guarantees thereof, as applicable;

(iii) (x) Indebtedness and Disqualified Stock of the Lux Co-Issuer and its Restricted Subsidiaries and Preferred Stock of its Restricted Subsidiaries existing on the Issue Date or on any Reversion Date (excluding, in each case, Indebtedness described in clause (i) or (ii) above that is Incurred or existing (or deemed to be Incurred or existing) on the Issue Date or any Reversion Date, but, for the avoidance of doubt, including all Capitalized Lease Obligations existing on the Issue Date or any Reversion Date) and (y) the Existing Notes and the guarantees thereof;

(iv) Indebtedness (including, without limitation, Capitalized Lease Obligations and mortgage financings as purchase money obligations) Incurred by the Lux Co-Issuer or any of its Restricted Subsidiaries, Disqualified Stock issued by the Lux Co-Issuer or any of its Restricted Subsidiaries and Preferred Stock issued by any of its Restricted Subsidiaries to finance all or any part of the purchase, lease, construction, installation, repair or improvement of property (real or personal), plant or equipment or other fixed or capital assets (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) and Indebtedness, Disqualified Stock or Preferred Stock arising from the conversion of the obligations of the Lux Co-Issuer or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet Indebtedness of the Lux Co-Issuer or such Restricted Subsidiary, in an aggregate principal amount or liquidation preference, including all Indebtedness Incurred and Disqualified Stock or Preferred Stock issued to renew, refund, refinance, replace, defease or discharge any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (iv), not to exceed the greater of (x) $150 million and (y) 10.5% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (iv) or any portion thereof, any Refinancing Expenses (it being understood that any Indebtedness, Disqualified Stock or Preferred Stock Incurred pursuant to this clause (iv) shall cease to be deemed Incurred or outstanding pursuant to this clause (iv) but shall be deemed Incurred and outstanding as Ratio Debt from and after the first date on which the Lux Co-Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness, Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Lux Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification)); provided that Capitalized Lease Obligations Incurred by the Lux Co-Issuer or any Restricted Subsidiary pursuant to this clause (iv) in connection with a Sale/Leaseback Transaction shall not be subject to the foregoing limitation so long as the proceeds of such Sale/Leaseback Transaction are used by the Lux Co-Issuer or such Restricted Subsidiary to permanently repay any Secured Indebtedness of the Lux Co-Issuer or any of the Guarantors;

-76-

(v) Indebtedness Incurred by the Lux Co-Issuer or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments issued in the ordinary course of business, including, without limitation, (x) letters of credit or performance or surety bonds in respect of workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement-type obligations regarding workers’ compensation claims, health, disability or other employee benefits (whether current or former) or property, casualty or liability insurance and (y) guarantees of Indebtedness Incurred by customers in connection with the purchase or other acquisition of equipment or supplies in the ordinary course of business;

(vi) the Incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock arising from agreements of the Lux Co-Issuer or its Restricted Subsidiaries providing for indemnification, earn-outs, adjustment of purchase or acquisition price or similar obligations, in each case, Incurred in connection with the acquisition or disposition of any business, assets or a Subsidiary of either of the Issuers in accordance with the terms of this Indenture, other than guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

(vii) Indebtedness or Disqualified Stock of the Lux Co-Issuer owing to a Restricted Subsidiary; provided that (x) such Indebtedness or Disqualified Stock owing to a Non-Guarantor Subsidiary shall be subordinated in right of payment to the Issuers’ Obligations with respect to this Indenture or the Guarantee of the Guarantors with respect to the Obligations under this Indenture and (y) any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness or Disqualified Stock (except to the Lux Co-Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness or an issuance of such Disqualified Stock not permitted by this clause (vii);

(viii) shares of Preferred Stock or Disqualified Stock of a Restricted Subsidiary or the Lux Co-Issuer issued to the Lux Co-Issuer or another Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary that holds such shares of Preferred Stock or Disqualified Stock of another Restricted Subsidiary or the Lux Co-Issuer ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock or Disqualified Stock (except to the Lux Co-Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock or Disqualified Stock not permitted by this clause (viii);

(ix) Indebtedness of a Restricted Subsidiary or the Lux Co-Issuer owing to the Lux Co-Issuer or another Restricted Subsidiary; provided that (x) if the Lux Co-Issuer, U.S. Co-Issuer or a Guarantor Incurs such Indebtedness owing to a Non-Guarantor Subsidiary, such Indebtedness is subordinated in right of payment to the Issuers’ Obligations with respect to this Indenture or the Guarantee of such Guarantor, as applicable, and (y) any subsequent issuance or transfer of any Capital Stock or any other event that results in any Restricted Subsidiary lending such Indebtedness ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Lux Co-Issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness not permitted by this clause (ix);

-77-

(x) Swap Contracts and Cash Management Services Incurred (including, without limitation, in connection with any Qualified Receivables Financing), other than for speculative purposes;

(xi) obligations (including reimbursement obligations with respect to letters of credit or bank guarantees or similar instruments) in respect of customs, self-insurance, performance, bid, appeal and surety bonds and completion guarantees and similar obligations provided by the Lux Co-Issuer or any Restricted Subsidiary;

(xii) Indebtedness or Disqualified Stock of the Lux Co-Issuer or any of its Restricted Subsidiaries and Preferred Stock of any of its Restricted Subsidiaries in an aggregate principal amount or liquidation preference that, when aggregated with the principal amount or liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and Incurred pursuant to this clause (xii), does not exceed the greater of (x) $250 million and (y) 17.0% of Consolidated Net Tangible Assets, at any one time outstanding, plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xii) or any portion thereof, any Refinancing Expenses (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xii) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xii) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Lux Co-Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Lux Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xiii) any guarantee by the Lux Co-Issuer or a Restricted Subsidiary of Indebtedness, Disqualified Stock, Preferred Stock or other obligations of the Lux Co-Issuer or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness, Disqualified Stock, Preferred Stock or other obligations by the Lux Co-Issuer or such Restricted Subsidiary is permitted under the terms of this Indenture;

(xiv) the Incurrence by the Lux Co-Issuer or any of its Restricted Subsidiaries of Indebtedness or Disqualified Stock or the issuance of Preferred Stock by the Lux Co-Issuer or a Restricted Subsidiary that serves to refund, refinance, replace, redeem, repurchase, retire or defease, and is in an aggregate principal amount (or if issued with original issue discount an aggregate issue price) that is equal to or less than, Indebtedness Incurred or Disqualified Stock or Preferred Stock issued as Ratio Debt or permitted under clause (ii), (iii), this clause (xiv), (xv) or (xviii) of this Section 3.3 or subclause (y) of clauses (iv), (xii), (xx), (xxix) or (xxx) of this Section 3.3 (provided that any amounts Incurred under this clause (xiv) as Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to subclause (y) of any of these clauses shall reduce the amount available under such subclause (y) of such clause so long as such Refinancing Indebtedness remains outstanding) or any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to so refund, replace, refinance, redeem, repurchase, retire or defease such Indebtedness, Disqualified Stock or Preferred Stock, plus any Refinancing Expenses (subject to the following proviso, “Refinancing Indebtedness”); provided, however, that such Refinancing Indebtedness:

-78-

or extendable bridge loans or other interim debt, shall be determined by reference to the notes or loans into which such bridge loans or extendable bridge loans or other interim debt are converted or for which such bridge loans or extendable bridge loans or interim debt are exchanged at maturity and will be subject to other customary offers to repurchase or mandatory prepayments upon a change of control, asset sale or event of loss and customary acceleration rights after an event of default);

(2) in the case of any revolving Indebtedness, has a Stated Maturity that is no earlier than the Stated Maturity of the Indebtedness being refunded, refinanced, replaced, redeemed, repurchased or retired (which, in the case of bridge loans or extendable bridge loans or other interim debt, shall be determined by reference to the notes or loans into which such bridge loans or extendable bridge loans or other interim debt are converted or for which such bridge loans or extendable bridge loans or interim debt are exchanged at maturity and will be subject to other customary offers to repurchase or mandatory prepayments upon a change of control, asset sale or event of loss and customary acceleration rights after an event of default);

(3) to the extent that such Refinancing Indebtedness refinances (i) Subordinated Indebtedness, such Refinancing Indebtedness is Subordinated Indebtedness or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness is Disqualified Stock or Preferred Stock, respectively; and

(4) shall not include (x) Indebtedness, Disqualified Stock or Preferred Stock of a Non-Guarantor Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Issuer or a Guarantor, or (y) Indebtedness or Disqualified Stock of the Lux Co-Issuer or Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of an Unrestricted Subsidiary;

provided that subclauses (1) and (2) will not apply to any refunding or refinancing of any Secured Indebtedness;

(xv) (i) Indebtedness, Disqualified Stock or Preferred Stock (x) of the Lux Co-Issuer or any of its Restricted Subsidiaries Incurred or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person or any similar Investment and (y) of any Person that is acquired by the Lux Co-Issuer or any of its Restricted Subsidiaries or merged into or consolidated or amalgamated with the Lux Co-Issuer or a Restricted Subsidiary in accordance with the terms of this Indenture and (ii) Indebtedness Incurred or Disqualified Stock or Preferred Stock issued or, in each case, assumed in anticipation of, or in connection with, an acquisition of any assets, business or Person or any similar Investment; provided, however, that after giving pro forma effect to such acquisition, merger, consolidation or amalgamation and the Incurrence of such Indebtedness, Disqualified Stock or Preferred Stock, either:

(1) the Lux Co-Issuer would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt; or

(2) (x) the Fixed Charge Coverage Ratio of the Lux Co-Issuer is equal to or greater than such ratio immediately prior to giving pro forma effect to such acquisition, merger, consolidation, amalgamation or similar Investment, or (y) the Consolidated Total Debt Ratio of the Lux Co-Issuer is less than or equal to such ratio immediately prior to giving pro forma effect to such acquisition, merger, consolidation, amalgamation or similar Investment;

-79-

(xvi) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;

(xvii) Indebtedness of the Lux Co-Issuer or any Restricted Subsidiary supported by a letter of credit or bank guarantee issued pursuant to any credit facility permitted under this Indenture, so long as such letter of credit has not been terminated and is in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee;

(xviii) Contribution Indebtedness;

(xix) Indebtedness of the Lux Co-Issuer or any Restricted Subsidiary consisting of (x) the financing of insurance premiums or (y) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

(xx) Indebtedness, Disqualified Stock or Preferred Stock of Non-Guarantor Subsidiaries in an aggregate principal amount or liquidation preference, as applicable, not to exceed the greater of (x) $225 million and (y) 15.5% of Consolidated Net Tangible Assets, at any one time outstanding (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xx) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xx) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which such Non-Guarantor Subsidiary could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent such Non-Guarantor Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification)), plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xx) or any portion thereof, any Refinancing Expenses;

(xxi) Indebtedness, Disqualified Stock or Preferred Stock of a joint venture to the Lux Co-Issuer or a Restricted Subsidiary and to the other holders of Equity Interests or participants of such joint venture, so long as the percentage of the aggregate amount of such Indebtedness, Disqualified Stock or Preferred Stock of such joint venture owed to such holders of its Equity Interests or participants of such joint venture does not exceed the percentage of the aggregate outstanding amount of the Equity Interests of such joint venture held by such holders or such participant’s participation in such joint venture;

(xxii) Indebtedness Incurred or Disqualified Stock or Preferred Stock issued in a Qualified Receivables Financing or Qualified Receivables Factoring that is not recourse to the Lux Co-Issuer or any Restricted Subsidiary other than (x) a Receivables Subsidiary or (y) a Person described in the definition of “Factoring Transaction” (except for Standard Securitization Undertakings);

(xxiii) Indebtedness owed on a short-term basis to banks and other financial institutions Incurred in the ordinary course of business of the Lux Co-Issuer and the Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements, including cash management, cash pooling arrangements and related activities to manage cash balances of the Lux Co-Issuer and its Subsidiaries and joint ventures including treasury, depository, overdraft, credit, purchasing or debit card, electronic funds transfer and other cash management arrangements and Indebtedness in respect of netting services, overdraft protection, credit card programs, automatic clearinghouse arrangements and similar arrangements;

-80-

(xxiv) Indebtedness, Disqualified Stock or Preferred Stock consisting of Indebtedness, Disqualified Stock or Preferred Stock issued by the Lux Co-Issuer or any Restricted Subsidiary to future, current or former officers, directors, managers, employees, consultants and independent contractors thereof or any direct or indirect parent thereof, their respective estates, heirs, family members, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer to the extent permitted by Section 3.4;

(xxv) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of business;

(xxvi) Indebtedness Incurred by the Lux Co-Issuer or any Restricted Subsidiary in connection with bankers’ acceptances, discounted bills of exchange, warehouse receipts or similar facilities or the discounting or factoring of receivables for credit management purposes, in each case Incurred or undertaken in the ordinary course of business;

(xxvii) Indebtedness Incurred or Disqualified Stock issued by the Lux Co-Issuer or any Restricted Subsidiary or Preferred Stock issued by any of its Restricted Subsidiaries to the extent that a portion of the net proceeds thereof are or will be applied to satisfy and discharge the Notes in accordance with this Indenture or the Existing Notes in accordance with the Existing Indenture, as applicable;

(xxviii) (x) guarantees Incurred in the ordinary course of business in respect of obligations to suppliers, customers, franchisees, lessors, licensees, sub-licensees and distribution partners and (y) Indebtedness Incurred by the Lux Co-Issuer or a Restricted Subsidiary as a result of leases entered into by the Lux Co-Issuer or such Restricted Subsidiary or any direct or indirect parent of the Lux Co-Issuer in the ordinary course of business;

(xxix) the incurrence by the Lux Co-Issuer or any Restricted Subsidiary of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued on behalf of, or representing guarantees of Indebtedness Incurred or Disqualified Stock or Preferred Stock issued by, joint ventures; provided that the aggregate principal amount or liquidation preference, as applicable, of Indebtedness Incurred or guaranteed or Disqualified Stock or Preferred Stock issued or guaranteed pursuant to this clause (xxix) does not at any one time outstanding exceed the greater of (x) $75 million and (y) 5.0% of Consolidated Net Tangible Assets (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xxix) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xxix) but shall be deemed Incurred, issued and outstanding as Ratio Debt from and after the first date on which the Lux Co-Issuer or such Restricted Subsidiary could have Incurred or guaranteed such Indebtedness or issued or guaranteed such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Lux Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification)), plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xxix) or any portion thereof, any Refinancing Expenses;

-81-

(xxx) Indebtedness, Disqualified Stock or Preferred Stock of the Lux Co-Issuer or a Restricted Subsidiary Incurred to finance or assumed in connection with an acquisition of any assets (including Capital Stock), business or Person in an aggregate principal amount or liquidation preference that does not exceed the greater of (x) $150 million and (y) 10.5% of Consolidated Net Tangible Assets, at any one time outstanding plus, in the case of any refinancing of any Indebtedness, Disqualified Stock or Preferred Stock permitted under this clause (xxx) or any portion thereof, any Refinancing Expenses (it being understood that any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued pursuant to this clause (xxx) shall cease to be deemed Incurred, issued or outstanding pursuant to this clause (xxx) but shall be deemed Incurred or issued and outstanding as Ratio Debt from and after the first date on which the Lux Co-Issuer or such Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness or issued such Disqualified Stock or Preferred Stock as Ratio Debt (to the extent the Lux Co-Issuer or such Restricted Subsidiary is able to Incur any Liens related thereto as Permitted Liens after such reclassification));

(xxxi) Indebtedness, Disqualified Stock or Preferred Stock arising as a result of (the establishment of) a Dutch law fiscal unity for corporate income tax or turnover tax purposes (fiscale eenheid) of which any Restricted Subsidiary is a member; and

(xxxii) Indebtedness, Disqualified Stock or Preferred Stock pursuant to a declaration of joint and several liability used for the purpose of Section 2:403 of the Dutch Civil Code (and any residual liability under such declaration arising pursuant to section 2:404(2) of the Dutch Civil Code).

(c) For purposes of determining compliance with this Section 3.3, in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt or is entitled to be Incurred or issued as Ratio Debt, the Lux Co-Issuer shall, in its sole discretion, at the time of Incurrence or issuance, divide, classify or reclassify, or at any later time divide, classify or reclassify, such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) in any manner that complies with this covenant, provided that all Indebtedness under the Senior Credit Agreement Incurred on or prior to the Issue Date shall be deemed to have been Incurred pursuant to Section 3.3(b)(i) and the Lux Co-Issuer shall not be permitted to reclassify all or any portion of the Indebtedness Incurred on or prior to the Issue Date pursuant to Section 3.3(b)(i). Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest or dividends in the form of additional Indebtedness with the same terms, the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of Disqualified Stock or Preferred Stock of the same class, the accretion of liquidation preference and increases in the amount of Indebtedness, Disqualified Stock or Preferred Stock outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness will not be deemed to be an Incurrence of Indebtedness or issuance of Disqualified Stock or Preferred Stock for purposes of this Section 3.3. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this Section 3.3.

-82-

reborrowed, in whole or in part, from time to time, without further compliance with any ratio-based or ratio-referent component of any provision of this Indenture, or (y) give pro forma effect to the Incurrence of the actual amount drawn under such revolving Indebtedness, delayed draw facility or other committed debt financing, in which case, the ability to Incur the amounts committed to under such Indebtedness will be subject to the ratio-based or ratio-referent basket (to the extent being Incurred pursuant to such ratio) at the time of each such Incurrence. The Lux Co-Issuer hereby elects that on the Issue Date, the entire committed amount of the revolving portion of the Senior Credit Agreement on the Issue Date shall be deemed to have been Incurred under clause (a) of the definition of “Permitted Debt” and not under any ratio-based or ratio-referent basket.

For purposes of determining compliance with any Dollar-denominated restriction on the Incurrence of Indebtedness or the issuance of Disqualified Stock or Preferred Stock, the Dollar-equivalent principal amount or liquidation preference, as applicable, of Indebtedness, Disqualified Stock or Preferred Stock denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term debt, or first committed or first Incurred (whichever yields the lower Dollar-equivalent), in the case of revolving credit debt or debt financing to fund an acquisition, or first issued in the case of Disqualified Stock or Preferred Stock; provided that if such Indebtedness, Disqualified Stock or Preferred Stock is Incurred to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, denominated in a foreign currency, and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount or liquidation preference, as applicable, of such Refinancing Indebtedness does not exceed the principal amount or liquidation preference, as applicable, of such Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, being refinanced (plus any Refinancing Expenses).

The principal amount or liquidation preference, as applicable, of any Indebtedness Incurred or Disqualified Stock or Preferred Stock issued to refinance other Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, if Incurred or issued in a different currency from the Indebtedness, Disqualified Stock or Preferred Stock being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness, Disqualified Stock or Preferred Stock is denominated that is in effect on the date of such refinancing.

SECTION 3.4. Limitation on Restricted Payments.

(a) The Lux Co-Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any payment or distribution on account of the Lux Co-Issuer’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment made in connection with any merger, amalgamation or consolidation involving the Lux Co-Issuer (other than (A) dividends or distributions by the Lux Co-Issuer payable solely in Equity Interests (other than Disqualified Stock) of the Lux Co-Issuer; or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Lux Co-Issuer or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities);

(ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, including in connection with any merger, amalgamation or consolidation;

-83-

(iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness of either of the Issuers or any Guarantor (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness of either of the Issuers or any Guarantor in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under clause (vii) or (ix) of the definition of “Permitted Debt”); or

(iv) make any Restricted Investment;

(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(A) (x) in the case of a Restricted Investment, no Specified Event of Default shall have occurred and be continuing or would occur as a consequence thereof and (y) in the case of all other Restricted Payments, no Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(B) immediately after giving effect to such transaction on a Pro Forma Basis, the Lux Co-Issuer could Incur $1.00 of additional Indebtedness as Ratio Debt; and

(C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Lux Co-Issuer and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clause (i) of Section 3.4(b), but excluding all other Restricted Payments permitted by Section 3.4(b)), is less than the sum of, without duplication;

(1) an amount (which may not be less than zero) equal to 50% of the Consolidated Net Income of the Lux Co-Issuer for the period (taken as one accounting period) beginning on December 30, 2019 to the end of the Lux Co-Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (provided that such amount shall not be less than zero for any fiscal quarter), plus

(2) 100% of the aggregate net proceeds, including cash and the Fair Market Value of assets (other than cash), received by the Lux Co-Issuer after the Issue Date from the issue or sale of Equity Interests of the Lux Co-Issuer (other than Excluded Equity), including such Equity Interests issued upon exercise of warrants or options, plus

(3) 100% of the aggregate amount of contributions to the capital of the Lux Co-Issuer received in cash and the Fair Market Value of assets (other than cash) after the Issue Date (other than Excluded Equity), plus

(4) the principal amount of any Indebtedness, or the liquidation preference or Maximum Fixed Repurchase Price, as the case may be, of any Disqualified Stock, in each case, of the Lux Co-Issuer or any Restricted Subsidiary thereof issued after the Issue Date (other than Indebtedness or Disqualified Stock issued to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Lux Co-Issuer or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Lux Co-Issuer or any Restricted Subsidiary)) that, in each case, has been converted into or exchanged for Equity Interests in the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer (other than Excluded Equity), plus

-84-

(5) 100% of the aggregate amount received by the Lux Co-Issuer or any Restricted Subsidiary in cash and the Fair Market Value of assets (other than cash) received by the Lux Co-Issuer or any Restricted Subsidiary from:

(A) the sale or other disposition (other than to the Lux Co-Issuer or a Restricted Subsidiary of the Lux Co-Issuer) of Restricted Investments made by the Lux Co-Issuer and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Lux Co-Issuer and its Restricted Subsidiaries by any Person (other than the Lux Co-Issuer or any of its Restricted Subsidiaries) and from repayments of loans or advances that constituted Restricted Investments,

(B) the sale (other than to the Lux Co-Issuer or a Restricted Subsidiary or an employee stock ownership plan or trust established by the Lux Co-Issuer or any Restricted Subsidiary (other than to the extent such employee stock ownership plan or trust has been funded by the Lux Co-Issuer or any Restricted Subsidiary)) of the Equity Interests of an Unrestricted Subsidiary, and

(6) in the event any Unrestricted Subsidiary has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Lux Co-Issuer or a Restricted Subsidiary, in each case after the Day 1 Closing Date, the Fair Market Value of the Investment of the Lux Co-Issuer in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to Section 3.4(b)(x) or constituted a Permitted Investment, plus

(7) the aggregate amount of Retained Declined Proceeds since the Issue Date, plus

(8) $150 million.

(b) The foregoing provisions of Section 3.4(a) will not prohibit:

(i) the payment of any dividend or distribution or consummation of any redemption within 60 days after the date of declaration thereof or the giving of a redemption notice related thereto, if at the date of declaration or notice such payment would have complied with the provisions of this Indenture;

(ii) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, or Subordinated Indebtedness of an Issuer or any Guarantor, in exchange for, or out of the proceeds of the issuance or sale of, Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or contributions to the equity capital of the Lux Co-Issuer (other than Excluded Equity) (collectively, including any such contributions, “Refunding Capital Stock”);

-85-

(b) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the issuance or sale (other than to a Restricted Subsidiary of the Lux Co-Issuer or to an employee stock ownership plan or any trust established by the Lux Co-Issuer or any of its Restricted Subsidiaries) of Refunding Capital Stock; and

(c) if immediately prior to the retirement of the Retired Capital Stock, the declaration and payment of dividends thereon was permitted under this Section 3.4 and has not been made as of such time (the “Unpaid Amount”), the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer) in an aggregate amount no greater than the Unpaid Amount (with the payment of such Unpaid Amount being treated as a payment under the applicable provision under this Indenture);

(iii) the prepayment, redemption, defeasance, repurchase or other acquisition or retirement of Subordinated Indebtedness of an Issuer or any Guarantor made by exchange for, or out of the proceeds of the Incurrence of, Refinancing Indebtedness thereof;

(iv) the prepayment, redemption, purchase, defeasance or other satisfaction of any subordinated Indebtedness (1) existing at the time a Person becomes a Subsidiary or (2) assumed in connection with the acquisition of assets, in each case so long as such Indebtedness was not incurred in contemplation of such Person becoming a Subsidiary or such acquisition;

(v) the purchase, retirement, redemption or other acquisition (or Restricted Payments to the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer to finance any such purchase, retirement, redemption or other acquisition) for value of Equity Interests (including related stock appreciation rights or similar securities) of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer held directly or indirectly by any future, present or former employee, officer, director, manager, consultant or independent contractor of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer or their estates, heirs, family members, spouses or former spouses or permitted transferees (including for all purposes of this clause (v), Equity Interests held by any entity whose Equity Interests are held by any such future, present or former employee, officer, director, manager, consultant or independent contractor or their estates, heirs, family members, spouses or former spouses or permitted transferees) pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement or any stock subscription or shareholder or similar agreement; provided, however, that the aggregate amounts paid under this clause (v) shall not exceed (i) the greater of (x) $15 million and (y) 0.85% of Consolidated Net Tangible Assets in any calendar year or (y) subsequent to the consummation of any public common Equity Offering, the greater of (x) $30 million and (y) 1.65% of Consolidated Net Tangible Assets in any calendar year (in each case, with unused amounts in any calendar year beginning after December 31, 2017 being permitted to be carried over for the next two (2) succeeding calendar years); provided, further, however, that such amount in any calendar year may be increased by an amount not to exceed:

(a) the cash proceeds received by the Lux Co-Issuer from the issuance or sale of Equity Interests (other than Disqualified Stock) of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer (to the extent contributed to the Lux Co-Issuer), in each case, to any future, present or former employees, officers, directors, managers, consultants or independent contractors of the Lux Co-Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Lux Co-Issuer that occurs on or after the Issue Date, other than in connection with, or pursuant to, the Equity Contribution; provided that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend will not increase the amount available for Restricted Payments under Section 3.4(a); plus

-86-

(b) the cash proceeds of key man life insurance policies received by the Lux Co-Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Lux Co-Issuer (to the extent contributed to the Lux Co-Issuer) after the Issue Date; plus

(c) the amount of any cash bonuses otherwise payable to employees, officers, directors, managers, consultants or independent contractors of the Lux Co-Issuer or its Restricted Subsidiaries or any direct or indirect parent of the Lux Co-Issuer that are foregone in return for the receipt of Equity Interests; less

(d) the amount of cash proceeds described in subclause (a), (b) or (c) of this clause (v) previously used to make Restricted Payments pursuant to this clause (v); provided that the Lux Co-Issuer may elect to apply all or any portion of the aggregate increase contemplated by subclauses (a), (b) and (c) above in any calendar year;

provided, further, that cancellation of Indebtedness owing to the Lux Co-Issuer or any Restricted Subsidiary from any future, current or former officer, director, employee, manager, consultant or independent contractor (or any permitted transferees thereof) of the Lux Co-Issuer or any of its Restricted Subsidiaries or any direct or indirect parent of the Lux Co-Issuer, in connection with a repurchase of Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer from such Persons will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provisions of this Indenture;

(vi) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Lux Co-Issuer or any of its Restricted Subsidiaries and any class or series of Preferred Stock of any Restricted Subsidiaries issued or Incurred in accordance with the covenant described under Section 3.3;

(vii) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) and the declaration and payment of dividends to the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer issued after the Issue Date; provided, however, that (A) the Lux Co-Issuer would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt and (B) the aggregate amount of dividends declared and paid pursuant to this clause (vii) does not exceed the net cash proceeds actually received by the Lux Co-Issuer from the sale (or the contribution of the net cash proceeds from the sale) of Designated Preferred Stock;

(viii) any Restricted Payments made in connection with the consummation of the Refinancing Transactions, including any dividends, payments or loans made to the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer to enable it to make any such payments or any future payments to employees of the Lux Co-Issuer, any Restricted Subsidiary of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer under agreements entered into in connection with the Refinancing Transactions;

(ix) the declaration and payment of dividends on the Lux Co-Issuer’s common Equity Interests (or the payment of dividends to any direct or indirect parent of the Lux Co-Issuer to fund the payment by any direct or indirect parent of the Lux Co-Issuer of dividends on such entity’s common Equity Interests) of the greater of (x) up to 7% per annum of the cash proceeds, net of any underwriting spread, received by the Lux Co-Issuer from any public offering of Equity Interests or contributed to the Lux Co-Issuer by any direct or indirect parent of the Lux Co-Issuer from any public offering of common Equity Interests, other than public offerings with respect to the Lux Co-Issuer’s common Equity Interests registered on Form S-4 or S-8 or successor form thereto and other than any public sale constituting Excluded Contributions and (y) an aggregate amount per annum not to exceed 7% of Market Capitalization;

-87-

(x) Restricted Payments that are made with Excluded Contributions;

(xi) Restricted Payments in an aggregate amount taken together with all other Restricted Payments made pursuant to this clause (xi) not to exceed the greater of (x) $250 million and (y) 17.0% of Consolidated Net Tangible Assets;

(xii) the payment, purchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Lux Co-Issuer and its Restricted Subsidiaries pursuant to provisions similar to those described under Sections 3.7 and 3.9; provided that, prior to such payment, purchase, redemption, defeasance or other acquisition or retirement for value, the Issuers (or a third party to the extent permitted by this Indenture) have made any Change of Control Offer, Alternate Offer or Asset Sale Offer, as the case may be, with respect to the Notes, and have repurchased, redeemed, defeased, acquired or retired all Notes validly tendered and not validly withdrawn in connection with such Change of Control Offer, Alternate Offer or Asset Sale Offer, as the case may be;

(xiii) for so long as the Lux Co-Issuer or any of its Subsidiaries are members of a group filing a consolidated, combined, affiliated or unitary income tax return with Holdings or any other direct or indirect parent of the Lux Co-Issuer (including a Luxembourg fiscal unity that includes Holdings or any other direct or indirect parent of the Lux Co-Issuer), Restricted Payments, directly or indirectly, to Holdings or such other direct or indirect parent of the Lux Co-Issuer in amounts required for Holdings or such other parent entity to pay federal, national, foreign, state and local income taxes (and franchise taxes or other similar taxes imposed in lieu of income taxes) imposed on such entity to the extent such taxes are attributable to the income or operations of the Lux Co-Issuer and its Subsidiaries; provided, however, that the amount of such payments in respect of any tax year does not, in the aggregate, exceed the amount that the Lux Co-Issuer and its Subsidiaries that are members of such fiscal unity or other consolidated, combined, affiliated or unitary group would have been required to pay in respect of such taxes in respect of such year if the Lux Co-Issuer and its Subsidiaries paid such taxes directly on a separate company basis or as a stand-alone consolidated, combined, affiliated or unitary income (or similar) tax group (reduced by any such taxes paid directly by the Lux Co-Issuer or any Subsidiary);

(xiv) the declaration and payment of dividends, other distributions or other amounts to, or the making of loans to Holdings or any other direct or indirect parent of the Lux Co-Issuer, in the amount required for such entity to, if applicable:

(a) pay amounts equal to the amounts required for Holdings or any other direct or indirect parent of the Lux Co-Issuer to pay fees and expenses (including Related Taxes), customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, employees, directors, managers, consultants or independent contractors of any Holdings or any other direct or indirect parent of the Lux Co-Issuer, if applicable, and general corporate operating (including, without limitation, expenses related to auditing and other accounting matters) and overhead costs and expenses of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, if applicable, in each case to the extent such fees, expenses, salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of the Lux Co-Issuer and its Subsidiaries;

-88-

(b) pay, if applicable, amounts equal to amounts required for Holdings or any other direct or indirect parent of the Lux Co-Issuer to pay interest and/or principal on Indebtedness the proceeds of which have been contributed to the Lux Co-Issuer (other than as Excluded Equity) and that has been guaranteed by, and is otherwise considered Indebtedness of, the Lux Co-Issuer or any Restricted Subsidiary Incurred in accordance with the covenant described under Section 3.3 (except to the extent any such payments have otherwise been made by any such Guarantor);

(c) pay fees and expenses incurred by Holdings or any other direct or indirect parent of the Lux Co-Issuer related to (i) the maintenance of such parent entity of its corporate or other entity existence and performance of its obligations under this Indenture, the Existing Indenture and similar obligations under any Credit Agreement, (ii) any unsuccessful equity or debt offering of such parent entity (or any equity or debt offering from which such parent entity does not receive any proceeds) and (iii) any equity or debt issuance, incurrence or offering, any disposition or acquisition or any investment transaction by the Lux Co-Issuer or any of its Restricted Subsidiaries (or any acquisition of or investment in any business, assets or property that will be contributed to the Lux Co-Issuer or any of its Restricted Subsidiaries as part of the same or a related transaction) permitted by this Indenture;

(d) make payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other monitoring, consulting, management, transaction or any other financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, termination or similar fees, indemnities, reimbursements and reasonable and documented out-of-pocket fees and expenses to the Sponsor including, without limitation, in connection with acquisitions or divestitures, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) approved in respect of such activities by a majority of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer in good faith or a majority of the disinterested members of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer in good faith;

(e) pay franchise and excise taxes and other fees, taxes (including Related Taxes) and expenses in connection with any ownership of the Lux Co-Issuer or any of its Subsidiaries or required to maintain their organizational existences;

(f) make payments for the benefit of the Lux Co-Issuer or any of its Restricted Subsidiaries to the extent such payments could have been made by the Lux Co-Issuer or any of its Restricted Subsidiaries because such payments (x) (i) would not otherwise be Restricted Payments or (ii) would be Restricted Payments that would be permitted to be made by the Lux Co-Issuer or any of its Restricted Subsidiaries pursuant to this covenant; provided that any payment pursuant to this clause (f)(x)(ii) shall, if applicable, reduce capacity under the Restricted Payment exception or basket that would have been utilized if such payment were made directly by the Lux Co-Issuer or such Restricted Subsidiary and (y) would be permitted by Section 3.8; and

(g) make Restricted Payments to any direct or indirect parent of the Lux Co-Issuer to finance, or to any direct or indirect parent of the Lux Co-Issuer for the purpose of paying to any other direct or indirect parent of the Lux Co-Issuer to finance, any Investment that, if consummated by the Lux Co-Issuer or any Restricted Subsidiary, would be a Permitted Investment; provided that (i) such Restricted Payment is made substantially concurrently with the closing of such Investment and (ii) promptly following the closing thereof, such direct or indirect parent of the Lux Co-Issuer causes (x) all property acquired (whether assets or Equity Interests) to be contributed to the Lux Co-Issuer or any Restricted Subsidiary or (y) the merger, consolidation or amalgamation (to the extent permitted by Section 4.1) of the Person formed or acquired into the Lux Co-Issuer or any Restricted Subsidiary in order to consummate such acquisition or Investment, in each case, in accordance with the requirements of Section 3.11;

-89-

(xv) (i) repurchases of Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants, (ii) payments made or expected to be made by the Lux Co-Issuer or any Restricted Subsidiary in respect of withholding or similar taxes payable or expected to be payable by any future, present or former director, officer, employee, manager, consultant or independent contractor of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer (or their respective Affiliates, estates or immediate family members) in connection with the exercise of stock options or the grant, vesting or delivery of Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer and (iii) loans or advances to officers, directors, employees, managers, consultants and independent contractors of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or any Subsidiary of the Lux Co-Issuer in connection with such Person’s purchase of Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer; provided that no cash is actually advanced pursuant to this subclause (iii) other than to pay taxes due in connection with such purchase, unless immediately repaid;

(xvi) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Factoring or Qualified Receivables Financing and the payment or distribution of Receivables Fees;

(xvii) payments or distributions to satisfy dissenters’ rights, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of assets that complies with the provisions of this Indenture;

(xviii) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Lux Co-Issuer or a Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are cash and/or Cash Equivalents);

(xix) the payment of cash in lieu of the issuance of fractional shares of Equity Interests in connection with any merger, consolidation, amalgamation or other business combination, or in connection with any dividend, distribution or split of or upon exercise, conversion or exchange of Equity Interests, warrants, options or other securities exercisable or convertible into, Equity Interests of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer;

(xx) Investments in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (xx) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, Cash Equivalents or marketable securities, not to exceed the greater of (x) $125 million and (y) 8.5% of Consolidated Net Tangible Assets (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(xxi) the making of payments (i) to the Sponsor pursuant to or contemplated by any Management Agreement or (ii) to or on behalf of the Sponsor for any other financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, including in connection with the consummation of the Transactions, which payments in the case of clause (ii) are (x) made pursuant to agreements with the Sponsor or (y) approved in respect of such activities by a majority of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer in good faith or a majority of the disinterested members of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer in good faith;

-90-

(xxii) any Restricted Payment so long as immediately after giving effect to the making of such Restricted Payment, the Lux Co-Issuer’s Consolidated Total Debt Ratio does not exceed 5.00 to 1.00;

(xxiii) payments, dividends, distributions or other Restricted Payments with any Total Leverage Excess Proceeds; and

(xxiv) any payment that is intended to prevent any Indebtedness from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (xi) and (xxii) of this Section 3.4(b), no Event of Default shall have occurred and be continuing or would occur as a consequence thereof. For purposes of clauses (xiii) and (xiv) of this Section 3.4(b), taxes (including Related Taxes) shall include all interest and penalties with respect thereto and all additions thereto.

As of the Issue Date, all of the Lux Co-Issuer’s Subsidiaries will be Restricted Subsidiaries. The Lux Co-Issuer will not permit any Restricted Subsidiary to become an Unrestricted Subsidiary, or any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Lux Co-Issuer and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments or Permitted Investments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation will only be permitted if a Restricted Payment or Permitted Investment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture.

For purposes of this Section 3.4, if any Investment or Restricted Payment (or a portion thereof) would be permitted pursuant to one or more provisions described above and/or one or more of the exceptions contained in the definition of “Permitted Investments,” the Lux Co-Issuer may divide and classify such Investment or Restricted Payment (or a portion thereof) in any manner that complies with this covenant and may later divide and reclassify any such Investment or Restricted Payment so long as the Investment or Restricted Payment (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception as of the date of such reclassification.

SECTION 3.5. Liens.

(a) Prior to a Covenant Suspension Event, following any Reversion Date and during any Suspension Period when there is no election by the Issuers pursuant to Section 3.5(b), the Issuers will not, and will not permit any Guarantor to, directly or indirectly, create or Incur any Lien securing Indebtedness (other than Permitted Liens) on any asset or property of either of the Issuers or any Guarantor, unless (1) in the case of Liens securing Subordinated Indebtedness, the Notes and any applicable Guarantee are secured by a Lien on such property or assets and the proceeds thereof that is senior in priority to such Liens; or (2) in all other cases, the Notes and the applicable Guarantee are secured by a Lien on such property or assets and the proceeds thereof equally and ratably with or prior to such Liens.

(b) Following a Covenant Suspension Event, the Issuers may elect by written notice to the Trustee to be subject to this clause (b) with respect to the limitation on Liens in lieu of clause (a) above (the date such notice is delivered, the “Election Date”). From and after an Election Date and until a Reversion Date, the Issuers will not, and will not permit any of the Lux Co-Issuer’s Principal Property Subsidiaries to, directly or indirectly, create or Incur any Lien securing Indebtedness upon any (1) Restricted Property or (2) shares of Capital Stock or evidence of Indebtedness for borrowed money issued by any Principal Property Subsidiary, whether owned at the Issue Date or thereafter acquired, without making effective provision, and the Issuers in such case will make or cause to be made effective provision, whereby the Notes and the applicable Guarantees shall be secured by such Lien equally and ratably with any and all other Indebtedness or obligations thereby secured, so long as such Indebtedness or obligations shall be so secured; provided, however, that the foregoing shall not apply to any of the following:

-91-

(1) Liens that exist on the date of the Covenant Suspension Event;

(2) Liens on property, shares of Capital Stock or evidence of Indebtedness of any corporation existing at the time such corporation becomes a Guarantor;

(3) Liens in favor of an Issuer or any Guarantor;

(4) Liens in favor of governmental bodies to secure progress, advance or other payments pursuant to contract or statute or Indebtedness incurred to finance all or a part of construction of or improvements to property subject to such Liens;

(5) Liens (i) on property, shares of Capital Stock or evidences of Indebtedness for borrowed money existing at the time of acquisition thereof (including acquisition through merger, amalgamation or consolidation), and construction and improvement Liens that are entered into within one year from the date of such construction or improvement; provided that in the case of construction or improvement the Lien shall not apply to any property theretofore owned by an Issuer or any Guarantor except substantially unimproved real property on which the property so constructed or the improvement is located and (ii) for the acquisition of any real property, which Liens are created within 180 days after the completion of such acquisition to secure or provide for the payment of the purchase price of the real property acquired; provided that with respect to clauses (i) and (ii), any such Liens do not extend to any other property of the Issuers or any of the Guarantors (whether such property is then owned or thereafter acquired);

(6) mechanics’, landlords’ and similar Liens arising in the ordinary course of business in respect of obligations not due or being contested in good faith;

(7) Liens for taxes, assessments, or governmental charges or levies that are not delinquent or are being contested in good faith;

(8) Liens arising from any legal proceedings that are being contested in good faith;

(9) any Liens that (i) are incidental to the ordinary conduct of its business or the ownership of its properties and assets, including Liens incurred in connection with workmen’s compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts, (ii) were not incurred in connection with the borrowing of money or the obtaining of advances or credit and (iii) do not in the aggregate materially detract from the value of the property of the Issuers or any Guarantor or materially impair the use thereof in the operation of its business; and

(10) Liens for the sole purpose of extending, renewing or replacing (or unsuccessfully extending, renewing or replacing) in whole or in part any of the foregoing.

(c) Notwithstanding the provisions of clause (b) of this Section 3.5, if the Election Date has occurred, the Issuers or any Subsidiary may, without equally and ratably securing the Notes and the Guarantees, create or assume Liens that would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 10% of Consolidated Net Tangible Assets.

-92-

(d) Any Lien that is granted to secure the Notes or the applicable Guarantee pursuant to clause (a), (b) or (c) of this Section 3.5 shall be automatically and unconditionally released and discharged at the same time as the release of the Lien that gave rise to the obligation to secure the Notes or the Guarantee under the applicable preceding clauses (other than a release as a result of the enforcement of remedies in respect of such Lien or the Obligations secured by such Lien).

(e) With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the Incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The “Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms, accretion of original issue discount or liquidation preference, any fees, underwriting discounts, accrued and unpaid interest, premiums and other costs and expenses incurred in connection therewith and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness.

SECTION 3.6. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Lux Co-Issuer will not, and will not permit any of its Restricted Subsidiaries (other than the U.S. Co-Issuer or the Guarantors) to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary (other than the U.S. Co-Issuer or the Guarantors) to:

(a) (i) pay dividends or make any other distributions to the Lux Co-Issuer or any of its Restricted Subsidiaries on its Capital Stock; or (ii) pay any Indebtedness owed to the Lux Co-Issuer or any of its Restricted Subsidiaries;

(b) make loans or advances to the Lux Co-Issuer or any of its Restricted Subsidiaries; or

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(i) contractual encumbrances or restrictions of the Lux Co-Issuer or any of its Restricted Subsidiaries in effect on the Issue Date, including pursuant to the Senior Credit Agreement and the other documents relating to the Senior Credit Agreement, related Swap Contracts, the Existing Indenture, the Existing Notes, the related guarantees and the other documents relating to the Existing Notes and Indebtedness permitted pursuant to clause (c) of the definition of “Permitted Debt”;

(ii) this Indenture, the Notes, the Guarantees and other documents relating to this Indenture and the Notes;

(iii) applicable law or any applicable rule, regulation or order;

-93-

(iv) any agreement or other instrument of a Person acquired by or merged, amalgamated or consolidated with or into the Lux Co-Issuer or any Restricted Subsidiary or an Unrestricted Subsidiary that is designated a Restricted Subsidiary that was in existence at the time of such acquisition (or at the time it merges with or into the Lux Co-Issuer or any Restricted Subsidiary or assumed in connection with the acquisition of assets from such Person (but, in each case, not created in contemplation thereof)), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired or designated; provided that in connection with a merger, amalgamation or consolidation under this clause (iv), if a Person other than the Lux Co-Issuer or such Restricted Subsidiary is the Successor Company with respect to such merger, amalgamation or consolidation, any agreement or instrument of such Person or any Subsidiary of such Person, shall be deemed acquired or assumed, as the case may be, by the Lux Co-Issuer or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;

(v) customary encumbrances or restrictions contained in contracts or agreements for the sale of assets applicable to such assets pending consummation of such sale, including customary restrictions with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of Capital Stock or assets of such Restricted Subsidiary;

(vi) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(vii) customary provisions in operating or other similar agreements, asset sale agreements and stock sale agreements entered into in connection with the entering into of such transaction, which limitation is applicable only to the assets that are the subject of those agreements;

(viii) purchase money obligations for property acquired and Capitalized Lease Obligations, to the extent such obligations impose restrictions of the nature discussed in clause (c) of this Section 3.6 on the property so acquired;

(ix) customary provisions contained in leases, sub-leases, licenses, sublicenses, contracts and other similar agreements entered into in the ordinary course of business to the extent such obligations impose restrictions of the type described in clause (c) of this Section 3.6 on the property subject to such lease;

(x) any encumbrance or restriction effected in connection with a Qualified Receivables Factoring or Qualified Receivables Financing that, in the good faith determination of the Lux Co-Issuer, is necessary or advisable to effect such Qualified Receivables Factoring or Qualified Receivables Financing, as applicable;

(xi) any encumbrance or restriction contained in other Indebtedness, Disqualified Stock or Preferred Stock of the Lux Co-Issuer or any Restricted Subsidiary that is Incurred subsequent to the Issue Date pursuant to Section 3.3; provided that (i) such encumbrances and restrictions contained in any agreement or instrument will not materially affect the Issuers’ ability to make anticipated principal or interest payments on the Notes (as determined by the Lux Co-Issuer or a direct or indirect parent of the Lux Co-Issuer in good faith) or (ii) such encumbrances and restrictions contained in any agreement or instrument taken as a whole are not materially less favorable to the Holders than the encumbrances and restrictions contained in this Indenture, the Existing Indenture or the Senior Credit Agreement as of the Issue Date (as determined by the Lux Co-Issuer in good faith);

-94-

(xii) any encumbrance or restriction contained in Secured Indebtedness otherwise permitted to be Incurred pursuant to Sections 3.3 and 3.5 to the extent limiting the right of the debtor to dispose of the assets securing such Indebtedness;

(xiii) any encumbrance or restriction arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, (x) detract from the value of the property or assets of the Lux Co-Issuer or any Restricted Subsidiary in any manner material to the Lux Co-Issuer or any Restricted Subsidiary or (y) materially affect the Issuers’ ability to make future principal or interest payments on the Notes, in each case, as determined by the Lux Co-Issuer in good faith;

(xiv) customary provisions in joint venture agreements or arrangements and other similar agreements or arrangements relating solely to the applicable joint venture; and

(xv) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in the immediately preceding clauses (i) through (xiv); provided that such encumbrances and restrictions contained in any such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing are, in the good faith judgment of the Lux Co-Issuer, not materially more restrictive, taken as a whole, than the encumbrances and restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

For purposes of determining compliance with this Section 3.6, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Lux Co-Issuer or a Restricted Subsidiary to other Indebtedness Incurred by the Lux Co-Issuer or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

SECTION 3.7. Asset Sales.

(a) The Lux Co-Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale, unless:

(i) the Lux Co-Issuer or any of its Restricted Subsidiaries, as the case may be, receives consideration (including by way of relief from, or by any other person assuming responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Sale at least equal to the Fair Market Value (as determined at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of; and

(ii) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Lux Co-Issuer or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents or Replacement Assets; provided, that the amount of:

-95-

(1) any liabilities (as shown on the Lux Co-Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto for which internal financial statements are available immediately preceding such date or, if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Lux Co-Issuer’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet in the good faith determination of the Lux Co-Issuer) of the Lux Co-Issuer or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are extinguished in connection with the transactions relating to such Asset Sale, or that are assumed by the transferee of any such assets or Equity Interests, in each case, pursuant to an agreement that releases or indemnifies the Lux Co-Issuer or such Restricted Subsidiary, as the case may be, from further liability;

(2) any notes or other obligations or other securities or assets received by the Lux Co-Issuer or such Restricted Subsidiary from such transferee that are converted by the Lux Co-Issuer or such Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within 180 days of the receipt thereof; and

(3) any Designated Non-cash Consideration received by the Lux Co-Issuer or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this subclause (3) that is at that time outstanding, not to exceed the greater of (x) $200 million and (y) 14.0% of Consolidated Net Tangible Assets, calculated at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value);

shall each be deemed to be Cash Equivalents for the purposes of this clause (ii).

(b) Within 540 days after the Lux Co-Issuer’s or any Restricted Subsidiary’s receipt of the Net Cash Proceeds of any Asset Sale, the Lux Co-Issuer or such Restricted Subsidiary may apply an amount equal to the Net Cash Proceeds from such Asset Sale, at its option:

(i) to reduce Obligations under the Senior Credit Agreement and in the case of revolving loans, to correspondingly reduce commitments with respect thereto;

(ii) to reduce Obligations under Indebtedness that is secured by a Lien, which Lien is permitted by this Indenture and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto;

(iii) to reduce Obligations under (x) Pari Passu Indebtedness of the Issuers or the Guarantors (provided that if the Issuers or any Guarantor shall so reduce such Obligations under Pari Passu Indebtedness other than the Notes, the Issuers shall (A) reduce Obligations under the Notes as provided in Section 5.1 or through open-market purchases (to the extent such purchases are at or above 100% of the principal amount thereof) ratably with such other Pari Passu Indebtedness or (B) make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, the principal amount of Notes that would otherwise be redeemed under subclause (A) above) or (y) Indebtedness of a Non-Guarantor Subsidiary, in each case, other than Indebtedness owed to the Lux Co-Issuer or another Restricted Subsidiary (and, in the case of revolving loans, to correspondingly reduce commitments with respect thereto);

-96-

(iv) to make an investment in any one or more businesses, assets (other than working capital assets), or property or capital expenditures, in each case used or useful in a Similar Business;

(v) to make an investment (including capital expenditures) in any one or more businesses, properties (other than working capital assets) or assets (other than working capital assets) that replace the businesses, properties and/or assets that are the subject of such Asset Sale, with any such investment made by way of a capital or other lease valued at the present value of the minimum amount of payments under such lease (as determined by the Lux Co-Issuer in good faith); or

(vi) any combination of the foregoing;

provided that the Lux Co-Issuer and its Restricted Subsidiaries will be deemed to have complied with the provisions described in clause (iv) or (v) of this Section 3.7(b) if and to the extent that, within 540 days after the Asset Sale that generated the Net Cash Proceeds, the Lux Co-Issuer or such Restricted Subsidiary, as applicable, has entered into and not abandoned or rejected a binding agreement to make an investment in compliance with the provision described in clauses (iv) or (v) of this Section 3.7(b), and that investment is thereafter completed within 180 days after the end of such 540-day period.

(c) Pending the final application of any such amount of Net Cash Proceeds, the Lux Co-Issuer or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest or utilize such Net Cash Proceeds in any manner not prohibited by this Indenture. Any amount of Net Cash Proceeds from any Asset Sale that are not invested or applied as provided and within the time period set forth in Section 3.7(b) shall be deemed to constitute “Excess Proceeds;” provided that any amount of proceeds offered to Holders pursuant to Section 3.7(b)(iii)(x) or pursuant to an Asset Sale Offer made at any time after the Asset Sale shall be deemed to have been applied as required and shall not be deemed to be Excess Proceeds without regard to the extent to which such offer is accepted by the Holders. When the aggregate amount of Excess Proceeds less Total Leverage Excess Proceeds (as defined below) exceeds the greater of $50 million and 2.75% of Consolidated Net Tangible Assets, then subject to the limitations with respect to foreign dispositions set forth in Section 3.7(d), the Issuers shall make an offer (an “Asset Sale Offer”) to all Holders and, if required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness, to purchase the maximum principal amount of such Notes and Pari Passu Indebtedness, as appropriate, on a pro rata basis, that may be purchased out of such Excess Proceeds, if any, at an offer price, in the case of the Notes, in cash in an amount equal to 100% of the principal amount thereof (or in the event such other Indebtedness was issued with original issue discount, 100% of the accreted value thereof), plus accrued and unpaid interest, if any (or such lesser price with respect to Pari Passu Indebtedness, if any, as may be provided by the terms of such other Indebtedness), to (but not including) the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture and the agreement governing such Pari Passu Indebtedness. However, the Lux Co-Issuer shall only be required to make an Asset Sale Offer with 50% of the Excess Proceeds if the Consolidated Total Debt Ratio for the Lux Co-Issuer is less than or equal to 5.00 to 1.00 after giving effect to any application of any Net Cash Proceeds as set forth herein, including making an offer to repurchase a portion of the Notes (any Excess Proceeds not required to be offered in an Asset Sale Offer in reliance on this sentence shall constitute “Total Leverage Excess Proceeds”). For the avoidance of doubt, any Excess Proceeds not constituting Total Leverage Excess Proceeds shall be, at the option of the Issuers, offered in an Asset Sale Offer or applied in the manner and within the time periods described in clauses (i) through (vi) of Section 3.7(b). The Issuers will commence an Asset Sale Offer with

-97-

respect to Excess Proceeds within ten Business Days after the date that such Excess Proceeds less any Total Leverage Excess Proceeds exceeds the greater of $50 million and 2.75% of Consolidated Net Tangible Assets by transmitting electronically or by mailing to Holders the notice required pursuant to the terms of this Indenture, with a copy to the Trustee or otherwise in accordance with the procedures of the Depositary. The Issuers may satisfy the foregoing obligations with respect to such Net Cash Proceeds from an Asset Sale by making an Asset Sale Offer with respect to such Net Cash Proceeds at any time prior to the expiration of the application period or by electing to make an Asset Sale Offer with respect to such Net Cash Proceeds before the aggregate amount of Excess Proceeds less any Total Leverage Excess Proceeds exceeds the greater of $50 million and 2.75% of Consolidated Net Tangible Assets.

(d) To the extent that the aggregate amount of Notes and any other Pari Passu Indebtedness tendered or otherwise surrendered in connection with an Asset Sale Offer made with Excess Proceeds is less than the amount offered in an Asset Sale Offer, the Issuers may use any remaining Excess Proceeds (any such amount, “Retained Declined Proceeds”) for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and Pari Passu Indebtedness tendered or otherwise surrendered by holders thereof exceeds the amount offered in an Asset Sale Offer, the Issuers shall select the Notes (and the Issuers or their agents shall select such Pari Passu Indebtedness) to be purchased in the manner described below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. Notwithstanding anything to the contrary set forth herein, to the extent a distribution of any or all of the Excess Proceeds of any Asset Sales by a Restricted Subsidiary that is a Non-U.S. Subsidiary to the Issuers or another Restricted Subsidiary (x) is prohibited, restricted or delayed by applicable local law, prohibited, restricted or delayed by applicable organizational documents or any agreement or subject to other organizational or administrative impediments or (y) would have an adverse tax consequence, as determined by the Issuers in good faith, taking into account any foreign tax credit or benefit actually realized in connection with such repatriation, the portion of such Excess Proceeds so affected will not be required to be applied in compliance with this Section 3.7; provided that (a) in the case of clause (x), (1) the Issuers shall use commercially reasonable efforts to cause the applicable Non-U.S. Subsidiary to promptly take all actions reasonably required by the applicable local law to permit such repatriation or to otherwise remove such prohibition, restriction or other impediment to such repatriation and (2) once distribution of any of such affected Excess Proceeds is no longer prohibited, restricted or delayed by applicable local law, prohibited, restricted or delayed by applicable organizational documents or agreement or subject to other organizational or administrative impediments, an amount equal to such amount of Excess Proceeds so permitted to be repatriated will be promptly applied (net of any taxes, costs or expenses that would be payable or reserved against if such amounts were actually repatriated, whether or not they are repatriated) in compliance with this Section 3.7; and (b) in the case of clause (y), on or before the date that is twelve months after the date on which any Excess Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments in compliance with this Section 3.7, (1) the applicable Issuer shall apply an amount equal to such Excess Proceeds to such reinvestments or prepayments as if such Excess Proceeds had been received by the applicable Issuer rather than such Non-U.S. Subsidiary, less the amount of additional taxes that would have been payable or reserved against if such Excess Proceeds had been repatriated or (2) such Excess Proceeds shall be applied to the repayment of Indebtedness of a Non-U.S. Subsidiary. The non-application of any prepayment amounts as a consequence of the foregoing provisions will not, for the avoidance of doubt, constitute a Default or an Event of Default. For the avoidance of doubt, nothing in this Indenture shall be construed to require the Issuers or any Restricted Subsidiary to repatriate cash or to apply any Net Cash Proceeds described in clause (x) above in compliance with this Section 3.7 in the event that such repatriation is not permitted under applicable local law, applicable organizational documents or agreements or other impediment within 12 months following the date on which the respective payment would otherwise have been required. To the extent the Excess Proceeds exceed the outstanding aggregate principal amount of the Notes (and, if required by the terms thereof, all Pari Passu Indebtedness), the Issuers need only make an Asset Sale Offer up to the outstanding aggregate principal amount of Notes (and any such Pari Passu Indebtedness), and any additional Excess Proceeds shall be deemed to be Retained Declined Proceeds, shall not be subject to this Section 3.7 and shall be permitted to be used for any purpose in the Issuers’ discretion.

-98-

(e) The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws or regulations are applicable in connection with the purchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.7 by virtue thereof.

(f) The Senior Credit Agreement limits, and future credit agreements or other agreements to which the Issuers become a party may prohibit or limit, the Issuers from purchasing any Notes pursuant to an Asset Sale Offer. In the event the Issuers are prohibited from purchasing the Notes, the Issuers or one of their Affiliates could seek the consent of their lenders or investors to the purchase of the Notes or attempt to refinance the borrowings that contain such prohibition. If the Issuers or one of their Affiliates do not obtain such consent or repay such borrowings, they will remain prohibited from purchasing the Notes. In such case, the Issuers’ failure to purchase tendered Notes would constitute an Event of Default under this Indenture.

(g) If more Notes are tendered pursuant to an Asset Sale Offer than the Issuers are required to purchase, selection of such Notes for purchase will be made by the Issuer in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or if such Notes are not listed, on a pro rata basis based on the total amount of Notes and Pari Passu Indebtedness tendered in connection with an Asset Sale Offer (with adjustments so that only Notes in denominations of the minimum denomination of $2,000 or integral multiples of $1,000 in excess thereof shall be purchased (or such lower denomination as may be permitted by the Depositary)) by lot or by such other method as the Paying Agent shall deem fair and appropriate (and in such manner as complies with applicable legal requirements); provided that the selection of Notes for purchase shall not result in a Holder with a principal amount of Notes less than the minimum denomination of $2,000 (or such lower denomination as may be permitted by the Depositary). No Note will be repurchased in part if less than the minimum denomination of such Note would be left outstanding.

(h) Notices of an Asset Sale Offer shall be sent by first class mail, postage prepaid, or sent electronically, at least ten (10) days but not more than 60 days before the purchase date to each Holder at such Holder’s registered address or otherwise in accordance with the procedures of the Depositary. If any Notes are to be purchased in part only, any notice of purchase that relates to such Notes shall state the portion of the principal amount of the Notes in the aggregate that has been or is to be purchased.

(i) A new Note in principal amount equal to the unpurchased portion of any Note (other than a global note) purchased in part will be issued in the name of the Holder thereof upon cancellation of the Note. On and after the purchase date, unless the Issuers default in payment of the purchase price, interest shall cease to accrue on Notes or portions thereof purchased.

SECTION 3.8. Transactions with Affiliates.

(a) The Lux Co-Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Lux Co-Issuer involving aggregate consideration in excess of $40 million (each of the foregoing, an “Affiliate Transaction”), unless:

-99-

(i) such Affiliate Transaction is on terms that are not materially less favorable to the Lux Co-Issuer or the relevant Restricted Subsidiary than those that could have been obtained in a comparable transaction by the Lux Co-Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length basis (as determined in good faith by the senior management or the Board of Directors of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer); and

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $60 million, the Lux Co-Issuer delivers to the Trustee a resolution adopted in good faith by the majority of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer or a majority of the disinterested members of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer, approving such Affiliate Transaction, together with an Officer’s Certificate certifying that the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer determined or resolved that such Affiliate Transaction complies with clause (i) above.

(b) The provisions of Section 3.8(a) shall not apply to the following:

(i) (a) transactions between or among the Lux Co-Issuer and/or any of its Restricted Subsidiaries (or an entity that becomes a Restricted Subsidiary as a result of such transaction) and/or the Joint Business and (b) any merger, amalgamation or consolidation of the Lux Co-Issuer and Holdings or any other direct or indirect parent of the Lux Co-Issuer; provided that Holdings or such parent entity shall have no material liabilities and no material assets (other than cash, Cash Equivalents and the Capital Stock of the Lux Co-Issuer) and such merger, amalgamation or consolidation is otherwise in compliance with the terms of this Indenture and effected for a bona fide business purpose;

(ii) (a) Restricted Payments permitted by this Indenture and (b) Permitted Investments;

(iii) transactions in which the Lux Co-Issuer or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Lux Co-Issuer or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 3.8(a)(i);

(iv) payments, loans, advances or guarantees (or cancellation of loans, advances or guarantees) to employees, officers, directors, managers, consultants or independent contractors for bona fide business purposes or in the ordinary course of business;

(v) any agreement or arrangement as in effect as of the Issue Date or any Reversion Date (other than any Management Agreement) or as thereafter amended, supplemented or replaced (so long as such amendment, supplement or replacement agreement or arrangement is not materially disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer) to the Holders when taken as a whole as compared to the original agreement or arrangement as in effect on the Issue Date) or any transaction or payments contemplated thereby;

-100-

(vi) the Management Agreement or any transaction or payments (including reimbursement of out-of-pocket expenses or payments under any indemnity obligations) contemplated thereby;

(vii) the existence of, or the performance by the Lux Co-Issuer or any of its Restricted Subsidiaries of its obligations under the terms of, the Acquisition Agreement, any stockholders or similar agreement (including any registration rights agreement or purchase agreement related thereto) to which it or any direct or indirect parent of the Lux Co-Issuer is a party as of the Issue Date or similar transactions, arrangements or agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Lux Co-Issuer or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing transaction, arrangement or agreement or under any similar transaction, arrangement or agreement entered into after the Issue Date shall only be permitted by this clause (vii) to the extent that the terms of any such existing transaction, arrangement or agreement, together with all amendments thereto, taken as a whole, or new transaction, arrangement or agreement are not otherwise disadvantageous (as determined in good faith by the senior management or the Board of Directors of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer) to the Holders, in any material respect when taken as a whole as compared with the original transaction, arrangement or agreement as in effect on the Issue Date;

(viii) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case, in the ordinary course of business and otherwise in compliance with the terms of this Indenture, which are fair to the Lux Co-Issuer and its Restricted Subsidiaries or are on terms at least as favorable (as determined in good faith by the senior management or the Board of Directors of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer) as might reasonably have been obtained at such time from an unaffiliated party;

(ix) any transaction effected as part of a Qualified Receivables Financing or a Qualified Receivables Factoring;

(x) the sale, issuance or transfer of Equity Interests (other than Disqualified Stock) of the Lux Co-Issuer;

(xi) payments by the Lux Co-Issuer or any of its Restricted Subsidiaries to or on behalf of any Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are (x) made pursuant to agreements with the Sponsor or (y) approved by a majority of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer in good faith or a majority of the disinterested members of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer in good faith;

(xii) any contribution to the capital of the Lux Co-Issuer (other than Disqualified Stock) or any investments by the Sponsor or a direct or indirect parent of the Lux Co-Issuer in Equity Interests (other than Disqualified Stock of the Lux Co-Issuer) of the Lux Co-Issuer (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of the Lux Co-Issuer in connection therewith);

-101-

(xiii) any transaction with a Person (other than an Unrestricted Subsidiary) that would constitute an Affiliate Transaction solely because the Lux Co-Issuer or a Restricted Subsidiary owns an Equity Interest in or otherwise controls such Person; provided that no Affiliate of the Lux Co-Issuer or any of its Subsidiaries (other than the Lux Co-Issuer or a Restricted Subsidiary) shall have a beneficial interest or otherwise participate in such Person;

(xiv) transactions between the Lux Co-Issuer or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate Transaction solely because such Person is a director, or such Person has a director who is also a director, of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer; provided, however, that such director abstains from voting as a director of the Lux Co-Issuer or such direct or indirect parent of the Lux Co-Issuer, as the case may be, on any matter involving such other Person;

(xv) the entering into of any tax sharing agreement or arrangement and any payments permitted by Section 3.4(b)(xiii), (xiv)(a) or (xiv)(e);

(xvi) transactions to effect the Refinancing Transactions and the payment of all transaction, underwriting, commitment and other fees and expenses related to the Refinancing Transactions;

(xvii) pledges of Equity Interests of Unrestricted Subsidiaries;

(xviii) the issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer or of a Restricted Subsidiary in good faith;

(xix) (i) any employment, consulting, service or termination agreement, or customary indemnification arrangements, entered into by the Lux Co-Issuer or any of its Restricted Subsidiaries with current, former or future officers, directors, employees, managers, consultants, shareholders and independent contractors of the Lux Co-Issuer or any of its Restricted Subsidiaries (or of any direct or indirect parent of the Lux Co-Issuer to the extent such agreements or arrangements are in respect of services performed for the Lux Co-Issuer or any of the Restricted Subsidiaries), (ii) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with current, former or future officers, directors, employees, managers, consultants, shareholders and independent contractors of the Lux Co-Issuer or any of its Restricted Subsidiaries or of any direct or indirect parent of the Lux Co-Issuer and (iii) any payment of compensation or other employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers officers, directors, employees, managers, consultants, shareholders and independent contractors of the Lux Co-Issuer or any of its Restricted Subsidiaries or any direct or indirect parent of the Lux Co-Issuer (including amounts paid pursuant to any management equity plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, stock option or similar plans and any successor plan thereto and any supplemental executive retirement benefit plans or arrangements), in each case in the ordinary course of business or as otherwise approved in good faith by the Board of Directors of either of the Issuers or of a Restricted Subsidiary or any direct or indirect parent of the Lux Co-Issuer;

(xx) investments by Affiliates in Indebtedness or Preferred Stock of the Lux Co-Issuer or any of its Subsidiaries, so long as non-Affiliates were also offered the opportunity to invest in such Indebtedness or Preferred Stock, and transactions with Affiliates solely in their capacity as holders of Indebtedness or Preferred Stock of the Lux Co-Issuer or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally;

-102-

(xxi) the existence of, or the performance by the Lux Co-Issuer or any of its Restricted Subsidiaries of their obligations under the terms of, any registration rights agreement or shareholder’s agreement to which they are a party or become a party in the future;

(xxii) investments by the Sponsor or a direct or indirect parent of the Lux Co-Issuer in securities of the Lux Co-Issuer or debt securities or Preferred Stock of any Restricted Subsidiary (and payment of reasonable out-of-pocket expenses incurred by the Sponsor or a direct or indirect parent of the Lux Co-Issuer in connection therewith);

(xxiii) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business;

(xxiv) any lease entered into between the Lux Co-Issuer or any Restricted Subsidiary, as lessee, and any Affiliate of the Lux Co-Issuer, as lessor, in the ordinary course of business;

(xxv) (i) intellectual property licenses and (ii) intercompany intellectual property licenses and research and development agreements in the ordinary course of business;

(xxvi) transactions pursuant to, and complying with, (i) Section 3.3 to the extent such transaction complies with this Section 3.8(a)(i) or (ii) the second paragraph of Section 4.1(a) and Section 4.1(c); and

(xxvii) intercompany transactions undertaken in good faith for the purpose of improving the consolidated tax efficiency of the Lux Co-Issuer and its Restricted Subsidiaries and not for the purpose of circumventing any covenant set forth in this Indenture.

SECTION 3.9. Change of Control.

(a) Upon the occurrence of a Change of Control after the Issue Date, each Holder shall have the right to require the Issuers to purchase all or any part of such Holder’s Notes at a purchase price in cash (a “Change of Control Payment”) equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the Purchase Date), except to the extent the Issuers have previously elected to redeem all of the Notes pursuant to Article V of this Indenture.

(b) Prior to or within 30 days following any Change of Control, except to the extent that the Issuers have exercised their right to redeem all the Notes as described under Section 5.1, the Issuers shall deliver a notice (a “Change of Control Offer”) to each Holder with a copy to the Trustee and the Paying Agent, or otherwise in accordance with the procedures of the Depositary, describing:

(i) that a Change of Control has occurred or, if the Change of Control Offer is being made in advance of a Change of Control, that a Change of Control is expected to occur, and that such Holder has, or upon such occurrence will have, the right to require the Issuers to purchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the right of Holders of record on a Record Date to receive interest on the relevant Interest Payment Date falling prior to or on the purchase date);

-103-

(ii) the transaction or transactions that constitute, or are expected to constitute, such Change of Control;

(iii) the purchase date (which shall be no earlier than ten (10) days nor later than 60 days (unless delivered in advance of the occurrence of such Change of Control) from the date such notice is delivered) (a “Change of Control Payment Date”);

(iv) that any Note not properly tendered will remain outstanding and continue to accrue interest;

(v) that unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(vi) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(vii) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes; provided that the Paying Agent receives, not later than the expiration time of the Change of Control Offer, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

(viii) that if a holder (other than a holder of a global note) is tendering for purchase less than all of its Notes, the Issuers will issue new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered and the unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof (or such lower denomination as may be permitted by the Depositary);

(ix) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control; and

(x) the other instructions determined by the Issuers, consistent with this covenant, that a Holder must follow in order to have its Notes purchased.

While the Notes are in global form and the Issuers make an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes to be made through the facilities of the Depositary in accordance with the rules and regulations thereof.

-104-

(c) The Issuers shall not be required to make a Change of Control Offer upon a Change of Control if (i) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not validly withdrawn under such Change of Control Offer, (ii) in connection with or in contemplation of any Change of Control, the Issuers (or any Affiliate of the Issuers) or a third party has made an offer to purchase, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer (an “Alternate Offer”), any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes properly tendered in accordance with the terms of the Alternate Offer, or (iii) the Issuers have previously issued a notice of a full redemption pursuant to Section 5.1

(d) The Issuers shall comply, to the extent applicable, with the requirements of Rule 14e-1 of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 3.9. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 3.9, the Issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 3.9 by virtue of such compliance.

(e) A Change of Control Offer or Alternate Offer may be made in advance of a Change of Control, and conditioned upon such Change of Control.

(f) On the Change of Control Payment Date, the Issuers shall, to the extent permitted by law,

(i) accept for payment all Notes issued by the Issuers or portions thereof validly tendered and not withdrawn pursuant to the Change of Control Offer;

(ii) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered; and

(iii) deliver, or cause to be delivered, to the Trustee or registrar for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuers.

SECTION 3.10. Maintenance of Insurance. The Issuers and the Guarantors shall maintain with financially sound and reputable insurance companies not Affiliates of the Issuers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

SECTION 3.11. Future Guarantors. If, after the Issue Date, (a) any Restricted Subsidiary of the Lux Co-Issuer (including any newly formed, newly acquired or newly redesignated Restricted Subsidiary, but excluding any Receivables Subsidiary, any CFC, any CFC Holdco, any direct or indirect Subsidiary of a CFC and the U.S. Co-Issuer) that is not then an Issuer or a Guarantor guarantees or borrows or issues any Indebtedness under the Senior Credit Agreement or guarantees any capital markets Indebtedness of the Lux Co-Issuer or any of its Restricted Subsidiaries with an aggregate principal amount in excess of $100 million (“Certain Capital Markets Debt”) or (b) the Lux Co-Issuer otherwise elects to have any Restricted Subsidiary of the Lux Co-Issuer become a Guarantor, then, in each such case, the Lux Co-Issuer shall cause such Restricted Subsidiary to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary shall become a Guarantor under this Indenture providing for a Guarantee by such Restricted Subsidiary on the same terms and conditions as those set forth in this Indenture and applicable to the other Guarantors; provided that, in the case of clause (a), such supplemental indenture shall be executed and delivered to the Trustee within 20 Business Days of the date that such Indebtedness under the Senior Credit Agreement or such Certain Capital Markets Debt has been guaranteed, co-borrowed or co-issued by such Restricted Subsidiary.

-105-

Each Guarantee shall be released in accordance Section 10.2(b).

SECTION 3.12. Compliance Certificate; Statement by Officers as to Default. The Lux Co-Issuer shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Lux Co-Issuer ending after the Issue Date, an Officer’s Certificate to the effect that to the best knowledge of the signer thereof on behalf of each of the Issuers, the Issuers are or are not in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Issuers (through its own action or omission or through the action or omission of any Guarantor as applicable) shall be in default, specifying all such defaults and the nature and status thereof of which such signer may have knowledge.

So long as any of the Notes are outstanding, upon any Officer becoming aware of any Default or Event of Default, the Issuers shall deliver to the Trustee, within 30 days of such Officer becoming aware of such Default or Event of Default (unless such Default or Event of Default has been cured or waived within such 30-day time period), an Officer’s Certificate specifying such Default or Event of Default and what action the Issuers are taking or propose to take with respect thereto.

SECTION 3.13. [Reserved].

SECTION 3.14. Designation of Restricted and Unrestricted Subsidiaries.

(a) The Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer may designate any Subsidiary of the Lux Co-Issuer (including any existing Subsidiary and any newly acquired or newly formed Subsidiary of the Lux Co-Issuer but excluding the U.S. Co-Issuer) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns or holds any Lien on any property of, the Lux Co-Issuer or any other Subsidiary of the Lux Co-Issuer that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that immediately after giving effect to such designation, no Specified Event of Default shall have occurred and be continuing as a result of such designation; provided, further, however, that either:

(i) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or

(ii) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 3.4.

(b) The Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary. Any Indebtedness of such Subsidiary and any Liens encumbering its assets at the time of such designation shall be deemed newly incurred or established, as applicable, at such time.

(c) Any such designation by the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer shall be evidenced to the Trustee by promptly delivering to the Trustee a copy of the resolution of the Board of Directors of either of the Issuers or any direct or indirect parent of the Lux Co-Issuer giving effect to such designation and an Officer’s Certificate certifying that such designation complied with this Section 3.14.

-106-

SECTION 3.15. Covenant Suspension.

(a) If on any date following the Issue Date (i) the Notes have Investment Grade Ratings from any two of the Rating Agencies and (ii) no Default (other than any Default that would not constitute a Default following a Covenant Suspension Event (as defined below)) has occurred and is continuing under this Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), (x) the Guarantees will be automatically and unconditionally released and discharged and (y) the Lux Co-Issuer and its Restricted Subsidiaries will not be subject to Sections 3.3, 3.4, 3.5 (to the extent the Issuers make an election pursuant to Section 3.5(b)), 3.6, 3.7, 3.8, 3.9, 3.11 and 4.1(a)(iv) (collectively, the “Suspended Covenants”).

(b) In the event that, after a Covenant Suspension Event, the Notes no longer have an Investment Grade Rating from any two of the Rating Agencies (the date of such event, the “Reversion Date”), then the Lux Co-Issuer and its Restricted Subsidiaries shall thereafter again be subject to the Suspended Covenants under this Indenture with respect to future events. The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to as the “Suspension Period.”

(c) Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Net Cash Proceeds shall be reset at zero.

(d) With respect to Restricted Payments made after the Reversion Date, the amount of Restricted Payments made shall be calculated as though Section 3.4 had been in effect prior to, but not during, the Suspension Period. No Subsidiary may be designated as an Unrestricted Subsidiary during the Suspension Period unless such designation would have complied with Section 3.4 as if Section 3.4 were in effect during such period. In addition, all Indebtedness Incurred, or Disqualified Stock or Preferred Stock issued, during the Suspension Period shall be classified to have been Incurred or issued pursuant to Section 3.3(b)(iii). In addition, (i) for purposes of Section 3.8, all agreements and arrangements entered into by the Lux Co-Issuer and any Restricted Subsidiary with an Affiliate of the Lux Co-Issuer during the Suspension Period prior to such Reversion Date shall be deemed to have been entered pursuant to Section 3.8(b)(v), (ii) for purposes of Section 3.6, all contracts entered into during the Suspension Period prior to such Reversion Date that contain any of the restrictions contemplated by such Section 3.6 shall be deemed to have been entered pursuant to Section 3.6(i) and (iii) for purposes of Section 3.5, any Lien incurred during the Suspension Period prior to such Reversion Date will be deemed to have entered into pursuant to clause (7) of the definition of “Permitted Liens.” In addition, any Change of Control during such Suspension Period shall not require a Change of Control Offer during or after the Suspension Period.

(e) During the Suspension Period, any reference in the definition of “Unrestricted Subsidiary” or “Permitted Liens” to Section 3.3 or any provision thereof shall be construed as if Section 3.3 had remained in effect since the Issue Date and during the Suspension Period.

(f) In addition, during the Suspension Period, the Guarantees will be automatically released and the obligation to grant further Guarantees will be suspended. Upon the Reversion Date, the obligation to grant Guarantees pursuant to Section 3.11 will be reinstated (and the Reversion Date will be deemed to be the date on which Indebtedness under the Senior Credit Agreement was Incurred or guaranteed, as applicable, for purposes of Section 3.11).

-107-

(g) Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of any failure to comply with the Suspended Covenants during any Suspension Period, and the Lux Co-Issuer and any Subsidiary of the Lux Co-Issuer will be permitted, without causing a Default or Event of Default or breach of any of the Suspended Covenants (notwithstanding the reinstatement thereof) under this Indenture, to honor, comply with or otherwise perform any contractual commitments or obligations entered into during a Suspension Period following a Reversion Date and to consummate the transactions contemplated thereby; provided that, to the extent any such commitment or obligation results in the making of a Restricted Payment, such Restricted Payment shall be made under Section 3.4(a)(C) or Section 3.4(b) and if not permitted by Section 3.4(a)(C) or Section 3.4(b), such Restricted Payment shall be deemed permitted by Section 3.4(a)(C) and shall be deducted for purposes of calculating the amount pursuant to Section 3.4(a)(C) (which in no event shall be reduced to an amount less than zero).

One of the Issuers shall provide an Officer’s Certificate to the Trustee indicating the occurrence of any Covenant Suspension Event or Reversion Date. The Trustee shall have no obligation to (i) monitor the ratings of the Notes, (ii) independently determine or verify if such events have occurred, (iii) make any determination regarding the impact of actions taken during the Suspension Period on any Issuer and its Restricted Subsidiaries’ future compliance with their covenants or (iv) notify the Holders of any Covenant Suspension Event or Reversion Date.

SECTION 3.16. Stay, Extension and Usury Laws. The Issuers and each of the Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuers and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

ARTICLE IV

Merger, Consolidation, Amalgamation or Sale of Assets

SECTION 4.1. When the Issuers May Merge, Amalgamate or Otherwise Dispose of Assets.

(a) Neither Issuer shall consolidate, merge or amalgamate with or into or wind up into (whether or not such Issuer is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person (other than the merger, amalgamation or consolidation of one Issuer into the other Issuer) unless:

(i) such Issuer is the surviving Person or the Person formed by or surviving any such consolidation, merger, amalgamation or winding up (if other than such Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is (or is the foreign analog of) a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia, the laws of Bermuda, the laws of the United Kingdom or the laws of any member state of the European Union (such Issuer or such Person, as the case may be, being herein called the “Successor Company”); provided that after giving effect to any such consolidation, amalgamation, merger, sale, assignment, transfer, lease, conveyance or disposition, an entity that is organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia, shall be or become the issuer or a co-issuer of the Notes;

-108-

(ii) the Successor Company (if other than such Issuer) expressly assumes all the obligations of such Issuer under this Indenture and the Notes pursuant to supplemental indentures or other documents or instruments;

(iii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, either:

(1) the Lux Co-Issuer (or a Successor Company to the Lux Co-Issuer, if applicable) would be permitted to Incur at least $1.00 of additional Indebtedness as Ratio Debt; or

(2) the Fixed Charge Coverage Ratio for the Lux Co-Issuer (or, if applicable, the Successor Company thereto) and its Restricted Subsidiaries would be equal to or greater than such ratio for the Lux Co-Issuer and its Restricted Subsidiaries immediately prior to such transaction;

(v) each Guarantor, unless it is the other party to the transactions described above, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s Obligations under this Indenture and the Notes; and

(vi) such Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indentures (if any) comply with this Indenture.

The Successor Company (if other than an Issuer) shall succeed to, and be substituted for, such Issuer under this Indenture and the Notes, and such Issuer shall automatically be released and discharged from its obligations under this Indenture and the Notes. Notwithstanding the foregoing clauses (iii) and (iv) above, (A) either of the Issuers may consolidate or amalgamate with, merge into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to an Issuer or any Guarantor, (B) either of the Issuers may merge, consolidate or amalgamate with an Affiliate of such Issuer solely for the purpose of reincorporating or reorganizing such Issuer in another state of the United States, any state or territory thereof or the District of Columbia, Bermuda, the United Kingdom or in any member state of the European Union so long as the principal amount of Indebtedness of the Lux Co-Issuer and its Restricted Subsidiaries is not increased thereby (unless such increase is permitted by this Indenture), (C) an Issuer may convert into a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Issuer or the laws of the United States, any state or territory thereof or the District of Columbia; provided that, in the case of each of clauses (A), (B) and (C), if the resulting entity is not organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia, a co-issuer of the Notes remains in existence or is organized or existing under such laws, (D) an Issuer or Guarantor may change its name and (E) any Restricted Subsidiary may merge, amalgamate or consolidate with the Lux Co-Issuer so long as the Lux Co-Issuer is the Successor Company in such merger, amalgamation or consolidation.

-109-

(b) Subject to Sections 10.2 and 10.5 of this Indenture, each Guarantor shall not, and the Lux Co-Issuer shall not permit any such entity to, consolidate, merge or amalgamate with or into or wind up into (whether or not such entity is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless:

(i) (A) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, merger, amalgamation or winding up (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, partnership, limited partnership or limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of the United States, any state or territory thereof or the District of Columbia, the laws of the United Kingdom or the laws of any member state of the European Union or the laws of any other jurisdiction so long as a Guarantee provided by such surviving Person under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of the predecessor Guarantor (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”);

(B) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s Guarantee pursuant to a supplemental indenture or other documents or instruments;

(C) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Guarantor or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Guarantor or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and

(D) the Successor Guarantor (if other than such Guarantor) shall have delivered or caused to be delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation or transfer and such supplemental indenture (if any) comply with this Indenture; or

(ii) such sale or disposition or consolidation, amalgamation or merger is made in compliance with Section 3.7.

(c) Subject to Article X, the Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee, and such Guarantor shall automatically be released and discharged from its obligations under this Indenture and any Guarantee. Notwithstanding the foregoing, (1) a Guarantor may merge, consolidate or amalgamate with an Affiliate of the Lux Co-Issuer incorporated or organized solely for the purpose of reincorporating or reorganizing such Guarantor in the United States, any state or territory thereof or the District of Columbia, Bermuda, the United Kingdom or in any member state of the European Union, so long as the principal amount of Indebtedness of the Lux Co-Issuer and the Restricted Subsidiaries is not increased thereby (unless such increase is permitted by this Indenture), (2) a Guarantor may (a) consolidate, merge or amalgamate with or into or wind up into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets to, any Issuer or a Guarantor or (b) dissolve if such Guarantor sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its properties and assets to another Person in compliance with Section 3.7 and after giving effect to such sale, assignment, transfer, lease, conveyance or disposition and prior to such dissolution, has no or a de minimis amount of assets,

-110-

(3) a Guarantor may convert into a corporation, partnership, limited partnership, limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the jurisdiction of organization of such Guarantor or the laws of the United States, any state or territory thereof or the District of Columbia, the laws of the United Kingdom or the laws of any member state of the European Union or the laws of any other jurisdiction so long as a Guarantee provided under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of such Guarantor prior to such conversion, (4) a Guarantor may change its name and (5) any Restricted Subsidiary may merge, amalgamate or consolidate into any Guarantor; provided, in the case of this clause (5), that the surviving Person (i) is a corporation, partnership, limited partnership or limited liability company or trust, or the foreign analog of any of the foregoing entities, organized or existing under the laws of the United States, any state or territory thereof or the District of Columbia, Bermuda, the United Kingdom or the laws of any member state of the European Union or the laws of any other jurisdiction so long as a Guarantee provided by such surviving Person under the laws of such jurisdiction is substantially equivalent to the Guarantee provided under the laws of the jurisdiction of formation of the predecessor Guarantor or the laws of the jurisdiction of organization of such Restricted Subsidiary or Guarantor and (ii) is or becomes a Guarantor upon consummation of such merger, amalgamation or consolidation. Notwithstanding the foregoing, no restriction described under Article IV shall limit the ability of any Non-Guarantor Subsidiary or Unrestricted Subsidiary to engage in any merger, consolidation, amalgamation or sale of all or substantially all assets.

(d) For purposes of this Section 4.1, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Lux Co-Issuer, which properties and assets, if held by the Lux Co-Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Lux Co-Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Lux Co-Issuer.

ARTICLE V

Redemption of Notes

SECTION 5.1. Optional Redemption.

(a) The Notes may be redeemed, in whole at any time, or in part from time to time, subject to the conditions and at the redemption prices set forth in Paragraph 6 of the form of Note set forth in Exhibit A hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the redemption date.

(b) Any redemption of the Notes may, at the Issuers’ discretion, be subject to one or more conditions precedent. The Redemption Date of any redemption that is subject to satisfaction of one or more conditions precedent may, in the Issuers’ discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or such redemption may not occur and any notice with respect to such redemption may be modified, extended or rescinded in the event that any or all such conditions shall not have yet been satisfied (or waived by the Issuers in their sole discretion) by the redemption date, or by the redemption date so delayed (which may exceed 60 days from the date of the redemption notice in such case).

(c) Unless the Issuers default in the payment of the redemption price, interest shall cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

-111-

(d) The Notes of any series may be optionally redeemed in full or in part pursuant to this Section 5.1 before the Notes of any other series are optionally redeemed in full (or at all) pursuant to this Section 5.1.

SECTION 5.2. Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions. If the Issuers elect to redeem Notes pursuant to Section 5.1, the Issuers shall furnish to the Trustee, at least two Business Days for Global Notes and 10 calendar days for Definitive Notes before notice of redemption is required to be mailed or caused to be mailed to Holders pursuant to Section 5.4, an Officer’s Certificate setting forth (a) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (b) the Redemption Date, (c) the principal amount of the Notes to be redeemed and (d) the redemption price. The Issuers may also include a request in such Officer’s Certificate that the Trustee give the notice of redemption in the Issuers’ name and at their expense and setting forth the information to be stated in such notice as provided in Section 5.4. The Issuers shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 5.3.

SECTION 5.3. Selection by Trustee of Notes to Be Redeemed. In the case of any partial redemption of any series of Notes, the Trustee shall select Notes of such series for redemption in compliance with the requirements of the securities exchange, if any, on which such Notes are listed (so long as the Trustee knows of such listing), or if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and if the Notes are represented by Global Notes, interests in such Global Notes will be selected for redemption in such manner as complies with applicable legal requirements and the procedures of the Depositary) in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof; provided that the selection of Notes for redemption shall not result in a Holder of Notes with a principal amount of Notes less than the minimum denomination of $2,000. If any Notes are to be purchased or redeemed in part only, the notice of purchase or redemption relating to such Notes shall state the portion of the principal amount of the Notes in the aggregate that has been or is to be purchased or redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note in accordance with Section 5.7. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption so long as the Issuers have deposited with the Paying Agent funds sufficient to pay the principal of and premium, if any, plus accrued and unpaid interest, if any, on the Notes to be redeemed.

The Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

SECTION 5.4. Notice of Redemption. The Issuers shall deliver to each Holder’s registered address or otherwise in accordance with the procedures of the Depositary, a notice of redemption to each Holder whose Notes are to be redeemed not less than 10 nor more than 60 days prior to a date fixed for redemption (a “Redemption Date”); provided, however, that redemption notices may be delivered more than 60 days prior to a Redemption Date if (i) the notice is issued pursuant to Article VIII or (ii) in the case of a redemption that is subject to one or more conditions precedent, the date of redemption is extended as permitted under this Indenture. At the Issuers’ written request, the Trustee may give notice of redemption in the Issuers’ name and at the Issuers’ expense.

-112-

All notices of redemption shall be prepared by the Issuers and shall state:

(a) the Redemption Date;

(b) the redemption price and the amount of accrued interest to, but excluding, the Redemption Date payable as provided in Section 5.6, if any;

(c) if less than all outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption;

(d) in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder shall receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed;

(e) that on the Redemption Date the redemption price (and accrued interest to, but excluding, the Redemption Date payable as provided in Section 5.6, if any) shall become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Issuers default in making the redemption payment, that interest on Notes called for redemption (or the portion thereof) shall cease to accrue on and after said date;

(f) the place or places where such Notes are to be surrendered for payment of the redemption price and accrued interest, if any;

(g) the name and address of the Paying Agent;

(h) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(i) the CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes;

(j) the Section of this Indenture pursuant to which the Notes are to be redeemed; and

(k) any conditions to such redemption.

At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ name and at its expense; provided, however, that the Issuers shall have delivered to the Trustee, at least two Business Days prior to when the notice of the redemption is to be given, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Such Officer’s Certificate shall state that all conditions precedent to the delivery of such notice have been complied with.

SECTION 5.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time, on any Redemption Date, the Issuers shall deposit with the Trustee or with a Paying Agent (or, if the Issuers are acting as their own Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the redemption price of, and accrued interest on, all the Notes which are to be redeemed on that date.

-113-

SECTION 5.6. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to, but excluding, the Redemption Date), and from and after such date (unless the Issuers shall default in the payment of the redemption price and accrued interest, if any, to, but excluding, the Redemption Date) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Issuers at the redemption price, together with accrued interest, if any, to, but excluding, the Redemption Date (subject to the rights of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the redemption date).

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.

If a Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, shall be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no further interest shall be payable to Holders whose Notes shall be subject to redemption by the Issuers.

SECTION 5.7. Notes Redeemed in Part. Any Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Issuers maintained for such purpose pursuant to Section 2.3 (with, if the Issuers so require, due endorsement by, or a written instrument of transfer in form satisfactory to the Issuers duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Issuers shall execute, and the Trustee upon receipt of an Authentication Order shall authenticate and make available for delivery to the Holder of such Note at the expense of the Issuers, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered, provided that each such new Note shall be in a minimum principal amount of $2,000 and integral multiples of $1,000 in excess thereof.

SECTION 5.8. Offer to Repurchase. In the event that, pursuant to Section 3.7, the Issuers are required to commence an offer to all Holders to purchase the Notes (an “Offer to Repurchase”), it shall follow the procedures specified below:

(a) The Offer to Repurchase shall remain open for a period of at least 10 days following its commencement and not more than 60 Business Days, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than five Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuers shall apply all Excess Proceeds (the “Offer Amount”), to the purchase of Notes and such Pari Passu Indebtedness, if any (in each instance, on a pro rata basis, if applicable), or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Offer to Repurchase. Payment for any Notes so purchased shall be made pursuant to Section 3.1.

(b) If the Purchase Date is on or after an interest record date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Offer to Repurchase.

(c) Upon the commencement of an Offer to Repurchase, the Issuers shall send, by first class mail, a notice to the Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Repurchase. The notice, which shall govern the terms of the Offer to Repurchase, shall state:

-114-

(i) that the Offer to Repurchase is being made pursuant to this Section 5.8 and Section 3.7, and the length of time the Offer to Repurchase shall remain open;

(ii) the Offer Amount, the purchase price and the Purchase Date;

(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;

(iv) that, unless the Issuers default in making such payment, any Note accepted for payment pursuant to the Offer to Repurchase shall cease to accrue interest after the Purchase Date;

(v) that Holders electing to have a Note purchased pursuant to an Offer to Repurchase may elect to have Notes purchased in a minimum amount of $2,000 or an integral multiple of $1,000 in excess thereof only;

(vi) that Holders electing to have Notes purchased pursuant to any Offer to Repurchase shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Issuers, a Depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

(vii) that Holders shall be entitled to withdraw their election if the Issuers, the Depositary or the Paying Agent, as the case may be, receives, not later than on the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased;

(viii) that, if the aggregate principal amount of Notes and, if applicable, Pari Passu Indebtedness, if any, surrendered by Holders thereof exceeds the Offer Amount, the Trustee shall select the Notes and, if applicable, the Issuers shall select such Pari Passu Indebtedness to be purchased or prepaid, on a pro rata basis based on the principal amount of Notes and Pari Passu Indebtedness, if any, surrendered (with such adjustments as may be deemed appropriate by the Issuers so that only Notes in minimum denominations of $2,000, or integral multiples of $1,000 in excess thereof, shall be purchased); and

(ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

(d) On or before the Purchase Date, the Issuers shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Offer to Repurchase, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating that such Notes or portions thereof were accepted for payment by the Issuers in accordance with the terms of this Section 5.8. The Issuers, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order from the Issuers, shall authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers shall publicly announce the results of the Offer to Repurchase on the Purchase Date.

-115-

SECTION 5.9. Redemption for Taxation Reasons. The Issuers may redeem the Notes, at their option, in whole, but not in part, at any time upon giving not less than ten (10) nor more than sixty (60) days’ notice, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to (but not including) the date fixed for redemption (a “Tax Redemption Date”) (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date) and all Additional Amounts, if any, then due or that will become due on the Tax Redemption Date as a result of the redemption or otherwise, if the Issuers determine in good faith that, as a result of:

(a) any change in, or amendment to, the law or treaties (or any regulations, protocols or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affecting taxation; or

(b) any change in official position regarding the application, administration or interpretation of such laws, treaties, regulations, protocols or rulings (including a holding, judgment or order by a government agency or court of competent jurisdiction or a change in published administrative practice) (each of the foregoing in clauses (a) and (b), a “Change in Tax Law”),

any Payor with respect to the Notes or a Guarantee is, or on the next date on which any amount would be payable in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to such Payor (including the appointment of a new Paying Agent or, where such action would be reasonable, payment through another Payor); provided that changing the jurisdiction of an Issuer is not a reasonable measure for purposes of this section; provided further that no Payor shall be required to take any measures that in the Issuers’ good-faith determination would result in the imposition on such person of any legal or regulatory burden or the incurrence by such person of additional costs, or would otherwise result in any adverse consequences to such person.

In the case of any Payor, the Change in Tax Law with respect to a given Relevant Taxing Jurisdiction must become effective on or after the later of the date of the Offering Memorandum or the date a jurisdiction becomes a Relevant Taxing Jurisdiction. Notwithstanding the foregoing, no such notice of redemption will be given earlier than 90 days prior to the earliest date on which the Payor would be obligated to make such payment of Additional Amounts. Prior to the publication, mailing or delivery of any notice of redemption of the Notes pursuant to the foregoing, the Issuers will deliver to the Trustee (1) an Officer’s Certificate stating that they are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to their right so to redeem have been satisfied (including that the obligation to pay such Additional Amounts cannot be avoided by the Payor taking reasonable measures available to it) and (2) an opinion of an independent tax counsel of recognized standing to the effect that the Payor would be obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee will accept such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, in which event it will be conclusive and binding on the Holders.

The provisions of this Section 5.9 will apply mutatis mutandis to the laws and official positions of any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. In addition, the provisions of this Section 5.9 will apply with respect to a Guarantor’s obligation to pay Additional Amounts only after the Guarantor is obligated to make at least one payment on the Notes. The provisions of this Section 5.9 will survive any termination, defeasance or discharge of this Indenture.

-116-

ARTICLE VI

Defaults and Remedies

SECTION 6.1. Events of Default. Each of the following is an “Event of Default” with respect to the Notes of any series:

(i) a default in any payment of interest on such series of Notes when due, continued for thirty (30) days;

(ii) a default in the payment of principal or premium, if any, of such series of Notes when due at its Stated Maturity, upon optional redemption, upon required purchase, upon acceleration or otherwise;

(iii) the failure by the Lux Co-Issuer or any Restricted Subsidiary to comply for 60 days after receipt of written notice referred to below with any of its obligations, covenants or agreements (other than a default pursuant to Sections 6.1(i) or 6.1(ii)) contained in such series of Notes or this Indenture; provided that in the case of a failure to comply with Section 3.2, such period of continuance of such default or breach shall be 120 days after written notice described in this clause (iii) has been given;

(iv) (x) the failure by the Lux Co-Issuer or any Restricted Subsidiary to pay the principal amount of any Indebtedness for borrowed money (other than Indebtedness for borrowed money owing to the Lux Co-Issuer or a Restricted Subsidiary) within any applicable grace period after final maturity or (y) the acceleration of any Indebtedness for borrowed money (other than Indebtedness for borrowed money owing to the Lux Co-Issuer or a Restricted Subsidiary) by the holders thereof because of a default, in each case of clauses (x) and (y), if the total amount of such Indebtedness unpaid at final maturity or accelerated exceeds $75 million or its foreign currency equivalent;

(v) an Issuer or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(1) commences a voluntary case;

(2) consents to the entry of an order for relief against it in any voluntary case;

(3) consents to the appointment of a Custodian of it or for any substantial part of its property; or

(4) makes a general assignment for the benefit of its creditors;

or takes any comparable action under any foreign laws relating to insolvency;

(vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

-117-

(1) is for relief against the Issuers or any Significant Subsidiary in an involuntary case;

(2) appoints a Custodian of the Issuers or any Significant Subsidiary or for any substantial part of its property; or

(3) orders the winding up or liquidation of either of the Issuers or any Significant Subsidiary;

or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days;

(vii) failure by either Issuer or any Significant Subsidiary to pay final and non-appealable judgments aggregating in excess of $75 million or its foreign currency equivalent (net of any amounts that are covered by enforceable insurance policies issued by solvent insurance companies), which judgment or judgments are not discharged, waived or stayed for a period of 60 days after such judgment or judgments become final and, in the event such judgment or judgments are covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or judgments or decree which is not promptly stayed; or

(viii) the Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof or of this Indenture), or any Guarantor that is a Significant Subsidiary denies in writing that it has any further liability under its Guarantee or gives written notice to such effect, other than by reason of the termination or discharge of this Indenture or the release of any such Guarantee in accordance with this Indenture, and such Default continues for ten (10) days.

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

However, a default under Section 6.1(iii) shall not constitute an Event of Default with respect to any series of Notes until the Trustee or the Holders of at least 30% in principal amount of outstanding Notes of such series notify the Issuers in writing of the Default and such Default is not cured within the time specified in Section 6.1(iii) after receipt of such notice.

SECTION 6.2. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(v) or (vi) above with respect to an Issuer) occurs and is continuing with respect to any series of Notes, the Trustee or the Holders of at least 30% in principal amount of outstanding Notes of such series by written notice to the Issuers (and to the Trustee, if given by holders of Notes of such series) may declare the principal of, premium, if any, and accrued but unpaid interest, on all Notes outstanding of such series to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default arising from Section 6.1(v) or (vi) of an Issuer occurs, the principal of, premium, if any, and interest on all the outstanding Notes shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the holders of a majority in principal amount of outstanding Notes of a series may rescind any such acceleration with respect to the Notes of such series and its consequences.

SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture (including sums owed to the Trustee and its agents and counsel) and the Guarantees.

-118-

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the then outstanding Notes of any series by notice to the Trustee may, on behalf of the Holders of all of the Notes of such series, (i) waive, rescind or cancel any declaration of an existing or past Default or Event of Default with respect to such series of Notes and its consequences under this Indenture (except a continuing Default or Event of Default in the payment of interest or premium on, or the principal of, the Notes of such series (other than such non-payment of principal or interest that has become due as a result of such acceleration)) or (ii) waive compliance with any provision of this Indenture, the Notes of such series or the Guarantees if, in each case of clauses (i) and (ii), such waiver, rescission or cancellation, as applicable, would not conflict with any judgment or decree. Upon any waiver of a Default or Event of Default effected pursuant to clause (i) of the previous sentence with respect to any series of Notes, such Default or Event of Default shall cease to exist with respect to such series of Notes, and any Event of Default with respect to such series of Notes arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

In the event of any Event of Default arising from Section 6.1(iv), such Event of Default and all consequences thereof shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of such series, if prior to 20 days after such Event of Default arose, the Lux Co-Issuer delivers an Officer’s Certificate to the Trustee stating that (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged or (y) the requisite amount of Holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default or (z) the default that is the basis for such Event of Default has otherwise been cured.

SECTION 6.5. Control by Majority. The Holders of a majority in principal amount of outstanding Notes of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to such series of Notes. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability (it being understood that the Trustee has no duty to determine whether any action is prejudicial to any Holder) unless such Holders have offered, and if requested, provided to the Trustee security and indemnity satisfactory to the Trustee against any loss, liability or expense. Prior to taking any action under this Indenture, the Trustee shall be entitled to security or indemnification satisfactory to it in its sole discretion against all losses, liabilities and expenses that may be caused by taking or not taking such action.

SECTION 6.6. Limitation on Suits. In case an Event of Default occurs and is continuing with respect to any series of Notes, the Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders of Notes of such series unless such Holders have offered, and if requested, provided to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest, when due, no Holder may pursue any remedy with respect to this Indenture or the Notes of any series unless:

-119-

(i) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(ii) Holders of at least 30% of the aggregate principal amount of the outstanding Notes of such series have requested in writing that the Trustee pursue the remedy;

(iii) such Holders have offered, and if requested, provided the Trustee security or indemnity reasonably satisfactory to it in respect of any loss, liability or expense;

(iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(v) the Holders of a majority in principal amount of the outstanding Notes of such series have not given the Trustee a written direction inconsistent with such request within such 60-day period.

SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium, if any, or interest on the Notes of any series held by such Holder, on or after the respective due dates expressed in the Notes of such series, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.8. Collection Suit by Trustee. If an Event of Default specified in Sections 6.1(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.6.

SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Issuers, its Subsidiaries or their respective creditors or properties and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders of Notes of any series (pursuant to the written direction of Holders of a majority in principal amount of the then-outstanding Notes of such series) in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.6. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of Notes of any series any plan or reorganization, arrangement, adjustment or composition affecting the Notes of such series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder thereof in such proceeding.

SECTION 6.10. Priorities. The Trustee shall pay out any money or property received by it (and any money or property distributable in respect of the Issuers’ or the Guarantors’ obligations under this Indenture shall be applied) in the following order:

First: to the Trustee for amounts due under Section 7.6;

-120-

Second: to Holders for amounts due and unpaid on the Notes (or the Notes of any series) for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes (or the Notes of such series) for principal, premium, if any, and interest, respectively; and

Third: to the Issuers or, to the extent the Trustee receives any amount for any Guarantor, to such Guarantor as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. At least 15 days before such record date, the Issuers (or the Trustee) shall deliver to each applicable Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Notes of any series.

ARTICLE VII

Trustee

SECTION 7.1. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall, in the exercise of its rights and powers under this Indenture, use the same degree of care and skill in its exercise of such rights and powers as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs, subject to the provisions of clause (h) below.

(b) Except during the continuance of an Event of Default of which a Trust Officer has actual knowledge:

(i) the duties of the Trustee and the Agents shall be determined solely by the express provisions of this Indenture and the Trustee and the Agents undertake to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Agents; and

(ii) in the absence of gross negligence or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee under this Indenture, the Notes and the Guarantees, as applicable. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Notes and the Guarantees as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

-121-

(c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i) this Section 7.1(c) does not limit the effect of Section 7.1(b);

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer or Trust Officers unless it is proved in a final non-appealable decision of a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.

(d) None of the Trustee or any Agent shall be liable for interest on any money received by it except as the Trustee and the Agents may agree in writing with the Issuers.

(e) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(f) No provision of this Indenture, the Notes or the Guarantees shall require the Trustee or an Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1.

(h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered, and if requested, provided to the Trustee, security and indemnity satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction.

SECTION 7.2. Rights of Trustee.

(a) The Trustee and the Agents may conclusively rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or any other paper or document believed by it to be genuine and to have been signed or presented by the proper Person or Persons. The Trustee and the Agents need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting it may require an Officer’s Certificate or an Opinion of Counsel or both, except that (x) no Officer’s Certificate or Opinion of Counsel will be required in connection with the original issuance of the Initial Notes on the date hereof and (y) no Opinion of Counsel will be required in connection with the execution of any amendment or supplement adding a new Guarantor under this Indenture or the release of a Guarantor pursuant to Section 10.2(b) hereof. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate or Opinion of Counsel.

-122-

(c) The Trustee and the Agents may act through its attorneys, custodians, nominees and agents and shall not be responsible for the misconduct or negligence of or for the supervision of any agent, custodians, nominees or attorney appointed with due care.

(d) The Trustee and the Agents shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s or such Agent’s conduct does not constitute willful misconduct or negligence as determined in a final non-appealable decision of a court of competent jurisdiction.

(e) The Trustee and the Agents may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Notes and the Guarantees shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder or under the Notes and the Guarantees in good faith and in accordance with the advice or opinion of such counsel.

(f) The Trustee and the Agents shall not be bound to make any investigation into any statement, warranty or representation, or the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or other paper or document made or in connection with this Indenture; moreover, the Trustee and the Agents shall not be bound to make any investigation into (i) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (ii) the occurrence of any default, or the validity, enforceability, effectiveness or genuineness of this Indenture or any other agreement, instrument or document or (iii) the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other evidence of indebtedness or other paper or document, but the Trustee or an Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee or an Agent, as applicable, shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuers, personally or by agent or attorney and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(g) The Trustee shall not be deemed to have knowledge of any Default or Event of Default except any Default or Event of Default of which a Trust Officer shall have (x) received written notification from the Issuers or a Holder at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture or (y) obtained “actual knowledge.” “Actual knowledge” shall mean the actual fact or statement of knowing by a Trust Officer without independent investigation with respect thereto.

(h) In no event shall the Trustee or an Agent be responsible or liable for special, indirect, or consequential punitive or incidental loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee or Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent (including the Agents), custodian and other Person employed to act hereunder.

(j) The Trustee and the Agents may request that the Issuers deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

-123-

(k) The Trustee shall not have any duty (A) to see to any recording, filing, or depositing of this Indenture or any agreement referred to herein, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, re-filing or redepositing of any thereof or (B) to see to any insurance.

(l) The right of the Trustee or an Agent to take or refrain from taking any actions enumerated in this Indenture shall not be construed as a duty.

SECTION 7.3. Individual Rights of Trustee. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuers, the Guarantors or their Affiliates with the same rights it would have if it were not the Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Section 7.9. In addition, the Trustee shall be permitted to engage in transactions with the Issuers; provided, however, that if the Trustee acquires any conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the SEC for permission to continue acting as Trustee or (iii) resign.

SECTION 7.4. Disclaimer. Neither the Trustee nor any Agent shall be responsible for and none of them makes any representation as to the validity, sufficiency or adequacy of this Indenture, the Notes or the Guarantees, neither of them shall be accountable for the Issuers’ use of the Notes or the proceeds from the Notes, and neither of them shall be responsible for any statement of the Issuers in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication or for the use or application of any funds received by any Paying Agent other than the Trustee. Neither the Trustee nor any Agent shall be responsible to make any calculation with respect to any matter under this Indenture. Neither the Trustee nor any Agent shall have any duty to monitor or investigate the Issuers’ compliance with or the breach of, or cause to be performed or observed, any representation, warranty, or covenant, or agreement of any Person, other than the Trustee or any Agent, as applicable, made in this Indenture.

SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing with respect to any series of Notes and is actually known to the Trustee, the Trustee shall deliver to each Holder of the Notes of such series notice of the Default within 90 days after it is known to the Trustee (unless such Default or Event of Default has been cured or waived within such 90-day time period). Except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note of a series, the Trustee may withhold notice if and so long as the Trustee in good faith determines that withholding notice is in the interests of the Holders of the Notes of such series.

-124-

the Notes and the Guarantees, including the costs and expenses of enforcing this Indenture (including this Section 7.6), the Notes and the Guarantees and of defending itself against any claims (whether asserted by any Holder, the Issuers or otherwise). The Trustee and the Agents shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee or an Agent to so notify the Issuers shall not relieve the Issuers of their obligations hereunder. The Issuers shall defend the claim and the Trustee and the Agents may have separate counsel and the Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee or an Agent as a result of its own willful misconduct or negligence as determined by a final non-appealable decision of a court of competent jurisdiction.

To secure the Issuers’ payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes. The right of the Trustee and each Agent to receive payment of any amounts due under this Section 7.6 shall not be subordinate to any other liability or indebtedness of the Issuers.

The Issuers’ obligations pursuant to this Section and any lien arising hereunder shall survive the satisfaction and discharge of this Indenture, the termination for any reason of this Indenture and the resignation or removal of the Trustee or an Agent. When the Trustee or an Agent incurs expenses after the occurrence of a Default specified in Sections 6.1(v) or (vi) with respect to the Issuers, the expenses are intended to constitute expenses of administration under any Bankruptcy Law.

Pursuant to Section 10.1, the obligations of the Issuers hereunder are jointly and severally guaranteed by the Guarantors.

SECTION 7.7. Replacement of Trustee. The Trustee may resign at any time by so notifying the Issuers. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Issuers and the Trustee in writing and may appoint a successor Trustee. The Issuers shall remove the Trustee if:

(i) the Trustee fails to comply with Section 7.9;

(ii) the Trustee is adjudged bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Trustee or its property; or

(iv) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed by the Issuers or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Issuers shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.6. All costs reasonably incurred in connection with any resignation or removal hereunder shall be borne by the Issuers.

-125-

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Notes of any series may petition, at the Issuers’ expense, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.9, unless the Trustee’s duty to resign is stayed, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.7, the Issuers’ obligations under Section 7.6 shall continue for the benefit of the retiring Trustee.

SECTION 7.8. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture; provided that the certificate of the Trustee shall have.

SECTION 7.9. Eligibility; Disqualification. The Trustee shall have a combined capital and surplus of at least $50.0 million as set forth in its most recent filed annual report of condition.

This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

SECTION 7.10. Limitation on Duty of Trustee. The Trustee shall not have any duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture, the Notes and the Guarantees by the Issuers, the Guarantors or any other Person.

SECTION 7.11. Preferential Collection of Claims Against the Issuers. The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

ARTICLE VIII

Discharge of Indenture; Defeasance

SECTION 8.1. Discharge of Liability on Notes; Defeasance. This Indenture shall be discharged and shall cease to be of further effect and any collateral then securing the Notes shall be released (except for certain rights of the Trustee and the Issuers’ obligations with respect thereto and as to surviving rights of registration of transfer or exchange of Notes, as expressly provided for in this Indenture) as to all outstanding Notes when:

-126-

(a) either (i) all the Notes theretofore authenticated and delivered (other than Notes which have been replaced pursuant to Section 2.7 or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from such trust) have been delivered to the Trustee for cancellation or (ii) all of the Notes not previously delivered to the Trustee for cancellation (a) have become due and payable, (b) shall become due and payable at their Stated Maturity within one year or (c) have been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of a full redemption by the Trustee (or such entity designated (as agent) by the Trustee or the Issuers for such purpose) in the name, and at the expense, of the Issuers, and either of the Issuers or any Guarantor has deposited or caused to be deposited in a manner that is not revocable by any Issuer or such Guarantor or any of their respective Affiliates with the Paying Agent money or U.S. Government Obligations or a combination thereof in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Issuers directing the Paying Agent to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(b) the Issuers and/or the Guarantors have paid all other sums then due and payable under this Indenture; and

(c) the Lux Co-Issuer has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

Subject to Sections 8.1(c) and 8.2, the Issuers, at any time may, with respect to the Notes of any series, terminate (i) all their obligations under the Notes of such series and this Indenture (with respect to such Notes of such series) and have each Guarantor’s obligation discharged with respect to its Guarantee of the Notes of such series (“legal defeasance option”) and cure all then-existing Events of Default with respect to the Notes of such series or (ii) their obligations, with respect to the Notes of such series, under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.14 and 3.15 and the operation of Section 4.1 (other than Sections 4.1(a)(i), (ii) and (vi)) and Sections 6.1(iii) (with respect to any Default under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.14 and 3.15), 6.1(iv), 6.1(v) (with respect to Significant Subsidiaries of the Issuers only), 6.1(vi) (with respect to Significant Subsidiaries of the Issuers only) and 6.1(vii) (“covenant defeasance option”). The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of their covenant defeasance option. In the event that the Issuers exercise their legal defeasance option or their covenant defeasance option with respect to the Notes of any series, the obligations of each Guarantor under its Guarantee of such Notes of such series shall be terminated simultaneously with the termination of the applicable obligations of the Issuers being terminated.

If the Issuers exercise their legal defeasance option with respect to the Notes of any series, payment of the Notes of such series so defeased may not be accelerated because of an Event of Default, with respect thereto. If the Issuers exercise their covenant defeasance option with respect to the Notes of any series, payment of the Notes of such series so defeased may not be accelerated because of an Event of Default specified in Section 6.1(iii) (with respect to any Default by the Lux Co-Issuer or any of its Restricted Subsidiaries with any of their obligations under Article III other than Section 3.1), 6.1(iv), 6.1(v) (with respect to Significant Subsidiaries of the Issuers only), 6.1(vi) (with respect to Significant Subsidiaries of the Issuers only) or 6.1(vii).

Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuers terminate.

-127-

(d) Notwithstanding clauses (a) and (b) above, the Issuers’ obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.6 and 7.7 and in this Article VIII shall survive with respect to the applicable series of Notes until the Notes of such series have been paid in full. Thereafter, the Issuers’ obligations in Sections 7.6, 8.5 and 8.6 shall survive such satisfaction and discharge.

SECTION 8.2. Conditions to Defeasance.

(a) The Issuers may exercise their legal defeasance option or their covenant defeasance option only if:

(i) the Issuers irrevocably deposit or cause to be deposited in trust (the “defeasance trust”) with the Trustee or the Paying Agent (or such entity designated as agent by the Issuers for such purpose) money or U.S. Government Obligations or a combination thereof (sufficient in the opinion of a nationally recognized certified public accounting firm) for the payment of principal, premium (if any) and interest on the applicable series of Notes to redemption or maturity, as the case may be; provided that if such redemption is made pursuant to Paragraph 6(b) of the form of Note set forth in Exhibit A hereto (or any corresponding paragraph of a Global Note or a Definitive Note), then (x) the amount of money or U.S. Government Obligations that the Issuers must irrevocably deposit or cause to be deposited will be determined using an assumed Applicable Premium calculated as of the date of such deposit, as calculated by the Issuers in good faith, and (y) the Issuers must irrevocably deposit or cause to be deposited additional money in trust on the redemption date as necessary to pay the Applicable Premium as determined on such date;

(ii) the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment shall provide cash at such times and in such amounts as shall be sufficient to pay principal, premium, if any, and interest when due on all the Notes of the applicable series to maturity or redemption, as the case may be;

(iii) 91 days pass after the deposit is made and during the 91-day period no Default specified in Section 6.1(v) or (vi) with respect to the Issuers occurs which is continuing at the end of the period;

(iv) the deposit does not constitute a default under any other agreement binding on the Issuers;

(v) the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment advisor under the Investment Advisors Act of 1940;

(vi) in the case of the legal defeasance option, the Issuers shall have delivered to the Trustee an Opinion of Counsel stating that (1) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling, or (2) since the date of this Indenture there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Notes of such series shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

-128-

(vii) in the case of the covenant defeasance option, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Notes of such series shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; and

(viii) the Issuers deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes of the applicable series to be so defeased and discharged as contemplated by this Article VIII have been complied with.

Before or after a deposit, the Issuers may make arrangements satisfactory to the Trustee or the applicable Paying Agent, as applicable, for the redemption of such Notes of the applicable series at a future date in accordance with Article V.

SECTION 8.3. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes of the applicable series.

SECTION 8.4. Repayment to Issuers. Anything herein to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon Company Order any money or U.S. Government Obligations held by it as provided in this Article VIII which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect legal defeasance or covenant defeasance, as applicable, provided that the Trustee shall not be required to liquidate any U.S. Government Obligations in order to comply with the provisions of this Section 8.4.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuers upon written request any money held by them for the payment of principal of or interest on the Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Issuers for payment as general creditors.

SECTION 8.5. Indemnity for U.S. Government Obligations. The Issuers shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Issuers and each Guarantor under this Indenture, the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if any of the Issuers or the Guarantors has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Issuers or any Guarantor, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

-129-

ARTICLE IX

Amendments

SECTION 9.1. Without Consent of Holders. Notwithstanding Section 9.2 hereof, this Indenture, the Notes of any series and Guarantees may be amended or supplemented by the Issuers, any Guarantor (with respect to this Indenture or a Guarantee to which it is a party) and the Trustee without notice to or consent of any Holder of Notes of any series:

(i) to cure any ambiguity, omission, mistake, defect or inconsistency identified in an Officer’s Certificate delivered to the Trustee;

(ii) to conform the text of this Indenture (including any supplemental indenture or other instrument pursuant to which Additional Notes are issued), the Guarantees or the Notes of such series to the “Description of Notes” in the Offering Memorandum or, with respect to any Additional Notes and any supplemental indenture or other instrument pursuant to which such Additional Notes are issued, to the “Description of Notes” relating to the issuance of such Additional Notes, solely to the extent that such “Description of Notes” provides for terms of such Additional Notes that differ from the terms of the Initial Notes, as contemplated by Section 2.2;

(iii) to comply with Section 4.1;

(iv) to provide for the assumption by a successor Person of the obligations of an Issuer or any Guarantor under this Indenture and the Notes of such series or Guarantee, as the case may be;

(v) to provide for uncertificated Notes of such series in addition to or in place of certificated Notes of such series; provided that the uncertificated Notes of such series are issued in registered form for purposes of Section 163(f) of the Code;

(vi) (A) to add or release Guarantees in accordance with the terms of this Indenture with respect to the Notes of such series or (B) to add additional co-issuers of the Notes of such series;

(vii) to secure the Notes of such series;

(viii) to add to the covenants of the Issuers for the benefit of the Holders or to surrender any right or power conferred upon the Issuers or any Guarantor;

(ix) to make any change that does not adversely affect the rights of any Holder in any material respect upon delivery to the Trustee of an Officer’s Certificate certifying the absence of such adverse effect;

(x) to comply with any requirement of the SEC in connection with any qualification of this Indenture under the TIA;

(xi) to make any amendment to the provisions of this Indenture relating to the transfer and legending of the Notes of such series as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes of such series; provided, however, that (i) compliance with this Indenture as so amended would not result in Notes of such series being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes of such series;

-130-

(xii) to evidence and provide for the acceptance of appointment by a successor Trustee, provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture; or

(xiii) to provide for or confirm the issuance of Additional Notes.

SECTION 9.2. With Consent of Holders.

(a) This Indenture, the Notes and the Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes); provided that (x) if any such amendment or supplement will only affect one series of Notes (or less than all series of Notes) then outstanding under this Indenture, then only the consent of the holders of a majority in principal amount of the Notes of such series then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such series of the Notes) shall be required and (y) if any such amendment or supplement by its terms will affect a series of Notes in a manner that is different from and materially adverse relative to the manner in which such amendment or supplement affects other series of Notes, then the consent of the holders of a majority in principal amount of the Notes of such series then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such series of Notes) shall be required. With respect to any series of Notes, (i) any Default or Event of Default with respect to such series of Notes or (ii) compliance with any provision of this Indenture, the Notes of such series or the Guarantees may, in each case, be waived as provided in Section 6.4. However, without the consent of each Holder of a Note affected of any series of Notes (including, for the avoidance of doubt, any Notes held by Affiliates), no amendment, supplement or waiver may (with respect to any Notes of such series held by a non-consenting Holder):

(i) reduce the percentage of the aggregate principal amount of Notes of such series whose Holders must consent to an amendment, supplement or waiver;

(ii) reduce the rate of or extend the time for payment of interest on any Note of such series;

(iii) reduce the principal of or change the Stated Maturity of any Note of such series;

(iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes of such series, except a rescission of acceleration of the Notes of such series by the Holders of at least a majority in aggregate principal amount of the Notes of such series and a waiver of the payment default that resulted from such acceleration;

(v) reduce the premium payable upon the redemption of any Note of such series or change the time at which any Note of such series may be redeemed as described under Section 5.1 (other than, in each case, any change to the notice periods with respect to such redemptions) or Section 5.9;

-131-

(vi) make any Note of such series payable in money other than that stated in such Note;

(vii) impair the right of any Holder of Notes of such series to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

(viii) make any change in the amendment or waiver provisions of this Indenture that require each Holder’s consent, as described in clauses (i) through (vii) above;

(ix) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes of such series to receive payments of principal of or premium, if any, or interest on the Notes of such series; or

(x) make the Notes of such series or any Guarantee subordinated in right of payment to any other obligations.

(b) It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. For the avoidance of doubt, no amendment to, or deletion of, any of the covenants contained in Article III of this Indenture (other than Section 3.1) shall be deemed to impair or affect any rights of Holders of the Notes of any series to receive payment of principal of, or premium, if any, or interest on, the Notes of such series.

(c) Promptly after an amendment under this Section 9.2 becomes effective, the Issuers shall (or shall cause the Trustee, at the expense of and at the written request of the Issuers, to) mail or electronically deliver to the Holders of Notes of such series affected thereby a notice briefly describing such amendment. The failure of the Issuers to deliver such notice, or any defect therein, shall not in any way impair or affect the validity of an amendment under this Section 9.2.

SECTION 9.3. Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Note of any series shall bind the Holder and every subsequent Holder of that Note of such series or portion of the Note of such series that evidences the same debt as the consenting Holder’s Note of such series, even if notation of the consent or waiver is not made on the Note of such series. After an amendment or waiver becomes effective with respect to the Notes of any series, it shall bind every Holder of Notes of such series unless it makes a change described in clauses (i) through (x) of Section 9.2(a), in which case the amendment or waiver or other action shall bind each Holder of Notes of such series who has consented to it and every subsequent Holder of a Note of such series that evidences the same debt as the consenting Holder’s Notes of such series. Any amendment, other than an amendment that in the sole determination of the Trustee adversely affects the rights, duties, liabilities or immunities of the Trustee or a waiver, in each case, made pursuant to Section 9.2 shall become effective with respect to the Notes of the applicable series upon receipt by the Trustee of the requisite number of written consents.

The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to take any such action, whether or not such Persons continue to be Holders after such record date.

-132-

SECTION 9.4. Notation on or Exchange of Notes. If an amendment changes the terms of a Note of the applicable series, the Trustee may require the Holder to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note of such series regarding the changed terms and return it to the Holder. Alternatively, if any Issuer so determines, such Issuers in exchange for the Note of such series shall issue and the Trustee shall authenticate a new Note of such series that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note of such series shall not affect the validity of such amendment.

SECTION 9.5. Trustee To Sign Amendments. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not, in the sole determination of the Trustee, adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing any amendment, supplement or waiver pursuant to this Article IX, the Trustee shall be entitled to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by or complies with this Indenture and that all conditions precedent to such amendment required by this Indenture have been complied with and, in the case of the Opinion of Counsel, that such amendment, supplement or waiver is the legally valid and binding obligation of the Issuers, enforceable against the Issuers in accordance with its terms, subject to customary exceptions. Notwithstanding the foregoing, no Opinion of Counsel will be required for the Trustee to execute any amendment or supplement adding a new Guarantor or a new co-issuer under this Indenture or releasing a Guarantee by a Guarantor pursuant to Section 10.2(b).

ARTICLE X

Guarantees

SECTION 10.1. Guarantees.

(a) Subject to the provisions of this Article X, each Guarantor hereby jointly and severally, irrevocably, fully and unconditionally guarantees, as guarantor and not as a surety, with each other Guarantor, to each Holder, to the extent lawful, the Trustee and the Agent the full and punctual payment and performance when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Notes and all other Obligations of the Issuers under this Indenture and the Notes (including, without limitation, interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Issuers or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and the obligations under Section 7.6) (all the foregoing being hereinafter collectively called the “Guarantor Obligations”). Each Guarantor agrees (to the extent lawful) that the Guarantor Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it shall remain bound under this Article X notwithstanding any extension or renewal of any Guarantor Obligation.

(b) Each Guarantor waives (to the extent lawful) presentation to, demand of, payment from and protest to the Issuers of any of the Guarantor Obligations and also waives (to the extent lawful) notice of protest for nonpayment. Each Guarantor waives (to the extent lawful) notice of any default under the Notes or the Guarantor Obligations.

(c) Each Guarantor further agrees that its Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guarantor Obligations.

-133-

(d) Except as set forth in this Article X, Section 10.2 and Article VIII, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guarantor Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not (to the extent lawful) be subject to any defense of set-off, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantor Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not (to the extent lawful) be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Issuers or any other Person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security held by any Holder for the Guarantor Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Guarantor; (f) any change in the ownership of the Issuers or of any other Guarantor; (g) any default, failure or delay, willful or otherwise, in the performance of the Guarantor Obligations; or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

(e) Each Guarantor agrees that its Guarantee herein shall remain in full force and effect until payment in full of all the Guarantor Obligations or such Guarantor is released from its Guarantee in compliance with Section 4.1, Section 10.2 or Article VIII. Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium, if any, or interest on any of the Guarantor Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Issuers or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuers to pay any of the Guarantor Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee, the Agents or the Trustee on behalf of the Holders and such Agents an amount equal to the sum of (i) the unpaid amount of such Guarantor Obligations then due and owing and (ii) accrued and unpaid interest on such Guarantor Obligations then due and owing (but only to the extent not prohibited by law) (including interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Issuers or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding).

(g) Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guarantor Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guarantor Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guarantor Obligations, such Guarantor Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Guarantee.

(h) Each Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee, the Agent or the Holders in enforcing any rights under this Section.

-134-

(i) Each Guarantor acknowledges and agrees that the Guarantee of such Guarantor will be a general senior obligation of such Guarantor and will rank senior in right of payment to all future obligations of such Guarantor that are, by their terms, expressly subordinated in right of payment to such Guarantee and equal in right of payment with all existing and future obligations of such Guarantor that are not so subordinated.

(j) Neither the Issuers nor the Guarantors shall be required to make a notation on the Notes to reflect any Guarantee or any release, termination or discharge thereof and any such notation shall not be a condition to the validity of any Guarantee.

(k) Each Guarantee shall be subject to limitations in accordance with local law in the jurisdiction of organization of the applicable Guarantor and defenses generally available to guarantors in such jurisdiction. For the avoidance of doubt, such limitations and defenses may include, but are not limited to, (i) those related to fraudulent conveyance, fraudulent transfer, voidable preference, financial assistance, corporate purpose, corporate benefit, capital maintenance, earnings stripping, retention of title claims and similar laws, regulations and defenses affecting the rights of creditors generally, (ii) such limitations and defenses as are described in the Offering Memorandum under the caption “Limitations on Validity and Enforceability of the Guarantees and the Security Interests” and (iii) other considerations under applicable law.

(l) (i) The obligations and liabilities of any Guarantor incorporated in France (each such Guarantor, a “French Guarantor”) under the Notes or this Indenture and in particular under this Article X shall not include any obligation or liability which, if incurred, would constitute the provision of financial assistance within the meaning of article L.225-216 of the French Code de Commerce and/or would constitute a misuse of corporate assets within the meaning of articles L.242-6 or L.244-1 of the French Code de Commerce or any other law or regulation having the same effect, as interpreted by French courts.

(ii) The obligations and liabilities of each French Guarantor under this Article X for the obligations under the Notes or this Indenture of any other obligor which is not a Subsidiary of such French Guarantor shall be limited, at any time to an amount equal to the proceeds from the offering of the Notes which the Issuers have applied for the direct or indirect benefit of each French Guarantor through the intercompany loan agreements and cash pooling arrangements that are outstanding on the date a payment is requested to be made by such French Guarantor under this Article X; it being specified that any payment made by a French Guarantor under this Article X in respect of the obligations of the Issuers shall reduce pro tanto the outstanding amount due by such French Guarantor under the intercompany loan agreements or cash pooling arrangements referred to above and that any repayment of the intercompany loans or of the cash pooling arrangements by the French Guarantor shall reduce pro tanto the amount payable under this Article X.

(iii) The obligations and liabilities of each French Guarantor under this Article X for the obligations under the Notes or this Indenture of any other obligor which is its Subsidiary shall not be limited, and shall therefore cover all amounts due by such obligor. However, where such Subsidiary is itself a Guarantor that guarantees the obligations of an obligor that is not a Subsidiary of the relevant French Guarantor, the amounts payable by such French Guarantor under this paragraph (iii) in respect of the obligations of this Subsidiary as Guarantor, shall be limited as set out in paragraph (ii) above.

(m) With respect to any Guarantor that is a foreign subsidiary which is incorporated in Germany (each a “German Guarantor”), the limitations and defenses in relation to such German Guarantor’s obligations and liabilities under its Guarantee shall be as agreed in the supplemental indenture to be entered into by the relevant German Guarantors after the date of this Indenture.

-135-

(n) (i) Notwithstanding anything to the contrary contained in this Indenture, the aggregate maximum amount payable by any Guarantor incorporated in Luxembourg (each, a “Luxembourg Guarantor”) in respect of the aggregate amount of its Guarantee obligations under this Indenture for the obligations of any Issuer which is not its direct or indirect subsidiary shall be limited at any time to an amount (the “Amount”) not exceeding the higher of:

(A) 95 percent of such Luxembourg Guarantor’s net assets (capitaux propres) and the subordinated debt (dettes subordonnées) owed by such Luxembourg Guarantor (excluding however any amounts borrowed by such Luxembourg Guarantor as per Section 10.1(o)(ii)) (the “Luxembourg Subordinated Debt”), as determined by article 34 of the Luxembourg law of December 19, 2002 on the Register of Commerce and Companies, on accounting and on annual accounts of the companies (the “2002 Law”) at the date of this Indenture; and

(B) 95 percent of such Luxembourg Guarantor’s net assets (capitaux propres) and the Luxembourg Subordinated Debt as determined by article 34 of the 2002 Law at the date the guarantee is called.

For the purpose of determining the value of the assets, the assets of such Luxembourg Guarantor incorporated under the laws of the Grand Duchy of Luxembourg will be determined by the Paying Agent (acting in its sole commercially reasonable discretion) and valued at the greater of:

(i) their book value, as reflected at the relevant time in the books of such Luxembourg Guarantor, or

(ii) their fair value.

In case of disagreement or doubt as regards the accuracy of the valuation of the assets, the holders of the Notes or the Paying Agent (acting in its sole commercially reasonable discretion) may require that such value be determined by an independent auditor (réviseur d’entreprises agréé).

(ii) The above limitation shall not apply to (i) any amounts (if any) borrowed directly or indirectly by or made available by whatever means to that Luxembourg Guarantor or any of its direct or indirect subsidiaries under the Senior Credit Agreement, (ii) any amounts borrowed under the Senior Credit Agreement and on-lent to the Luxembourg Guarantor or any of its direct or indirect subsidiaries (in any form whatsoever) and (iii) any amounts (if any) issued by an Issuer under this Indenture where the issued amounts have been directly or indirectly lent or otherwise made available by such Issuer to a Luxembourg Guarantor or to any direct or indirect subsidiary of a Luxembourg Guarantor;

(iii) Any Amount called under the Guarantee of a Luxembourg Guarantor is to be deducted from the Amount as defined in the Subsidiary Guaranty (as defined in the Senior Credit Agreement) at the moment of such calling.

SECTION 10.2. Limitation on Liability; Termination, Release and Discharge.

(a) Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Guarantor hereunder shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law or the laws of the jurisdiction of organization of such Guarantor and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally.

-136-

(b) A Guarantee of a Guarantor shall be automatically and unconditionally released and discharged, and each Guarantor and its obligations under the Guarantee and this Indenture shall be released and discharged upon:

(1) the sale, exchange, disposition or other transfer (including through merger, consolidation, amalgamation, dissolution or similar transaction) of (x) the Capital Stock of such Guarantor, if after such transaction the Guarantor is no longer a Restricted Subsidiary, or (y) all or substantially all the assets of such Guarantor if such sale, exchange, disposition or other transfer (including through merger, consolidation, amalgamation, dissolution or similar transactions) is made in compliance with this Indenture;

(2) the Lux Co-Issuer designating such Guarantor to be an Unrestricted Subsidiary in accordance with the provisions set forth in Section 3.4, Section 3.14 and the definition of “Unrestricted Subsidiary;”

(3) in the case of any Restricted Subsidiary that after the Issue Date is required to guarantee the Notes pursuant to Section 3.11, (x) the release or discharge of the guarantee by such Restricted Subsidiary (or the co-issuer or co-borrower obligation of such Restricted Subsidiary) of Indebtedness of the Issuers or any Restricted Subsidiary or (y) the repayment of the Indebtedness, in each case, that resulted in the obligation to guarantee the Notes (except if a release, discharge or repayment is by or as a result of payment in connection with the enforcement of remedies under such other guarantee);

(4) the Issuers’ exercise of their legal defeasance option or covenant defeasance option as described under Article VIII or if this Indenture is discharged (including through redemption or repurchase of all the Notes as a result of satisfaction and discharge or otherwise) in accordance with this Indenture;

(5) the release or discharge of the guarantee by, or direct obligation of, such Guarantor of the Obligations under the Senior Credit Agreement (except a discharge or release by or as a result of payment in connection with the enforcement of remedies under such guarantee or direct obligation);

(6) upon the occurrence of a Covenant Suspension Event; or

(7) upon the applicable Subsidiary ceasing to be a Subsidiary as a result of any foreclosure of any pledge or security interest securing the Senior Credit Agreement or other exercise of remedies in respect thereof.

(c) If any Guarantor is released from its Guarantee, any of its Subsidiaries that are Guarantors shall be released from their Guarantees, if any.

(d) In the case of Section 10.2(b), to the extent an Issuer requests evidence of release of a Guarantor pursuant to Section 10.2(b) from the Trustee, such Issuer shall deliver an Officer’s Certificate to the Trustee with respect to such release.

-137-

(e) The release of a Guarantor from its Guarantee and its obligations under this Indenture in accordance with the provisions of this Section 10.2 shall not preclude the future applications of Section 3.11 to such Person.

SECTION 10.3. Right of Contribution. Each Guarantor hereby agrees that to the extent that any such Guarantor shall have paid more than its proportionate share of any payment made on the obligations under its Guarantee, such Guarantor shall be entitled to seek and receive contribution from and against the Issuers or any other Guarantor who have not paid their proportionate share of such payment. The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee and the Holders and each Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Guarantor hereunder.

SECTION 10.4. No Subrogation. Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Issuers or any other Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guarantor Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Issuers or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Issuers on account of the Guarantor Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Guarantor Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Guarantor Obligations.

ARTICLE XI

INTENTIONALLY OMITTED

ARTICLE XII

Miscellaneous

SECTION 12.1. Notices. Notices given by publication shall be deemed given on the first date on which publication is made, and notices given by first-class mail, postage prepaid, shall be deemed given five calendar days after mailing. Notices personally delivered will be deemed given at the time delivered by hand. Notices given by facsimile or email will be deemed given when receipt is acknowledged. Notices given by overnight air courier guaranteeing next day delivery will be deemed given the next Business Day after timely delivery to the courier. Any notice or communication shall be in writing and delivered in person, by facsimile or mailed by first-class mail addressed as follows:

if to the Issuers or any Guarantor:

c/o Ortho Clinical Diagnostics

1001 U.S. 202

Raritan, NJ 08869

Tel: (908) 218-8000

Attention to: Chief Financial Officer

-138-

c/o The Carlyle Group

520 Madison Avenue, 42^nd Floor

New York, NY 10022

Fax: (212) 813-4901

Tel: (212) 813-4900

Attention to: Robert Schmidt

With copies to:

Ortho Clinical Diagnostics

1001 U.S. 202

Raritan, NJ 08869

Tel: (908) 218-8000

Attention to: General Counsel

Patrick Shannon and Jason Licht

Latham and Watkins LLP

555 Eleventh Street NW

Suite 1000

Washington, DC 20004-1304

Fax: (202) 637-2201

Tel: (202) 637-2200

if to the Trustee:

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Ortho-Clinical Notes Administrator

The Issuers or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods. If the party elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding if such instructions conflict or are inconsistent with a subsequent written instruction. The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

-139-

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption or purchase) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Note (or its designee) pursuant to the standing instructions from such Depositary.

SECTION 12.2. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuers to the Trustee to take or refrain from taking any action under this Indenture (except in connection with (x) the original issuance of Notes on the date hereof and (y) with respect to clause (ii) below, the execution of any amendment or supplement adding a new Guarantor under this Indenture), the Issuers shall furnish to the Trustee:

(i) an Officer’s Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 12.3. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than a certificate provided pursuant to Section 3.12) shall include:

(i) a statement that the individual making such certificate or opinion has read such covenant or condition;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officer’s Certificate or on certificates of public officials.

SECTION 12.4. Prescription. Pursuant to Luxembourg law, claims against the Lux Co-Issuer for the payment of principal or premium (if any) on the Notes will be prescribed 10 years after the applicable due date for payment thereof. Claims against the Lux Co-Issuer for payment of interest on the Notes will be prescribed five years after the applicable due date for payment of interest.

SECTION 12.5. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or a meeting of, Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.

-140-

SECTION 12.6. Days Other than Business Days. If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on such payment for the intervening period. If a regular Record Date is not a Business Day, the Record Date shall not be affected.

SECTION 12.7. Governing Law. This Indenture, the Notes and the Guarantees shall be governed by, and construed in accordance with, the laws of the State of New York. The application of the provisions set out in articles 470-3 to 470-19 of the Luxembourg law on commercial companies dated August 10, 1915, as amended, is excluded.

SECTION 12.8. Jurisdiction and Service. In relation to any legal action or proceedings arising out of or in connection with this Indenture and the Notes and the Guarantees, the Lux Co-Issuer and each Guarantor that is organized under laws other than those of the United States or a state or territory thereof or the District of Columbia or France hereby (i) irrevocably submits to the jurisdiction of the federal and state courts in the Borough of Manhattan in the City, County and State of New York, United States (ii) consents that any such action or proceeding may be brought in such courts and waives, to the fullest extent permitted by law, any objection to any suit, action or proceeding that may be brought in connection with this Indenture, the Notes or the Guarantees in such courts 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 and agrees not to plead or claim the same, (iii) designates and appoints the U.S. Co-Issuer as its authorized agent upon which process may be served in any such suit, action or proceeding that may be instituted in any such court, and (iv) agrees that service of any process, summons, notice or document by U.S. registered mail addressed to the U.S. Co-Issuer, with written notice of said service to such Person at the address of the U.S. Co-Issuer set forth in Section 12.1, shall be effective service of process for any such action or proceeding brought in any such court.

SECTION 12.9. Waiver of Jury Trial. EACH OF THE ISSUERS, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 12.10. No Recourse Against Others. No manager, managing director, incorporator, director, officer, employee or holder of any Equity Interests of the Lux Co-Issuer, the U.S. Co-Issuer, any Subsidiary or any direct or indirect parent of the Lux Co-Issuer, as such, shall have any liability for any obligations of the Issuers or any Guarantor under the Notes or this Indenture or any Guarantee or for any claim based on, in respect of, or by reason of such obligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

SECTION 12.11. Successors. All agreements of the Issuers and each Guarantor in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors.

SECTION 12.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Delivery of an executed counterpart of a signature page to this Indenture by telecopier, facsimile or other electronic transmission (i.e. a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof. One signed copy is enough to prove this Indenture.

-141-

SECTION 12.13. Variable Provisions. The Issuers initially appoint the Trustee as Paying Agent and Registrar and Notes Custodian with respect to any Global Notes.

SECTION 12.14. Table of Contents; Headings. The table of contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 12.15. Force Majeure. In no event shall the Trustee or any Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services or the unavailability of the Federal Reserve bank wire or telex or other wire or communication facility; it being understood that the Trustee and such Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

SECTION 12.16. USA Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account. The parties to this Indenture agree that they shall provide the Trustee with such information as they may request in order to satisfy the requirements of the USA Patriot Act.

SECTION 12.17. [Reserved].

SECTION 12.18. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA § 312(b) with other Holders of Notes with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

[Signature Pages Follow]

-142-

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.


ORTHO-CLINICAL DIAGNOSTICS, INC.

By:		/s/ John Sanders
		Name: John Sanders
		Title: Vice President and Treasurer

ORTHO-CLINICAL DIAGNOSTICS S.A.
duly represented by

By:		/s/ John K. Sanders
		Name: John K. Sanders
		Title: Director & Authorized Signatory

[Signature Page to the Indenture]


ORTHO-CLINICAL DIAGNOSTICS CANADA HOLDINGS CORPORATION, as a Guarantor

By:		/s/ Elana Benayon
		Name: Elana Benayon
		Title: Director

[Signature Page to the Indenture]


CRIMSON GERMANY GMBH, as a Guarantor

By:		/s/ Waclaw Lukowicz
		Name: Waclaw Lukowicz
		Title: Managing Director

GERMANY OCD CO GMBH, as a Guarantor

By:		/s/ Waclaw Lukowicz
		Name: Waclaw Lukowicz
		Title: Managing Director

GERMANY OCD HOLDING GMBH & CO. KG, as a Guarantor

By:		/s/ Waclaw Lukowicz
		Name: Waclaw Lukowicz
		Title: Managing Director

ORTHO-CLINICAL DIAGNOSTICS GMBH, as a Guarantor

By:		/s/ Waclaw Lukowicz
		Name: Waclaw Lukowicz
		Title: Managing Director

[Signature Page to the Indenture]


ORTHO-CLINICAL DIAGNOSTICS FRANCE, as a Guarantor

By:		/s/ Mikaël Julien
		Name: Mikaël Julien
		Title: President (Président)

[Signature Page to the Indenture]


OCD INVESTMENT HOLDINGS B.V., as a Guarantor

By:		/s/ Dean Andrew Read
		Name: Dean Andrew Read
		Title: Managing Director / Authorised Officer

ORTHO-CLINICAL DIAGNOSTICS NETHERLANDS B.V., as a Guarantor

By:		/s/ Dean Andrew Read
		Name: Dean Andrew Read
		Title: Managing Director / Authorised Officer

[Signature Page to the Indenture]


ORTHO-CLINICAL DIAGNOSTICS FINCO S.À R.L., as a Guarantor

By:		/s/ John K. Sanders
		Name: John K. Sanders
		Title: Manager & Authorized Signatory

ORTHO-CLINICAL DIAGNOSTICS LUXEMBOURG S.À R.L., as a Guarantor

By:		/s/ John K. Sanders
		Name: John K. Sanders
		Title: Manager & Authorized Signatory

[Signature Page to the Indenture]


CRIMSON OCD (UK) LIMITED, as a Guarantor

By:		/s/ Richard Jenkins
		Name: Richard Jenkins
		Title: Director

ORTHO-CLINICAL DIAGNOSTICS (UK), as a Guarantor

By:		/s/ Richard Jenkins
		Name: Richard Jenkins
		Title: Director

[Signature Page to the Indenture]


CRIMSON INTERNATIONAL ASSETS LLC, as a Guarantor

By:		/s/ Todd Davachi
		Name: Todd Davachi
		Title: Chief Financial Officer

CRIMSON U.S. ASSETS LLC, as a Guarantor

By:		/s/ Todd Davachi
		Name: Todd Davachi
		Title: Chief Financial Officer

U.S. CRIMSON ACQUISITION INC., as a Guarantor

By:		/s/ Todd Davachi
		Name: Todd Davachi
		Title: Chief Financial Officer

MICRO TYPING SYSTEMS, INC., as a Guarantor

By:		/s/ Todd Davachi
		Name: Todd Davachi
		Title: Chief Financial Officer

[Signature Page to the Indenture]


WILMINGTON TRUST NATIONAL ASSOCIATION, as Trustee

By:		/s/ Joseph P. O’Donnell
		Name: Joseph P. O’Donnell
		Title: Vice President

[Signature Page to the Indenture]

EXHIBIT A

[FORM OF FACE OF NOTE]

Global Note Legend, if applicable

Private Placement Legend, if applicable

Temporary Regulation S Legend, if applicable

A-1


No. [___]		Principal Amount $[________________],
		as revised by the Schedule of Increases
		or Decreases in the Global Note attached
		hereto¹

		CUSIP NO. ²

		ISIN NO. ³

ORTHO-CLINICAL DIAGNOSTICS, INC.

ORTHO-CLINICAL DIAGNOSTICS S.A.

7.250% Senior Notes due 2028

ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York, and ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693, promise to pay to Cede & Co., or its registered assigns, the initial principal amount set forth on the Schedule of Increases or Decreases in the Global Note attached hereto, as revised by the Schedule of Increases or Decreases in the Global Note attached hereto, on February 1, 2028.

Interest Payment Dates: February 1 and August 1.

Record Dates: January 15 and July 15.

Additional provisions of this Note are set forth on the other side of this Note.

¹	Insert Global Notes only

²	144A – 68752D AA6

Reg S – U6831N AA6

IAI – 68752D AB4

³	144A – US68752DAA63

Reg S – USU6831NAA64

IAI – US68752DAB47

A-2


ORTHO-CLINICAL DIAGNOSTICS, INC.

By:
		Name:
		Title:

ORTHO-CLINICAL DIAGNOSTICS S.A.

By:
		Name:
		Title:

A-3


TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

WILMINGTON TRUST, NATIONAL ASSOCIATION

as Trustee, certifies that this is one of the
Notes referred to in the Indenture.

By:
Authorized Signatory		Date:

A-4

[FORM OF REVERSE SIDE OF NOTE]

7.250% Senior Note due 2028

Interest

ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), and ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer, the “Issuers”), promise to pay interest on the principal amount of this Note at the rate per annum shown above.

The Issuers shall pay interest semiannually on February 1 and August 1 of each year, with the first interest payment to be made on August 1, 2020.⁴ Interest on this Note shall accrue from the most recent date to which interest has been paid on this Note or, if no interest has been paid, from January 27, 2020.⁵ The Issuers shall pay interest on overdue principal or premium, if any (plus interest on such interest to the extent lawful), at the rate borne by this Note to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at 2% per annum in excess of the above rate and shall pay interest on overdue installments of interest at such higher rate to the extent lawful.

2.	Method of Payment

By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on this Note is due and payable, the Issuers shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Issuers shall pay interest (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the January 15 and July 15 next preceding the Interest Payment Date unless Notes are cancelled, repurchased or redeemed after the record date and before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) shall be made by the Paying Agent by the transfer of immediately available funds to the accounts specified by the Depositary. The Issuers shall make all payments in respect of a Definitive Note (including principal, premium, if any, and interest) through the Paying Agent by mailing a check to the registered address of each Holder thereof.

3.	Paying Agent and Registrar

Initially, Wilmington Trust, National Association, duly organized and existing under the laws of the United States of America and having a corporate trust office at 246 Goose Lane, Suite 105, Guilford, CT 06437 (“Trustee”), shall act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Issuers or any of their Subsidiaries may act as Paying Agent, Registrar or co-registrar.

⁴	With respect to the Initial Notes.

⁵	With respect to the Initial Notes.

A-5

Indenture

The Issuers issued the Notes under an Indenture dated as of January 27, 2020 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), among the Issuers, the guarantors party thereto from time to time and the Trustee. The terms of the Notes include those stated in the Indenture. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Securities Act for a statement of those terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

The Notes are senior unsecured obligations of the Issuers. This Note is one of the 7.250% Senior Notes due 2028 referred to in the Indenture. The Notes include (i) $675,000,000 aggregate principal amount of the Issuers’ 7.250% Senior Notes due 2028 issued under the Indenture on January 27, 2020 (herein called “Initial Notes”) and (ii) if and when issued, additional Notes of the Issuers that may be issued from time to time under the Indenture subsequent to January 27, 2020 (herein called “Additional Notes”).

Guarantee

To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Notes and all other amounts payable by the Issuers under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Guarantors have unconditionally Guaranteed (and future guarantors shall unconditionally Guarantee), jointly and severally, such obligations on a senior unsecured basis, subject to the limitations described in Article X of the Indenture.

6.	Optional Redemption

(a) On and after February 1, 2023⁶, the Issuers may redeem the Notes, at their option, in whole at any time or in part from time to time, upon notice as described in Section 5.4 of the Indenture, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to (but not including) the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date), if redeemed during the 12-month period commencing on February 1⁷ of the years set forth below:


Year	Percentage
2023		103.625	%
2024		101.813	%
2025 and thereafter		100.000	%

⁶	With respect to the Initial Notes.

⁷	With respect to the Initial Notes.

A-6

(b) At any time prior to February 1, 2023⁸, the Issuers may redeem the Notes at their option, in whole at any time or in part from time to time, upon notice as described in Section 5.4 of the Indenture, at a redemption price equal to 100.0% of the principal amount of the Notes redeemed plus the Applicable Premium as of the date of the redemption notice, and accrued and unpaid interest, if any, to (but not including) the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date).

(c) At any time and from time to time, upon notice as described in Section 5.4 of the Indenture, prior to February 1, 2023⁹, the Issuers may redeem up to 40% of the aggregate principal amount of the Notes (calculated after giving effect to any issuance of Additional Notes) with an aggregate amount not to exceed the cash proceeds less any underwriting spread paid in cash of one or more Equity Offerings, to the extent (in the case of an Equity Offering by a direct or indirect parent of the Lux Co-Issuer) that such cash proceeds thereof are contributed to the common equity capital of the Lux Co-Issuer or used to purchase Capital Stock (other than Disqualified Stock) of the Lux Co-Issuer, at a redemption price (expressed as a percentage of the principal amount thereof) equal to 107.250% plus accrued and unpaid interest, if any, to (but not including) the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date); provided, however, that at least the lesser of (i) 50% of the aggregate principal amount of the Notes (calculated after giving effect to any issuance of Additional Notes) then outstanding and (ii) $200 million aggregate principal amount of the Notes must remain outstanding immediately after each such redemption (except to the extent otherwise repurchased or redeemed substantially contemporaneously in accordance with the terms of the Indenture); provided, further, that for purposes of calculating the principal amount of the Notes able to be redeemed with such cash proceeds of such Equity Offering or Equity Offerings, such amount shall include only the principal amount of the Notes to be redeemed plus the premium on such Notes to be redeemed; provided, further, that such redemption shall occur within 180 days after the date on which any such Equity Offering is consummated.

(d) At any time, in connection with any tender offer or other offer to purchase any series of Notes (including pursuant to a Change of Control Offer, Alternate Offer or Asset Sale Offer), if not less than 90% in aggregate principal amount of the outstanding Notes of such series are purchased by the Issuers, or any third party purchasing or acquiring in lieu of the Issuers, all of the Holders will be deemed to have consented to such tender or other offer and accordingly, the Issuers or such third party will have the right, upon notice as described in Section 5.4 of the Indenture, to redeem all Notes of such series that remain outstanding following such purchase at a price equal to the price paid to Holders in such purchase, plus accrued and unpaid interest, if any, on such Notes to (but not including) the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the Redemption Date).

(e) Any redemption of the Notes may, at the Issuers’ discretion, be subject to one or more conditions precedent. The Redemption Date of any redemption that is subject to satisfaction of one or more conditions precedent may, in the Issuers’ discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuers in their sole discretion), or such redemption may not occur and any notice with respect to such redemption may be modified, extended or rescinded in the event that any or all such conditions shall not have yet been satisfied (or waived by the Issuers in their sole discretion) by the redemption date, or by the redemption date so delayed (which may exceed 60 days from the date of the redemption notice in such case).

⁸	With respect to the Initial Notes.

⁹	With respect to the Initial Notes.

A-7

(f) Unless the Issuers default in the payment of the redemption price, interest shall cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(g) Any redemption pursuant to this paragraph 6 shall be made pursuant to the provisions of Article V of the Indenture.

7.	Redemption for Taxation Reasons

The Issuers may redeem the Notes, at their option, in whole, but not in part, at any time upon giving not less than 10 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to (but not including) the Tax Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date falling prior to or on the redemption date) and all Additional Amounts, if any, then due or that will become due on the Tax Redemption Date as a result of the redemption or otherwise, if the Issuers determine in good faith that, as a result of a Change in Tax Law, any Payor with respect to the Notes or a Guarantee is, or on the next date on which any amount would be payable in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to such Payor (including the appointment of a new Paying Agent or, where such action would be reasonable, payment through another Payor); provided that changing the jurisdiction of an Issuer is not a reasonable measure for purposes of this section; provided further that no Payor shall be required to take any measures that in the Issuers’ good-faith determination would result in the imposition on such person of any legal or regulatory burden or the incurrence by such person of additional costs, or would otherwise result in any adverse consequences to such person.

The foregoing provisions will apply mutatis mutandis to the laws and official positions of any jurisdiction in which any successor to a Payor is organized or otherwise considered to be a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein. In addition, the foregoing provisions will apply with respect to a Guarantor’s obligation to pay Additional Amounts only after the Guarantor is obligated to make at least one payment on the Notes.

A-8

8.	Change of Control; Asset Sales

(a) If a Change of Control occurs after the Issue Date, unless the Issuers have exercised their right to redeem all of the Notes under Section 5.1 of the Indenture or an Alternate Offer has been made, each Holder shall have the right to require the Issuers to repurchase all or any part (in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof; provided that the Notes submitted or selected for purchase shall not result in a Holder with a principal amount of Notes less than the minimum denomination of $2,000) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to, but excluding, the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date falling prior to or on the redemption date) as provided in, and subject to the terms of, the Indenture.

(b) In connection with any Change of Control Offer or Alternate Offer, any such Change of Control Offer or Alternate Offer may, at the discretion of the Issuer or a third party making such offer, be subject to one or more conditions precedent. The purchase date of any purchase that is subject to satisfaction of one or more conditions precedent may, in the discretion of the Issuers or such third party making such offer, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Issuers or such third party in their sole discretion), or such purchase may not occur and any notice with respect to such purchase may be modified, extended or rescinded in the event that any or all such conditions shall not have yet been satisfied (or waived by the Issuers or such third party in their sole discretion) by the purchase date, or by the purchase date so delayed (which may exceed 60 days from the date of the notice in such case).

(c) In the event of an Asset Sale Offer that requires the purchase of Notes pursuant to Section 3.7(c) of the Indenture, the Issuers shall be required to make an offer to all Holders to purchase Notes in accordance with Section 3.7(c) and 5.8 of the Indenture at an offer price in cash in an amount equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the date of purchase (subject to the rights of Holders of record on any Record Date to receive payments of interest on the related Interest Payment Date). Holders that are the subject of an offer to purchase shall receive an Asset Sale Offer from the Issuers prior to any related purchase date and may elect to have such Note purchased pursuant to such offer by completing the form entitled “Option of Holder To Elect Purchase” attached hereto, or transferring its interest in such Note by book-entry transfer, to the Issuers, a Depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice at least three Business Days before the Purchase Date.

9.	Denominations; Transfer; Exchange

The Notes are in registered form without coupons in minimum denominations of principal amount of $2,000 and whole multiples of $1,000 in excess thereof. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes for a period beginning 15 Business Days before an Interest Payment Date and ending on such Interest Payment Date.

10.	Persons Deemed Owners

The registered Holder of this Note may be treated as the owner of it for all purposes.

A-9

11.	Unclaimed Money

If money for the payment of the principal of or premium, if any, or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers at their request unless an abandoned property law designates another person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

12.	Discharge and Defeasance

Subject to certain conditions set forth in the Indenture, the Issuers at any time may terminate some or all of their obligations under the Notes and the Indenture if the Issuers irrevocably deposit in trust with the Trustee money or U.S. Government Obligations (sufficient, without reinvestment, in the opinion of a nationally-recognized certified public accounting firm) for the payment of principal, premium (if any) and interest on the Notes to redemption or maturity, as the case may be.

13.	Amendment, Waiver

The Indenture and the Notes may be amended or waived as set forth in Article IX of the Indenture.

14.	Defaults and Remedies

Events of Default shall be as set forth in Article VI of the Indenture.

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy or insolvency of the Issuers) occurs and is continuing, the Trustee or the Holders of at least 30% in principal amount of outstanding Notes of such series may declare the principal of, premium, if any, and accrued but unpaid interest, on all the Notes outstanding of such series to be due and payable immediately. Certain events of bankruptcy or insolvency with respect to the Issuers are Events of Default which shall result in the Notes being due and payable immediately upon the occurrence of such Events of Default without any declaration or other act on the part of the Trustee or any Holders.

Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security reasonably satisfactory to the Trustee. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest.

15.	Trustee Dealings with the Issuers

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

16.	No Recourse Against Others

No manager, managing director, director, officer, employee, incorporator or Holder of any Equity Interests in the Lux Co-Issuer, the U.S. Co-Issuer, any Subsidiary or any direct or indirect parent of the Lux Co-Issuer, as such, shall not have any liability for any obligations of the Issuers or any Guarantor under the Notes or the Indenture or any Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability.

A-10

The waiver and release shall be part of the consideration for the issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

17.	Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

18.	Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

19.	CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures the Issuers have caused CUSIP numbers to be printed on the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers placed thereon.

20.	Successor Entity

When a successor entity assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, and immediately before and thereafter no Default or Event of Default exists and all other conditions of the Indenture are satisfied, the predecessor entity shall be released from those obligations.

21.	Governing Law

This Note shall be governed by, and construed in accordance with, the laws of the State of New York. The application of the provisions set out in articles 470-3 to 470-19 of the Luxembourg law on commercial companies dated August 10, 1915 is excluded.

A-11

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.


Date:				Your Signature:



Signature Guarantee:
		(Signature must be guaranteed)

Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

A-12

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial principal amount of this Note shall be $[ ]. The following increases or decreases in this Global Note have been made:

Date of

Exchange

Amount of decrease in Principal
Amount of this Global Note

Amount in increase in
Principal amount of this
Global Note

Principal amount of this
Global Note following

such decrease or increase

Signature of authorized signatory
of Trustee or Notes Custodian

A-13

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Issuers pursuant to Section 3.7 or 3.9 of the Indenture, check the box:


☐		☐
3.7		3.9

If you want to elect to have only part of this Note purchased by the Issuers pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in principal amount (must be in denominations of $2,000 or integral multiples of $1,000 in excess thereof): $


Date:		Your Signature:
		(Sign exactly as your name appears on
		the other side of the Note)


Signature Guarantee:
		(Signature must be guaranteed)

A-14

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Ortho-Clinical Diagnostics, Inc.

Ortho-Clinical Diagnostics S.A.

c/o Ortho Clinical Diagnostics

1001 U.S. 202

Raritan, NJ 08869

Tel: (908) 218-8000

Attention to: Chief Financial Officer

c/o The Carlyle Group

520 Madison Avenue, 42^nd Floor

New York, NY 10022

Facsimile: (212) 813-4901

Tel: (212) 813-4900

Attention to: Robert Schmidt

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Ortho-Clinical Notes Administrator

Re: 7.250% Senior Notes due 2028

Reference is hereby made to the Indenture, dated as of January 27, 2020 (the “Indenture”), among ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), and ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer and their successors and assigns under the Indenture, the “Issuers”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

__________________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $____ in such Note[s] or interests (the “Transfer”), to ___________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]


1.		☐		Check if Transferee shall take delivery of a beneficial interest in the 144A Global Note or a Definitive Note pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction

B-1


		meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

2.	☐	Check if Transferee shall take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

3.	☐	Check and complete if Transferee shall take delivery of a beneficial interest in the IAI Global Note or an Unrestricted Global Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

		(a)	☐	such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

				or

		(b)	☐	such Transfer is being effected to the Issuers or a subsidiary thereof;

				or

		(c)	☐	such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;

				or

B-2


		(d)	☐	such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit E to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $150,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

4.	☐	Check if Transferee shall take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

		(a)	☐	Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

		(b)	☐	Check if Transfer is pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

B-3



(c)	☐	Check if Transfer is pursuant to other exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any
		State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.



		[Insert Name of Transferor]

By:
		Name:
		Title:

Dated:

B-4

ANNEX A TO CERTIFICATE OF TRANSFER

1.	The Transferor owns and proposes to transfer the following:


				[CHECK ONE OF (a) OR (b)]

	(a)	☐	a beneficial interest in the:

		(i)	☐	144A Global Note (CUSIP [ ]), or

		(ii)	☐	Regulation S Global Note (CUSIP [ ]), or

		(iii)	☐	IAI Global Note (CUSIP [ ]), or

	(b)	☐	a Restricted Definitive Note.

2.	After the Transfer the Transferee shall hold:

				[CHECK ONE]

	(a)	☐	a beneficial interest in the:

		(i)	☐	144A Global Note (CUSIP [ ]), or

		(ii)	☐	Regulation S Global Note (CUSIP [ ]), or

		(iii)	☐	Unrestricted Global Note (CUSIP [ ]), or

		(iv)	☐	IAI Global Note (CUSIP [ ]), or

	(b)	☐	a Restricted Definitive Note; or

	(c)	☐	an Unrestricted Definitive Note,

	in accordance with the terms of the Indenture.

B-5

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Ortho-Clinical Diagnostics, Inc.

Ortho-Clinical Diagnostics S.A.

c/o Ortho Clinical Diagnostics

1001 U.S. 202

Raritan, NJ 08869

Tel: (908) 218-8000

Attention to: Chief Financial Officer

c/o The Carlyle Group

520 Madison Avenue, 42^nd Floor

New York, NY 10022

Facsimile: (212) 813-4901

Tel: (212) 813-4900

Attention to: Robert Schmidt

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Ortho-Clinical Notes Administrator

Re: 7.250% Senior Notes due 2028

(CUSIP [ ])

Reference is hereby made to the Indenture, dated as of January 27, 2020 (the “Indenture”), among ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), and ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer and their successors and assigns under the Indenture, the “Issuers”), the guarantors party thereto and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

(the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the

C-1

Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) ☐ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes.

(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued shall continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

C-2

(b) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] _ 144A Global Note, _ Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

C-3

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.



		[Insert Name of Transferor]

By:
		Name:
		Title:

Dated:

C-4

EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Ortho-Clinical Diagnostics, Inc.

Ortho-Clinical Diagnostics S.A.

c/o Ortho Clinical Diagnostics

1001 U.S. 202

Raritan, NJ 08869

Tel: (908) 218-8000

Attention to: Chief Financial Officer

c/o The Carlyle Group

520 Madison Avenue, 42^nd Floor

New York, NY 10022

Facsimile: (212) 813-4901

Tel: (212) 813-4900

Attention to: Robert Schmidt

Wilmington Trust, National Association

246 Goose Lane, Suite 105

Guilford, CT 06437

Facsimile: (203) 453-1183

Attention: Ortho-Clinical Notes Administrator

Re: 7.250% Senior Notes due 2028

Reference is hereby made to the Indenture, dated as of January 27, 2020 (the “Indenture”), among ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), and ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer and their successors and assigns under the Indenture, the “Issuers”), the guarantors party thereto and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

In connection with our proposed purchase of $ aggregate principal amount of:

(a) ☐ a beneficial interest in a Global Note, or

(b) ☐ a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

D-1

2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we shall do so only (A) to the Issuers or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuers a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $150,000, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we shall be required to furnish to you and the Issuers such certifications, legal opinions and other information as you and the Issuers may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us shall bear a legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.



		[Insert Name of Accredited Investor]

By:
		Name:
		Title:

Dated:

D-2

EXHIBIT E

FORM OF SUPPLEMENTAL INDENTURE

THIS [●] SUPPLEMENTAL INDENTURE, dated as of [●], 20[●] (this “Supplemental Indenture”), is by and among ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), and ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer and their successors and assigns under the Indenture, the “Issuers”), each of the parties identified as a New Guarantor on the signature pages hereto (each, a “New Guarantor” and collectively, the “New Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuers and the Trustee are parties to an indenture dated as of January 27, 2020 (the “Indenture”), providing for the issuance of the Issuers’ 7.250% Senior Notes due 2028 (the “Notes”);

WHEREAS, Section 3.11 of the Indenture provides that under certain circumstances the New Guarantors shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantors shall unconditionally guarantee all of the Issuers’ obligations under the Notes and the Indenture on the terms and conditions set forth herein; and

WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without consent of Holders of the Notes.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. Agreements to Become Guarantors. (a) Each of the New Guarantors hereby unconditionally guarantees the Issuers’ obligations for the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance and observance of each other obligation and covenant set forth in the Indenture to be performed or observed on the part of the Issuers, on the terms and subject to the conditions set forth in Article X of the Indenture and agrees to be bound by all other provisions of the Indenture and the Notes applicable to a Guarantor therein.

(b) [Local law limitations to be inserted, if applicable.]

3. Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

E-1

4. No Recourse Against Others. No manager, managing director, director, officer, employee, incorporator or holder of any Equity Interests in the Lux Co-Issuer, the U.S. Co-Issuer, any Subsidiary or any direct or indirect parent of the Lux Co-Issuer, as such, shall have any liability for any obligations of the Issuers or the New Guarantors under the Notes, the Indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes, by accepting a Note, waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. This waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

5. Notices. For purposes of Section 12.1 of the Indenture, the address for notices to each of the New Guarantors shall be:

Ortho-Clinical Diagnostics, Inc.

Ortho-Clinical Diagnostics S.A.

c/o Ortho Clinical Diagnostics

1001 U.S. 202

Raritan, NJ 08869

Tel: (908) 218-8000

Attention to: Chief Financial Officer

c/o The Carlyle Group

520 Madison Avenue, 42^nd Floor

New York, NY 10022

Fax: (212) 813-4901

Tel: (212) 813-4900

Attention to: Robert Schmidt

6. Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

7. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement. Delivery of an executed counterpart of a signature page to this Supplemental Indenture by telecopier, facsimile or other electronic transmission (i.e. a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.

8. Effect of Headings. The section headings herein are for convenience only and shall not affect the construction hereof.

9. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each of the New Guarantors.

[remainder of page intentionally blank]

E-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.


ORTHO-CLINICAL DIAGNOSTICS, INC.

By:
		Name:
		Title:

ORTHO-CLINICAL DIAGNOSTICS S.A.
duly represented by

By:
		Name:
		Title:

E-3


WILMINGTON TRUST,NATIONAL ASSOCIATION,
as Trustee

By:
		Name: [ ]
		Title: [ ]

E-4

Exhibit 4.2

Execution Version

ORTHO-CLINICAL DIAGNOSTICS, INC. and

ORTHO-CLINICAL DIAGNOSTICS S.A.,

as Issuers

and

the Guarantors party hereto from time to time

INDENTURE

Dated as of June 11, 2020

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee

TABLE OF CONTENTS


		Page

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1.	Definitions		1
SECTION 1.2.	Other Definitions		46
SECTION 1.3.	Rules of Construction		48
SECTION 1.4.	Measuring Compliance		48

ARTICLE II

THE NOTES

SECTION 2.1.	Form and Dating		51
SECTION 2.2.	Form of Execution and Authentication		55
SECTION 2.3.	Registrar and Paying Agent		56
SECTION 2.4.	Paying Agent to Hold Money in Trust		56
SECTION 2.5.	Lists of Holders of the Notes		57
SECTION 2.6.	Transfer and Exchange		57
SECTION 2.7.	Replacement Notes		66
SECTION 2.8.	Outstanding Notes		67
SECTION 2.9.	Treasury Notes		67
SECTION 2.10.	Temporary Notes		67
SECTION 2.11.	Cancellation		67
SECTION 2.12.	Payment of Interest; Defaulted Interest		67
SECTION 2.13.	CUSIP and ISIN Numbers		68
SECTION 2.14.	[Reserved.]		69
SECTION 2.15.	Additional Amounts		69
SECTION 2.16.	Conversion of Currency		71

ARTICLE III

COVENANTS

SECTION 3.1.	Payment of Notes		72
SECTION 3.2.	Reports and Other Information		72
SECTION 3.3	Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock		76
SECTION 3.4.	Limitation on Restricted Payments		84
SECTION 3.5.	Liens		92
SECTION 3.6.	Dividend and Other Payment Restrictions Affecting Subsidiaries		93
SECTION 3.7.	Asset Sales		96
SECTION 3.8.	Transactions with Affiliates		100
SECTION 3.9.	Change of Control		104
SECTION 3.10.	Maintenance of Insurance		106
SECTION 3.11.	Future Guarantors		106
SECTION 3.12.	Compliance Certificate; Statement by Officers as to Default		106

-i-


		Page
SECTION 3.13.	[Reserved]		106
SECTION 3.14.	Designation of Restricted and Unrestricted Subsidiaries		106
SECTION 3.15.	Covenant Suspension		107
SECTION 3.16.	Stay, Extension and Usury Laws		108

ARTICLE IV

MERGER, CONSOLIDATION, AMALGAMATION OR SALE OF ASSETS
SECTION 4.1.	When the Issuers May Merge, Amalgamate or Otherwise Dispose of Assets		109

ARTICLE V

REDEMPTION OF NOTES
SECTION 5.1.	Optional Redemption		112
SECTION 5.2.	Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions		112
SECTION 5.3.	Selection by Trustee of Notes to Be Redeemed		112
SECTION 5.4.	Notice of Redemption		113
SECTION 5.5.	Deposit of Redemption Price		114
SECTION 5.6.	Notes Payable on Redemption Date		114
SECTION 5.7.	Notes Redeemed in Part		114
SECTION 5.8.	Offer to Repurchase		115
SECTION 5.9.	Redemption for Taxation Reasons		116

ARTICLE VI

DEFAULTS AND REMEDIES
SECTION 6.1.	Events of Default		117
SECTION 6.2.	Acceleration		119
SECTION 6.3.	Other Remedies		119
SECTION 6.4.	Waiver of Past Defaults		119
SECTION 6.5.	Control by Majority		120
SECTION 6.6.	Limitation on Suits		120
SECTION 6.7.	Rights of Holders to Receive Payment		120
SECTION 6.8.	Collection Suit by Trustee		121
SECTION 6.9.	Trustee May File Proofs of Claim		121
SECTION 6.10.	Priorities		121
SECTION 6.11.	Undertaking for Costs		121

ARTICLE VII

TRUSTEE
SECTION 7.1.	Duties of Trustee		122
SECTION 7.2.	Rights of Trustee		123
SECTION 7.3.	Individual Rights of Trustee		124
SECTION 7.4.	Disclaimer		125
SECTION 7.5.	Notice of Defaults		125
SECTION 7.6.	Compensation and Indemnity		125

-ii-


		Page
SECTION 7.7.	Replacement of Trustee		126
SECTION 7.8.	Successor Trustee by Merger		126
SECTION 7.9.	Eligibility; Disqualification		127
SECTION 7.10.	Limitation on Duty of Trustee		127
SECTION 7.11.	Preferential Collection of Claims Against the Issuers		127

ARTICLE VIII

DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.1.	Discharge of Liability on Notes; Defeasance		127
SECTION 8.2.	Conditions to Defeasance		128
SECTION 8.3.	Application of Trust Money		130
SECTION 8.4.	Repayment to Issuers		130
SECTION 8.5.	Indemnity for U.S. Government Obligations		130
SECTION 8.6.	Reinstatement		130

ARTICLE IX

AMENDMENTS

SECTION 9.1.	Without Consent of Holders		130
SECTION 9.2.	With Consent of Holders		132
SECTION 9.3.	Effect of Consents and Waivers		133
SECTION 9.4.	Notation on or Exchange of Notes		133
SECTION 9.5.	Trustee To Sign Amendments		134

ARTICLE X

GUARANTEES

SECTION 10.1.	Guarantees		134
SECTION 10.2.	Limitation on Liability; Termination, Release and Discharge		140
SECTION 10.3.	Right of Contribution		141
SECTION 10.4.	No Subrogation		141

ARTICLE XI

INTENTIONALLY OMITTED

ARTICLE XII

MISCELLANEOUS

SECTION 12.1.	Notices		142
SECTION 12.2.	Certificate and Opinion as to Conditions Precedent		143
SECTION 12.3.	Statements Required in Certificate or Opinion		144
SECTION 12.4.	Prescription		144
SECTION 12.5.	Rules by Trustee, Paying Agent and Registrar		144
SECTION 12.6.	Days Other than Business Days		144
SECTION 12.7.	Governing Law		144

-iii-


		Page
SECTION 12.8.	Jurisdiction and Service		144
SECTION 12.9.	Waiver of Jury Trial		145
SECTION 12.10.	No Recourse Against Others		145
SECTION 12.11.	Successors		145
SECTION 12.12.	Multiple Originals		145
SECTION 12.13.	Variable Provisions		145
SECTION 12.14.	Table of Contents; Headings		145
SECTION 12.15.	Force Majeure		145
SECTION 12.16.	USA Patriot Act		145
SECTION 12.17.	[Reserved]		146
SECTION 12.18.	Communication by Holders with Other Holders		146


EXHIBITS
EXHIBIT A		Form of Note
EXHIBIT B		Form of Certificate of Transfer
EXHIBIT C		Form of Certificate of Exchange
EXHIBIT D		Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited Investors
EXHIBIT E		Form of Supplemental Indenture

-iv-

INDENTURE, dated as of June 11, 2020, as amended or supplemented from time to time (this “Indenture”), among ORTHO-CLINICAL DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of New York (the “U.S. Co-Issuer”), ORTHO-CLINICAL DIAGNOSTICS S.A., a société anonyme governed by the laws of Luxembourg, having its registered office at 89C, rue Pafebruch, and registered with the Luxembourg trade and companies register under number B185693 (the “Lux Co-Issuer” and, together with the U.S. Co-Issuer, the “Issuers”), the Guarantors (as defined herein) from time to time party hereto, and WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee (in such capacity, the “Trustee”).

Recitals of the Issuers

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined herein) of the Notes (as defined herein):

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.1. Definitions.

“2022 Senior Notes” means the 6.625% Senior Notes due 2022 issued by the Issuers.

“Acquired Indebtedness” means, with respect to any specified Person:

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Agent” means any Registrar, Paying Agent, co-registrar or additional paying agent.

“Applicable Premium” means, with respect to any Note on any applicable Redemption Date, as calculated by the Issuers, the greater of:

(1) 1% of the then outstanding principal amount of the Note; and

(2) the excess, if any, of (a) the present value at such Redemption Date of (i) the redemption price of the Note at June 1, 2022, in the case of the Initial Notes, or at such first optional redemption date as may be specified by the Issuers in accordance with the provisions of Section 2.2 hereof, in the case of any Additional Notes, in each case, as set forth in Section 5.1(a), plus (ii) all required interest payments due on such Note through June 1, 2022 (excluding accrued but unpaid interest to (but not including) the Redemption Date), in the case of each of clauses (i) and (ii) above, computed using a discount rate equal to the Treasury Rate, plus 50 basis points; over (b) the then outstanding principal amount of the Note.

The Trustee shall have no duty to calculate or verify the Issuers’ calculation of the Applicable Premium.

“Asset Sale” means:

(each of the foregoing referred to in this definition as a “disposition”). Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(b) any disposition in compliance with Section 4.1 or any disposition that constitutes a Change of Control;

-2-

(f) the creation of any Lien permitted under this Indenture;

(g) any issuance, sale, pledge or other disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(i) the lease, assignment, license, sublicense or sublease of any real or personal property in the ordinary course of business;

(j) a sale, assignment or other transfer of Receivables Assets, or participations therein, and related assets (i) to a Receivables Subsidiary in a Qualified Receivables Financing or

(ii) to any other Person in a Qualified Receivables Factoring;

(k) a sale, assignment or other transfer of Receivables Assets, or participations therein and related assets by a Receivables Subsidiary in a Qualified Receivables Financing;

-3-

(p) dispositions arising from foreclosures, condemnations, eminent domain, seizure, nationalization or any similar action with respect to assets, dispositions of property subject to casualty events;

(r) to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(s) the issuance of directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law;

(u) a sale or transfer of equipment receivables, or participations therein, and related assets; and

For the avoidance of doubt, the unwinding of Swap Contracts shall not be deemed to constitute an Asset Sale.

“Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.

“beneficial owner” has the meaning given to that term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, in each case as in effect on June 11, 2020, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act, as in effect on June 11, 2020), such “person” will not be deemed to have beneficial ownership of any securities that such “person” has the right to acquire or vote only upon the happening of any future event or contingency (including the passage of time) that is outside the control of the holder and that has not yet occurred. The terms “beneficial ownership,” “beneficially owns” and “beneficially owned” have a corresponding meaning.

“Bermuda Holdco” means Ortho-Clinical Diagnostics Bermuda Co. Ltd. (f/k/a Crimson Bermuda Co. Ltd.), a Bermuda exempted limited liability company, and its successors.

-4-

“Capital Stock” means:

(1) in the case of a corporation or company, corporate stock or share capital;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person (it being understood and agreed, for the avoidance of doubt, that “cashsettled phantom appreciation programs” in connection with employee benefits that do not require a dividend or distribution shall not constitute Capital Stock).

“Cash Equivalents” means:

-5-

(8) investment funds investing at least 95% of their assets in investments of the types described in clauses (1) through (7) above and (9) and (10) below;

-6-

“Change of Control” means the occurrence of any of the following events:

(i) any person or “group” (within the meaning of Rule 13d-5 under the Exchange Act, as in effect on June 11, 2020, but excluding any employee benefit plan and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than one or more Permitted Holders, acquires beneficial ownership of more than 50% of the Voting Stock (measured by reference to voting power) of the Lux Co-Issuer (determined on a fully diluted basis); or

“Clearstream” means Clearstream Banking, S.A., or any successor securities clearing agency.

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

“Company Order” means a written request or order signed in the name of each of the Issuers by any Officer of each of the Issuers.

“Consolidated EBITDA” means, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of such Person for such period:

(1) increased, in each case to the extent deducted and not added back in calculating such Consolidated Net Income (and without duplication), by:

(b) Consolidated Interest Expense; plus

-7-

(d) all depreciation and amortization charges and expenses, including amortization for upfront payments related to any contract signing and signing bonus and incentive payments; plus

(f) the amount of management, monitoring, consulting, transaction and advisory fees (including termination fees) and related indemnities, charges and expenses paid or accrued to or on behalf of any direct or indirect parent of the Lux Co-Issuer or any of the Permitted Holders (or any other Person who becomes a beneficial owner in the common equity of the Lux Co-Issuer (or a Permitted Parent) after the Existing Notes Issue Date), in each case, to the extent permitted under Section 3.8; plus

(g) earn-out obligations incurred in connection with any acquisition or other Investment and paid or accrued during the applicable period; plus

(i) all non-cash losses, charges and expenses, including any write-offs or write-downs; provided that if any such non-cash charge represents an accrual or reserve for potential cash items in any future four-fiscal quarter period, (i) such Person may determine not to add back such non-cash charge in the period for which Consolidated EBITDA is being calculated and (ii) to the extent such Person does decide to add back such non-cash charge, the cash payment in respect thereof in such future four-fiscal quarter period will be subtracted from Consolidated EBITDA for such future four-fiscal quarter period; plus

(j) all costs and expenses in connection with pre-opening and opening and closure and/or consolidation of facilities that were not already excluded in calculating such Consolidated Net Income; plus

(k) restructuring charges, accruals or reserves and business optimization expense, including any restructuring costs and integration costs incurred in connection with the Transactions and acquisitions after the Existing Notes Issue Date, project start-up costs, costs related to the closure, relocation, reconfiguration and/or consolidation of facilities and costs to relocate employees, integration and transaction costs, retention charges, severance, contract termination costs, recruiting and signing bonuses and expenses, future lease commitments, systems establishment costs, conversion costs and excess pension charges and consulting fees, expenses attributable to the implementation of costs savings initiatives, costs associated with tax projects/audits and costs consisting of professional consulting or other fees relating to any of the foregoing; plus

(l) Pro Forma Cost Savings; plus

-8-

(n) [reserved]; plus

(o) the amount of loss or discount on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Financing; plus

(2) decreased (without duplication and to the extent increasing such Consolidated Net Income for such period) by (i) non-cash gains or income, excluding any non-cash gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that were deducted (and not added back) in the calculation of Consolidated EBITDA for any prior period ending after the Existing Notes Issue Date and (ii) the amount of any minority interest income consisting of a Subsidiary loss attributable to minority equity interest of third parties in any non-Wholly Owned Subsidiary (to the extent not deducted from Consolidated Net Income for such period);

(3) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any net realized gains and losses relating to (i) amounts denominated in foreign currencies resulting from the application of FASB ASC 830 (including net realized gains and losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains or losses from related Swap Contracts (entered into in the ordinary course of business or consistent with past practice)) or (ii) any other amounts denominated in or otherwise trued-up to provide similar accounting as if it were denominated in foreign currencies; and

(4) increased (with respect to losses) or decreased (with respect to gains) by, without duplication, any gain or loss relating to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice).

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(a) the aggregate interest expense of such Person and its Restricted Subsidiaries for such period, calculated on a consolidated basis in accordance with GAAP, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including pay in kind interest payments, amortization of original issue discount, the interest component of Capitalized Lease Obligations and net payments and receipts (if any) pursuant to interest rate Swap Contracts (other than in connection with the early termination thereof) but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, fees and expenses and expensing of any bridge, commitment or other financing fees, and all discounts, commissions, fees and other charges associated with any Receivables Financing); plus

-9-

(b) consolidated capitalized interest of the referent Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

provided that (a) when determining Consolidated Interest Expense in respect of any four-quarter period ending prior to the first anniversary of the Existing Notes Issue Date, Consolidated Interest Expense will be calculated by multiplying the aggregate Consolidated Interest Expense accrued since the Existing Notes Issue Date by 365 and then dividing such product by the number of days from and including the Existing Notes Issue Date to and including the last day of such period and (b) in the case of any Person that became a Restricted Subsidiary of such Person after the commencement of such four-quarter period, the interest expense of such Person paid in cash prior to the date on which it became a Restricted Subsidiary of such Person will be disregarded. For purposes of this definition, interest on Capitalized Lease Obligations will be deemed to accrue at the interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligations in accordance with GAAP.

-10-

(f) all non-cash gains, losses, expenses or charges attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Contracts or other derivative instruments will be excluded;

(i) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period will be excluded;

(k) all non-cash impairment charges and asset write-ups, write-downs and write-offs, in each case pursuant to GAAP, will be excluded;

-11-

(n) accruals and reserves for liabilities or expenses that are established or adjusted as a result of the Transactions within 24 months after the Day 1 Closing Date will be excluded;

(p) all discounts, commissions, fees and other charges (including interest expense) associated with any Receivables Financing will be excluded;

(u) non-cash charges for deferred tax asset valuation allowances will be excluded;

-12-

statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of such Person will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to such Person or any of its Restricted Subsidiaries in respect of such period, to the extent not already included therein (subject, in the case of a dividend to another Restricted Subsidiary (other than a Guarantor), to the limitation contained in this clause (w)); and

(x) any Initial Public Company Costs will be included as an add back.

-13-

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds:

(a) for the purchase or payment of any such primary obligation; or

(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.

-14-

receivables) or letters of credit, (B) debt securities, notes, mortgages, guarantees, collateral documents, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other Indebtedness, Preferred Stock or Disqualified Stock, in each case, with the same or different borrowers or issuers and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, increased (provided, that such increase in borrowings is permitted under this Indenture other than with respect to Refinancing Expenses, which shall be permitted without being deemed to increase the Indebtedness), replaced or refunded in whole or in part from time to time and whether by the same or any other agent, lender or investor or group of lenders or investors.

“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

“Data Download Program” means the interactive electronic interface made available by the Board of Governors of the Federal Reserve System or any successor information system.

“Day 1 Acquisition” means the acquisition by Bermuda Holdco and certain of its direct and indirect subsidiaries of the Day 1 Countries and the payment of the purchase price for Ortho.

“Day 1 Closing Date” means the date of the consummation of the Day 1 Acquisition, which was June 30, 2014.

“Day 2 Acquisition” means the acquisition by Bermuda Holdco and certain of its direct and indirect subsidiaries of the Day 2 Countries.

“Default” means any event that is, or after notice or the passage of time or both would be, an Event of Default.

-15-

“Depositary” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Issuers.

“Designated Preferred Stock” means Preferred Stock of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, as applicable (other than Excluded Equity), that is issued after the Existing Notes Issue Date for cash and is so designated as Designated Preferred Stock, pursuant to an Officer’s Certificate, on the issuance date thereof, the cash proceeds of which are contributed to the capital of the Lux Co-Issuer (if issued by Holdings or any other direct or indirect parent of the Lux Co-Issuer) and excluded from the calculation set forth in Section 3.4(a)(C).

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock, or

(3) is redeemable at the option of the holder thereof, in whole or in part,

in each case prior to the date that is 91 days after the earlier of the maturity date of the Notes and the date the Notes are no longer outstanding; provided that only the portion of Equity Interests that so mature or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Lux Co-Issuer or its Subsidiaries or a direct or indirect parent of the Lux Co-Issuer or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Lux Co-Issuer or its Subsidiaries or a direct or indirect parent of the Lux Co-Issuer in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided, further, that any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.

“Dollar” and “$” mean lawful money of the United States.

-16-

“Equity Contribution” means the cash equity contributions to the Lux Co-Issuer made, either directly or indirectly, by the Sponsor in order to provide the Lux Co-Issuer with capital, when taken together with the proceeds of the 2022 Senior Notes and borrowings under the Senior Credit Agreement, sufficient to consummate the Day 1 Acquisition on the Day 1 Closing Date.

(1) public offerings with respect to the Lux Co-Issuer’s or such direct or indirect parent’s common stock registered on Form S-4 or Form S-8 or any successor form thereto;

(2) issuances to any Subsidiary of the Lux Co-Issuer; and

(3) any such public or private sale that constitutes an Excluded Contribution or Refunding Capital Stock.

“Euro” and “€” mean the single currency of the participating member states of the European Union introduced in accordance with the provisions of Article 109(i)4 of the EU Treaty.

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor securities clearing agency.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Excluded Contributions” means the Net Cash Proceeds and Cash Equivalents, or the Fair Market Value of other assets, received by the Lux Co-Issuer after the Day 1 Closing Date from:

(1) contributions to its common equity capital, and

(2) the sale of Capital Stock (other than Excluded Equity) of the Lux Co-Issuer,

-17-

“Existing Notes” means the 7.250% Senior Notes due 2028 issued by the Issuers.

“Existing Notes Issue Date” means January 27, 2020.

“Fitch” means Fitch Ratings, Inc. or any successor to the rating agency business thereof.

-18-

“Fixed Charges” means, with respect to any Person for any period, the sum of (without duplication):

(1) Consolidated Interest Expense of such Person for such period, and

“GAAP” means generally accepted accounting principles in the United States of America as applied by the Lux Co-Issuer as in effect on the Fixed GAAP Date (for purposes of the Fixed GAAP Terms) and as in effect from time to time (for all other purposes of this Indenture), including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession (but excluding the policies, rules and regulations of the SEC applicable only to public companies); provided that the Lux Co-Issuer may at any time elect by written notice to the Trustee to use IFRS in lieu of GAAP for financial reporting purposes and, upon any such notice, references herein to GAAP shall thereafter be construed to mean (a) for periods beginning on and after the date specified in such notice, IFRS as in effect on the date specified in such notice (for purposes of the Fixed GAAP Terms) and as in effect from time to time (for all other purposes of this Indenture) and (b) for prior periods, GAAP as defined in the first sentence of this definition. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP.

“Global Note Legend” means the legend set forth in Section 2.1(b) hereof, which is required to be placed on all Global Notes issued under this Indenture.

-19-

“Guarantee” means any guarantee of the Obligations of the Issuers under this Indenture and the Notes in accordance with the provisions of this Indenture.

“Holder” or “noteholder” means the Person in whose name a Note is registered on the Registrar’s

books.

“Holdings” means Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., a société à responsabilité limitée organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 89C, rue Pafebruch, L—8308 Capellen, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies’ register (Registre de Commerce et des Sociétés de Luxembourg) under number B185679, and its successors.

“IFRS” means the International Financial Reporting Standards as issued by the International Accounting Standards Board.

“Indebtedness” means, with respect to any Person, without duplication:

-20-

(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness shall be the lesser of: (a) the Fair Market Value of such asset on the date such Indebtedness was Incurred or, at the option of such Person, at such date of determination, and (b) the amount of such Indebtedness of such other Person.

Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

(i) Contingent Obligations Incurred in the ordinary course of business or consistent with past practices;

(ii) obligations under or in respect of Receivables Financings;

(iii) any balance that constitutes a trade payable, accrued expense or similar obligation to a trade creditor, in each case Incurred in the ordinary course of business;

(iv) intercompany liabilities that would be eliminated on the consolidated balance sheet of the Lux Co-Issuer and its consolidated Subsidiaries;

(v) prepaid or deferred revenue arising in the ordinary course of business;

(vi) Cash Management Services;

(vii) in connection with the purchase by the Lux Co-Issuer or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid in a timely manner;

-21-

(x) Capital Stock (other than Disqualified Stock of the Lux Co-Issuer and Preferred Stock of a Non-Guarantor Subsidiary).

“Indenture” has the meaning set forth in the preamble hereto.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Initial Notes” means the $400,000,000 in aggregate principal amount of 7.375% Senior Notes due 2025 of the Issuers issued under this Indenture on the Issue Date.

“Interest Payment Date” means, in the case of the Initial Notes, June 1 and December 1 of each year, commencing on December 1, 2020 and, in the case of any Additional Notes, such interest payment dates as may be designated by the Issuers in accordance with the provisions of Section 2.2 hereof and, in each case, ending at the Stated Maturity of the Notes.

“Investment Grade Securities” means:

(1) securities issued or directly guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents),

(2) securities that have an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Lux Co-Issuer and its Subsidiaries,

-22-

(1) “Investments” shall include the portion (proportionate to the Lux Co-Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Lux Co-Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Lux Co-Issuer shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Lux Co-Issuer’s “Investment” in such Subsidiary at the time of such redesignation, less

(b) the portion (proportionate to the Lux Co-Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

-23-

Fair Market Value of the assets invested and without taking into account subsequent increases or decreases in value), reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Lux Co-Issuer or a Restricted Subsidiary in respect of such Investment, and shall be net of any Investment by such Person in the Lux Co-Issuer or any Restricted Subsidiary.

“Issue Date” means June 11, 2020.

“Issuers” has the meaning set forth in the preamble hereto.

“Joint Business” means the contractual joint venture operated pursuant to that certain Agreement, dated August 17, 1989, between Ortho-Clinical Diagnostics, Inc. (as successor-in-interest to Ortho Diagnostics Systems, Inc.) and Novartis Vaccines and Diagnostics, Inc. (as successor-in-interest to Chiron Corporation), as amended.

“JV Distributions” means, at any time, the aggregate amount of all cash dividends or distributions received by the Lux Co-Issuer or any of its Restricted Subsidiaries as a return on an Investment in a joint venture during the period from the Existing Notes Issue Date through the end of the fiscal quarter most recently ended immediately prior to such date for which financial statements are internally available; provided that the Lux Co-Issuer or any of its Restricted Subsidiaries are not required to reinvest such dividends or distributions in the joint venture.

“Lux Co-Issuer” has the meaning set forth in the preamble hereto.

-24-

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

“Non-Guarantor Subsidiary” means any Restricted Subsidiary of the Lux Co-Issuer (other than the U.S. Co-Issuer) that is not a Guarantor.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Non-U.S. Subsidiary” means any direct or indirect Subsidiary of the Lux Co-Issuer that is not a U.S. Subsidiary.

“Notes” means the Initial Notes and any Additional Notes, treated as a single class of securities except as otherwise provided in Section 2.2 and Section 9.2(a).

“Notes Custodian” means the custodian with respect to the Global Notes (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee.

“Offering Memorandum” means the Offering Memorandum related to the offering of Initial Notes, dated May 28, 2020.

-25-

“Officer” means, with respect to any Person, the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, the Secretary or director (or any person serving the equivalent function of any of the foregoing) of such Person (or of any direct or indirect parent, general partner, managing member or sole member of such Person) or any individual designated as an “Officer” for purposes of this Indenture by the Board of Directors of such Person (or the Board of Directors of any direct or indirect parent or the general partner, managing member or sole member of such Person).

“Pari Passu Indebtedness” means:

(1) with respect to the Issuers, the Notes and any Indebtedness that ranks pari passu in right of payment to the Notes; and

(2) with respect to any Guarantor, its Guarantee and any Indebtedness that ranks pari passu in right of payment to such Guarantor’s Guarantee.

-26-

“Permitted Investments” means:

(1) any Investment in cash and Cash Equivalents or Investment Grade Securities and Investments that were Cash Equivalents or Investment Grade Securities when made;

(2) any Investment in the Lux Co-Issuer (including the Notes) or any Restricted Subsidiary;

(3) any Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries;

(5) any Investment in securities or other assets received in connection with an Asset Sale made pursuant to Section 3.7 or any other disposition of assets not constituting an Asset Sale;

(6) any Investment (x) existing on the Issue Date, (y) made pursuant to binding commitments in effect on the Existing Notes Issue Date or the Issue Date or (z) that replaces, refinances, refunds, renews, modifies, amends or extends any Investment described under either of the immediately preceding clauses (x) or (y), provided that any such Investment is in an amount that does not exceed the amount replaced, refinanced, refunded, renewed, modified, amended or extended, except as contemplated pursuant to the terms of such Investment in existence on the Issue Date or the Existing Notes Issue Date, as applicable, or as otherwise permitted under this definition or under Section 3.4;

-27-

other Investment or accounts receivable, or (b) as a result of a foreclosure or other remedial action by the Lux Co-Issuer or any of its Restricted Subsidiaries with respect to any Investment or other transfer of title with respect to any Investment in default and (y) received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Lux Co-Issuer or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (B) litigation, arbitration or other disputes;

(10) Swap Contracts and Cash Management Services permitted under Section 3.3(b)(x);

(11) any Investment by the Lux Co-Issuer or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) in an aggregate amount, taken together with all other Investments made pursuant to this clause (11) that are at the time outstanding, not to exceed the greater of (x) $200 million and (y) 14.0% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (11) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (11) for so long as such Person continues to be a Restricted Subsidiary;

(12) additional Investments by the Lux Co-Issuer or any of its Restricted Subsidiaries in an aggregate amount, taken together with all other Investments made pursuant to this clause

(12) that are at the time outstanding, not to exceed the greater of (x) $225 million and (y) 15.5% of Consolidated Net Tangible Assets; provided, however, that if any Investment pursuant to this clause (12) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (2) above and shall cease to have been made pursuant to this clause (12) for so long as such Person continues to be a Restricted Subsidiary;

(14) Investments the payment for which consists of Equity Interests (other than Excluded Equity) of the Lux Co-Issuer or any direct or indirect parent of the Lux Co-Issuer, as applicable; provided, however, that such Equity Interests shall not increase the amount available for Restricted Payments under Section 3.4(a)(C);

-28-

(19) repurchases of the Notes;

(21) advances, loans or extensions of trade credit in the ordinary course of business by the Lux Co-Issuer or any of its Restricted Subsidiaries;

(22) Investments consisting of purchases and acquisitions of assets or services in the ordinary course of business;

(26) the Transactions and the Refinancing Transactions;

-29-

(29) Investments resulting from pledges and deposits that are Permitted Liens;

(32) Investments consisting of the redemption, purchase, repurchase or retirement of any Equity Interests permitted by Section 3.4;

(33) non-cash Investments made in connection with tax planning and reorganization activities;

(34) Investments made by, or in, the Joint Business;

“Permitted Liens” means, with respect to any Person:

-30-

(7) Liens of the Issuers or any of the Guarantors existing on the Issue Date or any Reversion Date (other than Liens Incurred to secure Obligations under the Senior Credit Agreement);

(8) Liens on assets of, or Equity Interests in, a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided, further, that such Liens are limited to all or a portion of the assets (and improvements on such assets) that secured (or, under the written arrangements under which the Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (8), if a Person becomes a Subsidiary, any Subsidiary of such Person shall be deemed to become a Subsidiary of the Issuers, and any property or assets of such Person or any Subsidiary of such Person shall be deemed acquired by the Issuers at the time of such merger, amalgamation or consolidation;

-31-

Liens arose, could secure) the obligations to which such Liens relate; provided, further, that for purposes of this clause (9), if, in connection with an acquisition by means of a merger, amalgamation or consolidation with or into either of the Issuers or any Restricted Subsidiary, a Person other than such Issuer or any Restricted Subsidiary is the Successor Company with respect thereto, any Subsidiary of such Person shall be deemed to become a Subsidiary of such Issuer or such Restricted Subsidiary, as applicable, and any property or assets of such Person or any such Subsidiary of such Person shall be deemed acquired by such Issuer or such Restricted Subsidiary, as the case may be, at the time of such merger, amalgamation or consolidation;