APTARGROUP INC (Form: 10-Q, Received: 11/05/2018 17:16:09)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-11846

AG_LOGO_RGB_K_CG10_5545_SMALL JPG

AptarGroup, Inc.


DELAWARE		36-3853103
(State of Incorporation)		(I.R.S. Employer Identification No.)

265 EXCHANGE DRIVE, SUITE 100, CRYSTAL LAKE, ILLINOIS 60014

815-477-0424

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.


Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at October 30, 2018
Common Stock, $.01 par value per share		62,814,068 shares

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AptarGroup, Inc.

Form 10-Q

Quarter Ended September 30, 2018

INDEX

Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income – Three and Nine Months Ended September 30, 2018 and 2017	1

	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2018 and 2017	2

	Condensed Consolidated Balance Sheets – September 30, 2018 and December 31, 2017	3

	Condensed Consolidated Statements of Changes in Equity – Three and Nine Months Ended September 30, 2018 and 2017	5

	Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2018 and 2017	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47

Item 4.	Controls and Procedures	47

Part II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 6.	Exhibits	49

	Signature	50

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PART I – FINANCIAL INFORMATIO N

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED )

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOM E

(Unaudited)


In thousands, except per share amounts

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

Net Sales	$	665,775	$	624,326	$	2,079,733	$	1,843,388
Operating Expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		435,379		407,781		1,355,445		1,192,129
Selling, research & development and administrative		103,574		95,536		323,146		292,274
Depreciation and amortization		41,857		40,087		123,133		114,660
Restructuring initiatives		23,852		—		48,002		—
		604,662		543,404		1,849,726		1,599,063
Operating Income		61,113		80,922		230,007		244,325

Other (Expense) Income:
Interest expense		(8,735)		(9,733)		(24,754)		(25,707)
Interest income		1,537		1,113		6,306		2,086
Equity in results of affiliates		(45)		(72)		(130)		(142)
Miscellaneous, net		(2,928)		(2,712)		(4,372)		(1,996)
		(10,171)		(11,404)		(22,950)		(25,759)

Income before Income Taxes		50,942		69,518		207,057		218,566

Provision for Income Taxes		11,920		15,989		52,966		48,043

Net Income	$	39,022	$	53,529	$	154,091	$	170,523

Net Income Attributable to Noncontrolling Interests	$	(26)	$	(6)	$	(20)	$	(6)

Net Income Attributable to AptarGroup, Inc.	$	38,996	$	53,523	$	154,071	$	170,517

Net Income Attributable to AptarGroup, Inc. per Common Share:
Basic	$	0.63	$	0.86	$	2.47	$	2.73
Diluted	$	0.60	$	0.83	$	2.38	$	2.64

Average Number of Shares Outstanding:
Basic		62,378		62,592		62,304		62,527
Diluted		65,129		64,821		64,822		64,626

Dividends per Common Share	$	0.34	$	0.32	$	0.98	$	0.96

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOM E

(Unaudited)


In thousands

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

Net Income	$	39,022	$	53,529	$	154,091	$	170,523
Other Comprehensive Income:
Foreign currency translation adjustments		(9,869)		17,903		(53,157)		69,505
Changes in treasury locks, net of tax		3		7		17		21
(Gain) loss on derivatives, net of tax		(1,166)		(3,591)		1,046		(3,591)
Defined benefit pension plan, net of tax
Amortization of prior service cost included in net income, net of tax		90		74		278		210
Amortization of net loss included in net income, net of tax		1,243		850		3,754		2,489
Total defined benefit pension plan, net of tax		1,333		924		4,032		2,699
Total other comprehensive (loss) income		(9,699)		15,243		(48,062)		68,634
Comprehensive Income		29,323		68,772		106,029		239,157
Comprehensive Income Attributable to Noncontrolling Interests		(15)		(11)		(4)		(18)
Comprehensive Income Attributable to AptarGroup, Inc.	$	29,308	$	68,761	$	106,025	$	239,139

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEET S

(Unaudited)


In thousands

		September 30,		December 31,
		2018		2017
Assets
Current Assets:
Cash and equivalents	$	291,382	$	712,640
Accounts and notes receivable, less allowance for doubtful accounts of $2,702 in 2018 and $3,161 in 2017		580,450		510,426
Inventories		394,264		337,216
Prepaid and other		118,613		109,791
		1,384,709		1,670,073
Property, Plant and Equipment:
Buildings and improvements		446,216		416,241
Machinery and equipment		2,352,421		2,237,655
		2,798,637		2,653,896
Less: Accumulated depreciation		(1,842,885)		(1,811,819)
		955,752		842,077
Land		25,355		25,829
		981,107		867,906
Other Assets:
Investments in affiliates		19,143		9,444
Goodwill		699,330		443,887
Intangible assets		283,110		95,460
Miscellaneous		39,597		51,053
		1,041,180		599,844
Total Assets	$	3,406,996	$	3,137,823

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In thousands, except share and per share amounts

		September 30,		December 31,
		2018		2017
Liabilities and Stockholders’ Equity
Current Liabilities:
Notes payable, including revolving credit facilities	$	153,236	$	4,336
Current maturities of long-term obligations, net of unamortized debt issuance costs		64,039		61,833
Accounts payable and accrued liabilities		524,528		461,579
		741,803		527,748
Long-Term Obligations, net of unamortized debt issuance costs		1,131,737		1,191,146
Deferred Liabilities and Other:
Deferred income taxes		48,857		20,995
Retirement and deferred compensation plans		67,704		80,278
Deferred and other non-current liabilities		24,837		5,608
Commitments and contingencies		—		—
		141,398		106,881
Stockholders’ Equity:
AptarGroup, Inc. stockholders’ equity
Common stock, $.01 par value, 199 million shares authorized, 67.2 and 66.7 million shares issued as of September 30, 2018 and December 31, 2017, respectively		672		667
Capital in excess of par value		670,710		609,471
Retained earnings		1,345,851		1,301,147
Accumulated other comprehensive (loss)		(301,348)		(253,302)
Less: Treasury stock at cost, 4.5 and 4.9 million shares as of September 30, 2018 and December 31, 2017, respectively		(324,141)		(346,245)
Total AptarGroup, Inc. Stockholders’ Equity		1,391,744		1,311,738
Noncontrolling interests in subsidiaries		314		310
Total Stockholders’ Equity		1,392,058		1,312,048
Total Liabilities and Stockholders’ Equity	$	3,406,996	$	3,137,823

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUIT Y

(Unaudited)


In thousands

Three Months Ended	AptarGroup, Inc. Stockholders’ Equity
September 30, 2018 and 2017			Accumulated
			Other		Common				Capital in		Non-
	Retained		Comprehensive		Stock		Treasury		Excess of		Controlling		Total
	Earnings		(Loss) Income		Par Value		Stock		Par Value		Interest		Equity
Balance - June 30, 2017	$	1,238,123	$	(266,325)	$	665	$	(257,731)	$	594,145	$	299	$	1,309,176
Net income		53,523		—		—		—		—		6		53,529
Foreign currency translation adjustments		—		17,898		—		—		—		5		17,903
Changes in unrecognized pension gains/losses and related amortization, net of tax		—		924		—		—		—		—		924
Changes in treasury locks, net of tax		—		7		—		—		—		—		7
Changes in derivative gains/losses, net of tax		—		(3,591)		—		—		—		—		(3,591)
Stock awards and option exercises		—		—		1		4,024		5,463		—		9,488
Cash dividends declared on common stock		(20,070)		—		—		—		—		—		(20,070)
Treasury stock purchased		—		—		—		(45,542)		—		—		(45,542)
Balance - September 30, 2017	$	1,271,576	$	(251,087)	$	666	$	(299,249)	$	599,608	$	310	$	1,321,824

Balance - June 30, 2018	$	1,328,034	$	(291,660)	$	668	$	(336,278)	$	646,449	$	299	$	1,347,512
Net income		38,996		—		—		—		—		26		39,022
Foreign currency translation adjustments		—		(9,858)		—		—		—		(11)		(9,869)
Changes in unrecognized pension gains/losses and related amortization, net of tax		—		1,333		—		—		—		—		1,333
Changes in treasury locks, net of tax		—		3		—		—		—		—		3
Changes in derivative gains/losses, net of tax		—		(1,166)		—		—		—		—		(1,166)
Stock awards and option exercises		—		—		4		12,137		24,261		—		36,402
Cash dividends declared on common stock		(21,179)		—		—		—		—		—		(21,179)
Balance - September 30, 2018	$	1,345,851	$	(301,348)	$	672	$	(324,141)	$	670,710	$	314	$	1,392,058


In thousands

Nine Months Ended	AptarGroup, Inc. Stockholders’ Equity
September 30, 2018 and 2017			Accumulated
			Other		Common				Capital in		Non-
	Retained		Comprehensive		Stock		Treasury		Excess of		Controlling		Total
	Earnings		(Loss) Income		Par Value		Stock		Par Value		Interest		Equity
Balance - December 31, 2016	$	1,197,234	$	(319,709)	$	660	$	(250,917)	$	546,682	$	292	$	1,174,242
Net income		170,517		—		—		—		—		6		170,523
Foreign currency translation adjustments		—		69,493		—		—		—		12		69,505
Changes in unrecognized pension gains/losses and related amortization, net of tax		—		2,699		—		—		—		—		2,699
Changes in treasury locks, net of tax		—		21		—		—		—		—		21
Changes in derivative gains/losses, net of tax		—		(3,591)		—		—		—		—		(3,591)
Stock awards and option exercises		—		—		11		23,938		57,742		—		81,691
Cash dividends declared on common stock		(60,002)		—		—		—		—		—		(60,002)
Treasury stock purchased		—		—		—		(72,270)		—		—		(72,270)
Common stock repurchased and retired		(36,173)		—		(5)		—		(4,816)		—		(40,994)
Balance - September 30, 2017	$	1,271,576	$	(251,087)	$	666	$	(299,249)	$	599,608	$	310	$	1,321,824

Balance - December 31, 2017	$	1,301,147	$	(253,302)	$	667	$	(346,245)	$	609,471	$	310	$	1,312,048
Net income		154,071		—		—		—		—		20		154,091
Adoption of accounting standards		2,937		—		—		—		—		—		2,937
Foreign currency translation adjustments		—		(53,141)		—		—		—		(16)		(53,157)
Changes in unrecognized pension gains/losses and related amortization, net of tax		—		4,032		—		—		—		—		4,032
Changes in treasury locks, net of tax		—		17		—		—		—		—		17
Changes in derivative gains/losses, net of tax		—		1,046		—		—		—		—		1,046
Stock awards and option exercises		—		—		11		26,009		67,705		—		93,725
Cash dividends declared on common stock		(60,989)		—		—		—		—		—		(60,989)
Treasury stock purchased		—		—		—		(3,905)		—		—		(3,905)
Common stock repurchased and retired		(51,315)		—		(6)		—		(6,466)		—		(57,787)
Balance - September 30, 2018	$	1,345,851	$	(301,348)	$	672	$	(324,141)	$	670,710	$	314	$	1,392,058

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW S

(Unaudited)


In thousands, brackets denote cash outflows

Nine Months Ended September 30,		2018		2017

Cash Flows from Operating Activities:
Net income	$	154,091	$	170,523
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		113,555		107,017
Amortization		9,578		7,643
Stock-based compensation		14,829		15,005
Provision for doubtful accounts		190		124
Gain on disposition of fixed assets		(979)		67
Deferred income taxes		(5,414)		(2,265)
Defined benefit plan expense		14,466		12,932
Equity in results of affiliates		130		142
Changes in balance sheet items, excluding effects from acquisitions and foreign currency adjustments:
Accounts and other receivables		(72,620)		(46,038)
Inventories		(41,183)		(1,392)
Prepaid and other current assets		(807)		(10,839)
Accounts payable and accrued liabilities		55,921		49,158
Income taxes payable		(7,481)		2,061
Retirement and deferred compensation plan liabilities		(21,534)		(20,621)
Other changes, net		(3,157)		(18,355)
Net Cash Provided by Operations		209,585		265,162
Cash Flows from Investing Activities:
Capital expenditures		(145,321)		(120,803)
Proceeds from sale of property and equipment		4,056		2,345
Insurance proceeds		10,631		—
Settlement of derivative		—		(66,155)
Acquisition of business, net of cash acquired		(527,916)		—
Acquisition of intangible assets		(346)		—
Investment in unconsolidated affiliate		(10,000)		(5,000)
Notes receivable, net		216		451
Net Cash (Used) by Investing Activities		(668,680)		(189,162)
Cash Flows from Financing Activities:
Proceeds from notes payable		18,003		—
Repayments of notes payable		(6,395)		—
Proceeds and repayments of short term credit facility, net		139,384		(63,905)
Proceeds from long-term obligations		10,092		625,525
Repayments of long-term obligations		(67,026)		(4,836)
Dividends paid		(60,989)		(60,002)
Credit facility costs		—		(2,937)
Proceeds from stock option exercises		78,896		66,686
Purchase of treasury stock		(3,905)		(72,270)
Common stock repurchased and retired		(57,787)		(40,994)
Net Cash Provided by Financing Activities		50,273		447,267
Effect of Exchange Rate Changes on Cash		(7,436)		29,112
Net (Decrease) Increase in Cash and Equivalents and Restricted Cash		(416,258)		552,379
Cash and Equivalents and Restricted Cash at Beginning of Period		712,640		466,287
Cash and Equivalents and Restricted Cash at End of Period	$	296,382	$	1,018,666

Restricted cash included in the line item prepaid and other on the Condensed Consolidated Balance Sheets as shown below represents amounts held in escrow related to the CSP Technologies acquisition.


Nine Months Ended September 30,		2018		2017

Cash and equivalents	$	291,382	$	1,018,666
Restricted cash included in prepaid and other		5,000		—
Total Cash and Equivalents and Restricted Cash shown in the Statement of Cash Flows	$	296,382	$	1,018,666

See accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

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AptarGroup, Inc.

Notes to Condensed Consolidated Financial Statement s

(Dollars in Thousands, Except per Share Amounts, or as Otherwise Indicated)

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of AptarGroup, Inc. and our subsidiaries. The terms “AptarGroup”, “Aptar” or “Company” as used herein refer to AptarGroup, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain previously reported amounts have been reclassified to conform to the current period presentation.

In the opinion of management, the unaudited Condensed Consolidated Financial Statements (the “Condensed Consolidated Financial Statements”) include all normal recurring adjustments necessary for a fair statement of consolidated financial position, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. The accompanying Condensed Consolidated Financial Statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Also, certain financial position data included herein was derived from the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 but does not include all disclosures required by U.S. GAAP. Accordingly, these Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

During the quarter ended June 30, 2018, primarily based on published estimates, which indicate that Argentina's three-year cumulative inflation rate has exceeded 100%, we concluded that Argentina has become a highly inflationary economy. Beginning July 1, 2018, we have applied highly inflationary accounting for our Argentinian subsidiaries. We have changed the functional currency from the Argentinian peso to the U.S. dollar. Local currency monetary assets and liabilities have been remeasured into U.S. dollars using exchange rates as of the latest balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in net earnings. During the third quarter of 2018, we recognized approximately $1.0 million of additional losses due to these changes. Our Argentinian operations contributed approximately 2.0% of consolidated net assets and revenues at and for the nine months ended September 30, 2018.

ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification.

In May 2014, the FASB issued ASU 2014-09, which amended the guidance for recognition of revenue from customer contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in the amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On January 1, 2018, we adopted this standard and all the related amendments (the “new revenue standard”) for all contracts. This adoption was accounted for using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of retained earnings. Comparative information for the prior periods has not been restated and continues to be reported under the accounting standards in effect prior to January 1, 2018.


		Balance at				Balance at
		December 31, 2017		Adjustment		January 1, 2018
Consolidated Balance Sheets
Assets
Inventories	$	337,216	$	(14,637)	$	322,579
Prepaid and other		109,791		13,984		123,775
Liabilities
Accounts payable and accrued liabilities		461,579		(5,706)		455,873
Deferred income taxes		20,995		1,292		22,287
Deferred and other non-current liabilities		5,608		824		6,432
Stockholders’ Equity
Retained earnings		1,301,147		2,937		1,304,084

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A majority of our sales revenue continues to be recognized when products are shipped from our manufacturing facilities. For certain custom product and tooling sales where revenue was previously recognized when the products were shipped, we now recognize revenue over the time required to manufacture the product or build the tool in accordance with the new revenue standard. We also have certain extended warranty contracts, which under the new standard are considered a separate performance obligation and are required to be deferred and recognized into revenue over the life of the agreement.

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statements of income and balance sheets is as follows:


	For the Three Months Ended September 30, 2018
				Balances
				Without		Effect of
		As		Adoption of		Change
		Reported		ASC 606		Higher/(Lower)
Consolidated Statements of Income
Net Sales
Beauty + Home	$	341,760	$	340,787	$	973
Pharma		227,515		227,526		(11)
Food + Beverage		96,500		96,478		22
Costs and Expenses
Cost of sales (exclusive of depreciation and amortization)		435,379		434,601		778
Provision for income taxes		11,920		11,866		54
Net income		39,022		38,870		152


	For the Nine Months Ended September 30, 2018
				Balances
				Without		Effect of
		As		Adoption of		Change
		Reported		ASC 606		Higher/(Lower)
Consolidated Statements of Income
Net Sales
Beauty + Home	$	1,088,469	$	1,087,922	$	547
Pharma		698,851		699,299		(448)
Food + Beverage		292,413		292,437		(24)
Costs and Expenses
Cost of sales (exclusive of depreciation and amortization)		1,355,445		1,354,844		601
Provision for income taxes		52,966		53,138		(172)
Net income		154,091		154,445		(354)


	September 30, 2018
				Balances
				Without		Effect of
		As		Adoption of		Change
		Reported		ASC 606		Higher/(Lower)
Consolidated Balance Sheets
Assets
Inventories	$	394,264	$	409,502	$	(15,238)
Prepaid and other		118,613		102,767		15,846
Liabilities
Accounts payable and accrued liabilities		524,528		528,081		(3,553)
Deferred income taxes		48,857		47,737		1,120
Deferred and other non-current liabilities		24,837		24,379		458
Stockholders’ Equity
Retained earnings		1,345,851		1,343,268		2,583

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In January 2016, the FASB issued ASU 2016-01, which provides guidance on the classification and measurement of financial assets and liabilities (equity securities and financial liabilities) under the fair value option and the presentation and disclosure requirements for financial instruments. In February 2018, ASU 2018-03 was issued to clarify certain aspects of the guidance issued in January 2016. The guidance modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any related changes in fair value in net income unless the investments qualify for the new practicality exception. A measurement alternative exists for those equity investments that do not have a readily determinable fair value. These investments may be measured at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The standard also includes a new impairment model for equity investments without readily determinable fair values. The new model is a single-step model under which the Company is required to perform a qualitative assessment each reporting period to identify impairment. When a qualitative assessment indicates that an impairment exists, the Company will estimate the fair value of the investment and recognize in current earnings an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company adopted the requirements of this standard during the first quarter of 2018.

In February 2016, the FASB issued ASU 2016-02 and subsequent amendments, which requires organizations to recognize leases on the balance sheet, and disclose key information about leasing arrangements. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and recognition of expense in the income statement. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. We expect to adopt the new standard on its effective date. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. We expect to adopt the new standard on January 1, 2019 and use the effective date (option 1) as our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. We expect to elect the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently expect to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to the recognition of new ROU assets and lease liabilities on our balance sheet for our operating leases and the significant new disclosures about our leasing activities.

In August 2016, the FASB issued ASU 2016-15, which provides guidance on the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance provides clarification for the following types of transactions: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, distributions received from equity method investees and beneficial interest in securitization transactions. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. However, early adoption was permitted and an entity that elects early adoption must adopt all of the amendments on a retrospective basis in the period of adoption. The Company adopted this standard in the fourth quarter of 2017.

In November 2016, the FASB issued ASU 2016-18, which provides guidance to address the diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this standard require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company adopted the requirements of this standard during the first quarter of 2018 and appropriate disclosures are included on the statement of cash flows to the extent applicable.

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In January 2017, the FASB issued ASU 2017-01, which provides guidance to clarify the definition of a business to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this standard provide a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments also narrow the definition of the term “output” so that the term is consistent with how outputs are described in the new guidance for revenue recognition. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company adopted the requirements of this standard during the first quarter of 2018.

In March 2017, the FASB issued ASU 2017-07, which provides guidance to disaggregate the current service cost component from the other components of net periodic benefit costs. The service cost component should be presented within compensation costs while the other components should be presented outside of income from operations. The guidance also clarifies that only the service cost component is eligible for capitalization. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company adopted the requirements of this standard during the first quarter of 2018 and the prior periods were restated as follows:


	Original				Revised
	Balance		Adjustment		Balance
Revised Condensed Consolidated Statements of Income
Three Months Ended September 30, 2017
Cost of sales (exclusive of depreciation and amortization)	$	408,081	$	(300)	$	407,781
Selling, research & development and administrative		95,748		(212)		95,536
Total Operating Expenses		543,916		(512)		543,404
Operating Income		80,410		512		80,922
Miscellaneous, net		(2,200)		(512)		(2,712)
Total Other (Expense) Income		(10,892)		(512)		(11,404)
Income before Income Taxes		69,518		—		69,518
Nine Months Ended September 30, 2017
Cost of sales (exclusive of depreciation and amortization)	$	1,192,967	$	(838)	$	1,192,129
Selling, research & development and administrative		292,923		(649)		292,274
Total Operating Expenses		1,600,550		(1,487)		1,599,063
Operating Income		242,838		1,487		244,325
Miscellaneous, net		(509)		(1,487)		(1,996)
Total Other (Expense) Income		(24,272)		(1,487)		(25,759)
Income before Income Taxes		218,566		—		218,566

In May 2017, the FASB issued ASU 2017-09, which provides clarification on applying the standards for stock compensation accounting. The new standard provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017. The Company adopted the requirements of this standard during the first quarter of 2018.

In August 2017, the FASB issued ASU 2017-12, which provides new guidance to improve the accounting for hedging activities. The guidance changes the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the guidance makes certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. However, early application is permitted in any interim period after the issuance of this guidance. The Company adopted this standard in the third quarter of 2017. See details in Note 9 – Derivative Instruments and Hedging Activities.

Other accounting standards that have been issued by the FASB or other standards-setting bodies did not have a material impact on our Condensed Consolidated Financial Statements.

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RETIREMENT OF COMMON STOCK

During the first nine months of 2018, the Company repurchased 668 thousand shares of common stock, of which 623 thousand shares were immediately retired. During the first nine months of 2017, the Company repurchased 1.4 million shares of common stock, of which 512 thousand shares were immediately retired. Common stock was reduced by the number of shares retired at $0.01 par value per share. The Company allocates the excess purchase price over par value between additional paid-in capital and retained earnings.

INCOME TAXES

The Company computes taxes on income in accordance with the tax rules and regulations of the many taxing authorities where income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pre-tax income for financial accounting purposes. To the extent that these differences create temporary differences between the tax basis of an asset or liability and our reported amount in the financial statements, an appropriate provision for deferred income taxes is made.

The Tax Cuts and Jobs Act (the “TCJA”) was enacted in the United States on December 22, 2017. The TCJA lowered the corporate tax rate from 35.0% to 21.0% and imposed a one-time transition tax on unremitted earnings as of the end of 2017, and featured many other tax law provisions. New provisions for 2018 include, most notably, a tax on global intangible low-taxed income (“GILTI”) and the base erosion anti-abuse tax (“BEAT”), repeal of the domestic manufacturing deduction and limitations on the deductibility of executive compensation. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the U.S. GAAP application of the TCJA. SAB 118 provides us up to a year to finalize accounting for the impacts of the TCJA.

The Company estimated provisional tax amounts related to the transition tax and components of the revaluation of deferred tax assets and liabilities for the period ended December 31, 2017. This resulted in the recognition of a net tax charge of approximately $24.8 million, comprised of a provisional charge of $31.6 million for the transition tax and a provisional benefit of $6.8 million related to the corporate rate change. While our accounting for the enactment of the new U.S. tax legislation is not complete, during the three months ended September 30, 2018, we recognized a provisional, discrete $1.9 million net tax benefit, consisting of a provisional $2.8 million benefit related to the change in the corporate tax rate that was partially offset by a provisional $0.9 million charge for the transition tax liability. During the nine months ended September 30, 2018, we recognized $5.4 million in provisional, discrete net tax benefits, composed of the $2.8 million benefit for the change in corporate tax rate and a net $2.6 million decrease to our transition tax liability. The benefit for the lower transition tax liability reflects additional guidance issued by the U.S. Treasury during 2018. The Company expects both provisional amounts to be finalized in the fourth quarter of 2018 when the 2017 U.S. tax return filings are completed. The Company has elected to account for the tax on GILTI as a period cost and not as a measure of deferred taxes in the current period.

All of the Company’s non-U.S. earnings are subject to U.S. taxation, either from the TCJA transition tax on accumulated non-U.S. earnings as of the end of 2017 or the GILTI provisions on non-U.S. earnings going forward. The Company maintains its assertion that the cash and distributable reserves at its non-U.S. affiliates are indefinitely reinvested. The Company will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and the global cash management goals of the Company.

The Company provides a liability for the amount of unrecognized tax benefits from uncertain tax positions. This liability is provided whenever the Company determines that a tax benefit will not meet a more-likely-than-not threshold for recognition. See Note 5 - Income Taxes for more information.

NOTE 2 – REVENUE

At contract inception, Aptar assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all the goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. For a contract that has more than one performance obligation, the Company allocates the total contract consideration to each distinct performance obligation on a relative standalone selling price basis. Revenue is recognized when (or as) the performance obligations are satisfied (i.e., when the customer obtains control of the good or service). The majority of the Company’s revenues are derived from product and tooling sales; however Aptar also receives revenues from service, license, exclusivity and royalty arrangements, which are considered insignificant. Revenue by segment and geography for the three and nine months ended September 30, 2018 is as follows:

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	For the Three Months Ended September 30, 2018
					Latin
Segment	Europe		Domestic		America		Asia		Total
Beauty + Home	$	190,267	$	83,353	$	44,653	$	23,487	$	341,760
Pharma		161,733		50,126		6,165		9,491		227,515
Food + Beverage		29,472		47,870		7,476		11,682		96,500
Total	$	381,472	$	181,349	$	58,294	$	44,660	$	665,775


	For the Nine Months Ended September 30, 2018
					Latin
Segment	Europe		Domestic		America		Asia		Total
Beauty + Home	$	622,184	$	252,709	$	140,238	$	73,338	$	1,088,469
Pharma		520,574		132,496		19,229		26,552		698,851
Food + Beverage		90,185		143,005		23,343		35,880		292,413
Total	$	1,232,943	$	528,210	$	182,810	$	135,770	$	2,079,733

Aptar performs its obligations under a contract with a customer by transferring goods and/or services in exchange for consideration from the customer. The timing of performance will sometimes differ from the timing of the receipt of the associated consideration from the customer, thus resulting in the recognition of a contract asset or a contract liability. Aptar recognizes a contract asset when it transfers control of goods or services to a customer prior to invoicing for the related performance obligation. The contract asset is transferred to accounts receivable when the product is shipped and invoiced to the customer. Aptar recognizes a contract liability if the customer's payment of consideration precedes the entity's performance.

The opening and closing balances of Aptar’s contract asset and contract liabilities are as follows:


	Balance as of		Balance as of
	January 1, 2018		September 30, 2018		Increase/
	(opening)		(closing)		(Decrease)
Contract asset (current)	$	13,984	$	15,846	$	1,862
Contract asset (long-term)	$	—	$	—	$	—
Contract liability (current)	$	15	$	413	$	398
Contract liability (long-term)	$	824	$	458	$	(366)

The differences in the opening and closing balances of the Company’s contract asset and contract liabilities are primarily the result of timing differences between the Company’s performance and the customer’s payment. The amount of revenue recognized in the current year that was included in the opening contract liability balance was $154 thousand.

Determining the Transaction Price

In most cases, the transaction price for each performance obligation is stated in the contract. In determining the variable amounts of consideration within the transaction price (such as volume-based customer rebates), Aptar includes an estimate of the expected amount of consideration as revenue. Aptar applies the expected value method based on all of the information (historical, current, and forecast) that is reasonably available and identifies reasonable estimates based on this information. The Company applies the method consistently throughout the contract when estimating the effect of an uncertainty on the amount of variable consideration to which it will be entitled.

Point in Time Performance Obligations

For product and tooling sales considered to be point in time, Aptar typically assesses, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. For free on board (“FOB”) shipping point terms, revenue is recognized at the time of shipment. The performance obligation with respect to the sale of goods is satisfied at the time of shipment because the customer gains control at that time. Once the goods are shipped, the Company is precluded from redirecting the shipment to another customer. With respect to FOB destination sales, shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfilment activities and are accounted for as fulfilment costs and revenue is recorded upon final delivery to the customer location.

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Over Time Performance Obligations

For performance obligations related to manufacturing of highly customized products that have no alternative use to the Company and for which the Company has an enforceable right to payment for performance completed to date, the Company transfers control and recognizes revenue over time by measuring progress towards complete satisfaction using the Output Method based on the number of products produced. For similar performance obligations related to our tooling sales, the Company transfers control and recognizes revenue over time by measuring progress towards complete satisfaction using the Input Method based on costs incurred relative to total estimated costs to completion. We believe these measurements provide a faithful depiction of the transfer of goods as the costs incurred reflect the value of the products produced.

Product Sales

Aptar primarily manufactures dispensing systems for our Beauty + Home, Pharma, and Food + Beverage customers. The amount of consideration is typically fixed for such customers. At the time of delivery, the customer is invoiced the agreed-upon price. Revenue from product sales is typically recognized upon manufacture or shipment, when control of the goods transfers to the customer.

To determine when the control transfers, Aptar typically assesses, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. A majority of product sales are sold FOB shipping point. For FOB shipping point shipments, control of the goods transfers to the customer at the time of shipment of the goods. Therefore, Aptar's performance obligation is satisfied at the time of shipment. Aptar has elected to account for shipping and handling costs that occur after the customer has obtained control of a good as fulfillment costs rather than as a promised service. Aptar does not have any material significant payment terms as payment is typically received shortly after the point of sale.

There also exist instances where Aptar manufactures highly customized products that have no alternative use to Aptar and for which Aptar has an enforceable right to payment for performance completed to date. For these products, the Company transfers control and recognizes revenue over time by measuring progress towards completion using the Output Method based on the number of products produced. As we normally make our products to a customer’s order, the time between production and shipment of our products is typically within a few weeks.

As a part of its customary business practice, Aptar offers a standard warranty that the products will materially comply with the technical specifications and will be free from material defects. Because such warranties are not sold separately, do not provide for any service beyond a guarantee of a product’s initial specifications, and are not required by law, there is no revenue deferral for these types of warranties.

Tooling Sales

Aptar also builds or contracts for molds and other tools (collectively defined as “tooling”) necessary to produce our products. As with product sales, Aptar recognizes revenue when control of the tool transfers to the customer. If the tooling is highly customized with no alternative use to Aptar and Aptar has an enforceable right to payment for performance completed to date, the Company transfers control and recognizes revenue over time by measuring progress towards completion using the Input Method based on costs incurred relative to total estimated costs to completion. Otherwise, revenue for the tooling is recognized at the point in time when the customer approves the tool. Aptar does not have any material significant payment terms as payment is typically either received during the mold-build process or shortly after completion.

In certain instances, Aptar offers extended warranties on our tools above and beyond the normal standard warranties. Aptar normally receives payment at the inception of the contract and recognizes revenue over the term of the contract. At January 1, 2018, $839 thousand of unearned revenue associated with outstanding contracts was reported in Accounts Payable and Other Liabilities. At September 30, 2018, the unearned amount was $871 thousand. Aptar expects to recognize approximately $10 2 thousand of the unearned amount during the remainder of 2018, $367 thousand in 2019, and $402 thousand thereafter.

Contract Costs

Aptar does not incur material costs to obtain or fulfill revenue contracts.

Practical Expedients

Significant financing component: Aptar elected not to adjust the promised consideration for the time value of money for contracts where the difference between the time of payment and performance is one year or less.

Remaining performance obligations: Aptar elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. In addition, the Company has elected not to disclose the expected consideration related to performance obligations where the Company recognizes revenue in the amount it has a right to invoice (e.g., usage-based pricing terms).

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NOTE 3 - INVENTORIES

Inventories, by component, consisted of:


	September 30,		December 31,
	2018		2017
Raw materials	$	111,985	$	99,196
Work in process		127,569		107,307
Finished goods		154,710		130,713
Total	$	394,264	$	337,216

NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill by reporting segment since December 31, 2017 are as follows:


	Beauty +				Food +		Corporate
	Home		Pharma		Beverage		& Other		Total
Goodwill	$	223,947	$	203,069	$	16,871	$	1,615	$	445,502
Accumulated impairment losses		—		—		—		(1,615)		(1,615)
Balance as of December 31, 2017	$	223,947	$	203,069	$	16,871	$	—	$	443,887
Acquisition		5,565		154,827		106,389		—		266,781
Foreign currency exchange effects		(4,853)		(6,237)		(248)		—		(11,338)
Goodwill	$	224,659	$	351,659	$	123,012	$	1,615	$	700,945
Accumulated impairment losses		—		—		—		(1,615)		(1,615)
Balance as of September 30, 2018	$	224,659	$	351,659	$	123,012	$	—	$	699,330

The table below shows a summary of intangible assets as of September 30, 2018 and December 31, 2017.


		September 30, 2018							December 31, 2017
Weighted Average		Gross						Gross
Amortization Period		Carrying		Accumulated		Net		Carrying		Accumulated		Net
	(Years)	Amount		Amortization		Value		Amount		Amortization		Value
Amortized intangible assets:
Patents	0.3	$	7,645	$	(7,535)	$	110	$	7,819	$	(7,806)	$	13
Acquired technology	13.5		93,171		(16,786)		76,385		47,571		(14,624)		32,947
Customer relationships	14.6		199,591		(18,162)		181,429		68,886		(13,401)		55,485
Trademarks and trade names	7.0		21,333		(5,311)		16,022		6,965		(4,485)		2,480
License agreements and other	9.3		19,808		(10,644)		9,164		14,862		(10,327)		4,535
Total intangible assets	13.2	$	341,548	$	(58,438)	$	283,110	$	146,103	$	(50,643)	$	95,460

Aggregate amortization expense for the intangible assets above for the quarters ended September 30, 2018 and 2017 was $4,005 and $2,708, respectively. Aggregate amortization expense for the intangible assets above for the nine months ended September 30, 2018 and 2017 was $9,578 and $7,643, respectively.

Future estimated amortization expense for the years ending December 31 is as follows:


2018	$	6,023	(remaining estimated amortization for 2018)
2019		23,888
2020		22,786
2021		22,407
2022 and thereafter		208,006

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Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of September 30, 2018.

NOTE 5 – INCOME TAXES

The TCJA was enacted in the U.S. on December 22, 2017. The TCJA lowered the corporate tax rate from 35.0% to 21.0% and imposed a one-time transition tax on unremitted earnings as of the end of 2017, among other changes. New provisions for 2018 include, most notably, a tax on GILTI and BEAT, repeal of the domestic manufacturing deduction and limitations on the deductibility of executive compensation. The SEC issued SAB 118 to address the U.S. GAAP application of the TCJA. SAB 118 provides us up to a year to finalize accounting for the impacts of the TCJA.

The Company estimated provisional tax amounts related to the transition tax and components of the revaluation of deferred tax assets and liabilities for the period ended December 31, 2017. This resulted in the recognition of a net tax charge of approximately $24.8 million, comprised of a provisional charge of $31.6 million for the transition tax and a provisional benefit of $6.8 million related to the corporate rate change. While our accounting for the enactment of the new U.S. tax legislation is not complete, during the three months ended September 30, 2018, we recognized a provisional, discrete $1.9 million net tax benefit, consisting of a provisional $2.8 million benefit related to the change in the corporate tax rate that was partially offset by a provisional $0.9 million charge for the transition tax liability. During the nine months ended September 30, 2018, we recognized $5.4 million in provisional, discrete net tax benefits, comprised of the $2.8 million benefit for the change in corporate tax rate and a net $2.6 million decrease to our transition tax liability. The benefit for the lower transition tax liability reflects additional guidance issued by the U.S. Treasury during 2018. The Company expects both provisional amounts to be finalized in the fourth quarter of 2018 when the 2017 U.S. tax return filings are completed. The Company has elected to account for the tax on GILTI as a period cost and not as a measure of deferred taxes in the current period.

The reported effective tax rate for the three months ended September 30, 2018 was 23.4%. The current year rate was favorably impacted by $4.5 million of tax benefits from employee share-based compensation along with a $1.9 million benefit from the TCJA provisional items (see above) and $3.5 million of refunds from the settlement of tax claims. These favorable items were partially offset in the quarter by a $1.4 million impact of foreign valuation allowances, $1.5 million from the new U.S. tax provisions, including GILTI and BEAT and $4.0 million of other discrete and non-discrete tax items. The reported effective tax rate for the three months ended September 30, 2017 was 23.0%. The prior year tax rate was favorably impacted by a $4.4 million benefit of refunds from the settlement of tax claims.

The reported effective tax rate for the nine months ended September 30, 2018 was 25.6%. The tax rate was favorably impacted by $9.9 million of tax benefits from employee share-based compensation along with a $5.4 million benefit from the TCJA provisional items (see above) and $3.9 million of refunds from the settlement of tax claims. These favorable items were partially offset by a $6.3 million impact from the new U.S. tax provisions, including GILTI and BEAT and $4.5 million of other discrete and non-discrete tax items. The reported effective tax rate for the nine months ended September 30, 2017 was 22.0%. The prior year tax rate was favorably impacted by $8.8 million of tax benefits from employee share-based compensation, a $3.4 million net benefit from the settlement of tax claims and a $3.6 million benefit from repatriation activities to the U.S.

The Company had approximately $3.5 million and $3.1 million recorded for income tax uncertainties as of September 30, 2018 and December 31, 2017, respectively. The uncertain amounts, if recognized, that would impact the effective tax rate are $3.5 million and $3.1 million, respectively. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease by no more than $1.5 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions.

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-NOTE 6 – DEBT

At September 30, 2018, the Company’s long-term obligations consisted of the following:


			Unamortized
			Debt Issuance
	Principal		Costs		Net
Notes payable 0.00% – 18.00%, due in monthly and annual installments through 2025	$	17,521	$	—	$	17,521
Senior unsecured notes 3.2%, due in 2022		75,000		94		74,906
Senior unsecured debts 3.6% floating, equal annual installments through 2022		224,000		578		223,422
Senior unsecured notes 3.5%, due in 2023		125,000		190		124,810
Senior unsecured notes 1.0%, due in 2023		116,095		456		115,639
Senior unsecured notes 3.4%, due in 2024		50,000		80		49,920
Senior unsecured notes 3.5%, due in 2024		100,000		190		99,810
Senior unsecured notes 1.2%, due in 2024		232,190		944		231,246
Senior unsecured notes 3.6%, due in 2025		125,000		215		124,785
Senior unsecured notes 3.6%, due in 2026		125,000		215		124,785
Capital lease obligations		8,932		—		8,932
	$	1,198,738	$	2,962	$	1,195,776
Current maturities of long-term obligations		(64,039)		—		(64,039)
Total long-term obligations	$	1,134,699	$	2,962	$	1,131,737

At December 31, 2017, the Company’s long-term obligations consisted of the following:


			Unamortized
			Debt Issuance
	Principal		Costs		Net
Notes payable 0.61% – 18.00%, due in monthly and annual installments through 2025	$	15,349	$	—	$	15,349
Senior unsecured notes 3.2%, due in 2022		75,000		113		74,887
Senior unsecured debts 2.6% floating, equal annual installments through 2022		280,000		692		279,308
Senior unsecured notes 3.5%, due in 2023		125,000		217		124,783
Senior unsecured notes 1.0%, due in 2023		120,095		526		119,569
Senior unsecured notes 3.4%, due in 2024		50,000		89		49,911
Senior unsecured notes 3.5%, due in 2024		100,000		217		99,783
Senior unsecured notes 1.2%, due in 2024		240,190		1,066		239,124
Senior unsecured notes 3.6%, due in 2025		125,000		238		124,762
Senior unsecured notes 3.6%, due in 2026		125,000		238		124,762
Capital lease obligations		741		—		741
	$	1,256,375	$	3,396	$	1,252,979
Current maturities of long-term obligations		(61,833)		—		(61,833)
Total long-term obligations	$	1,194,542	$	3,396	$	1,191,146

Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:


	Requirement	Level at September 30, 2018
Consolidated Leverage Ratio (1)	Maximum of 3.50 to 1.00	2.05 to 1.00
Consolidated Interest Coverage Ratio (1)	Minimum of 3.00 to 1.00	12.36 to 1.00

(1)

Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.

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During the third quarter of 2017, the Company entered into the borrowing arrangements summarized below through our wholly-owned United Kingdom subsidiary to better balance our capital structure.


Debt Type	Amount		Term/Maturity	Interest Rate
Bank term loan	$	280,000	5 year amortizing/July 2022	2.56% floating swapped to 1.36% fixed
Bank revolver	€	150,000	5 year/July 2022	1.10% floating
Private placement	€	100,000	6 year/July 2023	0.98% fixed
Private placement	€	200,000	7 year/July 2024	1.17% fixed

The €150 million facility is available to the Company and €89.5 million was utilized as of September 30, 2018. For the nine months ended September 30, 2018, the floating interest rate on the remaining $224 million of the original $280 million bank term loan was 3.60%.

The Company also maintains a 5-year revolving credit facility that provides for unsecured financing of up to $300 million and matures in July 2022. We had a $35.0 million outstanding balance under the credit facility at September 30, 2018. No balance was utilized as of December 31, 2017. Credit facility balances are included in Notes Payable, including revolving credit facilities on the Condensed Consolidated Balance Sheet.

Aggregate long-term maturities, excluding capital lease obligations, due annually from the current balance sheet date for the next five years are $62,477, $60,379, $58,316, $ 133,284, $117,219 and $758,131 thereafter.

NOTE 7 – RETIREMENT AND DEFERRED COMPENSATION PLANS

Components of Net Periodic Benefit Cost:


	Domestic Plans				Foreign Plans
Three Months Ended September 30,	2018		2017		2018		2017
Service cost	$	2,853	$	2,426	$	1,457	$	1,447
Interest cost		1,713		1,752		445		459
Expected return on plan assets		(2,803)		(2,470)		(645)		(627)
Amortization of net loss		1,214		801		422		493
Amortization of prior service cost		—		—		122		104
Net periodic benefit cost	$	2,977	$	2,509	$	1,801	$	1,876


	Domestic Plans				Foreign Plans
Nine Months Ended September 30,	2018		2017		2018		2017
Service cost	$	8,546	$	7,279	$	4,479	$	4,166
Interest cost		5,139		5,257		1,374		1,321
Expected return on plan assets		(8,409)		(7,409)		(1,982)		(1,781)
Amortization of net loss		3,642		2,403		1,301		1,400
Amortization of prior service cost		—		—		376		296
Net periodic benefit cost	$	8,918	$	7,530	$	5,548	$	5,402

The components of net periodic benefit cost, other than the service cost component, are included in the line “Miscellaneous, net” in the income statement.

EMPLOYER CONTRIBUTIONS

Although the Company has no minimum funding requirement, we contributed $20.0 million to our domestic defined benefit plans during the quarter ended September 30, 2018. We expect to contribute approximately $3.1 million to our foreign defined benefit plans in 2018, and as of September 30, 2018, we have contributed approximately $1.6 million of that amount.

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NOTE 8 – ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in Accumulated Other Comprehensive (Loss) Income by Component:


	Foreign		Defined Benefit
	Currency		Pension Plans		Derivatives		Total
Balance - December 31, 2016	$	(259,888)	$	(59,775)	$	(46)	$	(319,709)
Other comprehensive income (loss) before reclassifications		69,493		—		(9,237)		60,256
Amounts reclassified from accumulated other comprehensive income		—		2,699		5,667		8,366
Net current-period other comprehensive income		69,493		2,699		(3,570)		68,622
Balance - September 30, 2017	$	(190,395)	$	(57,076)	$	(3,616)	$	(251,087)

Balance - December 31, 2017	$	(185,503)	$	(64,595)	$	(3,204)	$	(253,302)
Other comprehensive income (loss) before reclassifications		(53,141)		—		12,507		(40,634)
Amounts reclassified from accumulated other comprehensive income		—		4,032		(11,444)		(7,412)
Net current-period other comprehensive income		(53,141)		4,032		1,063		(48,046)
Balance - September 30, 2018	$	(238,644)	$	(60,563)	$	(2,141)	$	(301,348)

Reclassifications Out of Accumulated Other Comprehensive (Loss) Income:


	Amount Reclassified from
Details about Accumulated Other	Accumulated Other				Affected Line in the Statement
Comprehensive Income Components	Comprehensive Income				Where Net Income is Presented
Three Months Ended September 30,	2018		2017

Defined Benefit Pension Plans
Amortization of net loss	$	1,636	$	1,294	(1)
Amortization of prior service cost		122		104	(1)
		1,758		1,398	Total before tax
		(425)		(474)	Tax benefit
	$	1,333	$	924	Net of tax
Derivatives
Changes in treasury locks	$	4	$	11	Interest Expense
Changes in cross currency swap: interest component		(1,337)		(678)	Interest Expense
Changes in cross currency swap: foreign exchange component		(2,131)		7,481	Miscellaneous, net
		(3,464)		6,814	Total before tax
		588		(1,161)	Tax benefit
	$	(2,876)	$	5,653	Net of tax
Total reclassifications for the period	$	(1,543)	$	6,577

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	Amount Reclassified from
Details about Accumulated Other	Accumulated Other				Affected Line in the Statement
Comprehensive Income Components	Comprehensive Income				Where Net Income is Presented
Nine Months Ended September 30,	2018		2017

Defined Benefit Pension Plans
Amortization of net loss	$	4,943	$	3,803	(1)
Amortization of prior service cost		376		296	(1)
		5,319		4,099	Total before tax
		(1,287)		(1,400)	Tax benefit
	$	4,032	$	2,699	Net of tax
Derivatives
Changes in treasury locks	$	26	$	32	Interest Expense
Changes in cross currency swap: interest component		(3,824)		(678)	Interest Expense
Changes in cross currency swap: foreign exchange component		(9,984)		7,481	Miscellaneous, net
		(13,782)		6,835	Total before tax
		2,338		(1,168)	Tax benefit
	$	(11,444)	$	5,667	Net of tax
Total reclassifications for the period	$	(7,412)	$	8,366

(1)

These accumulated other comprehensive income components are included in the computation of net periodic benefit costs, net of tax (see Note 7 – Retirement and Deferred Compensation Plans for additional details).

NOTE 9 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company maintains a foreign exchange risk management policy designed to establish a framework to protect the value of the Company’s non-functional denominated transactions from adverse changes in exchange rates. Sales of the Company’s products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales or intercompany loans can impact the Company’s results of operations. The Company’s policy is not to engage in speculative foreign currency hedging activities, but to minimize our net foreign currency transaction exposure, defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. The Company may use foreign currency forward exchange contracts, options and cross currency swaps to economically hedge these risks.

For derivative instruments designated as hedges, the Company formally documents the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness at inception. Quarterly thereafter, the Company formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur. All derivative financial instruments used as hedges are recorded at fair value in the Condensed Consolidated Balance Sheets (see Note 10 - Fair Value).

CASH FLOW HEDGE

For derivative instruments that are designated and qualify as cash flow hedges, the changes in fair values are recorded in accumulated other comprehensive loss and included in changes in derivative gain/loss. The changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings. Cash flows from the settlement of derivative contracts designated as cash flow hedges offset cash flows from the underlying hedged items and are included in operating activities in the Condensed Consolidated Statements of Cash Flows.

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As disclosed in Note 6 – Long-Term Obligations, our wholly-owned UK subsidiary borrowed $280 million in term loan borrowings under a new credit facility. In order to mitigate the currency risk of U.S. dollar debt on a euro functional currency entity and to mitigate the risk of variability in interest rates, we entered into a EUR/USD floating-to-fixed cross currency swap on July 20, 2017 in the notional amount of $280 million to effectively hedge the foreign exchange and interest rate exposure on the $280 million term loan. Related to this hedge, approximately $2.1 million of net after-tax loss is included in accumulated other comprehensive earnings at September 30, 2018. The amount expected to be recognized into earnings during the next 12 months related to the interest component of our cross currency swap based on prevailing foreign exchange and interest rates at September 30, 2018 is $4.8 million. The amount expected to be recognized into earnings during the next 12 months related to the foreign exchange component of our cross currency swap is dependent on fluctuations in currency exchange rates. As of September 30, 2018, the fair value of the cross currency swap was a $4.7 million liability. The swap contract expires on July 20, 2022.

HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS

A significant number of the Company’s operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of the Company’s foreign subsidiaries. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on the Company’s financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset exposure. The Company does not otherwise actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of our foreign subsidiaries where the Company’s net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction.

OTHER

As of September 30, 2018, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepaid and other and $0.9 million in accounts payable and accrued liabilities on the balance sheet. All forward exchange contracts outstanding as of September 30, 2018 had an aggregate contract amount of $103.9 million.

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017


		September 30, 2018				December 31, 2017
				Derivatives				Derivatives
		Derivatives		not		Derivatives		not
		Designated		Designated		Designated		Designated
	Balance Sheet	as Hedging		as Hedging		as Hedging		as Hedging
	Location	Instruments		Instruments		Instruments		Instruments
Derivative Assets
Foreign Exchange Contracts	Prepaid and other	$	—	$	262	$	—	$	663
		$	—	$	262	$	—	$	663

Derivative Liabilities
Foreign Exchange Contracts	Accounts payable and accrued liabilities	$	—	$	881	$	—	$	1,604
Cross Currency Swap Contract (1)	Accounts payable and accrued liabilities		4,712		—		16,309		—
		$	4,712	$	881	$	16,309	$	1,604

(1) This cross currency swap contract is composed of both an interest component and a foreign exchange component.

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The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Quarters Ended September 30, 2018 and 2017


						Amount of Gain (Loss)				Total Amount
	Amount of Gain (Loss)				Location of (Loss)	Reclassified from				of Affected
Derivatives in Cash	Recognized in				Gain Recognized	Accumulated				Income
Flow Hedging	Other Comprehensive				in Income on	Other Comprehensive				Statement
Relationships	Income on Derivative				Derivatives	Income on Derivative				Line Item
	2018		2017			2018		2017
Cross currency swap contract:
Interest component	$	(68)	$	(3,648)	Interest expense	$	1,337	$	678	$	(8,735)
Foreign exchange component		2,131		(7,481)	Miscellaneous, net		2,131		(7,481)		(2,928)
	$	2,063	$	(11,129)		$	3,468	$	(6,803)	$	(11,663)

The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2018 and 2017


						Amount of Gain (Loss)				Total Amount
	Amount of Gain (Loss)				Location of (Loss)	Reclassified from				of Affected
Derivatives in Cash	Recognized in				Gain Recognized	Accumulated				Income
Flow Hedging	Other Comprehensive				in Income on	Other Comprehensive				Statement
Relationships	Income on Derivative				Derivatives	Income on Derivative				Line Item
	2018		2017			2018		2017
Cross currency swap contract:
Interest component	$	5,084	$	(3,648)	Interest expense	$	3,824	$	678	$	(24,754)
Foreign exchange component		9,984		(7,481)	Miscellaneous, net		9,984		(7,481)		(4,372)
	$	15,068	$	(11,129)		$	13,808	$	(6,803)	$	(29,126)

The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Quarters Ended September 30, 2018 and 2017


		Amount of (Loss) Gain
Derivatives Not Designated	Location of (Loss) Gain Recognized	Recognized in Income
as Hedging Instruments	in Income on Derivatives	on Derivatives
		2018		2017
Foreign Exchange Contracts	Other (Expense) Income: Miscellaneous, net	$	(1,011)	$	(15,534)
		$	(1,011)	$	(15,534)

The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2018 and 2017


		Amount of (Loss) Gain
Derivatives Not Designated	Location of (Loss) Gain Recognized	Recognized in Income
as Hedging Instruments	in Income on Derivatives	on Derivatives
		2018		2017
Foreign Exchange Contracts	Other (Expense) Income: Miscellaneous, net	$	102	$	(64,651)
		$	102	$	(64,651)

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						Gross Amounts not Offset
			Gross Amounts	Net Amounts		in the Statement of
			Offset in the	Presented in		Financial Position
	Gross		Statement of	the Statement of		Financial	Cash Collateral	Net
	Amount		Financial Position	Financial Position		Instruments	Received	Amount
Description
September 30, 2018
Derivative Assets	$	262	—	$	262	—	—	$	262
Total Assets	$	262	—	$	262	—	—	$	262

Derivative Liabilities	$	5,593	—	$	5,593	—	—	$	5,593
Total Liabilities	$	5,593	—	$	5,593	—	—	$	5,593

December 31, 2017
Derivative Assets	$	663	—	$	663	—	—	$	663
Total Assets	$	663	—	$	663	—	—	$	663

Derivative Liabilities	$	17,913	—	$	17,913	—	—	$	17,913
Total Liabilities	$	17,913	—	$	17,913	—	—	$	17,913

NOTE 10 – FAIR VALUE

Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

As of September 30, 2018, the fair values of our financial assets and liabilities were categorized as follows:


	Total		Level 1		Level 2		Level 3
Assets
Foreign exchange contracts (1)	$	262	$	—	$	262	$	—
Total assets at fair value	$	262	$	—	$	262	$	—
Liabilities
Foreign exchange contracts (1)	$	881	$	—	$	881	$	—
Cross currency swap contract (1)		4,712		—		4,712		—
Total liabilities at fair value	$	5,593	$	—	$	5,593	$	—

As of December 31, 2017, the fair values of our financial assets and liabilities were categorized as follows:


	Total		Level 1		Level 2		Level 3
Assets
Foreign exchange contracts (1)	$	663	$	—	$	663	$	—
Total assets at fair value	$	663	$	—	$	663	$	—
Liabilities
Foreign exchange contracts (1)	$	1,604	$	—	$	1,604	$	—
Cross currency swap contract (1)		16,309		—		16,309		—
Total liabilities at fair value	$	17,913	$	—	$	17,913	$	—

(1)

Market approach valuation technique based on observable market transactions of spot and forward rates.

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The carrying amounts of the Company’s other current financial instruments such as cash and equivalents, accounts and notes receivable, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instruments. The Company considers our long-term obligations a Level 2 liability and utilizes the market approach valuation technique based on interest rates that are currently available to the Company for issuance of debt with similar terms and maturities. The estimated fair value of the Company’s long-term obligations was $1.1 billion as of September 30, 2018 and December 31, 2017. As discussed in Note 17 - Acquisitions, the Company has a contingent consideration obligation to the selling shareholders of Reboul SAS (“Reboul”) in connection with the Reboul Acquisition (as defined herein) based on 2018 earnings before net interest, taxes, depreciation and amortization (“EBITDA”). We consider this a Level 3 liability; however, we estimated the aggregate fair value for this contingent consideration arrangement to be zero as of September 30, 2018.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on the Company’s financial position or results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur and could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial position, results of operations and cash flows.

Under our Certificate of Incorporation, the Company has agreed to indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a directors and officers liability insurance policy that covers a portion of our exposure. As a result of our insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of September 30, 2018 and December 31, 2017.

An environmental investigation, undertaken to assess areas of possible contamination, was completed at the Company’s facility in Jundiaí, São Paulo, Brazil. The facility is primarily an internal supplier of anodized aluminum components for certain of our dispensing systems. The testing indicated that soil and groundwater in certain areas of the facility were impacted above acceptable levels established by local regulations. In March 2017, the Company reported the findings to the relevant environmental authority, the Environmental Company of the State of São Paulo (“CETESB”). The Company continues to monitor and test the affected areas to determine the full extent of the impact and the scope of any required remediation. Initial costs for further investigation and possible remediation, which are based on assumptions about the area of impact and customary remediation costs, are estimated to be in the range of $1.5 million to $3.0 million. The range of possible loss associated with this environmental contingency is subject to considerable uncertainty due to the incomplete status of the investigation and ongoing review of the CETESB. We will continue to evaluate the range of likely costs as the investigation proceeds and we have further clarity on the nature and extent of remediation that will be required. We note that the contamination, or any failure to complete any required remediation in a timely manner, could potentially result in fines or penalties. We accrued $1.5 million (operating expense) in the first quarter of 2017 relating to this contingency. The amount is periodically reviewed, and adjusted as necessary, as the matter continues to evolve. Based on the current status of the investigation, no adjustment to the accrual was necessary for the quarter ended September 30, 2018. Also, during the quarter ended June 30, 2018, the Company recorded a $750 thousand accrual for a potential environmental matter at a U.S. manufacturing site. This matter was remediated and settled during the third quarter of 2018 for $239 thousand. The remaining accrual has been released during the third quarter of 2018.

NOTE 12 – STOCK REPURCHASE PROGRAM

On October 20, 2016, the Company announced a share repurchase authorization of up to $350 million of common stock. This authorization replaces previous authorizations and has no expiration date. Aptar may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.

During the nine months ended September 30, 2018, the Company repurchased approximately 668 thousand shares for approximately $61.7 million. We did not repurchase any shares during the quarter ended September 30, 2018. During the three and nine months ended September 30, 2017, the Company repurchased approximately 546 thousand and 1.4 million shares for approximately $45.5 million and $113.3 million, respectively. As of September 30, 2018, there was $80.2 million of authorized share repurchases available to the Company.

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NOTE 13 – STOCK-BASED COMPENSATION

The Company issues stock options and restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Restricted Stock Unit Award Agreement for Directors pursuant to the 2018 Equity Incentive Plan. Previously, non-employee directors were issued stock options under a Director Stock Option Plan. Stock options are awarded with the exercise price equal to the market price on the date of grant and generally vest over three years and expire 10 years after grant.

RSUs granted to employees vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over three years. Performance-based RSUs vest at the end of the specified performance period, generally three years, assuming required performance or market vesting conditions are met. Performance-based RSUs have one of two vesting conditions: (1) based on Aptar’s internal financial performance metrics and (2) based on Aptar’s total shareholder return (“TSR”) relative to total shareholder returns of an industrial peer group, subject to discretion if the overall TSR is negative at the conclusion of the performance period. At the time of vesting, Aptar will issue or cause to be issued in the employee’s name the vested shares of common stock. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). Director RSUs are only time-based, and generally vest over one year.

Compensation expense attributable to employee stock options for the first nine months of 2018 was approximately $8.9 million ($6.9 million after tax). The income tax benefit related to this compensation expense was approximately $2.0 million. Approximately $7.1 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense attributable to stock options for the first nine months of 2017 was approximately $12.6 million ($8.6 million after tax). The income tax benefit related to this compensation expense was approximately $4.0 million. Approximately $11.0 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales.

The Company uses historical data to estimate expected life and volatility. The weighted-average fair value of stock options granted under the Stock Awards Plans was $14.82 and $11.86 per share during the first nine months of 2018 and 2017, respectively. These values were estimated on the respective grant dates using the Black-Scholes option-pricing model with the following weighted-average assumptions:


Stock Awards Plans:
Nine Months Ended September 30,	2018		2017
Dividend Yield	1.5	%	1.7	%
Expected Stock Price Volatility	14.2	%	15.8	%
Risk-free Interest Rate	2.8	%	2.2	%
Expected Life of Option (years)	6.6		6.7

A summary of option activity under the Company’s stock plans during the nine months ended September 30, 2018 is presented below:


	Stock Awards Plans					Director Stock Option Plans
			Weighted Average				Weighted Average
		Options	Exercise Price			Options	Exercise Price
Outstanding, January 1, 2018		8,059,319	$	61.67		214,967	$	57.44
Granted		603,901		88.39		—		—
Exercised		(1,439,333)		52.69		(57,767)		55.71
Forfeited or expired		(243,110)		74.32		—		—
Outstanding at September 30, 2018		6,980,777	$	65.39		157,200	$	58.08
Exercisable at September 30, 2018		5,114,822	$	60.65		157,200	$	58.08
Weighted-Average Remaining Contractual Term (Years):
Outstanding at September 30, 2018		6.0				4.3
Exercisable at September 30, 2018		5.2				4.3
Aggregate Intrinsic Value:
Outstanding at September 30, 2018	$	295,630			$	7,807
Exercisable at September 30, 2018	$	240,839			$	7,807
Intrinsic Value of Options Exercised During the Nine Months Ended:
September 30, 2018	$	62,895			$	2,187
September 30, 2017	$	44,734			$	1,995

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The grant date fair value of options vested during the nine months ended September 30, 2018 and 2017 was $16.5 million and $16.9 million, respectively. Cash received from option exercises was approximately $78.9 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $15.5 million in the nine months ended September 30, 2018. As of September 30, 2018, the remaining valuation of stock option awards to be expensed in future periods was $10.7 million and the related weighted-average period over which it is expected to be recognized is 1.7 years.

The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. Inputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement.


Nine Months Ended September 30,		2018
Fair value per stock award	$	128.70
Measurement date stock price	$	89.42
Assumptions:
Aptar's stock price expected volatility		12.30	%
Expected average volatility of peer companies		27.50	%
Correlation assumption		20.20	%
Risk-free interest rate		2.42	%
Dividend yield assumption		1.43	%

A summary of RSU activity as of September 30, 2018, and changes during the nine month period then ended, is presented below:


	Time-Based RSUs			Performance-Based RSUs
		Weighted Average			Weighted Average
	Units	Grant-Date Fair Value		Units	Grant-Date Fair Value
Nonvested at January 1, 2018	124,067	$	74.65	—	$	—
Granted	187,502		96.26	80,843		111.55
Vested	(33,882)		75.57	—		—
Forfeited	(31,672)		78.62	(9,762)		111.55
Nonvested at September 30, 2018	246,015	$	90.48	71,081	$	111.55

Included in the September 30, 2018 time-based RSUs are 14,257 units awarded to non-employee directors and 14,793 units vested related to non-employee directors.

Compensation expense recorded attributable to RSUs for the first nine months of 2018 and 2017 was approximately $5.9 million and $2.4 million, respectively. The actual tax benefit realized for the tax deduction from RSUs was approximately $718 thousand in the nine months ended September 30, 2018. The fair value of units vested during the nine months ended September 30, 2018 and 2017 was $2.6 million and $4.7 million, respectively. The intrinsic value of units vested during the nine months ended September 30, 2018 and 2017 was $3.1 million and $5.2 million, respectively. As of September 30, 2018, there was $23.2 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted-average period of 2.4 years.

The Company has a long-term incentive program for certain employees. Each award is based on the cumulative TSR of our common stock during a three-year performance period compared to a peer group. The total expected expense related to this program for awards outstanding as of September 30, 2018 is approximately $3.7 million, of which $1.8 million and $1.5 million was recognized in the first nine months of 2018 and 2017, respectively.

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NOTE 14 – EARNINGS PER SHARE

Basic net income per share is calculated by dividing net income attributable to Aptar by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing the net income attributable to Aptar by the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to stock-based compensation awards. Stock-based compensation awards for which total employee proceeds exceed the average market price over the applicable period would have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share. The reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 is as follows:


	Three Months Ended
	September 30, 2018				September 30, 2017
	Diluted		Basic		Diluted		Basic
Consolidated operations
Income available to common stockholders	$	38,996	$	38,996	$	53,523	$	53,523

Average equivalent shares
Shares of common stock		62,378		62,378		62,592		62,592
Effect of dilutive stock based compensation
Stock options		2,659		—		2,171		—
Restricted stock		92		—		58		—
Total average equivalent shares		65,129		62,378		64,821		62,592
Net income per share	$	0.60	$	0.63	$	0.83	$	0.86


	Nine Months Ended
	September 30, 2018				September 30, 2017
	Diluted		Basic		Diluted		Basic
Consolidated operations
Income available to common stockholders	$	154,071	$	154,071	$	170,517	$	170,517

Average equivalent shares
Shares of common stock		62,304		62,304		62,527		62,527
Effect of dilutive stock-based compensation
Stock options		2,440		—		2,046		—
Restricted stock		78		—		53		—
Total average equivalent shares		64,822		62,304		64,626		62,527
Net income per share	$	2.38	$	2.47	$	2.64	$	2.73

NOTE 15 – SEGMENT INFORMATION

The Company is organized into three reporting segments. Operations that sell dispensing systems and sealing solutions primarily to the personal care, beauty and home care markets form the Beauty + Home segment. Operations that sell dispensing systems, sealing and active packaging solutions primarily to the prescription drug, consumer health care and injectables markets form the Pharma segment. Operations that sell dispensing systems and sealing solutions primarily to the food and beverage markets form the Food + Beverage segment. CSP Technologies’ financial results are reported in the Pharma and Food + Beverage segments. The accounting policies of the segments are the same as those described in Part II, Item 8, Note 1 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In order to more closely align with how the markets analyze our segment results, we have changed our non-U.S. GAAP segment measure of profitability from Segment Income to Adjusted EBITDA beginning in 2018. All internal segment reporting and discussions of results with our Chief Operating Decision Maker (CODM) are now based on segment Adjusted EBITDA. All references to segment profitability have been updated for this change.

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Financial information regarding the Company’s reporting segments is shown below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Total Sales:
Beauty + Home	$	346,040	$	338,068	$	1,103,664	$	992,476
Pharma		227,691		199,551		699,105		598,168
Food + Beverage		97,297		91,852		294,362		269,159
Total Sales		671,028		629,471		2,097,131		1,859,803
Less: Intersegment Sales:
Beauty + Home	$	4,280	$	4,320	$	15,195	$	14,163
Pharma		176		4		254		7
Food + Beverage		797		821		1,949		2,245
Total Intersegment Sales	$	5,253	$	5,145	$	17,398	$	16,415
Net Sales:
Beauty + Home	$	341,760	$	333,748	$	1,088,469	$	978,313
Pharma		227,515		199,547		698,851		598,161
Food + Beverage		96,500		91,031		292,413		266,914
Net Sales	$	665,775	$	624,326	$	2,079,733	$	1,843,388
Adjusted EBITDA (1):
Beauty + Home	$	42,174	$	42,627	$	141,155	$	129,265
Pharma		84,516		66,260		250,709		204,750
Food + Beverage		15,482		18,116		46,284		49,756
Corporate & Other, unallocated		(7,954)		(8,778)		(28,576)		(26,924)
Acquisition-related costs (2)		(10,369)		—		(12,932)		—
Restructuring Initiatives (3)		(23,852)		—		(48,002)		—
Depreciation and amortization		(41,857)		(40,087)		(123,133)		(114,660)
Interest Expense		(8,735)		(9,733)		(24,754)		(25,707)
Interest Income		1,537		1,113		6,306		2,086
Income before Income Taxes	$	50,942	$	69,518	$	207,057	$	218,566

(1)

The Company evaluates performance of our business units and allocates resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs.

(2)

Acquisition-related costs include transaction costs and purchase accounting adjustments related to inventory for acquisitions (see Note 17 – Acquisitions for further details).

(3)

Restructuring Initiatives includes expense items for the three and nine months ended September 30, 2018 as follows (see Note 18 – Restructuring Initiatives for further details):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Restructuring Initiatives by Segment
Beauty + Home	$	18,854	$	—	$	38,501	$	—
Pharma		2,008		—		3,596		—
Food + Beverage		2,638		—		4,307		—
Corporate & Other		352		—		1,598		—
Total Restructuring Initiatives	$	23,852	$	—	$	48,002	$	—

Note 16 – INSURANCE SETTLEMENT RECEIVABLE

A fire caused damage to Aptar’s facility in Annecy, France in June 2016. The fire was contained to one of three production units and there were no reported injuries. Aptar Annecy supplies anodized aluminum components for certain Aptar dispensing systems. While repairs are underway, Aptar sources from its network of suppliers as well as from its anodizing facility in Brazil. The Company is insured for the damages caused by the fire, including business interruption insurance, and it does not expect this incident to have a material impact on its financial results.

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Losses related to the fire of $3.2 million and $14.1 million were incurred during the three and nine months ended September 30, 2018, respectively. Losses related to the fire of $4.5 million and $14.4 million were incurred during the three and nine months ended September 30, 2017, respectively. For the nine months ended September 30, 2018, we received insurance proceeds of $24.2 million, and have no insurance receivable as of September 30, 2018. In many cases, our insurance coverage exceeds the amount of these recognized losses. However, no gain contingencies were recognized during the three or nine months ended September 30, 2018 as our ability to realize those gains remains uncertain. Profitability was negatively impacted by $1.5 million and $4.4 million related to the Annecy fire during the three and nine months ended September 30, 2018, respectively. These 2018 losses negatively impacted the Beauty + Home and Pharma segments by $0.5 million and $1.0 million, respectively, in the third quarter of 2018. Profitability was negatively impacted by $1.4 million and $4.1 million related to the Annecy fire during the three and nine months ended September 30, 2017, respectively. These 2017 losses negatively impacted the Beauty + Home segment.

NOTE 17 – ACQUISITIONS

On August 27, 2018, the Company completed its acquisition (the “CSP Technologies Acquisition”) of all of the outstanding capital stock of CSP Technologies S.à r.l. (“CSP Technologies”). CSP Technologies is a leader in active packaging technology based on proprietary material science expertise for the pharma and food service markets. CSP Technologies operates two manufacturing locations in the U.S. and one in France. The purchase price was approximately $553.5 million and was funded by cash on hand. $5 million is currently held in restricted cash pending the finalization of a working capital adjustment expected to be completed within 75 days after closing.

CSP Technologies contributed net sales of $13.2 million and pretax loss of $1.9 million for the quarter ended September 30, 2018. Sales of $9.4 million and $3.8 million were reported in the Pharma and Food + Beverage segments, respectively, for the quarter ended September 30, 2018. Pretax losses of $1.8 million and $0.1 million were reported in the Pharma and Food + Beverage segments, respectively, for the quarter ended September 30, 2018. The pretax loss for the quarter includes $3.3 million of fair value adjustment amortization for inventory sold during the quarter. The aforementioned purchase accounting adjustments and amounts included in the following tables are provisional, as the Company is in the process of finalizing purchase accounting.

The Company recognized $7.1 million and $9.0 million in transaction costs related to the acquisition of CSP Technologies for the three and nine months ended September 30, 2018, respectively. These costs are reflected in the selling, research & development and administration section of the Consolidated Statements of Income and within Corporate & Other as disclosed in Note 15 – Segment Information.

The following table summarizes the assets acquired and liabilities assumed as of the acquisition date at estimated fair value.


	August 27, 2018
Assets
Cash and equivalents	$	24,053
Accounts receivable		21,250
Inventories		45,500
Prepaid and other		2,925
Property, plant and equipment		101,579
Goodwill		261,216
Intangible assets		198,200
Other miscellaneous assets		980
Liabilities
Current maturities of long-term obligations		129
Accounts payable and accrued liabilities		30,871
Long-term obligations		6,037
Deferred income taxes		47,504
Retirement and deferred compensation plans		212
Deferred and other non-current liabilities		17,492
Net assets acquired	$	553,458

The following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition date:

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	Weighted-Average	Estimated
	Useful Life	Fair Value
	(in years)	of Asset
Acquired technology	12	$	46,700
Customer relationships	16		132,300
Trademarks and trade names	9		14,600
License agreements and other	9		4,600
Total		$	198,200

Goodwill in the amount of $261.2 million was recorded for the CSP Technologies Acquisition, of which $154.8 million and $106.4 million is included in the Pharma and Food + Beverage segments, respectively. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill largely consists of leveraging the Company’s commercial presence in selling the CSP Technologies line of products in markets where CSP Technologies did not previously operate and the ability of CSP Technologies to maintain its competitive advantage from a technical viewpoint. Goodwill will not be amortized, but will be tested for impairment at least annually. We do not expect any of the goodwill will be deductible for tax purposes.

The unaudited pro forma results presented below include the effects of the CSP Technologies Acquisition as if it had occurred as of January 1, 2017. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as intangible asset amortization, fair value adjustments for inventory and financing costs related to the change in our debt structure. Pro forma earnings were adjusted to exclude $14.2 million after tax ($18.5 million pretax) and $16.6 million after tax ($21.9 million pretax) of transaction and other costs for the three and nine months ended September 30, 2018, respectively. The aforementioned costs include compensation, consulting, legal and advisory fees. Pro forma earnings were also adjusted to exclude $2.6 million after tax ($3.3 million pretax) of nonrecurring expense related to the fair value adjustment to acquisition-date inventory for both the three and nine months ended September 30, 2018.

The pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the date indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
		2018		2017		2018		2017

Net Sales	$	687,201	$	659,741	$	2,172,737	$	1,943,297
Net Income Attributable to AptarGroup Inc.		48,034		57,829		158,527		168,028
Net Income per common share — basic		0.77		0.92		2.54		2.69
Net Income per common share — diluted		0.74		0.89		2.45		2.60

On May 1, 2018, the Company acquired 100% of the common stock of Reboul, a French manufacturer specializing in stamping, decorating and assembling metal and plastic packaging for the cosmetics and luxury markets, for an initial purchase price of approximately $3.6 million (exclusive of $112 thousand of cash acquired) (the “Reboul Acquisition”). The results of Reboul’s operations have been included in the consolidated financial statements within our Beauty + Home segment since the date of acquisition. As part of the Reboul Acquisition, we may be obligated to pay to the selling shareholders of Reboul certain contingent consideration based on 2018 EBITDA as defined in the purchase agreement. Based on projections as of the acquisition date, we estimated the aggregate fair value for this contingent consideration arrangement to be zero.

In May 2018, the Company invested $10.0 million in preferred equity stock of Reciprocal Labs Corporation, doing business as Propeller Health, which is accounted for at cost, consistent with measurement alternative guidance described in Note 1 above. There were no indications of impairment nor were there any changes resulting from observable price changes noted in the three and nine months ended September 30, 2018.

In February 2017, the Company acquired a 20% minority investment in Kali Care, Inc. (“Kali Care”) for $5.0 million. Kali Care is a Silicon Valley-based technology company that provides digital monitoring systems for ophthalmic medication. Kali Care’s sensing technology allows clinicians to collect real-time compliance data, and is a powerful tool for ophthalmologists in managing the care of their patients, and represents an additional investment into connected devices for our Pharma applications. This investment is being accounted for under the equity method of accounting from the date of acquisition.

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NOTE 18 – RESTRUCTURING INITIATIVES

As of September 30, 2018 the Company has recorded the following activity associated with the business transformation:


	Beginning		Net Charges for						Ending
	Reserve at		the Nine Months						Reserve at
	12/31/2017		Ended 9/30/2018		Cash Paid		FX Impact		9/30/2018
Employee severance	$	2,258	$	2,035	$	(2,414)	$	(52)	$	1,827
Professional fees and other costs		—		45,967		(35,033)		637		11,571
Totals	$	2,258	$	48,002	$	(37,447)	$	585	$	13,398

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, OR AS OTHERWISE INDICATED)

RESULTS OF OPERATIONS


	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018		2017

Net sales		100.0	%		100.0	%	100.0	%	100.0	%
Cost of sales (exclusive of depreciation and amortization shown below)		65.4			65.3		65.2		64.7
Selling, research & development and administrative		15.5			15.3		15.5		15.8
Depreciation and amortization		6.3			6.4		5.9		6.2
Restructuring initiatives		3.6			—		2.3		—
Operating income		9.2			13.0		11.1		13.3
Other expense		(1.5)			(1.9)		(1.1)		(1.4)
Income before income taxes		7.7			11.1		10.0		11.9
Net Income		5.9			8.6		7.4		9.3
Effective tax rate		23.4	%		23.0	%	25.6	%	22.0	%
Adjusted EBITDA margin (1)		20.2	%		18.9	%	19.7	%	19.4	%

(1)

Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation of non-U.S. GAAP measures starting on page 38.

NET SALES

We reported net sales of $665.8 million for the quarter ended September 30, 2018, which represents a 7% increase compared to $624.3 million reported during the third quarter of 2017. The average U.S. dollar exchange rate strengthened compared to most major currencies resulting in a negative currency translation impact of 3%. The acquisitions of CSP Technologies and Reboul positively impacted sales by 3%. Therefore, core sales, which exclude acquisitions and changes in foreign currency rates, increased by 7% in the third quarter of 2018 compared to the third quarter of 2017. The core sales growth reflected increased demand for products across all three of our reporting segments. Core tooling sales increased $0.9 million during the quarter ended September 30, 2018 compared to the prior year as increased sales in the Beauty + Home segment were offset by lower tooling sales in the Pharma and Food + Beverage segments.


Third Quarter 2018	Beauty				Food +
Net Sales Change over Prior Year	+ Home		Pharma		Beverage		Total

Core Sales Growth	5	%	12	%	4	%	7	%
Acquisitions	1	%	5	%	4	%	3	%
Currency Effects (1)	(4)	%	(3)	%	(2)	%	(3)	%
Total Reported Net Sales Growth	2	%	14	%	6	%	7	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

For the first nine months of 2018, we reported net sales of $2.1 billion, 13% above the first nine months of 2017 reported net sales of $1.8 billion. The average U.S. dollar exchange rate weakened compared to the euro while the impact of several other major currencies on our business was mixed. This resulted in a positive currency translation impact of 3%. Sales were also positively impacted 1% by the acquisitions of CSP Technologies and Reboul. Therefore, core sales for the first nine months of 2018 increased 9% as all three segments reported strong growth over the first nine months of 2017. Core sales were also positively impacted by higher tooling sales of $14.5 million for the first nine months of 2018 compared to the prior year mainly due to increased tooling sales in the Beauty + Home and Food + Beverage segments.

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First Nine Months of 2018	Beauty				Food +
Net Sales Change over Prior Year	+ Home		Pharma		Beverage		Total

Core Sales Growth	8	%	11	%	6	%	9	%
Acquisitions	—	%	1	%	2	%	1	%
Currency Effects (1)	3	%	5	%	2	%	3	%
Total Reported Net Sales Growth	11	%	17	%	10	%	13	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

The following table sets forth, for the periods indicated, net sales by geographic location:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018		% of Total	2017		% of Total	2018		% of Total	2017		% of Total

Domestic	$	181,349	27%	$	164,345	26%	$	528,210	25%	$	484,984	26%
Europe		381,472	57%		350,631	56%		1,232,943	59%		1,057,841	57%
Latin America		58,294	9%		65,557	11%		182,810	9%		176,965	10%
Asia		44,660	7%		43,793	7%		135,770	7%		123,598	7%

For further discussion on net sales by reporting segment, please refer to the analysis of segment net sales and segment Adjusted EBITDA on the following pages.

COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW)

Our cost of sales (“COS”) as a percent of net sales was 65.4% in the third quarter of 2018, nearly equal to 65.3% in the third quarter of 2017. While the mix of our product sales favored the higher margin Pharma products, our overall COS percentage was negatively impacted by higher material costs. During the quarter, we experienced increases in several raw material substrates, principally resin and metal. While the majority of our material cost increases can be passed along to our customers in our selling prices, we experience a lag in the timing of passing on these cost increases. The incremental business from our CSP Technologies acquisition also reported a higher COS percentage due to the effects of purchase accounting adjustments related to inventory, which further negatively impacted our overall COS percentage.

Cost of sales as a percent of net sales increased to 65.2% in the first nine months of 2018 compared to 64.7% in the same period a year ago. As mentioned above, our COS percentage was negatively impacted by the timing delay of resin pass-throughs to our customers along with other material increases. We also had a higher COS percentage due to the mix of sales. Historically, our tooling sales margins are lower than our product sales margins. Therefore, the increase in tooling sales during the first nine months of 2018 negatively impacted our COS percentage. We also reported a higher COS percentage related to some operational inefficiencies including start-up costs in our French anodizing facility along with the negative impact of purchase accounting adjustments related to our CSP Technologies and Reboul acquisitions during the first nine months of 2018 compared to the first nine months of 2017.

SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE

Our selling, research & development and administrative expenses (“SG&A”) increased by approximately $8.0 million to $103.6 million in the third quarter of 2018 compared to $95.5 million during the same period in 2017. Excluding changes in foreign currency rates, SG&A increased by approximately $10.1 million in the quarter. The increase is mainly due to $7.1 million of one-time transaction costs and $1.9 million of operational costs related to our CSP Technologies acquisition during the third quarter of 2018. We also recognized increases in professional fees and higher personnel costs in accordance with our growth strategy. SG&A as a percentage of net sales increased slightly to 15.5% compared to 15.3% in the same period of the prior year due to these acquisition costs and other cost increases mentioned above.

SG&A increased by $30.8 million to $323.1 million in the first nine months of 2018 compared to $292.3 million during the same period a year ago. Excluding changes in foreign currency rates, SG&A increased by approximately $21.1 million in the first nine months of 2018 compared to the first nine months of 2017. As discussed above, the increase is related to $9.5 million of one-time acquisition-related costs, $1.9 million of operational cost related to our CSP Technologies acquisition along with higher professional fees and personnel costs related to our growth strategy. During 2018, we also recognized approximately $0.9 million of costs related to the write-down of an administrative building that is being held for sale, while in 2017 we recognized $1.5 million for the estimated costs to remediate environmental contamination found at the Company’s facility in Brazil. Although SG&A increased in amount, SG&A as a percentage of net sales decreased to 15.5% compared to 15.8% in the same period of the prior year due to the strong increase in sales.

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DEPRECIATION AND AMORTIZATION

Reported depreciation and amortization expenses increased by approximately $1.8 million to $41.9 million in the third quarter of 2018 compared to $40.1 million during the same period a year ago. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $2.5 million in the quarter compared to the same period a year ago. This increase is mainly due to $2.1 million of incremental operational results and amortization of purchase accounting adjustments related to our CSP Technologies acquisition. We also realized increased capital spending during the past year to support the growth in our business. Depreciation and amortization as a percentage of net sales decreased to 6.3% in the third quarter of 2018 compared to 6.4% in the same period of the prior year primarily due to the strong increase in sales.

For the first nine months of 2018, reported depreciation and amortization expenses increased by approximately $8.4 million to $123.1 million compared to $114.7 million in the first nine months of 2017. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $4.0 million compared to the same period a year ago. As discussed above, this increase is mainly due to $2.1 million of incremental costs related to our CSP Technologies acquisition and increased capital spending in the current year to support the growth in our business. Depreciation and amortization as a percentage of net sales decreased to 5.9% in the first nine months of 2018 compared to 6.2% in the same period of the prior year primarily due to the strong increase in sales.

RESTRUCTURING INITIATIVES

In late 2017, Aptar began a business transformation to drive profitable sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan is the Beauty + Home segment; however, certain global general and administrative functions are also being addressed. During the third quarter of 2018, we recognized approximately $23.9 million of restructuring costs related to this plan with approximately $18.9 million, $2.0 million, $2.6 million and $0.4 million being reported within the Beauty + Home segment, Pharma segment, Food + Beverage segment and Corporate & Other, respectively. During the first nine months of 2018, we recognized approximately $48.0 million of restructuring costs related to this plan with approximately $38.5 million, $3.6 million, $4.3 million and $1.6 million being reported within the Beauty + Home segment, Pharma segment, Food + Beverage segment and Corporate & Other, respectively. We estimate total implementation costs of approximately $90 million over the next three years, including costs that have been recognized to date. We also anticipate making capital investments related to the business transformation of approximately $54 million in 2018. We expect this business transformation to yield annualized incremental EBITDA of approximately $80 million by the end of 2020, principally within the Beauty + Home segment.

OPERATING INCOME

Operating income decreased approximately $19.8 million in the third quarter of 2018 compared to the same period a year ago. Excluding changes in foreign currency rates, operating income decreased by approximately $17.5 million in the quarter compared to the same period a year ago. This decrease is due to $23.9 million of restructuring costs and $7.1 million of transaction costs related to our CSP Technologies acquisition, partially offset by the increase in profitability from the higher sales during the third quarter of 2018. Operating income as a percentage of net sales decreased to 9.2% in the third quarter of 2018 compared to 13.0% for the same period in the prior year due to these strategic investments.

For the first nine months of 2018, operating income decreased approximately $14.3 million to $230.0 million compared to $244.3 million in the same period of the prior year. Excluding changes in foreign currency rates, operating income decreased by approximately $25.5 million in the first nine months of 2018 compared to the same period a year ago. As discussed above, this decrease is due to the $48.0 million of restructuring costs and $9.5 million of transaction costs related to our CSP Technologies and Reboul acquisitions, partially offset by increased profitability on higher sales reported during the first nine months of 2018. Operating income as a percentage of net sales decreased to 11.1% in the first nine months of 2018 compared to 13.3% for the same period in the prior year mainly due to these costs.

NET OTHER EXPENSE

Net other expense in the third quarter of 2018 decreased $1.2 million to $10.2 million from $11.4 million in the same period of the prior year. For 2018, interest expense decreased by approximately $1.0 million mainly due to the prepayment of two of our higher interest private placement facilities during the fourth quarter of 2017 with cash available from our repatriation of foreign earnings to the U.S. during the third quarter of 2017.

Net other expenses for the nine months ended September 30, 2018 decreased $2.8 million to $23.0 million from $25.8 million in the same period of the prior year. This decrease is mainly due to $4.2 million of higher interest income in 2018 on U.S. cash balances repatriated from Europe. However, in 2017 we realized $2.5 million of income on our forward exchange contracts due to the forward points in the currencies in which we were invested.

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EFFECTIVE TAX RATE

The reported effective tax rate for the three months ended September 30, 2018 was 23.4%. The tax rate was favorably impacted by $4.5 million of tax benefits from employee share-based compensation along with a $1.9 million benefit from the Tax Cuts and Jobs Act (the “TCJA”) provisional items and $3.5 million of refunds from the settlement of tax claims. These favorable items were partially offset in the quarter by a $1.4 million impact of foreign valuation allowances, $1.5 million for the new U.S. tax provisions, including the global intangible low-taxed income (“GILTI”) and base erosion anti-abuse tax (“BEAT”) tax, and $4.0 million of other discrete and non-discrete tax items. The reported effective tax rate for the three months ended September 30, 2017 was 23.0%. The prior year tax rate was favorably impacted by a $4.4 million benefit of refunds from the settlement of tax claims.

The reported effective tax rate for the nine months ended September 30, 2018 was 25.6%. The tax rate was favorably impacted by $9.9 million of tax benefits from employee share-based compensation along with a $5.4 million benefit from the TCJA provisional items and $3.9 million of refunds from the settlement of tax claims. These favorable items were partially offset by a $6.3 million impact of the new U.S. tax provisions, including GILTI and BEAT, and $4.5 million of other discrete and non-discrete tax items. The reported effective tax rate for the nine months ended September 30, 2017 was 22.0%. The prior year tax rate was favorably impacted by $8.8 million of tax benefits from employee share-based compensation, $3.4 million of net benefit from the settlement of tax claims and $3.6 million benefit of repatriation activities to the U.S.

NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.

We reported net income attributable to AptarGroup of $39.0 million and $154.1 million in the three and nine months ended September 30, 2018, respectively, compared to $53.5 million and $170.5 million for the same periods in the prior year.

BEAUTY + HOME SEGMENT

Operations that sell dispensing systems and sealing solutions primarily to the personal care, beauty and home care markets form the Beauty + Home segment.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

Net Sales	$	341,760	$	333,748	$	1,088,469	$	978,313
Adjusted EBITDA (1)		42,174		42,627		141,155		129,265
Adjusted EBITDA margin (1)		12.3%		12.8%		13.0%		13.2%

(1)

Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation of non-U.S. GAAP measures starting on page 38.

Net sales for the quarter ended September 30, 2018 increased 2% to $341.8 million compared to $333.7 million in the third quarter of the prior year. Incremental sales from our Reboul acquisition positively impacted sales by 1% while changes in currency rates negatively impacted net sales by 4%. Therefore, core sales increased 5% in the third quarter of 2018 compared to the same quarter of the prior year. Geographically, core sales increased in all regions compared to the prior year quarter. We experienced strong core sales growth of 6% in our personal care and beauty markets while core home care sales declined by 2% compared to the prior year due to lower custom tooling sales. The increase in personal care sales mainly relates to increased sales of our products used on body care applications and increased tooling sales. Increased sales to the beauty market mainly related to increased demand for our facial skin care dispensing solutions.

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Third Quarter 2018	Personal				Home
Net Sales Change over Prior Year	Care		Beauty		Care		Total

Core Sales Growth	6	%	6	%	(2)	%	5	%
Acquisitions	—	%	2	%	—	%	1	%
Currency Effects (1)	(4)	%	(4)	%	(3)	%	(4)	%
Total Reported Net Sales Growth	2	%	4	%	(5)	%	2	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Net sales increased 11% in the first nine months of 2018 to $1.1 billion compared to $978.3 million in the first nine months of the prior year. Changes in currency rates positively impacted net sales by 3%. Acquisitions were immaterial for the nine month period ended September 30, 2018. Therefore, core sales increased 8% in the first nine months of 2018 compared to the same period in the prior year. Geographically, core sales increased in all regions compared to the prior year. Core sales were higher across all three markets as personal care, beauty and home care increased by 9%, 8% and 1%, respectively. Strong sales in the facial skin care and body care applications along with higher tooling sales were responsible for the increase in sales for the first nine months of 2018 compared to 2017.


First Nine Months of 2018	Personal				Home
Net Sales Change over Prior Year	Care		Beauty		Care		Total

Core Sales Growth	9	%	8	%	1	%	8	%
Acquisitions	—	%	1	%	—	%	—	%
Currency Effects (1)	2	%	4	%	2	%	3	%
Total Reported Net Sales Growth	11	%	13	%	3	%	11	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the third quarter of 2018 decreased 1% to $42.2 million compared to $42.6 million reported in the same period in the prior year. Increases in product and tooling sales and an operational improvement in our European custom decorative packaging business were offset by large increases in both resin and metal costs. We also experienced unfavorable currency impact on Argentina hyperinflation accounting and operating results related to our Reboul acquisition during the third quarter of 2018.

Adjusted EBITDA in the first nine months of 2018 increased 9% to $141.2 million compared to $129.3 million reported in the same period in the prior year. Our increase in sales more than compensated for the increased resin and metal costs. The first nine months of 2017 also included $1.5 million of estimated costs to remediate environmental contamination found at the Company’s anodizing facility in Brazil.

PHARMA SEGMENT

Operations that sell dispensing systems, sealing and active packaging solutions primarily to the prescription drug, consumer health care and injectables markets form the Pharma segment.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

Net Sales	$	227,515	$	199,547	$	698,851	$	598,161
Adjusted EBITDA (1)		84,516		66,260		250,709		204,750
Adjusted EBITDA margin (1)		37.1%		33.2%		35.9%		34.2%

(1)

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Net sales for the Pharma segment increased 14% in the third quarter of 2018 to $227.5 million compared to $199.5 million in the third quarter of 2017. Changes in currency negatively affected net sales by 3% while the acquisition of CSP Technologies positively impacted sales by 5% in the third quarter of 2018. Therefore, core sales increased by 12% in the third quarter of 2018 compared to the third quarter of 2017. All three of our existing markets reported increased core sales over the prior year. Core sales to the prescription market were particularly strong and increased 15% mainly driven by increased demand for our innovative nasal drug delivery systems for our central nervous system and allergic rhinitis treatments, which compensated for lower tooling sales. Sales to the consumer health care market increased 9% on strong demand for our ophthalmic and dermal treatments. For the injectables market, core sales increased 7% primarily due to increased demand for components used in the administration of antithrombotic products to customers in Europe during the third quarter of 2018.


Third Quarter 2018	Prescription		Consumer				Active
Net Sales Change over Prior Year	Drug		Health Care		Injectables		Packaging		Total

Core Sales Growth	15	%	9	%	7	%	—	%	12	%
Acquisitions	—	%	—	%	—	%	100	%	5	%
Currency Effects (1)	(2)	%	(4)	%	(1)	%	—	%	(3)	%
Total Reported Net Sales Growth	13	%	5	%	6	%	100	%	14	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Net sales for the first nine months of 2018 increased by 17% to $698.9 million compared to $598.2 million in the first nine months of 2017. Changes in currency rates positively impacted net sales by 5% in the first nine months of 2018 while the CSP Technologies acquisition contributed a 1% sales improvement. Therefore, core sales increased by 11% in the first nine months of 2018 compared to the same period in the prior year. As discussed above, the prescription drug market reported a core sales increase of 10% on strong sales of our products sold for central nervous system and allergic rhinitis treatments. Core sales to the consumer health care market increased 15% on strong demand for our products used on decongestants and nasal salines. Core sales of our products to the injectables markets increased 6% due to strong sales of our injectable components used on vaccine products. Lower core tooling sales in prescription and consumer health care negatively impacted the segment’s reported sales by $2.5 million for the first nine months of 2018 compared to 2017.


First Nine Months of 2018	Prescription		Consumer				Active
Net Sales Change over Prior Year	Drug		Health Care		Injectables		Packaging		Total

Core Sales Growth	10	%	15	%	6	%	—	%	11	%
Acquisitions	—	%	—	%	—	%	100	%	1	%
Currency Effects (1)	5	%	3	%	6	%	—	%	5	%
Total Reported Net Sales Growth	15	%	18	%	12	%	100	%	17	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the third quarter of 2018 increased 28% to $84.5 million compared to $66.3 million reported in the same period of the prior year. The strong product sales across all three markets discussed above along with improved operational efficiencies led to the increase in reported results for the third quarter of 2018 compared to the third quarter of 2017.

Adjusted EBITDA in the first nine months of 2018 increased 22% to $250.7 million compared to $204.8 million reported in the same period of the prior year. The increased sales and improved operational efficiencies discussed above offset lower profitability on some tooling projects.

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FOOD + BEVERAGE SEGMENT

Operations that sell dispensing systems and sealing solutions primarily to the food and beverage markets form the Food + Beverage segment.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017

Net Sales	$	96,500	$	91,031	$	292,413	$	266,914
Adjusted EBITDA (1)		15,482		18,116		46,284		49,756
Adjusted EBITDA margin (1)		16.0%		19.9%		15.8%		18.6%

(1)

Net sales for the quarter ended September 30, 2018 increased approximately 6% to $96.5 million compared to $91.0 million in the third quarter of the prior year. Incremental sales from our CSP Technologies acquisition positively impacted sales by 4% while changes in foreign currency rates had an unfavorable impact of 2% on the total segment sales. Therefore, core sales increased by 4% in the third quarter of 2018 compared to the third quarter of 2017. Core sales to the food market increased 14% while core sales to the beverage market decreased 8% in the third quarter of 2018 compared to the same period of the prior year. For the food market, we recognized strong sales of our products to our infant nutrition customers along with higher tooling sales compared to the same period last year. For the beverage market, an increase in product sales, mainly to our bottled water and juice customers, was more than offset by lower tooling sales which drove the lower core sales growth in the third quarter of 2018 compared to the prior year period. For the segment, lower tooling sales of $1.0 million was compensated by a $2.2 million increase in the pass-through of resin price changes in the quarter ended September 30, 2018 compared to the third quarter of the prior year.


Third Quarter 2018
Net Sales Change over Prior Year	Food		Beverage		Total

Core Sales Growth	14	%	(8)	%	4	%
Acquisitions	5	%	—	%	4	%
Currency Effects (1)	(2)	%	(2)	%	(2)	%
Total Reported Net Sales Growth	17	%	(10)	%	6	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Net sales for the first nine months of 2018 increased by 10% to $292.4 million compared to $266.9 million in the first nine months of 2017. Changes in currency rates and the CSP Technologies acquisition each positively impacted net sales by 2% in the first nine months of 2018. Therefore, core sales increased by 6% in the first nine months of 2018 compared to the same period in the prior year. Core sales to the food market increased 11% while core sales to the beverage market were flat compared to the first nine months of 2017. Sales to the food market increased due to strong sales of our products to our infant nutrition complemented by strong increases in tooling sales. For the beverage market, strong sales to our bottled water and juice customers were offset by a decrease in tooling sales and functional drink application sales, mainly in China. For the segment, sales for the first nine months of 2018 were favorably impacted by $7.6 million of higher core tooling sales along with a $6.0 million increase on the pass-through of resin price changes compared to the first nine months of 2017.


First Nine Months of 2018
Net Sales Change over Prior Year	Food		Beverage		Total

Core Sales Growth	11	%	—	%	6	%
Acquisitions	2	%	—	%	2	%
Currency Effects (1)	1	%	3	%	2	%
Total Reported Net Sales Growth	14	%	3	%	10	%

(1)

Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the third quarter of 2018 decreased 15% to $15.5 million compared to $18.1 million reported in the same period of the prior year. This decrease is mainly due to significant material cost increases along with lower profit on our tooling projects during the third quarter of 2018 compared to the third quarter of 2017.

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Adjusted EBITDA in the first nine months of 2018 decreased 7% to $46.3 million compared to $49.8 million reported in the same period of the prior year. As discussed above, our profitability was negatively impacted by material cost increases and lower tooling profits along with some price concessions to secure long-term supply contracts.

CORPORATE & OTHER

In addition to our three reporting segments, Aptar assigns certain costs to “Corporate & Other,” which is presented separately in Note 15 – Segment Information to the Notes to the Condensed Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring and transaction costs) primarily includes certain professional fees, compensation and information system costs which are not allocated directly to our reporting segments. For the quarter ended September 30, 2018, Corporate & Other expenses decreased slightly to $8.0 million from $8.8 million.

Corporate & Other expenses in the first nine months of 2018 increased to $28.6 million compared to $26.9 million reported in the same period of the prior year. This increase is mainly due to increases in advisory, legal and personnel costs. We also reported a $0.9 million loss on the write-down of an administrative building, which is held for sale, during 2018.

NON-U.S. GAAP MEASURE S

In addition to the information presented herein that conforms to U.S. GAAP, we also present financial information that does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S. GAAP financial measures because they allow for a better period over period comparison of operating results by removing the impact of items that, in management’s view, do not reflect Aptar’s core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the unaudited condensed consolidated statements of income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measure to arrive at these non-U.S. GAAP financial measures.

In our Management’s Discussion and Analysis, we exclude the impact of foreign currency translation when presenting net sales information, which we define as “constant currency.” Changes in net sales excluding the impact of foreign currency translation is a non-U.S. GAAP financial measure. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our prior period results at current period foreign currency exchange rates. As a result, our management believes that these presentations are useful internally and may be useful to investors. We also exclude the impact of material acquisitions when comparing results to prior periods. Changes in operating results excluding the impact of acquisitions are non-U.S. GAAP financial measures. We believe it is important to exclude the impact of acquisitions on period over period results in order to evaluate performance on a more comparable basis.

We present earnings before net interest and taxes (“EBIT”) and earnings before net interest, taxes, depreciation and amortization (“EBITDA”). We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and consolidated adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude the business transformation charges and acquisition-related costs. Our Outlook is also provided on a non-U.S. GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as tax and exchange rates, or reliably predicted because they are not part of the Company's routine activities, such as restructuring and acquisition-related costs.

Finally, we provide a reconciliation of Net Debt to Net Capital as a non-U.S. GAAP measure. Net Debt is calculated as interest bearing debt less cash, cash equivalents and short-term investments while Net Capital is calculated as stockholder’s equity plus Net Debt. Net Debt to Net Capital measures a company’s financial leverage, which gives users an idea of a company's financial structure, or how it is financing its operations, along with insight into its financial strength. We believe that it is meaningful to take into consideration the balance of our cash, cash equivalents, and short-term investments when evaluating our leverage. If needed, such assets could be used to reduce our gross debt position.

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	Three Months Ended
	September 30, 2018

	Consolidated		Beauty + Home		Pharma		Food + Beverage		Corporate & Other		Net Interest
Net Sales	$	665,775	$	341,760	$	227,515	$	96,500	$	-	$	-

Reported net income	$	39,022
Reported income taxes		11,920
Reported income before income taxes		50,942		3,471		67,016		5,481		(17,828)		(7,198)
Adjustments:
Restructuring initiatives		23,852		18,854		2,008		2,638		352
Transaction costs related to acquisitions		7,082								7,082
Purchase accounting adjustments related to acquired companies' inventory		3,287				2,761		526
Adjusted earnings before income taxes		85,163		22,325		71,785		8,645		(10,394)		(7,198)
Interest expense		8,735										8,735
Interest income		(1,537)										(1,537)
Adjusted earnings before net interest and taxes (Adjusted EBIT)		92,361		22,325		71,785		8,645		(10,394)		-
Depreciation and amortization		41,857		19,849		12,731		6,837		2,440		-
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	134,218	$	42,174	$	84,516	$	15,482	$	(7,954)	$	-

Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)		20.2%		12.3%		37.1%		16.0%


	Three Months Ended
	September 30, 2017

	Consolidated		Beauty + Home		Pharma		Food + Beverage		Corporate & Other		Net Interest
Net Sales	$	624,326	$	333,748	$	199,547	$	91,031	$	-	$	-

Reported net income	$	53,529
Reported income taxes		15,989
Reported income before income taxes		69,518		21,837		55,426		11,668		(10,793)		(8,620)
Adjustments:
None
Earnings before income taxes		69,518		21,837		55,426		11,668		(10,793)		(8,620)
Interest expense		9,733										9,733
Interest income		(1,113)										(1,113)
Earnings before net interest and taxes (EBIT)		78,138		21,837		55,426		11,668		(10,793)		-
Depreciation and amortization		40,087		20,790		10,834		6,448		2,015		-
Earnings before net interest, taxes, depreciation and amortization (EBITDA)	$	118,225	$	42,627	$	66,260	$	18,116	$	(8,778)	$	-

EBITDA margins (EBITDA / Reported Net Sales)		18.9%		12.8%		33.2%		19.9%

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	Nine Months Ended
	September 30, 2018

	Consolidated		Beauty + Home		Pharma		Food + Beverage		Corporate & Other		Net Interest
Net Sales	$	2,079,733	$	1,088,469	$	698,851	$	292,413	$	-	$	-

Reported net income	$	154,091
Reported income taxes		52,966
Reported income before income taxes		207,057		40,688		208,915		21,736		(45,834)		(18,448)
Adjustments:
Restructuring initiatives		48,002		38,501		3,596		4,307		1,598
Transaction costs related to acquisitions		9,526		574						8,952
Purchase accounting adjustments related to acquired companies' inventory		3,406		119		2,761		526
Adjusted earnings before income taxes		267,991		79,882		215,272		26,569		(35,284)		(18,448)
Interest expense		24,754										24,754
Interest income		(6,306)										(6,306)
Adjusted earnings before net interest and taxes (Adjusted EBIT)		286,439		79,882		215,272		26,569		(35,284)		-
Depreciation and amortization		123,133		61,273		35,437		19,715		6,708		-
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA)	$	409,572	$	141,155	$	250,709	$	46,284	$	(28,576)	$	-

Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales)		19.7%		13.0%		35.9%		15.8%


	Nine Months Ended
	September 30, 2017

	Consolidated		Beauty + Home		Pharma		Food + Beverage		Corporate & Other		Net Interest
Net Sales	$	1,843,388	$	978,313	$	598,161	$	266,914	$	-	$	-

Reported net income	$	170,523
Reported income taxes		48,043
Reported income before income taxes		218,566		69,248		174,288		31,385		(32,734)		(23,621)
Adjustments:
None
Earnings before income taxes		218,566		69,248		174,288		31,385		(32,734)		(23,621)
Interest expense		25,707										25,707
Interest income		(2,086)										(2,086)
Earnings before net interest and taxes (EBIT)		242,187		69,248		174,288		31,385		(32,734)		-
Depreciation and amortization		114,660		60,017		30,462		18,371		5,810		-
Earnings before net interest, taxes, depreciation and amortization (EBITDA)	$	356,847	$	129,265	$	204,750	$	49,756	$	(26,924)	$	-

EBITDA margins (EBITDA / Reported Net Sales)		19.4%		13.2%		34.2%		18.6%

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Net Debt to Net Capital Reconciliation		September 30,		December 31,
		2018		2017

Notes payable, including revolving credit facilities	$	153,236	$	4,336
Current maturities of long-term obligations, net of unamortized debt issuance costs		64,039		61,833
Long-Term Obligations, net of unamortized debt issuance costs		1,131,737		1,191,146
Total Debt		1,349,012		1,257,315
Less:
Cash and equivalents		291,382		712,640
Net Debt	$	1,057,630	$	544,675

Total Stockholders' Equity	$	1,392,058	$	1,312,048
Net Debt		1,057,630		544,675
Net Capital	$	2,449,688	$	1,856,723

Net Debt to Net Capital		43.2%		29.3%

FOREIGN CURRENCY

Because of our international presence, movements in exchange rates may have a significant impact on the translation of the financial statements of our foreign subsidiaries. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and South American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies. Changes in exchange rates on such inter-country sales could materially impact our results of operations. During the third quarter of 2018 the U.S. dollar strengthened compared to the Euro. This resulted in a dilutive impact on our translated results during the third quarter of 2018 when compared to the third quarter of 2017. Beginning July 1, 2018, we have applied highly inflationary accounting for our Argentinian subsidiaries. We have changed the functional currency from the Argentinian peso to the U.S. dollar. Our Argentinian operations contributed approximately 2.0% of consolidated net assets and revenues at and for the nine months ended September 30, 2018.

QUARTERLY TRENDS

Our results of operations in the last quarter of the year typically are negatively impacted by customer plant shutdowns in December. In the future, our results of operations in a quarterly period could be impacted by factors such as the seasonality of certain products within our segments, changes in foreign currency rates, changes in product mix, changes in material costs, changes in growth rates in the markets to which our products are sold, recognition of equity-based compensation expense for retirement eligible employees in the period of grant and changes in general economic conditions in any of the countries in which we do business.

We generally incur higher employee stock option expense in the first quarter compared with the rest of the fiscal year. Our estimated total stock-based compensation expense on a pre-tax basis (in $ millions) for the year 2018 compared to 2017 is as follows:


	2018		2017
First Quarter	$	7.5	$	7.8
Second Quarter		3.4		3.9
Third Quarter		3.9		3.3
Fourth Quarter (estimated for 2018)		4.7		3.9
	$	19.5	$	18.9

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LIQUIDITY AND CAPITAL RESOURCES

We believe we are in a strong financial position and have the financial resources to meet our business requirements in the foreseeable future. We have historically used cash flow from operations, our revolving credit facilities, stock option exercises and debt, as needed, as our primary sources of liquidity. Our primary uses of liquidity are to invest in equipment and facilities that are necessary to support our growth and to make acquisitions that will contribute to the achievement of our strategic objectives. Other uses of liquidity include repurchasing shares of our common stock and paying dividends to stockholders. On October 18, 2018, the Board of Directors declared a quarterly cash dividend of $0.34 per share payable on November 21, 2018 to stockholders of record as of October 31, 2018. In the event that customer demand would decrease significantly for a prolonged period of time and negatively impact cash flow from operations, we would have the ability to restrict and significantly reduce capital expenditure levels, as well as evaluate our acquisition strategy and dividend and share repurchase programs. A prolonged and significant reduction in capital expenditure levels could increase future repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.

During 2017, we voluntarily repatriated approximately $1.0 billion from Europe to the U.S. This was achieved through a combination of surplus available cash and raising debt in our UK subsidiary in Europe. This gave us full financial flexibility to utilize the repatriated cash to meet our U.S. funding needs and for strategic business investments, including the recent acquisition of CSP Technologies. Adding euro-denominated debt better aligns our capital structure with our euro earnings base, and we were able to take advantage of historically low euro debt interest rates. At September 30, 2018, our weighted-average debt interest rate is 2.66%, and the mix of our fixed to floating debt is 90:10.

Cash and equivalents decreased to $291.4 million at September 30, 2018 from $712.6 million at December 31, 2017 primarily due to the acquisition of CSP Technologies. Total short and long-term interest bearing debt of $1.3 billion at September 30, 2018 was at the same level as December 31, 2017. Due to the decrease in cash to fund our CSP Technologies acquisition, the ratio of our Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (stockholders’ equity plus Net Debt) increased to 43.2% at September 30, 2018 compared to 29.3% at December 31, 2017. See the reconciliation of non-U.S. GAAP measures starting on page 38

In the first nine months of 2018, our operations provided approximately $209.6 million in net cash flow compared to $265.2 million for the same period a year ago. In both periods, cash flow from operations was primarily derived from earnings before depreciation and amortization. The decrease in cash provided by operations is primarily attributable to a decrease in net income from our business transformation expenses.

We used $668.7 million in cash for investing activities during the first nine months of 2018 compared to $189.2 million during the same period a year ago. Approximately $553.5 million of our cash (exclusive of $24.1 million of cash acquired) was utilized to fund our acquisition of CSP Technologies during 2018. $5.0 million is currently held in restricted cash pending the finalization of a working capital adjustment expected to be completed within 75 days after closing. We also invested $10.0 million in preferred equity stock of Reciprocal Labs Corporation, doing business as Propeller Health, which is accounted for at cost, and acquired Reboul, a French manufacturer specializing in stamping, decorating and assembling metal and plastic packaging for the cosmetics and luxury markets, for an initial purchase price of approximately $3.6 million (exclusive of $112 thousand of cash acquired). Our investment in capital projects increased $24.5 million for the first nine months of 2018 compared to the first nine months of 2017 to support the growth of our business. Our 2018 estimated cash outlays for capital expenditures are expected to be in the range of approximately $190 to $210 million but could vary due to changes in exchange rates as well as the timing of capital projects. The increase in cash used for investing activities during the first nine months of 2018 was partially offset by the receipt of $10.6 million of insurance proceeds related to the Annecy fire property damages. In 2017, we also invested $5.0 million for a 20% minority investment in a technology company which provides digital monitoring systems for medical devices.

Financing activities provided $50.3 million in cash during the first nine months of 2018 compared to $447.3 million during the same period a year ago. During the first nine months of 2018, we received net proceeds from our short term credit facility and stock option exercises of $139.4 million and $78.9 million, respectively. We used cash on hand to repay $67.0 million of long-term debt, pay $61.0 million of dividends and repurchase $61.7 million of common stock. Following the repatriation in 2017 of $1.0 billion from Europe to the U.S., these funds were used to repay $160 million outstanding on the U.S. revolving credit facility and repurchase $113.3 million of common stock.

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On July 20, 2017, the Company replaced its $300 million revolving credit facility with a new 5-year multi-currency revolving credit facility with two tranches, providing for unsecured financing of up to $300 million that is available in the U.S. and up to €150 million that is available to our wholly-owned UK subsidiary. Each borrowing under the credit facility will bear interest at rates based on LIBOR, prime rates or other similar rates, in each case plus an applicable margin. A facility fee on the total amount of the facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the credit facility and the facility fee percentage may change from time to time depending on changes in Aptar’s consolidated leverage ratio. We utilized $35.0 million of the U.S. credit facility and €89.5 million of the UK subsidiary credit facility at September 30, 2018 and had no outstanding balance at December 31, 2017. We incurred approximately $850 thousand and $734 thousand in interest and fees related to our credit facilities during the nine months ended September 30, 2018 and 2017, respectively.

Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:


	Requirement	Level at September 30, 2018
Consolidated Leverage Ratio ₍₁₎	Maximum of 3.50 to 1.00	2.05 to 1.00
Consolidated Interest Coverage Ratio ₍₁₎	Minimum of 3.00 to 1.00	12.36 to 1.00

(1)

Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.

Based upon the above consolidated leverage ratio covenant, we have the ability to borrow approximately an additional $773 million before the 3.50 to 1.00 maximum ratio requirement is exceeded.

Our foreign operations have historically met cash requirements with the use of internally generated cash or uncommitted short-term borrowings. We also have committed financing arrangements in both the U.S. and UK as detailed above. We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.

During the third quarter of 2017, the Company entered into the borrowing arrangements summarized below through our wholly-owned UK subsidiary to better balance our capital structure.


Debt type	Amount	Term/Maturity	Interest rate
Bank term loan	$280 million	5 year amortizing/July 2022	2.56% floating swapped to 1.36% fixed
Bank revolver	€150 million	5 year/July 2022	1.10% floating
Private placement	€100 million	6 year/July 2023	0.98% fixed
Private placement	€200 million	7 year/July 2024	1.17% fixed

Aptar also entered into a EUR/USD floating-to-fixed cross currency swap on July 20, 2017 to mitigate the currency risk of U.S. dollar debt on a euro functional currency entity and to also mitigate the risk of variability in interest rates on the $280 million bank term loan. The Company expects its future European cash flows will be sufficient to service this new debt.

CONTINGENCIES

The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. Please refer to Note 11 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements for a discussion of contingencies affecting the Company’s business.

OFF-BALANCE SHEET ARRANGEMENTS

We lease certain warehouse, plant and office facilities as well as certain equipment under noncancelable operating leases expiring at various dates through the year 2027. Most of the operating leases contain renewal options and certain equipment leases include options to purchase during or at the end of the lease term. Other than operating lease obligations, we do not have any off-balance sheet arrangements.

RECENTLY ISSUED ACCOUNTING STANDARDS

We have reviewed the recently issued accounting standards updates to the FASB’s Accounting Standards Codification that have future effective dates. Standards that are effective for 2018 are discussed in Note 1 – Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements.

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In June 2016, the FASB issued ASU 2016-13, which changes the accounting guidance for measurement of credit losses on financial instruments. The guidance replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when recording credit loss estimates. The new standard is effective for fiscal years and interim periods beginning after December 15, 2019. The Company is currently evaluating the impact of adopting this guidance.

In January 2017, the FASB issued ASU 2017-04, which provides guidance to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As a result, impairment charges will be required for the amount by which a reporting units carrying amount exceeds its fair value up to the amount of its allocated goodwill. The new standard is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not believe that this new guidance will have a material impact on its Condensed Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-02, which provides guidance on the reclassification of certain tax effects from accumulated other comprehensive income. This guidance allows for the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018. The Company is currently evaluating the impact of adopting this guidance.

In August 2018, the FASB issued ASU 2018-14, which amends disclosure requirements for defined benefit pension and other postretirement plans. The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The new standard is effective for fiscal years ending after December 15, 2020. As this update amends disclosure requirements, the Company does not expect any significant impact around adopting this guidance.

In August 2018, the FASB issued ASU 2018-15 to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adopting this guidance.

Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our Condensed Consolidated Financial Statements upon adoption.

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OUTLOOK

For the fourth quarter, we expect continued core sales growth in each segment over the prior year in spite of difficult comparisons to our very strong prior year fourth quarter, where each segment posted double digit core sales growth. However, we expect the inflationary environment to continue and raw material and transportation costs are expected to weigh on margins due to the normal delay in passing on these increased costs. Further, we anticipate isolated weaker beverage volumes in China. We expect earnings per share for the fourth quarter, excluding any restructuring and acquisition costs, to be in the range of $0.81 to $0.86. This guidance is based on an effective tax rate range of 30% to 32%. Prior year reported earnings per share of $0.77 included a gain on insurance recovery of $0.11 per share, restructuring expenses of $0.03 per share and the $0.12 per share impact of the tax reform legislation enacted in the fourth quarter of last year. Excluding these effects and adjusting for comparable exchange rates, which had a positive impact of $0.03 per share, prior year adjusted earnings per share were $0.78. Prior year adjusted earnings per share would have been approximately $0.07 lower had our current effective tax rate been applied to prior year adjusted earnings.

FORWARD-LOOKING STATEMENTS

Certain statements in Management’s Discussion and Analysis and other sections of this Form 10-Q are forward-looking and involve a number of risks and uncertainties, including certain statements set forth in the Restructuring Initiatives, Quarterly Trends, Liquidity and Capital Resources, Contingencies and Outlook sections of this Form 10-Q. Words such as “expects,” “anticipates,” “believes,” “estimates,” “future,” “potential” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and are based on our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in our operations and business environment including, but not limited to:

economic conditions worldwide, including potential deflationary and inflationary conditions in regions we rely on for growth;

political conditions worldwide;

the impact of tax reform legislation, changes in tax rates and other tax-related events or transactions that could impact our effective tax rate;

significant fluctuations in foreign currency exchange rates;

financial conditions of customers and suppliers;

consolidations within our customer or supplier bases;

changes in customer and/or consumer spending levels;

loss of one or more key accounts;

the availability of raw materials and components (particularly from sole sourced suppliers) as well as the financial viability of these suppliers;

fluctuations in the cost of materials, components and other input costs (particularly resin, metal, anodization costs and transportation and energy costs);

the impact and extent of contamination found at the Company’s facility in Brazil;

our ability to successfully implement facility expansions and new facility projects;

the impact of the UK leaving the European Union (Brexit) on our UK operations;

our ability to offset inflationary impacts with cost containment, productivity initiatives or price increases;

changes in capital availability or cost, including interest rate fluctuations;

volatility of global credit markets;

the timing and magnitude of capital expenditures;

our ability to identify potential new acquisitions and to successfully acquire and integrate such operations or products, including the successful integration of the CSP Technologies business;

direct or indirect consequences of acts of war, terrorism or social unrest;

cybersecurity threats that could impact our networks and reporting systems;

the impact of natural disasters and other weather-related occurrences;

fiscal and monetary policies and other regulations;

changes or difficulties in complying with government regulation;

changing regulations or market conditions regarding environmental sustainability;

work stoppages due to labor disputes;

competition, including technological advances;

our ability to protect and defend our intellectual property rights, as well as litigation involving intellectual property rights;

the outcome of any legal proceeding that has been or may be instituted against us and others;

our ability to meet future cash flow estimates to support our goodwill impairment testing;

the demand for existing and new products;

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the success of our customers’ products, particularly in the pharmaceutical industry;

our ability to manage worldwide customer launches of complex technical products, particularly in developing markets;

difficulties in product development and uncertainties related to the timing or outcome of product development;

significant product liability claims;

the successful execution of our business transformation; and

other risks associated with our operations.

Although we believe that our forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please refer to Item 1A (“Risk Factors”) of Part I included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for additional risk factors affecting the Company.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of our entities. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso and Swiss franc, among other Asian, European, and South American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations. Conversely, a weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations.

Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.

We manage our exposures to foreign exchange principally with forward exchange contracts to hedge certain firm purchase and sales commitments and intercompany cash transactions denominated in foreign currencies.

The table below provides information as of September 30, 2018 about our forward currency exchange contracts. The majority of the contracts expire before the end of the fourth quarter of 2018.



			Average	Min / Max
		Contract Amount	Contractual	Notional
Buy/Sell		(in thousands)	Exchange Rate	Volumes

CHF / EUR	$	42,289	0.8877	42,289-52,933
EUR / USD		20,127	1.1720	14,422-20,555
EUR / BRL		17,475	4.7533	14,938-17,475
USD / EUR		8,289	0.8544	6,383-8,289
COP / USD		5,626	0.0003	5,520-5,934
EUR / INR		5,030	82.3400	5,030-6,195
EUR / IDR		2,298	19.2090	2,181-2,298
EUR / MXN		948	22.3549	934-948
USD / MXN		720	18.8954	630-720
USD / COP		664	2,958.8500	664-1,420
EUR / CHF		402	1.1287	64-11,384
USD / CHF		10	0.9634	0-10
Total	$	103,878

As of September 30, 2018, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepaid and other and $0.9 million in accounts payable and accrued liabilities on the balance sheet. Aptar also entered into a EUR/USD floating-to-fixed cross currency swap on July 20, 2017 to effectively hedge the foreign exchange and interest rate exposure on the $280 million bank term loan drawn by its wholly-owned UK subsidiary. The fair value of this cash flow hedge is $4.7 million and is reported in accounts payable and accrued liabilities on the balance sheet.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2018. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures were effective as of such date.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the quarter ended September 30, 2018, the Company implemented enterprise resource planning (“ERP”) systems at two operating facilities. Consequently, the control environments have been modified at these locations to incorporate the controls contained within the new ERP system. Other than these items, no changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the Company’s fiscal quarter ended September 30, 2018 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES

Certain French employees are eligible to participate in the FCP Aptar Savings Plan (the “Plan”). An independent agent purchases shares of common stock available under the Plan for cash on the open market and we do not issue shares. We do not receive any proceeds from the purchase of common stock under the Plan. The agent under the Plan is Banque Nationale de Paris Paribas Fund Services. No underwriters are used under the Plan. All shares are sold in reliance upon the exemption from registration under the Securities Act of 1933 provided by Regulation S promulgated under that Act. During the quarter ended September 30, 2018, the Plan purchased no shares of our common stock on behalf of the participants, and sold 3,524 shares of our common stock on behalf of the participants at an average price of $104.67, for an aggregate amount of $369 thousand. At September 30, 2018, the Plan owned 76,127 shares of our common stock.

ISSUER PURCHASES OF EQUITY SECURITIES

The Company did not repurchase any shares during the third quarter of 2018.

The following table summarizes the Company’s purchases of its securities for the quarter ended September 30, 2018:


					Dollar Value Of
				Total Number Of Shares	Shares that May Yet be
	Total Number			Purchased as Part Of	Purchased Under The
	Of Shares	Average Price		Publicly Announced	Plans or Programs
Period	Purchased	Paid Per Share		Plans Or Programs	(in millions)

7/1 – 7/31/18	—	$	—	—	$	80.2
8/1 – 8/31/18	—		—	—		80.2
9/1 – 9/30/18	—		—	—		80.2
Total	—	$	—	—	$	80.2

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ITEM 6. EXHIBITS



Exhibit 2.1	Offer Letter, dated as of July 26, 2018, among AptarGroup, Inc., CSP Technologies Parent S.A., Expansion 17 S.C.A. SICAR and Global Performance 17 S.C.A. SICAR. †

Exhibit 2.2	Stock Purchase Agreement, dated as of July 26, 2018, by and between AptarGroup, Inc., and CSP Technologies Parent S.A. †

Exhibit 31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101	The following financial information from our Quarterly Report on Form 10-Q for the third quarter of fiscal 2018, filed with the SEC on November 5, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Income – Three and Nine Months Ended September 30, 2018 and 2017, (ii) the Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2018 and 2017, (iii) the Condensed Consolidated Balance Sheets – September 30, 2018 and December 31, 2017, (iv) the Condensed Consolidated Statements of Changes in Equity – Three and Nine Months Ended September 30, 2018 and 2017, (v) the Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2018 and 2017 and (vi) the Notes to Condensed Consolidated Financial Statements.


† The exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		AptarGroup, Inc.
		(Registrant)

	By	/s/ ROBERT W. KUHN
		Robert W. Kuhn
		Executive Vice President,
		Chief Financial Officer and Secretary
		(Duly Authorized Officer and
		Principal Accounting and Financial Officer)


		Date: November 5, 2018

Exhibit 2.1

CSP Technologies Parent S.A.
5, rue Pierre d’Aspelt,
L-1142 Luxembourg
Attention: Board of Directors

Paris, on July 26, 2018

STRICTLY CONFIDENTIAL

Dear Sirs:

Following AptarGroup, Inc.’s (“ Buyer ”, “ we ” or “ our ”) discussions with CSP Technologies Parent S.A. (“ CSP ”) in relation to our potential acquisition of CSP Technologies S.à r.l., private limited liability company ( société à responsabilité limitée ) incorporated under the laws of the Grand Duchy of Luxembourg (the “ Company ”, and the Company, together with its Subsidiaries, the “ Group Companies ” or the “ Group ”), we are pleased to submit the following irrevocable and binding put option (the “ Offer ”) pursuant to which we will, in accordance with the terms and conditions of the Stock Purchase Agreement in the form attached hereto as Schedule I (the “ Purchase Agreement ”), acquire from CSP all of the equity interests in the Company and 13,605 shares of common stock, par value €16/share, of CSP Technologies Europe SAS (the “ Transaction ”). CSP may, in its sole discretion, elect to accept the Offer in accordance with the procedures set out below. Each of Expansion 17 S.C.A. , SICAR, a a société en commandite par actions qualifying as a société d'investissement en capital à risque, existing under the laws of the Grand Duchy of Luxembourg, registered with the Luxembourg trade registry under number B180975 and having its registered office at 5 rue Pierre d’Aspelt, L-1142 Luxembourg, Grand Duchy of Luxembourg (“ SICAR 1 ”) and Global Performance 17 S.C.A., SICAR, a , a société en commandite par actions qualifying as a société d'investissement en capital à risque, existing under the laws of the Grand Duchy of Luxembourg, registered with the Luxembourg trade registry under number B180980 and having its registered office at 5 rue Pierre d’Aspelt, L-1142 Luxembourg, Grand Duchy of Luxembourg (acting in relation to its compartment 1) (“ SICAR 2 ”, and SICAR 2 together with SICAR 1, “ Wendel ”) are party to this Offer Letter solely for purposes of Section 7 ( Exclusivity ), Section 8(a) ( Publicity ) and Section 9 ( Governing Law ) hereof.

Capitalized terms used in this letter (this “ Offer Letter ”) shall, unless otherwise defined herein, have the meanings ascribed to them in the Purchase Agreement.

DURATION AND ACCEPTANCE OF THE OFFER

(a)

Our Offer will enter into force on the date hereof and remain valid until the earliest of:

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

(i)

6 p.m., Paris time, the fifth (5th) Business Day following the date on which the works’ council ( Comité Social et Economique ) of CSP Technologies SAS (the “ Works’ Council ”) has concluded the information and consultation process and delivered its final opinion, if applicable, in respect of the Transaction in accordance with the provisions of Section 2 ( Information and Consultation of the Works’ Council ) (the “ Consultation Process ”), or on which the Consultation Process will be deemed to have concluded pursuant to applicable Law;

(ii)

6 p.m., Paris time, on October 31, 2018; provided, however, that if the Consultation Process shall not have been concluded by such date and Buyer or CSP, as the case may be, shall have complied in all material respects with respect to such Consultation Process pursuant to Section 2 ( Information and Consultation of the Works’ Council ), then Buyer or CSP, as the case may be, shall be permitted to extend this date from time to time in consecutive increments of up to 30 days each, but in any event no later than 6 p.m., Paris time, on December 31, 2018; and

(iii)

the termination of this Offer Letter pursuant to Section 4(a) ( Termination and Expense Reimbursement ).

(such date, as may be so extended by Buyer or CSP, the “ Expiry Date ”). The party extending the Expiry Date shall provide notice to the other party of any extension of the Expiry Date no later than one (1) Business Day prior to the then current Expiry Date.

(b)

CSP agrees that it shall promptly, and no later than 6 p.m., Paris time, on the fifth (5th) Business Day, following the date on which the Works’ Council has concluded the Consultation Process, or on which the Consultation Process will be deemed to have concluded pursuant to applicable Law, make a decision whether or not to accept the Offer and communicate such decision to Buyer and, in the event such decision is to accept the Offer, execute and deliver the Purchase Agreement, under the conditions described in Section 3 ( Execution of the Purchase Agreement ).

(c)

If the Offer has not been accepted by CSP prior to the Expiry Date under the conditions described in Section 3 ( Execution of the Purchase Agreement ), the Offer will automatically terminate as at the Expiry Date, subject to the terms of Sections 4 ( Termination and Expense Reimbursement ), 7 ( Exclusivity ) and 8 ( Publicity ), unless CSP and Buyer mutually agree in writing to postpone such Expiry Date to a later date.

INFORMATION AND CONSULTATION OF THE WORKS’ COUNCIL

(a)

We acknowledge that the execution of the Purchase Agreement by CSP is subject to the Consultation Process.

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

(b)

CSP undertakes to (i) take all reasonable appropriate steps (given in particular the calendar constraints of the members of the Works’ Council) to initiate as soon as possible the Consultation Process in order to swiftly obtain the Works’ Council’s final opinion, (ii) comply in all material respects with all appropriate requirements and procedures in connection with the Consultation Process, and (iii) keep Buyer reasonably informed of the status of such Consultation Process, including furnishing Buyer promptly with copies of any substantive material written communications obtained by CSP or the Company as part of the Consultation Process. Without limiting the generality of the foregoing, CSP undertakes to inform Buyer in writing as soon as possible (and in any event no later than two (2) Business Days) after the date on which the Works’ Council has concluded the Consultation Process or the Consultation Process will be deemed to have concluded pursuant to applicable Law; provided, that, notwithstanding anything in this Offer Letter or in the Purchase Agreement to the contrary, CSP shall not enter into any agreements, understandings, or commitments with, or for the benefit of, the Works Council that could reasonably be expected to result in any liability (other than de minimis amounts) to Buyer or its Affiliates on or following the Closing Date prior to providing Buyer with reasonable notice and obtaining Buyer’s consent, not to be unreasonably withheld, delayed or conditioned.

(c)

We undertake to co-operate with the Company and CSP with respect to the information and consultation of the Works’ Council, including by promptly providing the Company and CSP with any relevant document or information (whether in writing or in person) relating to Buyer’s group or its strategy which the Works’ Council, or the expert appointed by the Works’ Council, would reasonably request, and/or required under applicable Law.

EXECUTION OF THE PURCHASE AGREEMENT

(a)

Should CSP wish to accept this Offer (the “ Offer Acceptance ”), CSP shall notify such acceptance to Buyer through the delivery, on or prior to the Expiry Date, of a countersigned copy of the Purchase Agreement, duly executed by CSP, in accordance with the notice provisions set forth in Section 8.4 of the Purchase Agreement.

(b)

For the purposes of this Offer Letter, the “ Exercise Date ” shall mean the date, on or prior to the Expiry Date, of delivery to Buyer by CSP of the Purchase Agreement, duly executed by CSP.

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

TERMINATION AND EXPENSE REIMBURSEMENT

(a)

This Offer Letter may be terminated (i) by the mutual written consent of CSP and Buyer; or (ii) by Buyer, by written notice to CSP (such notice to be delivered in accordance with the notice provisions set forth in Section 8.4 of the Purchase Agreement), at any time prior to the Offer Acceptance, if Wendel or CSP shall have knowingly and willfully breached in any material respect any of their respective covenants or agreements contained in Section 7 ( Exclusivity ); provided, however, that Buyer may only terminate this Offer Letter pursuant to this clause (ii) if at the time of termination Buyer is not in breach in any material respect of any of its covenants or agreements contained in this Offer Letter.

(b)

If the Offer Acceptance has not been made prior to the occurrence of the Expiry Date, CSP shall promptly (but in any event not more than five (5) Business Days following the Expiry Date) pay to Buyer, in immediately available funds by wire transfer to a bank account designated in writing by Buyer, an amount of cash in respect of Buyer’s expenses equal to Eleven Million One Hundred Thousand Dollars ($11,100,000) (the “ Expense Reimbursement ”).

(c)

The parties hereto acknowledge and agree that the agreements contained in Section 4(b) ( Termination and Expense Reimbursement ) are an integral part of the transactions contemplated by this Offer Letter, and that, without these agreements, neither CSP nor Buyer would have entered into this Offer Letter. Accordingly, if CSP fails to promptly pay any amount due pursuant to Section 4(b) ( Termination and Expense Reimbursement ) and, in order to obtain such payment, Buyer commences any action which results in an award of, or a judgment against CSP for, the Expense Reimbursement (or any portion thereof), CSP shall pay Buyer’s reasonable costs and expenses (including reasonable attorney’s fees and expenses of enforcement) in connection with such action.

REGULATORY APPROVAL

Each of CSP and Buyer undertakes, as permitted by applicable Law, from the date hereof and up until the earliest of the Offer Acceptance and the Expiry Date, to observe and comply with the provisions of Section 5.3 ( Efforts; Regulatory Filings ) of the Purchase Agreement.

OTHER PROVISIONS OF THE PURCHASE AGREEMENT

Buyer and CSP hereby agree that, upon the Offer Acceptance, (x) the date of the Purchase Agreement as used therein shall be deemed to be the date hereof and (y) the Purchase Agreement shall be treated for all purposes as if executed and delivered by both parties on the date hereof, notwithstanding the execution and delivery thereof by CSP at a later date. CSP undertakes, from the date hereof and up until the earlier of the Offer Acceptance and the Expiry Date, to comply with the provisions of Section 5.1 ( Conduct of the Company ), Section 5.2 ( Access to Information Prior to the Closing ) and Section 5.8 ( Efforts ) of the Purchase Agreement.

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

EXCLUSIVITY

As from the date hereof and until the earlier of (i) the Exercise Date and (ii) March 31, 2019 (the “ Exclusivity Period ”), each of Wendel and CSP shall not, and shall procure that none of their respective Affiliates (including the Group) or its or their respective directors, officers or employees, or any attorney, accountant or other advisor or representative retained by any of them (collectively, “ Representatives ”), directly or indirectly, (i) initiate, continue, follow up on or otherwise participate in any discussions or negotiations regarding, or otherwise cooperate in any way with, or assist or participate in any effort or attempt by any Person with respect to, any Alternative Proposal, (ii) enter into or approve any contract with respect to any Alternative Proposal or (iii) solicit, initiate or knowingly encourage, or take or take any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal that constitutes, or could reasonably be expected to lead to, any Alternative Proposal. For purposes of this Section 7, the term “ Alternative Proposal ” means any proposal or offer by any third party, other than a proposal or offer by Buyer or any of its Affiliates, whether in a single transaction or series of related transactions, with respect to: (a) the sale, license, disposition, transfer or acquisition of all or a material portion of the assets or business of the Company and the Group, taken as a whole, or (b) the issuance, disposition or acquisition of all or a material portion of the capital stock and other equity securities of the Company or any member of the Group, in each case, whether effected by a merger, spin-off, contribution, consolidation, business combination, recapitalization, reorganization or similar transaction involving the Company or any of the Group Companies. Each of Wendel, CSP and their Affiliates shall, and shall cause their respective Representatives to, with respect to third parties with whom discussions or negotiations with respect to an Alternative Proposal occurred during the six (6) months prior to the date of this Offer Letter, use its reasonable best efforts to obtain the return or destruction of, in accordance with the terms of any applicable confidentiality agreement with such third parties, confidential information previously furnished by Wendel, CSP or any of their Affiliates, or its or their Representatives, with respect to the Group Companies. During the Exclusivity Period, CSP will promptly (and in any event within five (5) Business Days) notify Buyer after Wendel, CSP or any of their respective Affiliates has received, during the Exclusivity Period, any proposal, inquiry, offer or request relating to or constituting, or that could reasonably be expected to lead to, an Alternative Proposal. Such notice to Buyer shall indicate the identity of the person making such proposal and the material terms and conditions of such proposal, if any. During the Exclusivity Period, each of CSP shall also as promptly as practicable provide Buyer with (i) a copy of any written notice or other written communication from any person informing Wendel, CSP or any of their respective Affiliates during the Exclusivity Period that it is considering making, or has made, an Alternative Proposal, (ii) a copy of any Alternative Proposal (or any amendment thereof) received by Wendel, CSP or any of their respective Affiliates during the Exclusivity Period and (iii) such other details of any such Alternative Proposal that Buyer may reasonably request, and each of Wendel and CSP shall keep Buyer reasonably informed on a reasonably current basis of any material change to the terms of any such Alternative Proposal.

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

PUBLICITY

(a)

With respect to this offer and the transaction contemplated hereby, Buyer, Wendel and CSP each hereby agree to observe and comply with the restrictions set forth in Section 5.7 ( Public Announcements ) of the Purchase Agreement.

For the avoidance of doubt, Buyer, CSP and the Group Companies shall be entitled to disclose such Offer and the required information relating to the proposed Transaction to the Works’ Council, and Buyer and CSP shall be entitled to disclose such Offer and the required information relating to the proposed Transaction to obtain the necessary regulatory approvals mentioned in Section 6.1(b) of the Purchase Agreement.

GOVERNING LAW

(a)

This Offer Letter shall in all respects be governed by, and construed in accordance with, the Laws (excluding conflict of laws rules and principles) of the State of Delaware applicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance.

(b)

Any Litigation against any party to this Offer Letter arising out of or in any way relating to this Offer Letter shall be brought to the Delaware Chancery Court (or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court), and each of the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of any such Litigation; provided , that a final judgment in any such Litigation shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each party irrevocably and unconditionally agrees not to assert (a) any objection which it may ever have to the laying of venue of any such Litigation in any federal or state court located in the State of Delaware, (b) any claim that any such Litigation brought in any such court has been brought in an inconvenient forum and (c) any claim that such court does not have jurisdiction with respect to such Litigation. To the extent that service of process by mail is permitted by applicable Law, each party irrevocably consents to the service of process in any such Litigation in such courts by the mailing of such process by registered or certified mail, postage prepaid, at its address for notices provided for herein. Each party irrevocably and unconditionally waives any right to a trial by jury and agrees that any of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained-for agreement among the parties irrevocably to waive its right to trial by jury in any Litigation .

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

(c)

The provisions set forth in Sections 1.2 ( Interpretation ), 8.3 ( Expenses ), 8.4 ( Notices ), 8.6 ( Entire Agreement ), 8.7 ( Severability ), 8.8 ( Amendment ), 8.9 ( Effect of Waiver or Consent ), 8.10 ( Parties in Purchased Interests; Limitation on Rights of Others ), 8.11 ( Assignability ), 8.14 ( Reliance on Counsel and Other Advisors ), 8.15 ( Remedies ), 8.16 ( Specific Performance ) and 8.17 ( Counterparts ) of the Purchase Agreement are hereby incorporated by reference into this Offer, the terms of which shall apply to this Offer, mutatis mutandis, as though set forth herein, with references “this Agreement” interpreted to refer to “this Offer Letter.”

We look forward to working together in the coming weeks towards the signing and closing of the Transaction.

AptarGroup, Inc.

265 Exchange Drive, Suite 100

TEL +1 815 477 0424

FAX +1 815 477 0481

TEL +1 815 477 0424

FAX +1 815 477 0481

aptar.com

Yours faithfully,

BUYER :

AptarGroup, Inc.

By:      /s/ Robert W. Kuhn
Name: Robert W. Kuhn
Title:   Executive Vice President and
           Chief Financial Officer

[Signature Page to Put and Exclusivity Letter]

Acknowledged and agreed without any undertaking to accept the Offer:

SELLER:

CSP TECHNOLOGIES PARENT S.A.

By:
/s/ David Darmon
Name: David Darmon
Title: Director

By: /s/ Bernard Gautier
Name: Bernard Gautier
Title: Director

Solely for purposes of Section 7 ( Exclusivity ):

WENDEL:

EXPANSION 17 S.C.A. SICAR

By: Winvest Conseil S.A., its sole manager

By: /s/ Jean-Yves Hemery
Name: Jean-Yves Hemery
Title: Director

By: /s/ Bernard Gautier
Name: Bernard Gautier
Title: Director

GLOBAL PERFORMANCE 17 S.C.A. SICAR

By: Winvest Conseil S.A., its sole manager

By: /s/ Jean-Yves Hemery
Name: Jean-Yves Hemery
Title: Director

By: /s/ Bernard Gautier
Name: Bernard Gautier
Title: Director

[Signature Page to Put and Exclusivity Letter]

Exhibit 2.2

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and between

APTARGROUP, INC.

and

CSP TECHNOLOGIES PARENT S.A.

Dated: July 26, 2018

EXECUTION VERSION

TABLE OF CONTENTS


ARTICLE I Definitions and Rules of Construction		1
1.1	Definitions	1
1.2	Rules of Construction	16

ARTICLE II Purchase and Sale		18
2.1	Closing	18
2.2	Purchase and Sale	18
2.3	Determination of Aggregate Estimated Consideration	18
2.4	Payments and Deliveries at the Closing	18
2.5	Purchase Price Adjustment	21
2.6	Post-Closing Integration	23

ARTICLE III Representations and Warranties of Seller		24
3.1	Organization	24
3.2	Authorization and Enforceability	25
3.3	Title	25
3.4	No Violation	25
3.5	Governmental Authorizations and Consents	26
3.6	Capitalization of the Company and its Subsidiaries	26
3.7	Financial Statements	27
3.8	No Undisclosed Material Liabilities	28
3.9	Absence of Certain Changes	28
3.10	Real Property	29
3.11	Title to Assets	29
3.12	Accounts Receivable; Inventories	30
3.13	Intellectual Property	30
3.14	Data Privacy	33
3.15	Contracts	34
3.16	Compliance with Laws	35
3.17	Environmental Matters	36
3.18	Litigation	37
3.19	Labor Matters	38
3.20	Employee Benefits	40
3.21	Taxes	42
3.22	Insurance	44
3.23	No Brokers	44
3.24	Agreements with Company Related Person	44
3.25	Customers and Suppliers	44
3.26	Company Products; Food Safety and Compliance	45
3.27	Disclaimer	46

ARTICLE IV Representations and Warranties of Buyer		46
4.1	Organization and Power	46
4.2	Authorization and Enforceability	47
4.3	No Violation	47

EXECUTION VERSION

4.4	Governmental Authorizations and Consents	47
4.5	Litigation	47
4.6	Sufficiency of Funds	47
4.7	Investment Purpose	48
4.8	Solvency	48
4.9	No Brokers	48
4.10	No Inducement or Reliance; Independent Assessment	49

ARTICLE V Covenants		50
5.1	Conduct of the Company	50
5.2	Access to Information Prior to the Closing	53
5.3	Efforts; Regulatory Filings	53
5.4	Employee Matters	55
5.5	Post-Closing Indemnification of Directors and Officers	58
5.6	Preservation of Books and Records	58
5.7	Public Announcements	60
5.8	Efforts	60
5.9	Exclusive Dealing	61
5.10	Change of Name	61
5.11	Data Room Information	61
5.12	Cups Note	61

ARTICLE VI Conditions to Closing		62
6.1	Conditions to All Parties’ Obligations	62
6.2	Conditions to Seller’s Obligations	62
6.3	Conditions to Buyer’s Obligations	63

ARTICLE VII Termination		63
7.1	Termination Prior to Closing	63
7.2	Effect of Termination	64

ARTICLE VIII Miscellaneous		64
8.1	Survival; Certain Limitations	64
8.2	Tax Matters	65
8.3	Expenses	66
8.4	Notices	66
8.5	Governing Law	67
8.6	Entire Agreement	67
8.7	Severability	67
8.8	Amendment	67
8.9	Effect of Waiver or Consent	68
8.10	Parties in Purchased Interests; Limitation on Rights of Others	68
8.11	Assignability	68
8.12	Seller Disclosure Schedule	69
8.13	Jurisdiction; Court Proceedings; Waiver of Jury Trial	69
8.14	Reliance on Counsel and Other Advisors	69

EXECUTION VERSION

8.15	Remedies	70
8.16	Specific Performance	70
8.17	Counterparts	70
8.18	Further Assurance	70
8.19	Legal Representation	71
8.20	Release	72

Exhibits and Schedules

Exhibit A Form of Escrow Agreement

iii

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT , dated as of July 26, 2018, by and between AptarGroup, Inc., a Delaware corporation (“ Buyer ”), and CSP Technologies Parent S.A., a public limited liability company ( société anonyme ) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 5, rue Pierre d’Aspelt, L-1142 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B 194227 (“ Seller ”).

RECITALS

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of Seller’s right, title and interest in and to (i) 191,872,832 shares of CSP Technologies S.à r.l., a private limited liability company ( société à responsabilité limitée ) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 5, rue Pierre d’Aspelt, L-1142 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B 193147 (the “ Company ”) and (ii) 13,605 shares of CSP Technologies Europe SAS (individually, the “ CSP Europe Interests ” and collectively, the “ Purchased Interests ”), upon the terms and subject to the conditions hereinafter set forth; and

WHEREAS, Buyer, Seller and the other parties thereto have entered into that certain binding offer letter, dated as of the date hereof (the “ Binding Offer Letter ”), pursuant to which Buyer has agreed to enter into this Agreement with Seller subject to the terms and conditions set forth therein.

NOW THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, and subject to the terms and conditions set forth herein, the parties hereto agree as follows:

ARTICLE I

Definitions and R ules of Construction

1.1. Def initions .

As used in this Agreement, the following terms shall have the meanings set forth below:

“ 2018 Financial Package ” has the meaning set forth in Section 5.6(c)(i) .

“ 2018 Year-End Financial Package ” has the meaning set forth in Section 5.6(c)(ii) .

“ 2019 Financial Package ” has the meaning set forth in Section 5.6(c)(iii) .

“ 401(k) Plan ” has the meaning set forth in Section 5.4(h) .

“ Accounting Arbitrator ” has the meaning set forth in Section 2.5(d) .

“ Adjustment Escrow Account ” has the meaning set forth in Section 2.4(a)(ii) .

“ Adjustment Escrow Amount ” means $5,000,000.

EXECUTION VERSION

“ Affiliate ” means, (a) as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person or (b) as to any Person that is a natural Person, any such Person’s spouse, parents, children and siblings, whether by blood, adoption or marriage, residing in such Person’s home or any trust or similar entity for the benefit of any of the foregoing Persons. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. Except as otherwise provided herein, the Company and its Subsidiaries shall be deemed for purposes of this Agreement Affiliates of Seller prior to the Closing and of Buyer from and after the Closing.

“ Aggregate Cash Consideration ” means $555,000,000.

“ Aggregate Consideration ” means (a) the sum of (i) the Aggregate Cash Consideration, plus (ii) the Final Closing Cash, plus (iii) the Final Closing Net Working Capital Adjustment Amount (if a positive number) minus (b) the sum of (i) the Final Closing Funded Indebtedness, plus (ii) the Final Closing Transaction Expenses, plus (iii) if the Final Closing Net Working Capital Adjustment Amount is a negative number, the absolute value of the Final Closing Net Working Capital Adjustment Amount.

“ Aggregate Estimated Consideration ” means (a) the sum of (i) the Aggregate Cash Consideration, plus (ii) the Estimated Closing Cash, plus (iii) the Estimated Closing Net Working Capital Adjustment Amount (if a positive number) minus (b) the sum of (i) the Estimated Closing Funded Indebtedness, plus (ii) the Estimated Closing Transaction Expenses, plus (iii) if the Estimated Closing Net Working Capital Adjustment Amount is a negative number, the absolute value of the Estimated Closing Net Working Capital Adjustment Amount.

“ Agreement ” means this Stock Purchase Agreement, as it may be amended from time to time.

“ Alternative Proposal ” means any proposal or offer by any third Person, other than a proposal or offer by Buyer or any of its Affiliates, whether in a single transaction or a series of related transactions, with respect to: (a) the sale, license, disposition, transfer or acquisition of all or a material portion of the assets or business of the Company and the Company’s Subsidiaries, taken as a whole, or (b) the issuance, disposition or acquisition of all or a material portion of the capital stock or other equity securities of the Company or any of the Company’s Subsidiaries, in each case, whether effected by a merger, spin-off, contribution, consolidation, business combination, recapitalization, reorganization or similar transaction involving Seller, the Company or any of the Company’s Subsidiaries.

“ Ancillary Documents ” means the documents, agreements, exhibits, schedules, statements or certificates being executed and delivered in connection with this Agreement and the transactions contemplated hereby, including the support agreement, dated as of the date hereof, by and among Buyer, Seller and the other parties thereto, the Escrow Agreement and the Binding Offer Letter.

“ Anti-Corruption Law ” means the U.S. Foreign Corrupt Practices Act of 1977, as amended, and any other applicable anti-corruption Laws.

EXECUTION VERSION

“ Antitrust Division ” means the Antitrust Division of the United States Department of Justice.

“ Antitrust Filing ” has the meaning set forth in Section 5.3(b) .

“ Antitrust Laws ” means Sherman Antitrust Act, as amended, the Clayton Antitrust Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other applicable federal, state, or foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and all other applicable Laws that are designed or intended to prohibit, restrict or regulate (a) foreign investment or (b) actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger and acquisition.

“ Assignment Agreement ” has the meaning set forth in Section 2.4(d)(iii) .

“ Balance Sheet Date ” has the meaning set forth in Section 3.7(a) .

“ Binding Offer Letter ” has the meaning set forth in the Recitals.

“ Books and Records ” has the meaning set forth in Section 5.6(a) .

“ Business Day ” means any day other than a Saturday, Sunday or day on which banks are closed in New York, New York, Luxembourg or Paris, France. If any period expires on a day which is not a Business Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a Business Day, such period shall expire or such event or condition shall occur or be fulfilled, as the case may be, on the next succeeding Business Day.

“ Buyer ” has the meaning set forth in the Preamble.

“ Buyer Benefit Plan ” has the meaning set forth in Section 5.4(c) .

“ Buyer Material Adverse Effect ” means a material adverse effect on the ability of Buyer to consummate the Contemplated Transactions and to timely fulfill its obligations hereunder.

“ Cash ” means the aggregate amount of cash and cash equivalents of the Company and its Subsidiaries, including uncleared checks and drafts received or deposited, less any bank overdrafts and issued but uncleared checks, in each case, determined in accordance with IFRS.

“ Closing ” has the meaning set forth in Section 2.1 .

“ Closing Cash ” means the aggregate amount of Cash as of 11:59 P.M. Eastern Time on the date immediately prior to the Closing Date.

“ Closing Date ” has the meaning set forth in Section 2.1 .

EXECUTION VERSION

“ Closing Date Net Working Capital ” means (a) the sum of the total current assets of the Company and its Subsidiaries as of 11:59 P.M. Eastern Time on the date immediately prior to the Closing Date minus (b) the sum of the total current liabilities of the Company and its Subsidiaries as of 11:59 P.M. Eastern Time on the date immediately prior to the Closing Date, each as calculated in accordance with IFRS Consistently Applied and Section 1.1(a) of the Seller Disclosure Schedule; provided , that for purposes of calculating the Closing Date Net Working Capital, current assets shall exclude Cash, income tax assets, and deferred tax assets and current liabilities shall exclude any amounts of deferred revenue, income tax liabilities, deferred tax liabilities, Transaction Expenses and Indebtedness.

“ Closing Funded Indebtedness ” means the aggregate amount of all Funded Indebtedness as of 11:59 P.M. Eastern Time on the date immediately prior to the Closing Date; provided, that the Net Current Tax Amount shall be calculated as of the close of the Closing Date in accordance with the definition thereof.

“ Closing Net Working Capital Adjustment Amount ” means the amount equal to (a) the Closing Date Net Working Capital minus (b) the Target Working Capital, expressed as (i) a positive number if the Closing Date Net Working Capital exceeds the Target Working Capital or (ii) a negative number if the Closing Date Net Working Capital is less than the Target Working Capital.

“ Closing Transaction Expenses ” means the aggregate amount of all Transaction Expenses that remain unpaid as of the Closing.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, or corresponding provisions of subsequent superseding U.S. federal Tax Laws.

“ Company ” has the meaning set forth in the Recitals.

“ Company Employees ” has the meaning set forth in Section 5.4(a) .

“ Company Employment Contract ” means an employment, retention or severance agreement between (i) the Company or one of its Subsidiaries and (ii) an individual employee of the Company or one of its Subsidiaries.

“ Company Intellectual Property ” means all Intellectual Property owned by, purported to be owned by, or exclusively licensed to the Company or any of its Subsidiaries. Company Intellectual Property includes Intellectual Property listed, or required to be listed, in Section 3.13(a) of the Seller Disclosure Schedule.

EXECUTION VERSION

“ Company IP Agreements ” means any Contract to which the Company or any of its Subsidiaries is a party or is otherwise bound pursuant to which: (i) any Intellectual Property owned by any other Person has been licensed, granted, sold, assigned or otherwise conveyed or provided to the Company or any of its Subsidiaries; or (ii) any other Person has been granted any license under or any access to (as part of service bureau, time-sharing, application service or similar arrangement or otherwise), or otherwise has received or acquired any right (whether or not currently exercisable and including a right to receive a license) or interest in, any Company Intellectual Property. For purposes of this Agreement, a covenant or promise not to sue or not to assert claims regarding Intellectual Property infringement or misappropriation or similar releases shall be deemed to be a license.

“ Company Material Adverse Effect ” means any event, change, development, effect, condition, circumstance, matter, occurrence, or state of fact, individually or in the aggregate, that has had or is reasonably expected to have a material adverse effect on the business, operations, assets, liabilities or financial condition of the Company and its Subsidiaries taken as a whole; provided , that none of the following events, changes, developments, effects, conditions, circumstances, matters, occurrences or state of facts, whether alone or in combination, shall be taken into account in determining whether there has been or may be a Company Material Adverse Effect: (i) any change or development in global or national economic, monetary or financial conditions, including changes or developments in prevailing interest rates, credit markets, securities markets, general economic or business conditions or currency exchange rates, (ii) the occurrence of any act of God, war, armed hostilities or terrorism or any escalation or worsening thereof, (iii) any change or development in the industry in which the Company or its Subsidiaries operate, (iv) any change after the date hereof in Law or IFRS or the interpretation of either by a Governmental Authority, (v) the negotiation, execution, delivery, performance or the public announcement of this Agreement (other than for purposes of the representations and warranties set forth in Section 3.4), (vi) any change resulting from any action taken or failed to be taken by the Company or its Affiliates at the written request of Buyer or (vii) any failure of the Company or any of its Subsidiaries to meet, in and of itself, with respect to any period or periods, any internal or industry analyst projections, forecasts, estimates of earnings or revenues, or business plans (it being understood that the facts and circumstances giving rise or contributing to any such failure may, unless otherwise excluded by another clause in this definition of “Company Material Adverse Effect,” be taken into account in determining whether a “Company Material Adverse Effect” has occurred or would reasonably be expected to occur); except, in the case of clauses (i), (ii), (iii) and (iv), such events, changes, developments, effects, conditions, circumstances, matters, occurrences or state of facts shall be taken into account in determining whether there has been or may be a Company Material Adverse Effect to the extent they adversely affect the Company and its Subsidiaries, taken as a whole, in a disproportionate manner relative to other participants in the industry in which the Company and its Subsidiaries operate.

“ Company Privacy Policy ” means each external or internal privacy policy, as of the date hereof, of the Company or any of its Subsidiaries, including any policy relating to: (a) the privacy of individuals in connection with any website of the Company or Company Product; (b) the collection, storage, disclosure, and transfer of any Personal Data; and (c) any employee information.

EXECUTION VERSION

“ Company Product ” means any service, product or technology: (a) developed, marketed, distributed, sold, offered, provided, licensed or made available, directly or indirectly, by or on behalf of the Company or any of its Subsidiaries; or (b) currently under development by or for the Company or any of its Subsidiaries (whether or not in collaboration with another Person).

“ Company Registered IP ” has the meaning set forth in Section 3.13(a) .

“ Company Related Person ” has the meaning set forth in Section 3.24 .

“ Company Service Provider ” means any current or former employee, worker, contract laborer/worker, independent contractor, consultant, advisor, officer or director of the Company or any of its Subsidiaries or any Affiliate thereof.

“ Confidentiality Agreement ” means the Confidentiality Agreement, dated May 1, 2018, by and between Wendel and Buyer.

“ Contemplated Transactions ” means the transactions contemplated by this Agreement and the Ancillary Documents.

“ Contract ” means any legally binding agreement, license, contract, arrangement, understanding, obligation or commitment to which a party is bound, in each case other than invoices and purchase orders which do not contain material terms and conditions (other than price and quantity).

“ Credit Agreement ” means collectively, (i) the Credit Agreement, dated as of January 29, 2015, among the Company, CSP Technologies North America, LLC, each other revolving borrower from time to time party thereto, each lender from time to time party thereto and Barclays Bank PLC, as amended, and (ii) the Contracts listed as Items Nos. 16-18 in Section 3.15(a)(i) of the Seller Disclosure Schedule.

“ CSP Europe Interests ” has the meaning set forth in the Recitals.

“ CSP French Subsidiaries ” means, together, Accord Science SAS, Capitol Dairy Solutions S.A., CSP Technologies SAS and CSP Technologies Europe SAS.

“ Cups Note ” means that certain Secured Promissory Note, dated May 18, 2018, by and between Capitol Cups, Inc. and New Thermo Serv Ltd.

“ D&O Indemnified Parties ” has the meaning set forth in Section 5.5 .

“ Data Breach ” means the unauthorized access, use, disclosure, acquisition or modification of Personal Data or any other data security incident requiring notification to impacted persons or regulators under applicable Privacy Requirements.

“ Data Room ” has the meaning set forth in Section 1.2(i) .

“ Election Notice ” has the meaning set forth in Section 5.4(h) .

EXECUTION VERSION

“ Employee Representative ” has the meaning set forth in Section 3.19(a) .

“ Environmental Laws ” means all applicable foreign, federal, state or local Laws governing Environmental Matters.

“ Environmental Matters ” means any matters arising out of or relating to pollution, protection of the environment or human health and safety (with respect to exposure to any Hazardous Substance), natural resources, or the use, generation, transport, treatment, storage, or disposal of any Hazardous Substance.

“ Environmental Permits ” has the meaning set forth in Section 3.17(b) .

“ Equity Securities ” of any Person means any and all shares of capital stock, equity securities, warrants or options of such Person, and all securities exchangeable for or convertible or exercisable into, any of the foregoing.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, as well as any rules and regulations promulgated thereunder and any corresponding provisions of subsequent superseding federal Laws relating to retirement matters, as from time to time in effect.

“ ERISA Affiliate ” means, with respect to any Person, each trade or business (whether or not incorporated) under common control with, or otherwise treated as a single employer with, such Person within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

“ Escrow Agent ” means JPMorgan Chase Bank, NA.

“ Escrow Agreement ” has the meaning set forth in Section 2.4(a)(ii) .

“ Estimated Closing Cash ” has the meaning set forth in Section 2.3(a)(i) .

“ Estimated Closing Date Net Working Capital ” has the meaning set forth in Section 2.3(a)(i) .

“ Estimated Closing Date Statement ” has the meaning set forth in Section 2.3(a)(i) .

“ Estimated Closing Funded Indebtedness ” has the meaning set forth in Section 2.3(a)(i) .

“ Estimated Closing Net Working Capital Adjustment Amount ” means the amount equal to (a) the Estimated Closing Date Net Working Capital as shown on the Estimated Closing Date Statement, minus (b) the Target Working Capital, expressed as (i) a positive number if the Estimated Closing Date Net Working Capital exceeds the Target Working Capital or (ii) a negative number if the Estimated Closing Date Net Working Capital is less than the Target Working Capital.

“ Estimated Closing Transaction Expenses ” has the meaning set forth in Section 2.3(a)(i) .

EXECUTION VERSION

“ Excluded Funded Indebtedness ” means all Indebtedness included in sections (c), (d), (e), (f), (h), (i) and the last sentence of the definition of Indebtedness.

“ FDA ” has the meaning set forth in Section 3.26(b) .

“ Final Closing Cash ” has the meaning set forth in Section 2.5(c) - (d) .

“ Final Closing Date Net Working Capital ” has the meaning set forth in Section 2.5(c)-(d) .

“ Final Closing Funded Indebtedness ” has the meaning set forth in Section 2.5(c)-(d) .

“ Final Closing Net Working Capital Adjustment Amoun t ” means the amount equal to (a) the Final Closing Date Net Working Capital as shown on the Final Purchase Price Adjustment Statement, minus (b) the Target Working Capital, expressed as (i) a positive number if the Final Closing Date Net Working Capital exceeds the Target Working Capital or (ii) a negative number if the Final Closing Date Net Working Capital is less than the Target Working Capital.

“ Final Closing Transaction Expenses ” has the meaning set forth in Section 2.5(c)-(d) .

“ Final Purchase Price Adjustment Statement ” has the meaning set forth in Section 2.5(c)-(d) .

“ Financial Statements ” has the meaning set forth in Section 3.7(a) .

“ FIRPTA Certificate ” has the meaning set forth in Section 2.4(d)(v) .

“ Fried Frank ” has the meaning set forth in Section 8.19 .

“ FTC ” means the United States Federal Trade Commission.

“ Fundamental Representations ” has the meaning set forth in Section 6.3(a) .

“ Funded Indebtedness ” means the aggregate Indebtedness of the Company and its Subsidiaries (including principal, interest, prepayment penalties or fees, premiums, breakage amounts or other amounts payable in connection with prepayment) that remains unpaid as of 11:59 P.M. Eastern Time on the date immediately prior to the Closing Date; provided, that the Net Current Tax Amount shall be calculated as of the close of the Closing Date in accordance with the definition thereof.

EXECUTION VERSION

“ Governmental Authority ” means any nation or government, any supranational, foreign or domestic federal, state, county, municipal or other political instrumentality or subdivision thereof and any supranational, foreign or domestic entity, commission, agency, division, or body exercising executive, legislative, judicial, regulatory, administrative or taxing functions, including any court, tribunal, judicial body, administrative panel or any other entity, body or organization exercising governmental or quasi-governmental authority (to the extent that the rules, regulations or orders of such entity, body or organization have the force of Law).

“ Governmental Consents ” has the meaning set forth in Section 3.5 .

“ Hazardous Substances ” means any material, substance or waste defined, identified or regulated as hazardous or toxic or as a pollutant or contaminant or for which liability or standards of care are imposed under any Environmental Law, including any radioactive material, petroleum and any petroleum byproducts, asbestos and asbestos-containing material, or polychlorinated biphenyls.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

“ IFRS ” means the International Financial Reporting Standards (including international accounting standards, international financial reporting standards and interpretations of such standards) as formally adopted by the European Union and as in effect from time to time, together with its pronouncements thereon from time to time, and applied on a consistent basis.

“ IFRS Consistently Applied ” has the meaning set forth in Section 2.5(b) .

EXECUTION VERSION

“ Indebtedness ” means all payment obligations (including the principal amount thereof or, if applicable, the accreted amount thereof and the interest, premiums, penalties or other payment obligations of the Company or any of its Subsidiaries): (a) for borrowed money, (b) evidenced by bonds, debentures, notes or other similar instruments or debt securities, (c) for the deferred purchase price of property or services other than accounts payable in the ordinary course of business included in the Closing Date Net Working Capital, (d) under leases required to be, in accordance with IFRS, recorded as finance leases, (e) for the reimbursement of any obligor on any letter of credit (solely to the extent such letter of credit has been drawn, and not with respect to the entire face amount thereof), banker’s acceptance or similar credit transaction, (f) for any amounts due to a third party in respect of any swap, hedge or other derivative transaction or other financial transaction or agreement entered into for the purpose of managing interest rate risk, (g) for any amounts due to Wendel in respect of the Consideration (as such term is defined in the Wendel Management Agreement) pursuant to the Wendel Management Agreement or any other amounts payable to Wendel pursuant to the Wendel Management Agreement, (h) for any unreported consumer use Taxes payable determined in accordance with IFRS and for the Net Current Tax Amount, and (i) of the type referred to in clauses (a) through (g) above either (A) guaranteed by the Company or any of its Subsidiaries or (B) secured by any Lien on any property or asset of the Company or any of its Subsidiaries; provided , that Indebtedness shall not include (i) Indebtedness owing from the Company or any of its Subsidiaries, on the one hand, to the Company or any of its Subsidiaries, on the other hand or (ii) obligations under letters of credit or similar instruments to the extent undrawn. “Indebtedness” shall also include an amount equal to (1) the aggregate amount of cash received by the Company and its Subsidiaries since May 30, 2018 from customers for capital expenditures or that would otherwise give rise to additions to deferred revenue (including, for the avoidance of doubt, the $3,666,000 received on May 30, 2018 from Abbott Diabetes Care, pursuant to the Supply Agreement, dated April 19, 2018, by and between Abbott Diabetes Care, a division of Abbott Laboratories, Inc., and CSP Technologies, Inc.) less (2) the aggregate amount of cash spent by the Company and its Subsidiaries directly attributable to only those specific customer cash receipts described in clause (1) of this sentence.

“ Information Security Program ” has the meaning set forth in Section 3.14(b) .

“ Insurance Policies ” has the meaning set forth in Section 3.22 .

“ Intellectual Property ” means all rights in United States and foreign (a) patents and patent applications, including all reissues, divisions, renewals, extensions, provisionals, substitutions, continuations, and continuations-in-part thereof, (b) published and unpublished works of authorship and copyrights (registered or unregistered), including copyrights in Software, and all moral rights thereof, (c) trademarks, service marks, trade dress, trade names, brand names, logos, domain names, and other identifiers of source, and all registrations, applications, extensions, and renewals thereof, together with the goodwill connected with the use thereof and symbolized thereby, (d) Trade Secrets, (e) all industrial designs, (f) all registrations and applications for registration, renewals, revisions or extension of, and rights to claim priority to, any of the foregoing, and (g) rights of recovery, claims for damages, and all past, present, and future causes of action of any of the foregoing.

“ Interim Balance Sheet ” has the meaning set forth in Section 3.7(a) .

EXECUTION VERSION

“ Interim Balance Sheet Date ” has the meaning set forth in Section 3.7(a) .

“ IRS ” has the meaning set forth in Section 3.20(b) .

“ Joint Direction ” means joint written instructions of Buyer and Seller instructing the Escrow Agent to make a payment out of the Adjustment Escrow Account.

“ Knowledge of Buyer ” means the actual knowledge of any of the following personnel of Buyer within the scope of their employment responsibilities and the knowledge that any such person would have after reasonable inquiry: Robert Kuhn and Stephan Tanda.

“ Knowledge of the Company ” means the actual knowledge of any of the following personnel of the Company within the scope of their employment responsibilities and the knowledge that any such person would have after reasonable inquiry: Blake Arrington, John Belfance, Serge Dupuis, Jon Freedman, Rene Guermonprez and Lawrence Hughes.

“ Laws ” means all laws, treaties, Orders, statutes, codes, regulations, restrictions, ordinances, orders, decrees, rules, common law or other requirements with similar effect of any Governmental Authority.

“ Leased Real Property ” has the meaning set forth in Section 3.10(a) .

“ Lien ” means any lien, security interest, pledge, mortgage, deed of trust, hypothecation, assignment, charge, encumbrance, option, preemptive purchase right or other similar encumbrance.

“ Litigation ” has the meaning set forth in Section 3.18(a) .

“ Material Contracts ” has the meaning set forth in Section 3.15(a) .

“ Net Current Tax Amount ” means an amount, which shall not be less than zero, determined as of the end of the day on the Closing Date, as if the taxable year of the Company and its Subsidiaries ended at the end of such day, equal to: (a) the current income tax liabilities of the Company and its Subsidiaries, minus (b) the current income tax assets of the Company and its Subsidiaries attributable solely to estimated Taxes paid prior to Closing or overpayments of Taxes from prior periods applied toward current income tax liabilities; provided, that for purposes of calculating the Net Current Tax Amount, (x) all Transaction Tax Deductions shall be treated as deductible in the taxable period deemed to end at the end of the Closing Date, and (y) any transaction outside the ordinary course of business that occurs after the Closing, and any election under Section 338 of the Code, shall not be taken into account.

“ Net Negative Purchase Price Adjustment Amount ” has the meaning set forth in Section 2.5(f) .

“ Net Positive Purchase Price Adjustment Amount ” has the meaning set forth in Section 2.5(e) .

“ Objection Dispute ” has the meaning set forth in Section 2.5(c) .

EXECUTION VERSION

“ Orders ” means all judgments, orders, writs, injunctions, decisions, rulings, decrees, settlement agreements and awards of any Governmental Authority.

“ Owned Real Property ” has the meaning set forth in Section 3.10(b) .

“ Permits ” means all certifications, licenses, permits, authorizations, registrations, approvals, agreements, certificates of occupancy, exemptions, exceptions, qualifications, franchises or other form of permission, consent, exemption or authority issued, granted, given or otherwise made available by or under the authority of any Governmental Authority.

“ Permitted Lien ” shall mean any (a) Lien in respect of Taxes not yet delinquent or which is being contested in good faith by appropriate proceedings, (b) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business, (c) with respect to Leased Real Property, mortgages and other Liens incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the Leased Real Property, (d) limitations on the rights of the Company under any Material Contract that are expressly set forth in such contract, (e) any non-exclusive licenses to use any Intellectual Property entered into in the ordinary course of business consistent with past practice and (f) any other Lien that does not materially detract from the value of or materially impair the existing use of the property or assets affected by the applicable Lien.

“ Person ” means any individual, person, entity, general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association, foreign trust or foreign business organization.

“ Personal Data ” means a natural person’s name, street address or specific geolocation information, date of birth, telephone number, e-mail address, online contact information, photograph, biometric data, social security number, driver’s license number, passport number, tax identification number, any government-issued identification number, financial account number, credit card number, any information that would permit access to a financial account, a user name and password that would permit access to an online account, any persistent identifier such as customer number held in a cookie, an Internet Protocol address, a processor or device serial number, or a unique device identifier, any data that, if it were subject to a Data Breach, would require notification under Privacy Requirements, or any other piece of information that allows the identification of a natural person.

“ Plan ” or “ Plans ” has the meaning set forth in Section 3.20(a) .

“ Pre-Closing Period ” has the meaning set forth in Section 5.9 .

EXECUTION VERSION

“ Privacy Requirements ” means, to the extent applicable to the Company, the provisions of the following that set forth privacy or data security requirements that apply to Personal Data: the Federal Trade Commission Act, 15 U.S.C. § 45; the CAN-SPAM Act of 2003, 15 U.S.C. §§ 7701 et seq.; the Telephone Consumer Protection Act, 47 U.S.C. § 227; the Electronic Communications Privacy Act, 18 U.S.C. § 2510-22; the Stored Communications Act, 18 U.S.C. § 2701-12; the Children’s Online Privacy Protection Act, 15 U.S.C. § 6501, et seq.; California Online Privacy Protection Act, Cal. Bus. & Prof. Code § 22575, et seq.; amendments to and regulations promulgated by federal and state agencies in implementation of these laws and requirements; laws governing notification to consumers, employees or other individuals and regulatory authorities following Data Breaches, including without limitation Cal. Civ. Code § 1798.82, N.Y. Gen. Bus. Law § 899-aa, and Mass. Gen. Law 93H; federal, state, and local laws governing data security, including without limitation Massachusetts Gen. Law Ch. 93H, 201 C.M.R. 17.00, and Nev. Rev. Stat. 603A; Cal Civ. Code § 1798.83; local, state, and federal, and privacy, data protection, information security, or related laws relating to the collection, processing, storage, disclosure, disposal, or other handling of Personal Data; international laws, including but not limited to the European Union’s Directive on Privacy and Electronic Communications (2002/58/EC), General Data Protection Regulation (2016/679), and all implementing regulations and requirements, and other similar laws.

“ Purchase Price Adjustment Statement ” has the meaning set forth in Section 2.5(a) .

“ Purchased Interests ” has the meaning set forth in the Recitals.

“ R&W Policy ” means that certain representation and warranty insurance policy issued to Buyer in connection with this Agreement.

“ RCS ” has the meaning set forth in Section 2.4(d)(viii) .

“ RCS Filing Requirements ” has the meaning set forth in Section 2.4(d)(ix) .

“ Real Property ” means the Owned Real Property and Leased Real Property.

“ Real Property Leases ” has the meaning set forth in Section 3.10(a) .

“ Release ” means any spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, dumping, pouring, emanation or migration of any Hazardous Substance in, into, onto or through the environment.

“ Relevant Date ” means (i) January 29, 2015 or (ii) any time prior to January 29, 2015, unless, in the case of clause (ii), such matter has been fully and finally resolved without any ongoing liability or obligation of the Company or its Subsidiaries.

“ Representative ” means any officer, director, manager, principal, agent, contractor, employee or other authorized representative, advisor, consultant, account or attorney, solely in its capacity as such.

“ Review Period ” has the meaning set forth in Section 2.5(b) .

EXECUTION VERSION

“ Sanctions ” has the meaning set forth in Section 3.16(d) .

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Seller ” has the meaning set forth in the Preamble.

“ Seller Disclosure Schedule ” means the disclosure schedule, dated as of the date hereof, delivered by Seller to Buyer in connection with the execution and delivery of this Agreement.

“ Seller Material Adverse Effect ” means a material adverse effect on the ability of Seller to consummate the Contemplated Transactions and to timely fulfill Seller’s obligations hereunder.

“ Software ” means computer software and databases, together with, as applicable, object code, source code, application programming interfaces, tools, user interfaces, data files, firmware and embedded versions thereof and manuals, documentation, and specifications related thereto and all know-how relating thereto.

“ Spot Rate ” means, in respect of any amount expressed in a currency other than the U.S. dollar, as of any date of determination, the rate of exchange of U.S. dollars for such currency appearing in the Wall Street Journal published on the Business Day immediately prior to such date of determination; provided that when determining the Aggregate Estimated Consideration and any pre-closing or post-closing computations thereof for purposes of Section 2.5 , the Spot Rate shall be the rate of exchange of U.S. dollars for such currency appearing in the Wall Street Journal published on the Closing Date.

“ Subsidiary ” means, with respect to any Person, any corporation or other organization, whether incorporated or unincorporated, (a) of which such Person or any other Subsidiary of such Person is a general partner (excluding partnerships, the general partnership interests of which held by such Person or any Subsidiary of such Person do not have a majority of the voting interests in such partnership), or (b) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries.

“ Target Working Capital ” means $34,011,000.

“ Tax ” or “ Taxes ” means (i) all federal, state, local and foreign income, profits, franchise, wealth, gross receipts, environmental, customs duty, capital stock, severance, transfer, stamp, payroll, sales, use, license, employment, unemployment, disability, property, withholding, alternative or add-on minimum, ad valorem, excise, production, value added or occupancy tax, unclaimed property or escheat payments and other taxes, customs, duties, levies, fees, charges or assessments imposed by a Governmental Authority, together with all interest and penalties, additions to tax or additional amounts attributable thereto.

EXECUTION VERSION

“ Tax Return ” means any report, return, or statement (including schedules, information returns, claims for refund and declarations of estimated Tax) required to be supplied to a Governmental Authority in connection with any Taxes and any amendment thereto.

“ Termination Date ” has the meaning set forth in Section 7.1(d) .

“ Trade Secrets ” means trade secrets, know-how, and confidential information, including all source code, documentation, processes, methods, technology, formulae, customer lists, data, business and marketing plans, inventions (whether or not patentable) and marketing information, in each case, that (a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

“ Transaction Expenses ” means an amount equal to all fees, costs and expenses incurred by the Company or any of the Company Subsidiaries, in each case, in connection with the preparation, negotiation, execution and delivery of this Agreement and the Ancillary Documents or the Contemplated Transactions, including (a) all fees, costs and expenses incurred by the Company and its Subsidiaries in connection with the Contemplated Transactions payable to investment bankers, legal counsel, consultants, accountants and other advisors and Persons who performed services for or on behalf of, or provided advice to Seller, the Company or any Company Subsidiary, in connection with or relating to this Agreement or the Contemplated Transactions , (b) all fees and expenses or compensation that arise or are reasonably expected to arise, or are triggered or become due and payable, as a direct result of the Contemplated Transactions under any arrangements with or relating to a Company Service Provider, including any change of control or transaction-related bonuses (but, for the avoidance of doubt, not regular performance bonuses or “double trigger” bonuses payable upon the occurrence of a termination of employment or the occurrence of any other event or circumstance that may occur after the consummation of the Contemplated Transactions), including those listed on Section 1.1(b) of the Seller Disclosure Schedule, and (c) any social security, unemployment or other employment, withholding or payroll Tax or similar amount owed by the Company or any Company Subsidiary with respect to the foregoing; provided , that “Transaction Expenses” shall not include (i) any liabilities included in Closing Date Net Working Capital and (ii) any Indebtedness.

EXECUTION VERSION

“ Transaction Tax Deductions ” means the sum of, without duplication: (i) the aggregate out-of-pocket fees and expenses incurred by the Company and its Subsidiaries in connection with the Contemplated Transactions (including all items set forth in the definition of “Transaction Expenses,” regardless of whether such items remain unpaid as of the Closing and without regard to the proviso in such definition), to the extent more likely than not deductible in the taxable period or portion thereof ending or deemed to end on the close of the Closing Date, determined as if the taxable year of the Company and its Subsidiaries ended as of the end of the day on the Closing Date (provided, for the avoidance of doubt, that a timely election shall be made to apply Revenue Procedure 2011-29 with respect any such fees and expenses that are success-based fees within the scope of such Revenue Procedure, including without limitation any contingent at closing fees paid to Goldman Sachs & Co. LLC or Barclays Capital Inc.), and (ii) the capitalized financing fees, costs, expenses and interest (including amounts treated as interest for U.S. federal income tax purposes (and original issue discount or similar items) and any breakage fees or accelerated deferred financing fees or debt prepayment fees or capitalized debt costs) that become currently tax deductible for U.S. income tax purposes by Buyer, the Company or any of its Subsidiaries or any of their Affiliates as a result of the Closing and the satisfaction of the Indebtedness on the Closing Date.

“ WARN Act ” has the meaning set forth in Section 5.4(e) .

“ Wendel ” means Winvest Conseil SA, a Société anonyme organized under the laws of France.

“ Wendel Group ” means Wendel and its Affiliates other than the Company and its Subsidiaries.

“ Wendel Management Agreement ” means the Services Agreement, dated as of March 14, 2016, by and between CSP Technologies North America, LLC and Winvest Conseil SA, as amended from time to time.

“ Unaudited Financial Statements ” has the meaning set forth in Section 3.7(a) .

“ USD Equivalent ” means, in respect of any amount expressed in a currency other than the U.S. dollar, the corresponding amount in U.S. dollars resulting from multiplying such amount in the applicable currency by the Spot Rate.

1.2. Rul es of Construction .

Unless the context otherwise requires:

(a) a capitalized term has the meaning assigned to it;

(b) references in the singular or to “him,” “her,” “it,” “itself,” or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be;

EXECUTION VERSION

(c) references to Articles, Sections, Schedules and Exhibits shall refer to articles, sections, schedules and exhibits of this Agreement, unless otherwise specified;

(d) the headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof;

(e) this Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted;

(f) all monetary figures shall be in United States dollars unless otherwise specified;

(g) references to “including” in this Agreement shall mean “including, without limitation,” whether or not so specified;

(h) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other theory extends and such phrase shall not mean “if”;

(i) whenever the phrase “made available,” “delivered” or words of similar import are used in reference to a document, it shall mean the document was made available for viewing by Buyer and its Representatives in the “Project Unicorn” electronic data room hosted by Intralinks Datasite (the “ Data Room ”), at all times during the one (1) day period prior to the date of this Agreement;

(j) to the extent computation of any amounts contemplated by this Agreement (including the Aggregate Estimated Consideration) include a currency other than U.S. dollars, such amounts shall be converted to U.S. dollars using the USD Equivalent;

(k) the word “or” is not exclusive and the words “will” and “will not” are expressions of command and not merely expressions of future intent or expectation;

(l) references to an “officer” of Seller shall be construed as a reference to any of its directors or to any of its authorized signatories; and

(m) references to a “director” of the Company and to an “officer” of the Company shall be construed, respectively, as a reference to the sole manager of the Company and to any director or authorized signatory of the sole manager of the Company.

EXECUTION VERSION

ARTICLE II
Purchase and Sale

2.1. Clo sing .

Subject to the terms and conditions of this Agreement, the closing of the Contemplated Transactions (the “ Closing ”) is to be held at the offices of Fried, Frank, Harris, Shriver and Jacobson LLP, at One New York Plaza, New York, New York 10004, at 10:00 a.m. local time on the date that is three (3) Business Days after the day on which the last of the conditions to the obligations of the parties hereto set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived in accordance with this Agreement, or at such other date and place as Buyer and Seller shall otherwise mutually agree. The date on which the Closing actually occurs in compliance with this Section 2.1 is the “ Closing Date ”.

2.2. Purcha se and Sale .

(a) Subject to the terms and conditions set forth in this Agreement, at the Closing, Buyer shall purchase from Seller, and Seller shall sell, transfer and assign to Buyer, all of the Purchased Interests.

2.3. Determ ination of Aggregate Estimated Consideration .

(a) At least three (3) Business Days prior to the Closing Date, Seller shall deliver to Buyer a written certificate executed by an officer of the Company, dated the date of its delivery and setting forth:

(i) in reasonable detail the Company’s good faith estimate of the Aggregate Estimated Consideration (the “ Estimated Closing Date Statement ”), including each of (1) the Closing Date Net Working Capital (and each component thereof) (the “ Estimated Closing Date Net Working Capital ”) and, based thereon, the Closing Net Working Capital Adjustment Amount, (2) the Closing Cash (and each component thereof) (the “ Estimated Closing Cash ”), (3) the Closing Funded Indebtedness (and each component thereof) (the “ Estimated Closing Funded Indebtedness ”) and (4) the Closing Transaction Expenses (and each component thereof) and, to the extent applicable, invoices from each recipient of the Closing Transaction Expenses that sets forth wire transfer instructions for the payment of such Closing Transaction Expenses to such Person) (the “ Estimated Closing Transaction Expenses ”), which Estimated Closing Date Statement shall contain reasonably detailed support for each calculation set forth therein; and

(ii) to the extent then available, the respective amounts, bank accounts and wire information to which each of the amounts payable pursuant to Section 2.4(a)(i) through Section 2.4(a)(iv) shall be paid. Any payments required to be made by Buyer pursuant to this Article II shall be made by wire transfer of immediately available funds unless otherwise designated by the payee thereof.

2.4. Pay ments and Deliveries at the Closing .

(a) At the Closing, Buyer shall make the following payments:

EXECUTION VERSION

(i) to the account of each Person to whom any Funded Indebtedness (other than Excluded Funded Indebtedness) is owed, on behalf of the Company, an amount equal to the Funded Indebtedness owing to such Person, in each case as set forth in payoff letters provided to Buyer;

(ii) to an account designated by the Escrow Agent, an amount equal to the Adjustment Escrow Amount, which amount shall be held by the Escrow Agent pursuant to an escrow agreement substantially in the form attached hereto as Exhibit A (the “ Escrow Agreement ”) in a separate account (the “ Adjustment Escrow Account ”);

(iii) to the account of each Person to whom the Closing Transaction Expenses are owed, an amount equal to the portion of the Closing Transaction Expenses owing to such Person (other than Closing Transaction Expenses that are payable to employees of the Company, which shall be delivered to the Company to be paid through its payroll in accordance with the terms of the applicable arrangements); and

(iv) to the account designated by Seller in consideration for the Purchased Interests an amount equal to the Aggregate Estimated Consideration, less the Adjustment Escrow Amount, by wire transfer of immediately available funds.

(b) Buyer, its Affiliates and, effective upon the Closing, the Company and its Subsidiaries, and any of their agents, shall be entitled to deduct and withhold from any amount otherwise payable pursuant to th i s Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or non-U.S. Tax Law; provided , that in the event any Person is required to withhold amounts pursuant to this Section 2.4(b) , such Person shall provide prior written notice to the Seller of the amount subject to withholding and the provision of Law requiring such withholding, and shall provide the Seller a reasonable opportunity to deliver such forms, certificates or other evidence as would eliminate or reduce any such required withholding; provided , further , that the parties acknowledge and agree that no withholding is required pursuant to Section 1445 (provided that Seller shall have delivered the FIRPTA Certificate) or Section 1446(f) of the Code (provided that Seller shall have delivered the certificate described in Section 2.4(d)(vi) ). If any amount is so deducted or withheld, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person with respect to which such deduction or withholding was imposed.

(i) a counterpart signature page to the Escrow Agreement, duly executed by Buyer and the Escrow Agent;

(ii) the certificate contemplated by Section 6.2(c) , duly executed by Buyer; and

(iii) a counterpart signature page to the Assignment Agreement, duly executed by Buyer.

(d) At or prior to the Closing, Seller will deliver to Buyer all of the following:

EXECUTION VERSION

(i) a termination agreement with respect to: (A) the Wendel Management Agreement and (B) the Service Agreement ( contrat de prestation de services ), dated as of January 27, 2015, by and between the Company and Trief Corporation S.A., as amended, in each case, extinguishing any liability of the Company and its Subsidiaries;

(ii) resignation letters, dated as of the Closing Date, of the directors of the Company and its Subsidiaries and officers of the Company and its Subsidiaries that are employees of Wendel or any of its Affiliates (other than the Company and its Subsidiaries), in each case as requested by Buyer no later than three (3) Business Days prior to the Closing Date;

(iii) a transfer form or similar document, in form and substance reasonably satisfactory to Buyer, executed by Seller and confirming that the Purchased Interests are transferred with effect as of the Closing Date (the “ Assignment Agreement ”), which such Assignment Agreement shall contain, attached as an exhibit thereto, a copy of the duly updated and signed shareholders’ register of the Company and of CSP Technologies Europe SAS evidencing the transfer of the all of the Purchased Interests;

(iv) customary payoff letters providing for the discharge of Funded Indebtedness (other than the Excluded Funded Indebtedness), duly executed by each holder of Funded Indebtedness and containing the agreement by such holder that upon payment in full of all such amounts owed to such holder the applicable documents shall be terminated and such holder shall release and terminate all Liens securing such Funded Indebtedness, in order to fully discharge such Funded Indebtedness;

(v) a certificate (the “ FIRPTA Certificate ”) pursuant to Treasury Regulation Section 1.1445-11T(d)(2)(i) certifying that fifty percent (50%) or more of the value of the gross assets of CSP Technologies Europe SAS does not consist of “United States real property interests” or that ninety percent (90%) or more of the value of the gross assets of CSP Technologies Europe SAS does not consist of “United states real property interests” plus “cash or cash equivalents” (as such term is defined by Treasury Regulation Section 1.1445-11T(d)(1));

(vi) a certificate, in form and substance reasonably satisfactory to Buyer, (A) pursuant to Section 6.02 of Revenue Procedure 2018-29 certifying that the transfer of the CSP Europe Interests will not result in realized gain, (B) pursuant to Section 6.03 of Revenue Procedure 2018-29 certifying that for Seller’s immediately prior taxable year and the two (2) taxable years that precede it Seller was a partner in CSP Technologies Europe SAS for the entirety of each of those years, and that Seller’s allocable share of “effectively connected taxable income” for each of those taxable years was less than twenty-five percent (25%) of Seller’s total distributive share of income for that year, or (C) pursuant to Section 6.04 of Revenue Procedure 2018-29 from CSP Technologies Europe SAS certifying that if CSP Technologies Europe SAS had sold all of its assets at their fair market value, the amount of gain that would have been effectively connected with the conduct of a trade or business within the United States would be less than twenty-five percent (25%) of the total gain;

(vii) the certificate contemplated by Section 6.3(d) , duly executed by Seller;

EXECUTION VERSION

(viii) an excerpt from the Luxembourg Register of Commerce and Companies (the “ RCS ”) with respect to the Company, dated no earlier than three (3) Business Days prior to the Closing Date;

(ix) an electronic certificate as to the absence of a court decision ( certificat de non-inscription d’une decision judiciaire ), issued by the RCS, dated no earlier than three (3) Business Days prior to the Closing Date, certifying that no Luxembourg court decision has been filed with the RCS regarding the Company with respect to any event of bankruptcy ( faillite ), composition with creditors ( concordat préventif de la faillite ), controlled management ( gestion contrôlée ), suspension of payments ( sursis de paiement ), voluntary liquidation ( liquidation volontaire ) or foreign court decision as to faillite , concordat or other analogous procedures (the “ RCS Filing Requirements ”) which are required to be filed with the RCS in accordance with the law of December 19, 2002; and

(x) evidence that all required Form 5330 filings for the 401(k) Plan have been filed.

2.5. Purcha se Price Adjustment .

(a) Within seventy-five (75) days after the Closing Date, Buyer shall prepare and deliver to Seller a written statement setting forth (i) Buyer’s good faith calculation of the Closing Date Net Working Capital (and each component thereof) and, based thereon, the Closing Net Working Capital Adjustment Amount, the Closing Cash (and each component thereof), the Closing Funded Indebtedness (and each component thereof) and the Closing Transaction Expenses (and each component thereof), which written statement shall contain reasonably detailed support for each calculation set forth therein and (ii) based thereon, its calculation of the Aggregate Consideration and the Net Positive Purchase Price Adjustment Amount or Net Negative Purchase Price Adjustment Amount assuming the amounts set forth in the Purchase Price Adjustment Statement were final (the “ Purchase Price Adjustment Statement ”).

(b) Following the delivery of the Purchase Price Adjustment Statement, Seller shall have sixty (60) days (the “ Review Period ”) to review the Purchase Price Adjustment Statement. During the Review Period, Buyer shall provide Seller and its Representatives with reasonable access to the books and records of the Company and its Subsidiaries through the Closing Date and relevant personnel in connection therewith, and work papers prepared by Buyer or Buyer’s accountants to the extent that they relate to the Purchase Price Adjustment Statement; provided , however , that such access shall be in a manner that does not unreasonably interfere with the normal business operations of Buyer, the Company or its Subsidiaries. For the purposes of this Agreement, the Closing Date Net Working Capital shall be calculated in accordance with this Agreement (including the items and exclusions set forth on Section 1.1(a) of the Seller Disclosure Schedule) and with IFRS applied using the same accounting methods, policies, practices and procedures, with consistent classifications, judgments and estimation methodology, as were used in the preparation of the Financial Statements (“ IFRS Consistently Applied ”).

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(c) If Seller disagrees with the calculation of any of the items set forth in the Purchase Price Adjustment Statement, Seller shall notify Buyer in writing of such disagreement (an “ Objection Dispute ”) on or prior to the last day of the Review Period. Any Objection Dispute shall specify in reasonable detail the nature of any disagreement so asserted, and include reasonable supporting documentation. If Seller fails to deliver an Objection Dispute before the expiration of the Review Period, the Purchase Price Adjustment Statement shall be deemed to be the final Purchase Price Adjustment Statement (the “ Final Purchase Price Adjustment Statement ”) and shall be deemed to be final and binding on Buyer, the Company, and Seller for purposes of this Agreement. The Closing Date Net Working Capital, the Closing Net Working Capital Adjustment Amount, the Closing Cash, the Closing Funded Indebtedness and the Closing Transaction Expenses, each as shown on the Final Purchase Price Adjustment Statement, shall be referred to as the “ Final Closing Date Net Working Capital ,” the “ Final Closing Net Working Capital Adjustment Amount ,” the “ Final Closing Cash ,” the “ Final Closing Funded Indebtedness ” and the “ Final Closing Transaction Expenses ,” respectively.

(d) If Seller delivers a notice of an Objection Dispute pursuant to Section 2.5(c) , Buyer and Seller shall negotiate in good faith to resolve any Objection Dispute and any resolution agreed to in writing by Buyer and Seller shall be final and binding upon the parties. If Buyer and Seller are unable to resolve all Objection Disputes within twenty (20) days of delivery of written notice of such Objection Disputes by Seller to Buyer, then the disputed matters shall, at the request of either Seller or Buyer, be referred for final determination to KPMG (the “ Accounting Arbitrator ”) within fifteen (15) days thereafter. If such firm is unable to serve, Buyer and Seller shall jointly select an Accounting Arbitrator from an accounting firm of national standing. If Buyer and Seller are unable to agree upon an Accounting Arbitrator within such time period, then the Accounting Arbitrator shall be an accounting firm of national standing designated by the American Arbitration Association in New York, New York; provided , that such firm shall not be the independent auditor of (or otherwise serve as a consultant to) either Buyer or Seller (or their respective Affiliates). The Accounting Arbitrator shall only consider those items and amounts set forth on the Purchase Price Adjustment Statement as to which Buyer and Seller have disagreed within the time periods and amounts and on the terms specified in Section 2.5(c) and this Section 2.5(d) , limit its review and determination to those items that remain in dispute and resolve all unresolved Objection Disputes in accordance with the terms and provisions of this Agreement. The Accounting Arbitrator shall deliver to Buyer and Seller, as promptly as practicable and in any event within sixty (60) days after its appointment, a written report setting forth the resolution of any unresolved Objection Disputes determined in accordance with the terms herein. In resolving any disputed item, the Accounting Arbitrator shall be bound by the principles set forth in this Section 2.5 and shall not assign a value to any item greater than the greatest value for such item claimed by either Buyer or Seller in its written submission or less than the smallest value for such item claimed by either Buyer or Seller in its written submission. Such report shall be final and binding upon all of the parties to this Agreement. Upon the agreement of Buyer and Seller or the decision of the Accounting Arbitrator, the Purchase Price Adjustment Statement, as adjusted (if necessary) pursuant to the terms of this Agreement, shall be deemed to be the final Purchase Price Adjustment Statement (the “ Final Purchase Price Adjustment Statement ”) and shall be deemed to be final and binding on Buyer, the Company, and Seller for purposes of this Agreement. The Closing Date Net Working Capital, the Closing Net Working Capital Adjustment Amount, the Closing Cash, the Closing Funded Indebtedness and the Closing Transaction Expenses, each as shown on the Final Purchase Price Adjustment Statement, shall be referred to as the “ Final Closing Date Net Working Capital ,” the

EXECUTION VERSION

“ Final Closing Net Working Capital Adjustment Amount ,” the “ Final Closing Cash ,” the “ Final Closing Funded Indebtedness ” and the “ Final Closing Transaction Expenses ” respectively. The fees, expenses and costs of the Accounting Arbitrator shall be borne by Buyer and Seller, respectively, in the proportion that the aggregate dollar amount of the disputed items submitted to the Accounting Arbitrator by such party that are unsuccessfully disputed by such party (as finally determined by the Accounting Arbitrator) bears to the aggregate dollar amount of disputed items submitted by Buyer and Seller.

(e) If the Aggregate Consideration exceeds the Aggregate Estimated Consideration (such excess, “ Net Positive Purchase Price Adjustment Amount ”), then Buyer shall pay the Net Positive Purchase Price Adjustment Amount to the account of Seller as designated by Seller and by wire transfer of immediately available funds. In addition, Seller will be entitled to receive the amount then held in the Adjustment Escrow Account and Buyer and Seller shall deliver a Joint Direction instructing the Escrow Agent to make payments of such amount out of the Adjustment Escrow Account to the account of Seller, in each case as designated by Seller, in each case by wire transfer of immediately available funds.

(f) If the Aggregate Estimated Consideration exceeds the Aggregate Consideration (such excess, the “ Net Negative Purchase Price Adjustment Amount ”), then Buyer shall be entitled to receive a payment in cash out of the Adjustment Escrow Account in an amount equal to the Net Negative Purchase Price Adjustment Amount, and Buyer and Seller shall deliver a Joint Direction instructing the Escrow Agent to make a payment to Buyer in an amount equal to the Net Negative Purchase Price Adjustment Amount; provided, that, in the event the Adjustment Escrow Amount is insufficient to make the full amount of such payment to Buyer pursuant to this Section 2.5(f) , Seller shall pay the remaining amount of any payment directly to Buyer in cash. In addition, if the amount of the Adjustment Escrow Amount is greater than the Net Negative Purchase Price Adjustment Amount, then Buyer and Seller shall deliver a Joint Direction instructing the Escrow Agent to make an aggregate payment equal to the difference between the Adjustment Escrow Amount and the Net Negative Purchase Price Adjustment Amount to Seller as designated by Seller and by wire transfer of immediately available funds.

(g) The parties hereto agree to treat any payment made pursuant to this Section 2.5 as an adjustment to the Aggregate Consideration for federal, state, local and foreign income tax purposes.

2.6. Pos t-Closing Integration . The parties acknowledge and agree that after the Closing of the Contemplated Transactions, Buyer (or an Affiliate thereof) intends to transfer the CSP Europe Interests to an Affiliate of Buyer, Aptargroup Holding SAS, a simplified stock company (société par actions simplifiée) governed by the Laws of France, having its registered office at 36/38 rue de la Princesse, F-78430 Louveciennes, with a sole registration number SIREN 666 450 010 RCS Versailles, in order to provide for the inclusion of the CSP Europe Interests (and, for the avoidance of doubt, the Company’s French Subsidiaries) into a consolidated Tax group formed by certain French Subsidiaries of Buyer.

EXECUTION VERSION

ARTICLE III
Representations and Warranties of Seller

Except as set forth in the Seller Disclosure Schedule contemplated by Section 8.12 , Seller hereby represents and warrants to Buyer as follows as of the date hereof and as of the Closing Date:

3.1. Org anization .

(a) Seller has been duly incorporated and is validly existing under the Laws of the Grand Duchy of Luxembourg and has the requisite power and authority to own or lease its properties and assets and to conduct its business as it is now being conducted. The Company and each of its Subsidiaries is a corporation or legal entity duly incorporated or organized, validly existing and, where relevant, in good standing under the Laws of its respective jurisdiction of organization.

(b) The Company and each of its Subsidiaries has all power and authority, and possesses all material governmental licenses and permits necessary to enable it to own or lease and to operate its properties and assets and carry on its business as currently conducted. The Company has not filed, become subject to, or benefitted from faillite (bankruptcy), gestion contrôlée (controlled management), sursis de paiement (suspension of payments), concordat préventif de faillite (composition with creditors), liquidation judiciaire (compulsory liquidation) rulings, a decision of liquidation volontaire (voluntary liquidation) or other analogous procedures which have to be filed with the RCS in accordance with the law of 19 December 2002 on, inter alia, the RCS, or a decision appointing an interim administrator (administrateur provisoire) have been filed with the RCS.

(c) Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation in each jurisdiction in which the nature of the business transacted by it or the character of the properties owned or leased by it require such qualification, except where the failure to be so qualified would not be material to the Company and its Subsidiaries, taken as a whole. True and complete copies of the certificate or articles of incorporation, bylaws, certificate of formation, limited liability company operating agreement or other organizational or governance documents of the Company and its Subsidiaries, all as amended to date of this Agreement, have been made available to Buyer.

(d) Section 3.1(d) of the Seller Disclosure Schedule sets forth a true and complete list of: (i) the names of the members of the board of directors (or similar body) of the Company and each of the Company Subsidiaries; and (ii) the names and titles of the officers of the Company and each of the Company Subsidiaries.

EXECUTION VERSION

3.2. Auth orization and Enforceability . The execution and delivery of this Agreement and the Ancillary Documents to which Seller is a party and the performance by Seller of the Contemplated Transactions that are required to be performed by Seller, as applicable, have been duly and validly authorized by Seller, and no other corporate proceedings on the part of Seller are necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Documents to which Seller is a party or the consummation of the Contemplated Transactions that are required to be performed by Seller. This Agreement has been duly authorized, executed and delivered by Seller, and each of the Ancillary Documents to be executed and delivered at the Closing by Seller will be, at the Closing, duly authorized, executed and delivered by Seller. This Agreement (assuming this Agreement is a valid and legally binding obligation of the other party hereto) constitutes, and each of the Ancillary Documents to be delivered and executed at Closing (assuming each Ancillary Document is a valid and legally binding obligation of the other parties thereto), will constitute, a valid and legally binding agreement of Seller, enforceable against Seller in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

3.3. Ti tle . Seller has good and valid title to the Purchased Interests, free and clear of any Liens, other than restrictions on transfer that may be imposed by generally applicable securities Laws and the agreements entered into by Buyer incident to this Agreement. The shareholders’ register of the Company and the file of the Company at the RCS is accurate, complete and up to date. Seller has the power and authority to sell, transfer, assign, convey and deliver to Buyer the Purchased Interests, and such delivery will convey to Buyer at the Closing good and valid title to the Purchased Interests, free and clear of all Liens, other than restrictions on transfer that may be imposed by generally applicable securities Laws and the agreements entered into by Buyer incident to this Agreement.

3.4. No V iolation . Except as set forth in Section 3.4 of the Seller Disclosure Schedule, the execution and delivery by Seller of this Agreement and the Ancillary Documents to which Seller is a party, the consummation of the Contemplated Transactions that are required to be performed by Seller and compliance with and performance by Seller of the terms of this Agreement and the Ancillary Documents to which Seller is a party will not (a) conflict with or violate any provision of the certificate or articles of incorporation, bylaws or other similar organizational documents of Seller or the Company or any of its Subsidiaries, (b) assuming that all consents, approvals and authorizations contemplated by Section 3.5 have been obtained and all filings described therein have been made, conflict with or violate any applicable Law or Order, (c) violate or result in a breach of or constitute a default under, require the consent of any third party under, result in or permit the termination or amendment of any provision of, result in or permit the acceleration or cancellation of performance of any obligation under, any Material Contract, (d) result in the creation or imposition of any Lien (other than any Permitted Lien) upon any assets owned or used by the Company or any of the Company’s Subsidiaries or (e) conflict with or violate, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify any licenses or Permits that are held by any of Seller, the Company or the Company Subsidiaries or that otherwise relates to any of their respective businesses or any of the assets owned or used by any of them, except, in the cases of clauses (b) or (e), to the extent such conflict, violation, breach, default, required consent, termination, amendment or acceleration would not be material to the Company and its Subsidiaries, taken as a whole.

EXECUTION VERSION

3.5. Go vernmental Authorizations and Consents . No material consents, licenses, approvals, clearances, waivers or authorizations of, or registrations, declarations, notifications or filings with, any Governmental Authority (“ Governmental Consents ”) are required to be obtained or made by Seller, the Company or any of the Company’s Subsidiaries in connection with the execution, delivery and performance of this Agreement or any Ancillary Documents to which Seller, the Company or a Company Subsidiary is, or is to be, a party or the consummation by Seller, the Company or a Company Subsidiary of the Contemplated Transactions, except for (a) such filings as may be required under the HSR Act and (b) those resulting specifically from the identity of Buyer (as opposed to another party) being party to the Contemplated Transactions.

3.6. Cap italization of the Company and its Subsidiaries .

(a) The Company . The issued share capital of the Company consists of 191,872,832 shares. The record owner of all of the issued and outstanding Purchased Interests is as set forth on Section 3.6(a)(i) of the Seller Disclosure Schedule. All of the Purchased Interests have been validly issued and are fully paid and non-assessable, have not been issued in violation of any preemptive or similar rights, were issued in compliance with applicable securities Laws or exemptions therefrom and are free and clear of any Liens, other than Liens imposed by applicable securities Laws. Except as set forth on Section 3.6(a)(ii) of the Seller Disclosure Schedule, no other Equity Securities of the Company are issued, reserved for issuance or outstanding. The Company does not have any (i) outstanding options or other securities convertible into or exchangeable or exercisable for any shares or any rights to subscribe for or to purchase, or any agreements, arrangements or commitments providing for the issuance, delivery or sale, or reservation for issuance (contingent or otherwise) of any shares or other Equity Securities of the Company or (ii) outstanding equity appreciation, phantom equity, profit participation or similar rights.

(b) Except as set forth in Section 3.6(b) of the Seller Disclosure Schedule, the Company is not a party to, or subject to, any right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement or stockholders agreement, buy sell agreements or other Contract, option, pledge or preemptive right, including any Contract restricting the ownership, voting rights, distribution rights or disposition of the Purchased Interests or any other Equity Securities of the Company.

EXECUTION VERSION

(c) Subsidiaries . Section 3.6(c)(i) of the Seller Disclosure Schedule sets forth a true, correct and complete list of all Subsidiaries of the Company, listing for each Subsidiary its name, its jurisdiction of organization, its authorized equity interests and the ownership of all issued and outstanding equity interests. All the outstanding shares of capital stock, partnership interests, limited liability company interests or other equity interests, as applicable, of each of the Company’s Subsidiaries have been validly issued and are fully paid and nonassessable, have not been issued in violation of any preemptive or similar rights, were issued in compliance with applicable securities Laws or exemptions therefrom and are owned, directly or indirectly, by the Company, free and clear of any Liens, other than Liens imposed by applicable securities Laws. Except as set forth in Section 3.6(c)(ii) of the Seller Disclosure Schedule, there are no (i) outstanding options or other securities convertible into or exchangeable or exercisable for any shares of the capital stock, partnership interests, limited liability company interests or other equity interests, as applicable, of any of the Company’s Subsidiaries or any rights to subscribe for or to purchase, or any agreements, arrangements or commitments of any kind or character providing for the issuance, delivery or sale, or reservation for issuance (contingent or otherwise) of any shares of capital stock, partnership interests, membership interests or other equity interests, as applicable, of any of the Company’s Subsidiaries or (ii) outstanding equity appreciation, phantom equity, profit participation or similar rights with respect to any of the Company’s Subsidiaries. Except as set forth in Section 3.6(c)(iii) of the Seller Disclosure Schedule, none of the Company’s Subsidiaries is subject to any right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement or stockholders agreement, buy sell agreements or other Contract, including any Contract restricting the ownership, voting rights, distribution rights or disposition of the shares of capital stock, partnership interests, limited liability company interests or other equity interests of the Company’s Subsidiaries. Except as set forth in Section 3.6(c)(i) of the Seller Disclosure Schedule, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock, partnership interests, limited liability company interests or other equity interests of any Person.

3.7. Fi nancial Statements .

(a) Section 3.7(a) of the Seller Disclosure Schedule sets forth the following financial statements (the “ Financial Statements ”): (i) the audited consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2017 (the “ Balance Sheet Date ”) and December 31, 2016 and the related consolidated statements of income, stockholders’ equity and cash flows for the years ending December 31, 2017 and December 31, 2016 and (ii) the unaudited consolidated balance sheet (the “ Interim Balance Sheet ”) of the Company and its Subsidiaries as of May 31, 2018 (the “ Interim Balance Sheet Date ”), and the related unaudited consolidated statements of income, and stockholders’ equity, respectively, for the five-month period ended on such date (the “ Unaudited Financial Statements ”).

(b) Except as set forth in Section 3.7(b) of the Seller Disclosure Schedule, the Financial Statements have been prepared in all material respects in accordance with IFRS applied on a basis consistent with prior periods and fairly presents in all material respects the consolidated financial condition of the Company and its Subsidiaries as of its respective date and the consolidated results of operations and stockholders’ equity, or cash flows, as the case may be, of the Company and its Subsidiaries for the period covered thereby, subject, in the case of the Unaudited Financial Statements, to the absence of footnote disclosure and to normal, recurring end-of-period adjustments that are immaterial in amount.

EXECUTION VERSION

(c) The systems of internal controls of the Company and its Subsidiaries are sufficient to provide reasonable assurance that, in all material respects: (i) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS; (ii) receipts and expenditures are executed only in accordance with the authorization of management and (iii) the unauthorized acquisition, use or disposition of the Company’s and the Company’s Subsidiaries’ assets that would materially affect the financial statements of the Company and its Subsidiaries are prevented and timely detected.

(d) Indebtedness . The only Indebtedness of the Company and its Subsidiaries under clauses (a) and (b) of the definition thereof is pursuant to the Credit Agreement.

3.8. No Und isclosed Material Liabilities . There is no liability, commitment or obligation of the Company or its Subsidiaries, whether absolute, contingent, accrued or unaccrued, asserted or unasserted, known or unknown or otherwise, other than (a) liabilities, commitments or obligations reflected, accrued or reserved against in the Interim Balance Sheet, (b) those incurred since the Interim Balance Sheet Date in the ordinary course of business consistent with past practice, (c) as set forth in Section 3.8 of the Seller Disclosure Schedule or (d) contractual liabilities relating to future performance obligations under (i) any Contract disclosed in the Seller Disclosure Schedule or (ii) any other Contract not required to be set forth in the Seller Disclosure Schedule (other than, in the case of clauses (i)-(ii), any liabilities or other obligations arising out of or resulting from a breach by Seller, the Company or the Company’s Subsidiaries thereunder) or (e) liabilities, commitments or obligations that would not be material to the Company and its Subsidiaries, taken as a whole.

3.9. Abs ence of Certain Changes . Except as set forth in Section 3.9 of the Seller Disclosure Schedule, since the Interim Balance Sheet Date, (i) there has not been a Company Material Adverse Effect, (ii) each of the Company and its Subsidiaries has conducted its business in the ordinary course consistent with past practice, (iii) there has not been any damage, destruction, loss, claim, condemnation or other taking materially adversely affecting the business of the Company or the Company Subsidiaries, taken as a whole, and (iv) neither the Company nor any Company Subsidiary has taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Section 5.1(b) (other than clauses (i), (v), (xv), (xviii), (xxii) or (xxv)).

EXECUTION VERSION

3.10. Rea l Property .

(a) Section 3.10(a)(i) of the Seller Disclosure Schedule includes a true, correct and complete list of all real property leases, subleases, licenses or other occupancy agreements used by the Company or its Subsidiaries or to which any of them is a party as lessee, sublessee, licensee or occupant (the “ Real Property Leases ,” and the properties leased, subleased, licensed or occupied thereunder, the “ Leased Real Property ”). The Company or its Subsidiaries, as applicable, have a valid leasehold interest in all of the Leased Real Property free and clear of all Liens, other than Permitted Liens. Except as would not be material to the Company and its Subsidiaries, taken as a whole, (A) no default by the Company or its Subsidiaries, or, to the Knowledge of the Company, the lessor, exists under any Real Property Leases and (B) each Real Property Lease is legal, valid and binding on, and enforceable against, the Company or its Subsidiaries, as applicable, and, to the Knowledge of the Company, on and against the lessor or other party thereto, in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors’ rights and to general equity principles. Neither the Company nor any of its Subsidiaries has assigned, transferred or pledged any interest in any of the Real Property Leases.

(b) Section 3.10(b) of the Seller Disclosure Schedule sets forth a true and complete list of all the real property owned by the Company or its Subsidiaries (such properties, the “ Owned Real Property ”) and the record owner thereof. Except as set forth in Section 3.10(b) of the Seller Disclosure Schedule, the Company and its Subsidiaries have good marketable and valid fee simple title to all of the Owned Real Property free and clear of all Liens, other than Permitted Liens. Neither the Company nor any of its Subsidiaries is obligated or bound by any options, obligations or rights of first refusal or contractual rights to sell or acquire any real property. Except as would not be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries have fulfilled and performed in all material respects all obligations binding upon the Owned Real Property that are required to be performed by the Company or a Subsidiary prior to the date of this Agreement.

(c) Neither the whole nor any part of the Owned Real Property is subject to any pending suit for condemnation or other taking by any Governmental Authority, and, to the Knowledge of the Company, no such condemnation or other taking is threatened or contemplated. There are no leases, subleases, licenses, or other agreements granting to any Person the right of use or occupancy of any portion of the Real Property (except under the Real Property Leases and Permitted Liens).

3.11. Titl e to Assets . The Company and each of its Subsidiaries has good and valid title to all of its respective material assets and properties, free and clear of all Liens, other than Permitted Liens. The assets and properties owned or leased by the Company and its Subsidiaries (i) constitute all of the material assets and properties used in or necessary for the operation of the business of the Company and its Subsidiaries as is currently conducted, (ii) are in good and serviceable condition (ordinary wear and tear excepted) and (iii) in all material respects, are suitable for the uses for which they are intended.

EXECUTION VERSION

3.12. Acc ounts Receivable; Inventories .

(a) All accounts receivable reflected in the Interim Balance Sheet have arisen from bona fide transactions by the Company and its Subsidiaries in the ordinary course of the business of the Company and its Subsidiaries. All accounts receivable of the Company and its Subsidiaries are good and collectible in the ordinary course of business at the aggregate recorded amounts thereof, net of any applicable allowance for doubtful accounts reflected in the Interim Balance Sheet. All accounts receivable of the Company and its Subsidiaries constitute only valid, undisputed claims of the Company or its Subsidiaries not subject to claims of setoff or other defenses or counterclaims, other than normal cash discounts accrued in the ordinary course of business.

(b) The inventories of the Company and its Subsidiaries (including raw materials, supplies, work-in-process, finished goods and other materials) are in all material respects (i) in good, merchantable and useable condition and (ii) in the case of finished goods, of a quality and quantity saleable in the ordinary course of business and, in the case of all other inventories, are of a quality and quantity useable in the ordinary course of business.

3.13. Inte llectual Property .

(a) Section 3.13(a) of the Seller Disclosure Schedule sets forth a true and complete list as of the date hereof of Company Intellectual Property that is either: (i) subject to an application or registration with a Governmental Authority or Internet domain name registrar (by name, owner, jurisdiction, and, where applicable, registration or application number and the filing, issuance, and/or grant date) (collectively “ Company Registered IP ”); or (ii) a Trade Secret that is material to the business of the Company or any of its Subsidiaries. Each item of Intellectual Property identified in Section 3.13(a)(i) of the Seller Disclosure Schedule has been duly registered in, filed in or issued by the appropriate Governmental Authority where such registration, filing or issuance is necessary or appropriate for the conduct of the business of the Company and its Subsidiaries as currently conducted.

(b) All registrations set forth in Section 3.13(a) of the Seller Disclosure Schedule are subsisting, valid, and enforceable, and all applications set forth on the same are pending and in good standing. Without limiting the generality of the foregoing:

(i) except as set forth in Section 3.13(b)(i) of the Seller Disclosure Schedule, all applications and registrations set forth on Section 3.13(a) of the Seller Disclosure Schedule are in effect and all renewal fees and other maintenance fees have been paid and all other filings, payments, maintenance, and other actions required to be made or taken by the Company or any of its Subsidiaries to maintain each item of Company Registered IP in full force and effect have been properly made and taken;

EXECUTION VERSION

(ii) except as set forth in Section 3.13(b)(ii) of the Seller Disclosure Schedule, no interference, opposition, reissue, re-examination, cancellation or other Litigation of any nature is or has been, since January 29, 2015, pending or, to the Knowledge of the Company, threatened, in which the scope, validity or enforceability of any Company Registered IP is being, has been since January 29, 2015 or would reasonably be expected to be, contested or challenged, and to the Knowledge of the Company, there is no reasonable basis for a claim that any Company Registered IP is invalid or unenforceable; and

(iii) except as set forth in Section 3.13(b)(iii) of the Seller Disclosure Schedule, none of the Company or its Subsidiaries, nor any Company Intellectual Property or Company Product, is subject to any Order (A) restricting in any manner the use, distribution, transfer or licensing by the Company or any of its Subsidiaries of any Company Intellectual Property, or which may affect the validity, use or enforceability of any Company Intellectual Property, or (B) restricting the conduct of the business of the Company and its Subsidiaries in order to accommodate the Intellectual Property of any other Person.

(c) The Company and its Subsidiaries own or otherwise have, and immediately after the Closing will continue to have, a valid and legally enforceable right to use, in each case free and clear of any Liens (other than Permitted Liens), all Intellectual Property used in connection with or necessary to conduct the business of the Company or any of its Subsidiaries as currently conducted. Except as set forth in Section 3.13(c) of the Seller Disclosure Schedule, the Company or its Subsidiaries exclusively own all right, title, and interest in and to the Company Intellectual Property (other than Company Intellectual Property exclusively licensed to the Company or its Subsidiaries) and no Person has alleged since January 29, 2015 in writing (or, to the Knowledge of the Company, via any other means of communication) to have an ownership interest in any such Company Intellectual Property. Without limiting the generality of the foregoing:

(i) the Company or its applicable Subsidiary has secured from each Company Service Provider who is or was involved in the creation or development of any material Intellectual Property (including any Intellectual Property incorporated or embodied in a Company Product) for or on behalf of the Company or any Company Subsidiary a signed, valid and enforceable agreement containing: (A) an irrevocable assignment to the Company of all Intellectual Property created or developed by such Company Service Provider in the course of that Company Service Provider’s work for the Company or any Company Subsidiary, including all such Intellectual Property rights pertaining to any Company Intellectual Property; and (B) confidentiality provisions protecting the confidential portions of such Company Intellectual Property;

EXECUTION VERSION

(ii) no funding, facilities or personnel of any Governmental Authority or any university, college, research institute or other educational institution (other than refundable tax credits) have been or are being used, directly or indirectly, to develop or create, in whole or in part, any Company Intellectual Property, and, to the Knowledge of the Company, no Company Service Provider who was involved in, or who contributed to, the creation or development of any Intellectual Property for or on behalf of the Company or any Company Subsidiary performed services for any Governmental Authority, university, college, research institute or other educational institution during a period of time during which the Company Service Provider was also performing services for the Company, except in each case as would not (and would not reasonably be expected to), individually or in the aggregate, adversely affect in any material respect the Company or its Subsidiaries;

(iii) neither the Company nor any of its Subsidiaries is or has ever been a member of, or a contributor to, any industry standards body or any similar organization that would reasonably be expected to require or obligate the Company or any of its Subsidiaries to grant or offer to any other Person any license or right to any Company Intellectual Property; and

(iv) except as set forth in Section 3.13(c)(iv) of the Seller Disclosure Schedule, no Person has a joint ownership or co-ownership interest in any Company Intellectual Property or Company Product, nor is the Company or any of its Subsidiaries obligated to assign rights in any Company Intellectual Property or Company Product to any other Person.

(d) Except as set forth in Section 3.13(d)(i) of the Seller Disclosure Schedule, neither the Company’s nor any of its Subsidiaries’ use of any Intellectual Property nor the conduct of their respective businesses (A) infringes on (directly, contributorily, by inducement or otherwise), misappropriates, dilutes or otherwise violates, or (B) has infringed, misappropriated, diluted or otherwise violated any Intellectual Property or other proprietary rights of any other Person since the Relevant Date. Except as set forth in Section 3.13(d)(ii) of the Seller Disclosure Schedule, no Litigation alleging infringement, misappropriation, dilution or violation of the Intellectual Property of any Person is pending or, to the Knowledge of the Company, has been threatened against the Company or any of its Subsidiaries since January 29, 2015. Except as set forth in Section 3.13(d)(iii) of the Seller Disclosure Schedule, the Company has not, since January 29, 2015, received any notice in writing (or, to the Knowledge of the Company, via any other means of communication) relating to any actual, alleged or suspected infringement, misappropriation, dilution or violation of any Intellectual Property of another Person by the Company or its Subsidiaries or Company Products (in each case including any written or other communications suggesting or offering that the Company or any of its Subsidiaries obtain a license to any Intellectual Property of another Person).

(e) To the Knowledge of the Company, no Person (including any Company Service Provider) is infringing, misappropriating, diluting or violating any material Company Intellectual Property or Company Product. No clams or allegations that a Person is infringing on, misappropriating, diluting or otherwise violating any Company Intellectual Property are pending or have been since January 29, 2015 threatened in writing by or on behalf of the Company or any of its Subsidiaries against any other Person.

EXECUTION VERSION

(f) The Company has taken (and has caused its Subsidiaries to take) commercially reasonable precautions to maintain the confidentiality and otherwise protect the confidentiality of its Trade Secrets and other proprietary information pertaining to the Company and its Subsidiaries, the Company Intellectual Property, any Company Product, or the business of the Company and its Subsidiaries.

(g) Neither the execution, delivery or performance of this Agreement nor the consummation of the Contemplated Transactions will, or would reasonably be expected to, with or without notice or the lapse of time, result in or give any other Person the right or option to cause, create, impose or declare: (i) a loss of, or Lien on, any Company Intellectual Property; or (ii) the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in any Company Intellectual Property.

3.14. Da ta Privacy .

(a) Except as would not be material to the Company and its Subsidiaries, taken as a whole: (i) the Company and each Company Subsidiary complies and has complied, since the Relevant Date, with Company Privacy Policies, with all applicable Privacy Requirements, with all contractual obligations regarding Personal Data, including third party privacy policies which any of the Company or its Subsidiaries has been contractually obligated to comply with, and with any rules of applicable self-regulatory or other organizations in which any of the Company or its Subsidiaries is or has been a member and to which they are required to comply, and (ii) the consummation of the Contemplated Transactions will not result in any violation of any Company Privacy Policy, any contractual obligations regarding Personal Data or any Privacy Requirements. The Company and its Subsidiaries have obtained all material agreements, approvals, and licenses necessary to process Personal Data, including the transfer of Personal Data internationally, and are processing Personal Data in all material respects in accordance with the scope of such agreements, approvals, and licenses, if any .

(b) To the Knowledge of the Company, there is no complaint to or any audit, action, investigation or claim currently pending against the Company or any of its Subsidiaries by any private party or Governmental Authority in respect of Personal Data (collectively, “ Information Security Program ”). To the extent that third parties have access to any Company Personal Data, the Company and its Subsidiaries have required in all material respects that such third parties to comply with Privacy Requirements and its Information Security Program.

(c) The Company and its Subsidiaries have implemented and are in compliance with administrative, technical and physical safeguards that comply with Privacy Requirements in all material respects and are designed to (i) safeguard the security, confidentiality, and integrity of transactions of Personal Data; and (ii) protect against unauthorized access to, and use, alteration, disclosure or distribution of, the Company information technology systems or Personal Data.

(d) Since January 29, 2015, neither the Company nor any of its Subsidiaries nor, with respect to any Company Personal Data, any third Person acting at the Company’s or its Subsidiary’s direction have: (i) suffered a Data Breach and, to the Knowledge of the Company, none is threatened nor (ii) notified, or been required to notify, any Person or Governmental Authority of any Data Breach.

EXECUTION VERSION

3.15. Co ntracts .

(a) Material Contracts . Section 3.15(a) of the Seller Disclosure Schedule is a true and complete list, as of the date hereof, of all of the following Contracts to which the Company or its Subsidiaries is a party or by which they are bound (the “ Material Contracts ”):

(i) Contracts evidencing Indebtedness set forth in clauses (a)-(f) of the definition thereof or the such guarantee of Indebtedness of the Company or any Company Subsidiary;

(ii) Contracts evidencing any obligations of the Company or any of its Subsidiaries with respect to the issuance, sale, repurchase or redemption of any Equity Securities of the Company or any of its Subsidiaries;

(iii) all Real Property Leases;

(iv) all Company Employment Contracts that provide for annual base compensation in excess of $150,000 ;

(v) all collective bargaining agreements or Contracts with any labor organization, union or association;

(vi) all material Company IP Agreements (other than non-exclusive licenses of Intellectual Property granted to customers in connection with the sale or provision of Company Products in the ordinary course of business);

(vii) any Contract that is a coexistence agreement, settlement agreement, or a consent agreement, or that includes a covenant not to sue granted in connection with any such agreement, in each case under which the Company or any of its Subsidiaries is restricted in its right to use, enforce or register any Intellectual Property;

(viii) leases of personal property under which the Company or any of its Subsidiaries is the lessee and is obligated to make payments in excess of $100,000 per annum;

(ix) Contracts entered into at any time since January 29, 2015 pursuant to which the Company or any of its Subsidiaries acquired or disposed of (A) all or substantially all of a business (whether by merger, sale of stock, sale of assets or otherwise) or (B) any material equity or debt investment in any Person;

(x) Contracts with any Governmental Authority;

(xi) Contracts with the customers and suppliers set forth on Section 3.25(a) and Section 3.25(b) of the Seller Disclosure Schedule;

(xii) Contracts (A) limiting or purporting to limit the ability of the Company or its Subsidiaries to engage in any line of business, acquire any entity or compete with any Person or in any market or geographical area, (B) under which the Company or a Company Subsidiary has received exclusive rights from, or granted exclusive rights to, another Person, or

EXECUTION VERSION

(C) that grant any right of first refusal or right of first offer or similar right with respect to any material assets of the Company or a Company Subsidiary, or (D) that grant any Person “most favored nation” or similar status;

(xiii) Contracts regarding the settlement of any Litigation involving the Company or any of its Subsidiaries at any time since January 29, 2015;

(xiv) any joint venture, partnership, strategic alliance or similar Contract; and

(xv) any Contract not of a type listed above involving reasonably anticipated payments to or from the Company or any of its Subsidiaries in excess of $1,000,000 per annum.

(b) Status of Material Contracts . A true and complete copy of each Material Contract, including all amendments applicable thereto, has been made available to Buyer. Except as disclosed in Section 3.15(b) of the Seller Disclosure Schedule, all Material Contracts (assuming due power and authority of, and due execution and delivery by, the other party or parties thereto) are valid, binding and in full force and effect and enforceable by the Company or its Subsidiaries in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors’ rights and to general equity principles. With respect to each Material Contract (i) neither the Company nor any of its Subsidiaries are in material default under or in material breach of, or in receipt of any written claim of material default under or material breach of, any Material Contract, (ii) to the Knowledge of the Company, no other party to any Material Contract is in material default under or in material breach of any Material Contract and (iii) no event has occurred and is continuing through the Company’s or its Subsidiaries’ actions or inactions which, with or without the lapse of time or the giving of notice or both, would result in a material default under or material breach of any Material Contract.

3.16. Co mpliance with Laws .

(a) (i) Seller is not, nor has it been, since the Relevant Date, in violation of any Law or Order in any material respect that is applicable to the Purchased Interests and (ii) neither the Company nor any of its Subsidiaries is or has been, since the Relevant Date, in violation of any Law or Order in any material respect that is applicable to it, its Equity Securities or the conduct or operation of its business or the ownership or use of any of its assets, including, with respect to each of clause (i) and (ii), any of the RCS Filing Requirements. Since January 29, 2015, neither the Company nor any of its Subsidiaries has received written notice from any Governmental Authority, qui tam relator or other third Person to the effect that the Company or any of its Subsidiaries is not in compliance with any applicable Law, which failure to comply would be material to the Company and its Subsidiaries, taken as a whole.

EXECUTION VERSION

(b) None of the Company, any of its Subsidiaries, its or their respective Representatives or Persons acting on behalf of the Company or any of its Subsidiaries has made, since the Relevant Date, any unlawful payment within the meaning of, and is not in any other way in violation of, any Anti-Corruption Law, nor have they otherwise offered, authorized, made or paid any bribes, kickbacks or other similar payments or transfers of value to another Person to obtain or retain business or secure an improper advantage.

(c) Section 3.16(c) of the Seller Disclosure Schedule sets forth a true and complete list of all material Permits which are required for the operation of the business of the Company and its Subsidiaries as currently conducted. All such Permits are in full force and effect, and no suspension, revocation, cancellation or modification of any of them is, to the Knowledge of the Company, threatened, except for any such suspension, revocation, cancellation or modification that would not be material to the Company and its Subsidiaries, taken as a whole. The Company and its Subsidiaries are and have been since the Relevant Date in material compliance with the terms of such Permits. Except as would not be material to the Company and its Subsidiaries, taken as a whole, since January 29, 2015, none the Company or its Subsidiaries has suffered a suspension, revocation, cancellation or modification of any of such Permits and, to the Knowledge of the Company, no such suspension, revocation, cancellation or modification is threatened.

(d) None of the Company, any of its Subsidiaries or any of their respective Representatives is a Person that is owned or controlled by Persons that are: (i) the target of any sanction administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the United Nations Security Council, the European Union or other relevant sanctions authority (collectively, “ Sanctions ”), or (ii) is located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions, including, without limitations, Crimea, Cuba, Iran, North Korea and Syria. Except as set forth in Section 3.16(d) of the Seller Disclosure Schedule, the Company and each of its Subsidiaries is, and has been, since the Relevant Date, in compliance with United States and other applicable Sanctions, export and import controls, including but not limited to applicable regulations of the U.S. Department of Commerce, the U.S. Department of Treasury and the U.S. Department of State, customs Laws, anti-boycott Laws, anti-terrorism Laws and related measures.

3.17. Env ironmental Matters .

(a) Except as set forth in Section 3.17(a) of the Seller Disclosure Schedule, the Company and its Subsidiaries are, and have been, since the Relevant Date, in compliance in all material respects with all applicable Environmental Laws.

(b) Except as set forth in Section 3.17(b) of the Seller Disclosure Schedule, except as would not be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries have obtained all permits, licenses, authorizations, registrations, certifications and other governmental consents required by applicable Environmental Laws (collectively referred to as “ Environmental Permits ”); all such Environmental Permits are in full force and effect, the Company and its Subsidiaries are and have since January 29, 2015 been in compliance in all material respects with the terms and conditions of such Environmental Permits, and there is no Litigation pending or, to the Knowledge of the Company, threatened, that seeks the revocation, cancellation, suspension or adverse modification of any such Environmental Permit.

EXECUTION VERSION

(c) Except as set forth in Section 3.17(c) of the Seller Disclosure Schedule, neither the Company nor any of its Subsidiaries has received written notice of any pending Order or Litigation alleging liability of the Company or any of its Subsidiaries under any Environmental Law, nor is any such Order or Litigation threatened, except for any such pending or threatened Order or Litigation that would not be material to the Company and its Subsidiaries, taken as a whole

(d) Except as set forth on Section 3.17(d) of the Seller Disclosure Schedule, except as would not be material to the Company and its Subsidiaries, taken as a whole, there has been no Release of any Hazardous Substances at, on, under or from any property currently or formerly owned, leased or operated by the Company or any of its Subsidiaries, or at any third Person site to which Hazardous Substances generated by the Company or any of its Subsidiaries were sent for treatment, recycling, storage or disposal, in each case, that requires investigation or remediation under any Environmental Law.

(e) Seller has, or has caused to be, made available to Buyer true and complete copies of all material environmental investigations, studies, audits or assessments related to the operation of the Company or any of its Subsidiaries, or to the Real Property, that are in the possession of Seller, the Company or any of its Subsidiaries.

3.18. Lit igation . Except as set forth in Section 3.18 of the Seller Disclosure Schedule:

(a) there are no, and since January 29, 2015 there have been no material, claims, actions, suits, demands, summons, proceedings, litigation (in law or equity) by or before a Governmental Authority or investigations by a Governmental Authority (collectively, “ Litigation ”) pending or, to the Knowledge of the Company, threatened, (i) against or by the Company or any of its Subsidiaries or their respective (A) properties or business or (B) managers, officers, employees or Affiliates in their capacities as such, (ii) seeking injunctive relief or criminal sanctions or penalties against Seller, the Company or any of its Subsidiaries, or their employees (in their capacities as such) or (iii) seeking to enjoin, challenge, prevent or otherwise delay the Contemplated Transactions; and

(b) there is no, and since January 29, 2015 there has been no material, Order to which the Company or its Subsidiaries or any of their respective properties, assets or Equity Securities is subject or, to the Knowledge of the Company, threatened to be subject.

EXECUTION VERSION

3.19. Lab or Matters .

(a) Except as set forth in Section 3.19(a) of the Seller Disclosure Schedule and other than mandatory national or industry-wide collective bargaining agreements, neither the Company nor any of its Subsidiaries (i) is a party to, bound by or subject to any collective bargaining agreements or other agreements with any labor organization or union, works council, or other employee organization (each, an “ Employee Representative ”) (and no such agreement is currently being requested by, or is under discussion by management with, any employee or others, and, to the Knowledge of the Company, there is no basis for the Company or any of its Subsidiaries to be subject to a collective bargaining agreement or other agreements with any labor organization, other than as set forth in Section 3.19(a) of the Seller Disclosure Schedule) and neither the Company nor any Subsidiary is currently negotiating, or obligated to negotiate, any such agreement with any union, labor organization, work council, employee organization or others; or (ii) is obligated by, or subject to, any order of the National Labor Relations Board or other Governmental Authority, or any unfair labor practice decision, arbitration decision or Order relating to employment with the Company or any of its Subsidiaries.

(b) Neither the Company nor any of its Subsidiaries is a party or subject to any pending or, to the Knowledge of the Company, threatened material labor dispute, controversy or grievance or any unfair labor practice, charge or proceeding with respect to claims of, or obligations of, any employee or group of employees. Neither the Company nor any of its Subsidiaries has received any notice that any labor representation request is currently pending or is threatened, nor to the Knowledge of the Company, is any organizing activity currently pending or threatened with respect to any employees. Except as set forth in Section 3.19(b) of the Seller Disclosure Schedule, there have been no material labor strikes, disputes, slowdowns, pickets, lockouts, work stoppages or concerted protest actions, or any unfair labor practice proceedings pending or, to the Knowledge of the Company, threatened against or involving the Company or any of its Subsidiaries.

(c) Each of the Company and its Subsidiaries is, and since January 29, 2015, has been, in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, labor relations, collective bargaining, company collective agreements, customs and/or unilateral undertakings, employment discrimination, disability rights or benefits, occupational health safety, worker’s compensation, affirmative action, unemployment compensation, leaves of absence, plant closures, mass layoffs, work authorization, functioning of employee’s representatives, provident schedules, health insurance schemes and wages and hours. All employees are legally authorized to work in the country and facility in which they are located, and the Company and its Subsidiaries have maintained all work authorization and immigration documentation in accordance with applicable Law.

(d) The information contained in documents 10.1.1, 10.1.2 and 10.1.3 in the Data Room is true and correct in all material respects, as of the date set forth in such documents. Seller has made available to Buyer true and complete copies of all agreements containing restrictive covenants entered into with any current or former employee that are still in effect.

EXECUTION VERSION

(e) The information contained in document 10.12.14 in the Data Room is true and correct in all material respects, as of the date set forth in such document. Since the Relevant Date, the Company and each of its Subsidiaries have properly classified in accordance with all applicable Laws all of its respective service providers as either employees or independent contractors, and as exempt or non-exempt from overtime requirements, and have made all appropriate filings and withholdings in connection with services provided by, and compensation paid to, such service providers, and there is no agreement, to the Knowledge of the Company, that could allow any current independent contractor to claim the status of employee of the Company or any of its Subsidiaries.

(f) Since January 29, 2015, neither the Company nor any of its Subsidiaries has incurred any material liability or obligation under the WARN Act that remains unsatisfied. No dismissal of any employee of the CSP French Subsidiaries would be reasonably likely to lead to consequences other than any amounts already paid by the Company or such Subsidiary.

(g) Except as set forth in Section 3.19(g) of the Seller Disclosure Schedule, as of the date hereof, all wages, bonuses and incentive compensation payable to employees and former employees of the Company or any of its Subsidiaries for services performed on or prior to the date hereof have been paid in full, and there are no outstanding agreements, understandings or commitments of the Company or any of its Subsidiaries with respect to wages, bonuses, incentive compensation or increases in compensation.

(h) To the Knowledge of the Company, as of the date hereof, (i) no key employee or manager of the Company or any of its Subsidiaries has indicated to the Company or such Subsidiary that he or she intends to resign or retire as a result of the Contemplated Transactions or otherwise, and (ii) neither the Company nor any of its Subsidiaries has any plans to terminate the employment of any key employee or manager. No key employee or manager is under any notice of dismissal or mutual termination agreement ( rupture conventionnelle homologue ).

(i) There is no commitment from the CSP French Subsidiaries of any nature, whether express or implied, granted directly or indirectly, by such CSP French Subsidiaries that would restrict or affect in any manner whatsoever (including financial) any future dismissal or termination of any nature of any of the employees of the CSP French Subsidiaries, other than as provided by Law or an applicable collective bargaining agreement.

EXECUTION VERSION

3.20. Em ployee Benefits .

(a) Section 3.20(a)(i) of the Seller Disclosure Schedule sets forth a true and correct list of all employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus, stock option, stock purchase, equity-based compensation, profit sharing, savings, disability, incentive, deferred compensation, fringe benefit, retirement, severance, retention, change in control or other employee benefit plans, Contracts, policies or programs, maintained or contributed to or required to be contributed to, by the Company or any of its Subsidiaries for the benefit of, or relating to, any current or former employees, independent contractors and directors of the Company or any of its Subsidiaries or under which the Company or any of its Subsidiaries has or could have any liability or in which any current or former employee, independent contractor and director of the Company or any of its Subsidiaries is eligible to participate, other than any Company Employment Contract (individually, a “ Plan ” and collectively, the “ Plans ”). Section 3.20(a)(ii) of the Seller Disclosure Schedule sets forth a true and correct list of each Plan that is maintained in a jurisdiction outside of the United States.

(b) With respect to each Plan, the Company has made available to Buyer true, correct and complete copies of: (i) all material Plan documents and all amendments thereto (or, in the case of any unwritten Plan, a description of the material terms and conditions thereof), (ii) all material funding and administrative arrangement documents, including, but not limited to, trust agreements, insurance contracts, custodial agreements and investment manager agreements, (iii) the latest favorable determination letter, opinion letter or advisory letter received from the Internal Revenue Service (“ IRS ”) regarding the qualification of each Plan covered by Section 401(a) of the Code, (iv) if applicable, the most recently filed Form 5500 for each Plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and for each Plan that is an employee welfare benefit plan (as defined in Section 3(1) of ERISA), (v) each summary plan description and each summary of material modification regarding the terms and provisions thereof, and (vi) the most recent actuarial report, if applicable.

(c) Each Plan and Company Employment Contract (i) has been maintained, funded and administered in compliance in all material respects with all applicable Laws, Orders, statutes, regulations and rules issued by a Governmental Authority and, if applicable, with any agreement entered into with Employee Representatives and (ii) has been operated in compliance in all materials respects with its terms. All contributions required to be made prior to the date hereof with respect to any Plan by applicable Law, any Order or any Plan document or other contractual undertaking, and all premiums due or payable prior to the date hereof with respect to any insurance policy funding any Plan or Company Employment Contract have been timely made.

(d) Each Plan intended to qualify under Section 401(a) of the Code is the subject of a favorable determination letter (or is established on a pre-approved form of plan document that has received a favorable advisory or opinion letter) from the IRS to the effect that such Plan is qualified under Sections 401(a) and 501(a) of the Code, respectively, and the IRS has not taken any action to revoke such determination, advisory or opinion letter and nothing has occurred that would reasonably be expected to adversely affect the qualification of such Plan.

EXECUTION VERSION

(e) None of the Company or any of its Subsidiaries or any of their respective ERISA Affiliates has contributed to, contributes to, has been required to contribute to, or otherwise participated in or participates in or in any way has any liability, directly or indirectly, with respect to (i) any multiemployer plan, as defined in Section 3(37) of ERISA or (ii) any plan that is or has been subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability, directly or indirectly, under Title IV of ERISA. No Plan or Company Employment Contract is, and none of the Company or any of its Subsidiaries has any liability, directly or indirectly, with respect to a plan providing for or promising retiree welfare benefits ( including medical and life insurance benefits) to any current or former employee of the Company or any of its Subsidiaries (or any dependent thereof), except to the extent required by Section 4980B of the Code. No Plan or Company Employment Contract is a “multiple employer welfare arrangement” (within the meaning of Section 3(40)(A) of ERISA). None of the Company or any of its Subsidiaries or any of their respective ERISA Affiliates has any liability (including contingent liability) on account of any violation of the health care requirements of Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code or any similar Law.

(f) There is no pending or, to the Knowledge of the Company, threatened material Litigation by or on behalf of any Plan, any employee or beneficiary covered under any Plan or Company Employment Contract or any Governmental Authority involving any Plan, or otherwise involving any Plan or Company Employment Contract (other than routine claims for benefits in the ordinary course).

(g) Neither the execution of this Agreement nor the consummation of the Contemplated Transactions (either alone or in combination with another event) will or could be reasonably expected to (i) entitle any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries to any payment (including severance pay or similar compensation), any cancellation of indebtedness, or any increase in compensation, (ii) result in the acceleration of payment, funding or vesting under any Plan, Company Employment Contract or other plan, Contract or arrangement, or (iii) result in any increase in benefits payable under any Plan, Company Employment Contract or other plan, Contract or arrangement. No amount paid or payable (whether in cash, in property, or in the form of benefits) in connection with Contemplated Transactions (either alone or in combination with another event) will be, or could reasonably be expected to be, an “excess parachute payment” within the meaning of Section 280G of the Code.

(h) Each Plan or Company Employment Contract that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been administered, operated and maintained in all material respects according to the requirements of Section 409A of the Code. None of the Company or any of its Subsidiaries have any obligation to make a “gross-up” or similar payment in respect of any Taxes that may become payable under Sections 409A or 4999 of the Code.

(i) No employee of the CSP French Subsidiaries is benefiting from or receiving (i) an employment guaranty, extended notice period, stock options / free shares or supplementary retirement schemes; or (ii) non-contractual bonuses.

EXECUTION VERSION

(j) The applicable mandatory profit sharing agreement and the applicable voluntary profit sharing agreement of CSP Technologies SAS have been properly and timely registered with the Direccte , the Direccte has not made any comments thereon, and CSP Technologies SAS maintains proof of receipt of such registration.

(k) Accord Science SAS has implemented the Health and Provident Schemes by a unanimous decision formalized in written form.

(l) Each of the CSP French Subsidiaries is up to date with its respective French social security obligations and has paid all social security contributions due on all salaries and benefits conferred to employees since January 29, 2015, in accordance with applicable Law.

3.21. Ta xes .

(a) All material Tax Returns required to be filed by or with respect to the Company and its Subsidiaries have been timely filed (taking into account extensions of time to file) and such Tax Returns are true, correct and complete in all material respects, and all material Taxes (whether or not shown on any Tax Return) for which the Company or any of its Subsidiaries may be liable have been timely paid. No extension of time within which to file any such Tax Return, other than a properly filed extension for the 2017 tax year within the accepted extension periods, is in effect.

(b) There is no material Tax audit or other Litigation pending, or to the Knowledge of the Company, proposed or threatened with respect to Taxes of the Company or any of its Subsidiaries and neither of the Company nor any of its Subsidiaries has received written notice of any Tax audit or other Litigation that is currently pending. Neither the Company nor any of its Subsidiaries has granted any extension or waiver of the statute of limitations period, or of the time for assessment or collection, applicable to any Tax or Tax Return, which period (after giving effect to such extension or waiver) has not yet expired, and no written request for such an extension or waiver is outstanding.

(c) The Company and its Subsidiaries have or have caused to be withheld, and have paid over or have caused to have been paid over to the appropriate Governmental Authorities, all material Taxes required to be so withheld and paid over for all periods under all applicable Law in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, or other party.

(d) Since January 29, 2015, no written claim has been made by any Governmental Authority in any jurisdiction where the Company and its Subsidiaries do not currently file a particular type of Tax Return or pay a particular type of Tax that the Company or any of its Subsidiaries is required to file such Tax Return or pay such Tax in that jurisdiction.

(e) Neither the Company nor any of its Subsidiaries is a party to, or bound by, any Tax sharing, Tax indemnification or Tax allocation agreement or similar arrangement (other than an agreement or arrangement entered into the ordinary course of business that is not principally related to Taxes).

EXECUTION VERSION

(f) There are no Tax rulings, requests for rulings, closing agreements or similar arrangements with any Governmental Authority with regard to the determination of the Tax liability of the Company or any of its Subsidiaries that could affect the Company’s or any of its Subsidiaries’ liability for Taxes for any taxable periods (or portions thereof) ending after the Closing Date.

(g) Neither the Company nor any of its Subsidiaries has engaged in a “listed transaction,” as set forth in Section 1.6011-4(b)(2) of the Treasury Regulations.

(h) Since January 29, 2015, neither the Company nor any of its Subsidiaries has distributed stock of another Person or had its stock distributed by another Person in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code (or any similar provision of state, local or foreign law).

(i) Neither the Company nor any of its Subsidiaries will be required to include any material item in income, or exclude any material deduction, in each case in any taxable period (or portion thereof) after the Closing, as a result of any change in method of accounting made prior to the Closing, closing agreement entered into prior to the Closing, intercompany transaction entered into prior to the Closing, the deferral of any advance payments (within the meaning of Rev. Proc. 2004-34 or similar provisions of state, local or foreign Law, installment sale entered into prior to the Closing, or election under Section 965(h) of the Code filed prior to the Closing.

(j) There are no Liens for Taxes upon the assets of the Company or any of its Subsidiaries other than Permitted Liens.

(k) Neither the Company nor any of its Subsidiaries has any liability for Taxes of another Person under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or foreign law), or as a transferee or successor.

(l) Section 3.21(l) of the Seller Disclosure Schedule sets forth the U.S. federal income tax classification of the Company and each of its Subsidiaries.

(m) Neither the Company nor any of its Subsidiaries has, since January 29, 2015, had a permanent establishment in any country other than the country of its organization.

(n) The Company has not experienced any ownership changes within the meaning of Section 382 of the Code since January 29, 2015.

(o) Neither the Company nor any of its Subsidiaries is liable for any Taxes attributable to any taxable period (or portion thereof) ending on or before the Closing Date in excess of the amounts taken into account in computing Indebtedness and Closing Date Net Working Capital.

EXECUTION VERSION

3.22. Ins urance . Section 3.22 of the Seller Disclosure Schedule sets forth a true and complete list of all insurance policies (including general liability, professional liability, product liability, fire, casualty, motor vehicle and workers’ compensation) maintained by the Company and its Subsidiaries (collectively, the “ Insurance Policies ”). The Company and its Subsidiaries have complied in all material respects with each of such Insurance Policies. Except as would not be material to the Company and its Subsidiaries, taken as a whole, no written notice of cancellation, termination or revocation or other written notice that any such Insurance Policy is no longer in full force or effect has been received by the Company, its Subsidiaries or their respective Affiliates. There are no open material claims that have been denied by any of the insurance providers of the Insurance Policies since January 29, 2015.

3.23. No B rokers . Except as set forth in Section 3.23 of the Seller Disclosure Schedule, none of the Company or its Subsidiaries has employed or incurred any liability to any broker, finder or agent for any brokerage fees, finder’s fees, commissions or other similar amounts with respect to this Agreement, the Ancillary Documents or the Contemplated Transactions.

3.24. Agre ements with Company Related Person . Except as set forth in Section 3.24 of the Seller Disclosure Schedule, neither the Company nor any of its Subsidiaries is indebted to, or is a party to any Contract with, Seller or any of its Affiliates, or any director, manager or officer (or any of their Affiliates) of Seller, the Company or their respective Affiliates or Robert S. Abrams (or in the case of any such Person who is an individual, any member of his or her immediate family) (each, a “ Company Related Person ”), other than the Company Employment Contracts, the Wendel Management Agreement, or for salaries for services rendered, reimbursable business expenses or benefits under the Plans, nor is any Company Related Person indebted to, or is a party to any Contract with, the Company or any of its Subsidiaries, other than for advances made to employees of the Company or its Subsidiaries in the ordinary course of business to meet reimbursable business expenses reasonably anticipated to be incurred by such obligor.

3.25. Cus tomers and Suppliers .

(a) Section 3.25(a) of the Seller Disclosure Schedule sets forth a true and complete list of the (i) fifteen (15) largest customers of the Company and its Subsidiaries (on a consolidated basis) for the twelve (12) month period ended December 31, 2017 in terms of aggregate total sales in dollars by the Company and its Subsidiaries, showing approximate revenue to the Company or the applicable Subsidiary from each such customer during such period.

(b) Section 3.25(b) of the Seller Disclosure Schedule sets forth a true and complete list of the (i) ten (10) largest suppliers of the Company and its Subsidiaries (on a consolidated basis) for the twelve (12) month period ended December 31, 2017 in terms of aggregate total sales in dollars by the Company and its Subsidiaries, showing approximate purchases by the Company or the applicable Subsidiary to each such supplier during such period.

EXECUTION VERSION

(c) Except as set forth on Section 3.25(c) of the Seller Disclosure Schedule, since January 1, 2018, the Company and its Subsidiaries have not received a written notice from any customer set forth in Section 3.25(a) of the Seller Disclosure Schedule or supplier set forth in Section 3.25(b) of the Seller Disclosure Schedule stating the intention of such customer or supplier, and, to the Knowledge of the Company, no such Person intends, to (i) cease doing business with the Company or any of its Subsidiaries or (ii) change, in a manner materially adverse to the Company, the relationship of such Person with the Company or any of its Subsidiaries. Neither the Company nor its Subsidiaries is currently involved in any material dispute with any customer set forth in Section 3.25(a) of the Seller Disclosure Schedule or any supplier set forth in Section 3.25(b) of the Seller Disclosure Schedule.

3.26. Comp any Products; Food Safety and Compliance .

(a) There is no pending or, to the Knowledge of the Company, threatened Litigation (i) alleging any material liability of the Company or any of its Subsidiaries as a result of any defect or other deficiency, product return and/or warranty obligations with respect to any Company Product or (ii) against the Company or any of its Subsidiaries regarding the existence of a defect in, adulteration of or misbranding of any Company Product that would result in any material liability. Since January 29, 2015, no Company Product has been the subject of any recall, or has been adulterated or misbranded, seized, detained or subject to a suspension of manufacturing, distribution or marketing (including any action undertaken by the Company or any of its Subsidiaries on a voluntary basis).

(b) Since January 29, 2015, neither the Company nor any of its Subsidiaries has received an FDA-483, untitled letter, warning letter, notice of adverse finding, notice of deficiency or similar communication from the U.S. Food and Drug Administration (“ FDA ”) or any other Governmental Authority.

(c) Since January 29, 2015, neither the Company, any of its Subsidiaries or, to the Knowledge of the Company, any employee of the Company has (i) made an untrue statement of material fact or fraudulent statement to the FDA or any other Governmental Authority with respect to any Company Product or (ii) been or is being investigated by the FDA, Office of the Inspector General for the Department of Health and Human Services, Department of Justice, or other Governmental Authority for data or healthcare program fraud.

(d) All material documents, reports and notices required to be maintained or filed with any Governmental Authority by the Company and its Subsidiaries with respect to their business or the Company Products have been, in all material respects, so maintained or filed on a timely basis, and were complete and accurate in all material respects as of the date of filing, or were subsequently updated, changed, corrected, or modified prior to the date hereof and no such filing with any Governmental Authority contains any materially false, misleading or otherwise inaccurate statements or information, whether express or due to omission of material information, as of the date of filing.

EXECUTION VERSION

3.27. Di sclaimer . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER THE COMPANY, SELLER NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, AFFILIATES, REPRESENTATIVES OR ADVISORS HAS MADE, OR SHALL BE DEEMED TO HAVE MADE TO BUYER OR ANY OTHER PERSON ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE EXPRESSLY SET FORTH IN ARTICLE III. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE III, NO REPRESENTATION OR WARRANTY HAS BEEN MADE OR IS BEING MADE, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY HEREIN TO BUYER OR ANY OTHER PERSON (I) IN RESPECT OF THE COMPANY OR ANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE ASSETS, LIABILITIES OR OPERATIONS, INCLUDING AS TO MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY, WITH RESPECT TO ANY TANGIBLE ASSETS OR AS TO THE CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT (OR ANY OTHER REPRESENTATION OR WARRANTY REFERRED TO IN SECTION 2-312 OF THE UNIFORM COMMERCIAL CODE OF ANY APPLICABLE JURISDICTION), (II) WITH RESPECT TO ANY PROJECTIONS, FORECASTS, BUSINESS PLANS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE TO BUYER, OR (III) WITH RESPECT TO ANY OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE TO BUYER, ITS AFFILIATES OR ANY OF THEIR RESPECTIVE REPRESENTATIVES, AND SELLER EXPRESSLY DISCLAIMS ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES. NOTHING CONTAINED IN THIS SECTION 3.27 OR ELSEWHERE IN THIS AGREEMENT SHALL IN ANY WAY LIMIT ANY OF THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III OF THIS AGREEMENT OR WAIVE OR RELEASE ANY CLAIMS FOR INTENTIONAL FRAUD.

ARTICLE IV
Representations and Warranties of Buyer

Buyer hereby represents and warrants to the Company as follows as of the date hereof and as of the Closing Date:

4.1. Or ganization and Power . Buyer has been duly incorporated and is validly existing under the Laws of the State of Delaware and has requisite power and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Contemplated Transactions.

EXECUTION VERSION

4.2. Authori zation and Enforceability . The execution and delivery of this Agreement and the Ancillary Documents to which Buyer is a party and the performance by Buyer of the Contemplated Transactions have been duly authorized by Buyer, and no other corporate proceedings on the part of Buyer (including, without limitation, any stockholder vote or approval) are necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Documents to which Buyer is a party or the consummation of the Contemplated Transactions. This Agreement (assuming this Agreement is a valid and legally binding obligation of the other party hereto) is, and each of the Ancillary Documents to be executed and delivered at the Closing by Buyer (assuming each Ancillary Document is a valid and legally binding obligation of the other parties thereto) will be at the Closing, duly authorized, executed and delivered by Buyer, and constitutes, or as of the Closing Date will constitute, valid and legally binding agreements of Buyer enforceable against Buyer in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

4.3. No Violation . The execution and delivery by Buyer of this Agreement and the Ancillary Documents to which Buyer is a party, the consummation of the Contemplated Transactions and compliance with and performance of the terms of this Agreement and the Ancillary Documents to which Buyer is a party will not (a) conflict with or violate any provision of the certificate of incorporation, bylaws or similar organizational documents of Buyer, or (b) assuming that all consents, approvals and authorizations contemplated by Section 4.4 have been obtained and all filings described therein have been made, conflict with or violate in any material respect any Law applicable to Buyer or by which its properties are bound or affected. Neither Buyer nor its Affiliates are subject to any Contract that would materially impair or delay Buyer’s ability to consummate the Contemplated Transactions.

4.4. Gove rnmental Authorizations and Consents . No Governmental Consents are required to be obtained or made by Buyer in connection with the execution, delivery and performance of this Agreement or any Ancillary Documents to which it is, or is to be, a party, or the consummation by Buyer of the Contemplated Transactions, except for such filings as may be required under the HSR Act.

4.5. Liti gation . There is no Litigation pending or, to the Knowledge of Buyer, threatened against or involving Buyer which questions the validity of this Agreement or any of the Ancillary Documents to which it is a party or seeks to prohibit, enjoin or otherwise challenge Buyer’s ability to consummate the Contemplated Transactions.

4.6. Suf ficiency of Funds . Buyer has sufficient cash on hand or other sources of available funds that together are sufficient to enable it to pay the Aggregate Estimated Consideration as required by and in accordance with this Agreement and to consummate the Contemplated Transactions.

EXECUTION VERSION

4.7. Inves tment Purpose . Buyer is acquiring the Purchased Interests solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof other than in compliance with all applicable Laws, including United States federal securities Laws. Buyer agrees that the Purchased Interests may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and any applicable state securities Laws, except pursuant to an exemption from such registration under the Securities Act and such Laws. Buyer is able to bear the economic risk of holding its investment in the Company and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.

4.8. So lvency . The sale of the Purchased Interests (and the incurrence of any obligation in connection with the Contemplated Transactions) is not being made with the actual intent to hinder, delay or defraud either present or future creditors of the Company or any of its Subsidiaries. Assuming that the representations and warranties of Seller contained in this Agreement are true and correct in all material respects, at and immediately after the Closing, and subject to the satisfaction of the conditions to Buyer’s obligation to complete the Closing set forth in Section 6.3 , immediately after giving effect to the Contemplated Transactions, the Company and each of its Subsidiaries (a) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its probable liabilities on its debts as they become absolute and matured); (b) will have adequate capital and liquidity with which to engage in its business; and (c) will not have incurred and does not plan to incur debts beyond its ability to pay as they become absolute and matured and will own property which has a fair saleable value greater than the amounts required to pay their respective debts (including a reasonable estimate of the amount of all contingent liabilities).

4.9. No Brokers . Except for Wells Fargo Securities, LLC, neither Buyer nor or any of its Representatives or Affiliates has employed or incurred any liability to any broker, finder or agent for any brokerage fees, finder’s fees, commissions or other amounts with respect to this Agreement, the Ancillary Documents or the Contemplated Transactions.

EXECUTION VERSION

4.10. No Ind ucement or Reliance; Independent Assessment . Buyer has not been induced by and has not relied upon any representations, warranties or statements, whether express or implied, including any implied warranty of merchantability or of fitness for a particular purpose, made by the Company, any of Seller or their respective Affiliates officers, directors, employees, agents or representatives except for the representations and warranties expressly set forth in Article III and the Ancillary Documents (as modified by the Seller Disclosure Schedule), whether or not any such representations, warranties or statements were made in writing or orally. Buyer represents and warrants that neither the Company nor Seller nor any of its Representatives or Affiliates has made any representation or warranty, express or implied, oral or written, including any implied warranty of merchantability or of fitness for a particular purpose, as to the accuracy or completeness of the information regarding the Company or any of its Subsidiaries, Seller or the Contemplated Transactions, except for the representations and warranties of Seller expressly set forth in Article III and the Ancillary Documents (as modified by the Seller Disclosure Schedule), and neither the Company, nor Seller nor any of their respective Representatives or Affiliates will have or be subject to any liability to Buyer or any other Person resulting from the distribution to Buyer or its representatives or the use by Buyer or its representatives, of any information, including publications, any confidential information memorandum or electronic data room information provided to Buyer or its representatives, or any other document or information in any form provided to Buyer or its representatives in connection with the Contemplated Transactions. Buyer acknowledges that it has inspected and conducted, to its satisfaction, its own independent review, investigation and analysis (financial and otherwise) of the Company and / or any of its Subsidiaries. Notwithstanding anything in this Agreement to the contrary, nothing contained in this Section 4.10 or elsewhere in this Agreement shall in any way waive, release or limit any right to recovery for any intentional fraud by Seller, its Affiliates, or its or their respective officers, directors, employees, agents or Representatives arising out of the Contemplated Transactions, including any claims of intentional fraud based on any statements, omissions or conduct in connection with any information provided regarding the Company or any of its Subsidiaries, Seller or the Contemplated Transactions, and, for the avoidance of doubt, Seller expressly agrees that it will not invoke this Section 4.10 as a defense to any claim that Buyer was induced into entering this Agreement as a result of any intentionally fraudulent statements, omissions or conduct in connection with any information provided regarding the Company or any of its Subsidiaries, Seller or the Contemplated Transactions. Except as expressly set forth in Article III , Buyer acknowledges that neither the Company nor Seller nor any of their respective Representatives or Affiliates has made any representation or warranty, express or implied, including as to the prospects of the Company or any of its Subsidiaries or their respective businesses or their profitability for Buyer, or with respect to any forecasts, projections or business plans made available to Buyer, its Affiliates or their respective Representatives in connection with Buyer’s review of the Company and its Subsidiaries.

EXECUTION VERSION

ARTICLE V
Cove nants

5.1. Condu ct of the Company .

(a) Except (i) to the extent required by any applicable Law, (ii) as otherwise expressly contemplated by this Agreement, (iii) as set forth in Section 5.1 of the Seller Disclosure Schedule, or (iv) as consented to in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), during the period from the date hereof until the earlier of the Closing Date and the date this Agreement is validly terminated pursuant to Article VII , Seller shall cause the Company and the Company’s Subsidiaries to conduct its business and operations in the ordinary course consistent with past practice, and to the extent consistent therewith use commercially reasonable efforts to (x) maintain its assets and properties and to preserve its current relationships with customers, employees, suppliers and others having business dealings with it, (y) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice, and (z) preserve the goodwill and ongoing operations of its business.

(b) Without limiting the generality of the foregoing, except (i) to the extent required by any applicable Law, (ii) as otherwise expressly contemplated by this Agreement, (iii) as set forth in Section 5.1 of the Seller Disclosure Schedule, or (iv) as consented to in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), during the period from the date hereof until the earlier of the Closing Date and the date this Agreement is validly terminated pursuant to Article VII , Seller shall cause the Company and the Company’s Subsidiaries not to:

(i) modify or amend any of the organizational documents of the Company or any of its Subsidiaries;

(ii) issue, or authorize the issuance of, or sell or transfer any Equity Securities of the Company or any of its Subsidiaries;

(iii) split, combine, redeem or reclassify, or purchase or otherwise acquire any Equity Securities of the Company or its Subsidiaries, as applicable;

(iv) (A) declare or pay any non-cash dividend or make any non-cash distribution in respect of any Equity Securities, (B) declare any cash dividend or cash distribution in respect of any Equity Securities of the Company or its Subsidiaries which is not paid prior to 11:59 PM Eastern Time on the date immediately preceding the Closing Date or (C) pay any cash dividend or make any cash distribution in respect of any Equity Securities of the Company or its Subsidiaries after 11:59 PM Eastern Time on the date immediately preceding the Closing Date;

(v) (A) incur any Indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person (other than the Company or any of its Subsidiaries), or (B) make any loans or advances to any officer, director or employee of the Company or any of its Subsidiaries, in each case other than for amounts not in excess of $100,000 or Indebtedness in the ordinary course of business consistent with past practice;

EXECUTION VERSION

(vi) mortgage, pledge or subject to any Lien, any assets of the Company or any of its Subsidiaries, except Permitted Liens or in accordance with the Credit Agreement;

(vii) enter into any Contract that purports to limit, curtail or restrict the kinds of businesses which it may conduct, or the Persons with whom it can compete;

(viii) acquire (including by merger or consolidation or other action, or by purchasing an equity interest in or the assets of) any Person, corporation, limited liability company, partnership, joint venture, association or other business organization or division thereof;

(ix) establish or acquire any Subsidiary;

(x) except for sales of products or services in the ordinary course of business consistent with past practice, divest, sell or otherwise dispose of, or encumber any asset of the Company or its Subsidiaries (including capital stock of the Company’s Subsidiaries), other than obsolete assets or assets with de minimis or no book value in the ordinary course of business consistent with past practice;

(xi) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;

(xii) enter into, establish, renew, adopt, amend or terminate any (A) Plan (or arrangement that would have been a Plan had it been in existence on the date hereof), (B) any Contract with an officer employee or (C) any Contract with a non-officer employee that provides for annual base compensation, including bonuses, or severance amount, as applicable, of more than $100,000, except (y) to the extent required by Law or (z) as expressly contemplated by this Agreement or the terms of any Plan or Contract as in effect on the date hereof;

(xiii) take any action to accelerate the payment, funding, right to payment or vesting of, or increase or promise to increase compensation, commission, bonus, benefits or other direct or indirect remuneration payable, or agree to pay, conditionally or otherwise, any bonus, incentive, retention, change in control payment or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any employee, officer or director of the Company, except (A) in the ordinary course of business consistent with past practice with respect to any non-officer employee whose annual base compensation is less than $100,000, (B) to the extent required by any Plan or Contract as in effect on the date hereof or (C) as may be required by applicable Law under a national or industry-wide collective bargaining agreement;

(xiv) make any formal announcement or other widely disseminated communication (whether in writing or orally) to any employee regarding any compensation benefits to be provided by Buyer or its Affiliates after the Closing unless directed by Buyer or any of its Representatives to do so;

(xv) change its material accounting policies or procedures except to the extent required to conform with IFRS;

EXECUTION VERSION

(xvi) modify, amend, cancel, terminate, renew, release or waive any rights under any Material Contract outside the ordinary course of business consistent with past practice;

(xvii) enter into any Contract that would have been a Material Contract had it been entered into prior to the date of this Agreement (excluding the Ancillary Documents), other than entering into new Contracts in the ordinary course of business consistent with past practice;

(xviii) file any material amended Tax Return, settle or otherwise compromise any claim relating to material Taxes, enter into any closing agreement or similar agreement relating to material Taxes, otherwise settle any dispute relating to material Taxes, surrender any right to claim a material Tax refund, offset or other reduction in Tax liability, or request any ruling or similar guidance with respect to Taxes;

(xix) cancel any material insurance policy or materially reduce the amount of coverage provided thereunder;

(xx) commence, settle or compromise any Litigation if such Litigation involves (A) the payment of more than $50,000 or (B) injunctive or other equitable relief;

(xxi) enter into any Contract with a Company Related Person;

(xxii) change its fiscal year;

(xxiii) terminate the employment of any senior-level or management employee other than for “cause,” or hire or promote any senior-level or management employee, except with respect to new hires to fill open position vacancies;

(xxiv) acquire, transfer, lease or dispose of any real property; or

(xxv) authorize, agree, resolve or consent to any of the foregoing.

(c) Nothing contained in this Agreement shall give to Buyer, directly or indirectly, rights to control or direct the operations of the Company or its Subsidiaries prior to the Closing. Prior to the Closing, Seller shall cause the Company to exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of its and its Subsidiaries’ operations.

(d) Nothing contained in this Agreement shall prohibit the Company or any of its Subsidiaries from (i) repaying Indebtedness or (ii) declaring, setting aside or paying any cash dividends on, or making any other cash distributions in respect of, any outstanding Equity Securities, in each case, so long as any cash dividend or distribution is declared and paid prior to 11:59 PM Eastern Time on the day immediately preceding the Closing Date.

EXECUTION VERSION

5.2. Acce ss to Information Prior to the Closing . During the period from the date hereof until the earlier of the Closing Date and the date this Agreement is validly terminated pursuant to Article VIII , Seller shall cause the Company and its Subsidiaries to provide Buyer and its Representatives reasonable access during regular business hours and upon reasonable notice to all employees, Representatives, offices, facilities, books and records of the Company and its Subsidiaries as Buyer may reasonably request; provided , that (a) Buyer and its Representatives shall take such action as is deemed necessary in the reasonable judgment of the Company or its Subsidiaries to schedule such access to the employees, Representatives, offices, facilities, books and records of the Company and its Subsidiaries through a designated officer of the Company and in such a way as to avoid disrupting in any material respect the normal business of the Company and its Subsidiaries, (b) neither the Company nor its Subsidiaries shall be required to take any action which would constitute a waiver of the attorney-client privilege (it being understood that the Company or its Subsidiary shall inform Buyer that such information cannot be shared pursuant to this clause (b) and take reasonable actions to eliminate any impediments to providing such information) and (c) in no event shall Buyer be permitted to conduct any sampling of any environmental media, including soil, sediment, groundwater, surface water, indoor or outdoor air or building material without the prior consent of Seller. Buyer hereby agrees that from the date hereof until the Closing Date or the earlier termination of the Agreement, it is not authorized to, and shall not (and shall not permit any of its Representatives or Affiliates to), contact and communicate with the employees, customers, service providers and suppliers of the Company or its Subsidiaries in connection with the Contemplated Transactions without the prior consultation with and written approval of Seller (not to be unreasonably withheld, delayed or conditioned). For the avoidance of doubt, the foregoing restriction shall not prohibit any contacts by Buyer or its Representatives or Affiliates with the employees, customers, service providers and suppliers of the Company or its Subsidiaries in the ordinary course of business unrelated to the Contemplated Transactions. Buyer shall, and shall cause its Representatives to, abide by the terms of the Confidentiality Agreement with respect to any access or information provided pursuant to this Section 5.2 .

5.3. Effo rts; Regulatory Filings .

(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Contemplated Transactions, including (i) the obtaining of clearance and approvals under the HSR Act and the taking of all necessary steps to obtain such HSR Act clearance and approvals, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any Litigations, whether judicial or administrative, challenging this Agreement or the consummation of the Contemplated Transactions, including, seeking to have any stay, temporary restraining order or other injunctive relief or order entered by any court or other Governmental Authority vacated or reversed, and (iv) the execution and delivery of any additional instruments necessary to consummate the Contemplated Transactions and to fully carry out the purposes of this Agreement. Without limiting the foregoing, the parties and their Subsidiaries and Affiliates shall not take or agree to take any action that would reasonably be expected to result in any of the conditions set forth in Article VI not being satisfied or to prevent or delay the consummation of the Contemplated Transactions.

EXECUTION VERSION

(b) In furtherance and not in limitation of the foregoing Section 5.3(a) , each party undertakes and agrees to (i) make or cause to be made the registrations, declarations and filings required of such party under the HSR Act (in no event later than ten (10) Business Days from the execution of this Agreement) (“ Antitrust Filing ”), and any filing fees associated therewith shall be paid by Buyer and such initial Antitrust Filing from Buyer and Seller (or the Company, if applicable) shall request early termination of any applicable waiting period under the HSR Act. Each of the parties shall (i) subject to applicable Law, furnish to the other party as promptly as reasonably practicable all information required for the Antitrust Filing, application or other filing to be made by the other party pursuant to any applicable Law in connection with the Contemplated Transactions, (ii) respond as promptly as practicable to any inquiries and requests received from the FTC, the Antitrust Division, any state attorney general or other Governmental Authority for additional information or documentation in connection with the Antitrust Filing, registrations, declarations and filings or with respect to the Contemplated Transactions, and (iii) not extend any waiting period under the HSR Act or any other Antitrust Laws or enter into any agreement with the FTC, the Antitrust Division or any other Governmental Authority not to consummate the Contemplated Transactions, except with the prior written consent of the other party hereto (which consent shall not be unreasonably withheld, conditioned or delayed). In furtherance and not in limitation of the foregoing, Buyer shall take any and all steps necessary to (A) resolve, avoid, or eliminate any impediment or objection, if any, under any Antitrust Law that may be asserted by the FTC, the Antitrust Division, any state attorney general or any other Governmental Authority with respect to the Contemplated Transactions, or (B) avoid the entry of, effect the dissolution of, and have vacated, lifted, reversed or overturned, any decree, Order or judgment that would prevent, prohibit, restrict or delay the consummation of the Contemplated Transactions, so to enable the parties hereto to close the Contemplated Transactions expeditiously (but in no event after the Termination Date). Without limiting the foregoing and subject to this Section 5.3 , Buyer shall (x) propose, negotiate, commit to and effect, by consent decree, hold separate orders, or otherwise, the sale, divestiture, disposition, license of any assets, properties, products, product lines, services, businesses, or rights of Buyer, its Affiliates or their respective Subsidiaries or the Company or its Subsidiaries or any interest or interests therein, and (y) otherwise take or commit to take any action that limits its freedom of action with respect to, or its ability to retain, any of the assets, properties, products, product lines services, or businesses of Buyer, its Affiliates or their respective Subsidiaries or the Company or its Subsidiaries or any interest or interests therein, in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any Litigation, or any impediment under any Antitrust Law, which would otherwise have the effect of preventing the consummation of the Contemplated Transactions. In addition, Buyer shall defend through litigation on the merits any claim asserted in court by any party in order to avoid the entry of, or have vacated, lifted, reversed, overturned or terminated, any decree, order or judgment (whether temporary, preliminary or permanent) that would restrain, prevent or delay the Closing prior to the consummation of the Contemplated Transactions, including pursuing all available avenues of administrative and judicial appeal and all available legislative action. The Company shall agree, if requested by Buyer, to divest, hold separate or otherwise take or commit to take any action that limits its freedom of action with respect to, or its ability to retain, any of the businesses, products, services, or assets of the Company or any of its Subsidiaries, provided that any such action shall be conditioned upon the consummation of the Contemplated Transactions.

EXECUTION VERSION

(c) Each party shall (i) promptly notify the other party of any material communication to that party from the FTC, the Antitrust Division, any state attorney general or any other Governmental Authority in respect of any Antitrust Filing, investigation, inquiry or other proceeding relating to the Contemplated Transactions and, subject to applicable Law, discuss with and permit the other party (and its counsel) to review in advance, and consider in good faith the other party’s reasonable comments in connection with any proposed written communication to any of the foregoing; (ii) not participate or agree to participate in any substantive meeting, telephone call, or discussion with any Governmental Authority in respect of any Antitrust Filing, investigation or inquiry concerning this Agreement or the Contemplated Transactions unless it consults with the other party in advance and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend and participate thereat; (iii) subject to applicable Law and to the extent practicable, furnish the other party promptly with copies of all correspondence, filings, and communications (and memoranda setting forth the substance thereof) between them and their Affiliates and their respective Representatives on the one hand, and any Governmental Authority or members of their respective staffs on the other hand, with respect to this Agreement and the Contemplated Transactions; and (iv) act in good faith and reasonably cooperate with the other party in connection with the Antitrust Filing, registrations, declarations and filings concerning this Agreement or the Contemplated Transactions and in connection with resolving any investigation or other inquiry of any Governmental Authority under the HSR Act or any other Antitrust Law with respect to any such Antitrust Filing, registration, declaration and filing or the Contemplated Transactions.

5.4. Em ployee Matters .

(a) Until December 31, 2018, each employee of the Company or any of its Subsidiaries who continues to be employed by the Company or any such Subsidiary after the Closing Date (the “ Company Employees ”) shall be entitled to receive at least the same base salary and base wage rates that were provided to such Company Employee immediately prior to the Closing, and the Company or its Subsidiary shall maintain the Company’s or such Subsidiary’s bonus plan for fiscal year 2018, as set forth in Section 5.4(a) of the Seller Disclosure Schedule, and will pay such amounts to the Company Employees when and as they are become due thereunder and, to the extent applicable, only if the underlying performance goals have been achieved.

(b) Except as otherwise agreed in writing by the Company and Buyer, until December 31, 2018, each Company Employee shall receive employee benefits (excluding severance, fringe benefits, retention or change in control benefits, equity-based compensation, exit or transaction bonuses, employee loans, signing bonuses, retention bonuses and vacation advancements), that at least are substantially comparable in the aggregate to those benefits provided by the Company or any of its Subsidiaries as of the date hereof.

EXECUTION VERSION

(c) For purposes of participation of a Company Employee in a benefit plan of Buyer or its Affiliates (a “ Buyer Benefit Plan ”), each Company Employee shall be credited with all years of service for which such Company Employee was credited before the Closing Date under any comparable Plans, except that the foregoing shall not apply to equity incentive compensation, defined benefit pension plan accruals, the determination of retirement plan vesting or to the extent such credit would result in a duplication of benefits for the same period of service. In addition, and without limiting the generality of the foregoing, for the plan year in which the Closing occurs, Buyer shall, or shall cause its Affiliates to, use reasonable best efforts such that: (i) each Company Employee shall be immediately eligible to participate, without any waiting time, in any and all Buyer Benefit Plans providing medical, dental, pharmaceutical and / or vision benefits to the extent that coverage under such Buyer Benefit Plans replaces coverage under comparable Plans in which such Company Employee participated; (ii) for purposes of each Buyer Benefit Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, Buyer shall cause all pre-existing condition exclusions and actively-at-work requirements of such Buyer Benefit Plan to be waived for such Company Employee and his or her covered dependents, and (iii) Buyer shall cause any eligible expenses incurred by such Company Employee and his or her covered dependents during the portion of the plan year of the Plan ending on the date such Company Employee’s participation in the corresponding Buyer Benefit Plan begins to be taken into account under such Buyer Benefit Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Company Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such Buyer Benefit Plan.

(d) Buyer shall, or shall cause its Affiliates to, use reasonable best efforts to (i) credit each of the Company Employees with an amount of paid vacation and sick leave days following the Closing Date equal to the amount of vacation time and sick leave days each such Company Employee has accrued but not yet used or cashed out as of the Closing Date under the Company’s vacation and sick leave policies as in effect immediately prior to the Closing Date to the extent such accrued but unused paid-time off is reflected in Closing Date Net Working Capital, and (ii) allow each of the Company Employees to use such accrued vacation and sick leave days at such times as each would have been allowed under the Company’s vacation and sick leave policies as in effect immediately prior to the Closing Date (excluding the provisions in such policies that would permit the advancement of vacation).

(e) Buyer shall be solely responsible for any notices required to be given under, and to otherwise comply with, the Workers Adjustment and Retraining Notification Act (the “ WARN Act ”) or similar Laws or regulations of any jurisdiction relating to any plant closing or mass layoff (or similar triggering event) resulting from the Company’s or Buyer’s actions with respect to the layoff or termination of employment of any Company Employees after the Closing Date. On or as soon as practicable following the Closing Date, Seller shall deliver to Buyer a true, complete and correct list of all Persons who suffered employment losses (as defined under the WARN Act) within ninety (90) days of the Closing Date and who worked at one or more of the sites of employment in the United States where any Company Employee worked prior to the Closing Date.

EXECUTION VERSION

(f) Notwithstanding anything in this Section 5.4 , Buyer shall not be obligated to continue to employ any Company Employee for any specific period of time following the Closing Date, subject to applicable Law.

(g) Prior to Closing, Seller shall request from the beneficiaries of the sales bonuses identified in Section 3.20(a) of the Seller Disclosure Schedule, a release in favor of Seller, Buyer and their respective Affiliates, as generally contemplated by such bonuses, the form of which Buyer shall have the opportunity to review and comment upon (and Seller shall consider and implement in good faith Buyer’s reasonable and timely comments).

(h) Seller shall use commercially reasonable efforts to cause the Company and its Subsidiaries to take all actions necessary or appropriate to terminate, effective no later than the day immediately preceding the Closing Date, any Plan sponsored or maintained by the Company or any of its Subsidiaries that contains a cash or deferred arrangement intended to qualify under Section 401(a) of the Code (each, a “ 401(k) Plan ”), unless Buyer, in its sole and absolute discretion, provides the Company with written notice of its election that any such 401(k) Plan should not be terminated (an “ Election Notice ”) at least ten (10) Business Days prior to the Closing Date. Seller shall use commercially reasonable efforts to cause the Company or its Subsidiary, as applicable, to deliver to Buyer, prior to the Closing Date, evidence that it has validly adopted resolutions to terminate each 401(k) Plan, unless Buyer provides an Election Notice to the Company or its Subsidiary, (the form and substance of which resolutions shall be subject to review and approval of Buyer), effective no later than the day immediately preceding the Closing Date.

(i) Seller shall, and shall cause the Company and its Subsidiaries to, as applicable, use commercially reasonable efforts to file all required Form 5500 for Plans that are “employee welfare benefit plans” (as defined in Section 3(1) of ERISA), in a form reasonably acceptable to Buyer, prior to the Closing Date.

(j) The provisions of this Section 5.4 are for the sole benefit of the parties to this Agreement and nothing in this Section 5.4 , expressed or implied, is intended or shall be construed to confer upon or give to any Person (including, for the avoidance of doubt, any current or former employee of Seller, the Company, the Company’s Subsidiaries or any of their Affiliates), other than the parties hereto and their respective permitted successors and assigns, any legal or equitable or other rights or remedies (including any third-party beneficiary rights). Nothing in this Section 5.4 shall (i) constitute or be deemed to constitute the establishment, adoption or amendment of any Plan, Buyer Benefit Plan or any other benefit or compensation plan, program, policy, Contract, agreement or other arrangement, or (ii) limit the ability of Buyer or any of its Affiliates from amending, modifying or terminating any Plan or any other benefit or compensation plan, program, policy, agreement, arrangement or Contract at any time assumed, established, sponsored or maintained by any of them .

EXECUTION VERSION

5.5. Post -Closing Indemnification of Directors and Officers . From and after the Closing Date, Buyer shall cause the Company and its Subsidiaries to fulfill and honor in all respects the obligations of the Company to its current and former directors and officers (and those of its Subsidiaries) pursuant to any indemnification provisions under the certificate of incorporation and bylaws of the Company as in effect on the date of this Agreement (the persons entitled to be indemnified pursuant to such provisions, and all other current and former directors and officers of the Company, being referred to collectively as the “ D&O Indemnified Parties ”). For six (6) years following the Closing, Buyer shall maintain in effect the current level and scope of directors’ and officers’ liability insurance or a tail insurance policy of the same level or scope for the six (6) year period, in each case covering those persons who are covered by the Company’s directors’ and officers’ liability insurance policy as of the Closing; provided , that in no event shall Buyer be required to expend in any one (1) year an amount in excess of 300% of the annual premium currently paid by the Company for such insurance; and provided , further , that if the annual premiums of such insurance coverage exceed such amount, Buyer shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount. On or prior to the Closing Date, Buyer shall deliver to the Company and Seller reasonable evidence of the continuation as aforesaid of such insurance coverages; provided, that the Company and Seller shall provide to the Buyer such reasonable assistance as is necessary for Buyer to obtain continuation of such insurance coverage. This Section 5.5 shall survive the Closing Date, is intended to benefit and may be enforced by Seller and the D&O Indemnified Parties, and shall be binding on all successors and assigns of Buyer and the Company.

5.6. Preser vation of Books and Records .

(a) For a period of six (6) years from the Closing Date: Buyer shall not and shall cause its Affiliates not to dispose of or destroy any of the books and records of the Company and its Subsidiaries relating to periods prior to the Closing (the “ Books and Records ”) without first offering to turn over possession thereof to Seller by written notice to Seller at least sixty (60) days prior to the proposed date of such disposition or destruction.

(b) For a period of six (6) years from the Closing Date: Buyer shall, and shall cause its Affiliates to, in connection with the preparation of Tax Returns, financial statements, audits, regulatory reporting obligations and support for Litigation (other than Litigation between Seller or any of its Affiliates and Buyer or any of its Affiliates (including the Company and its Subsidiaries) or any other reasonable request), (i) provide Seller and its agents with electronic access to any portions of the Books and Records that are available in electronic format on reasonable notice, (ii) allow Seller and its agents access to all other Books and Records on reasonable notice and at reasonable times at Buyer’s principal place of business or at any location where any Books and Records are stored and permit Seller and its agents, at their own expense, to make copies of such Books and Records and (iii) make available Buyer’s or its Affiliates’ personnel to assist in locating such Books and Records (except that, with respect to Tax matters, Buyer shall only be required to make available such personnel for matters related to Taxes of the Company or its Subsidiaries); provided , however , that Seller shall not have access to such Books and Records to the extent that restricting such access or information is necessary, in Buyer’s reasonable opinion, to ensure compliance with any applicable Law, confidentiality or other agreement or preserve the attorney-client privilege.

EXECUTION VERSION

(c)

(i) If the Closing occurs prior to December 31, 2018, Buyer shall use commercially reasonable efforts to cause the Company and its Subsidiaries to provide Seller: (A) prior to February 6, 2019, the preliminary consolidated financial statements of the Company and its Subsidiaries for the period from December 31, 2017 until the Closing Date, prepared in accordance with IFRS Consistently Applied and with IFRS 9, IFRS 15, and, if applicable, for the period after December 31, 2018, IFRS 16, including the balance sheet, income statement (including analysis of recurring and non-recurring and purchase price allocation items), equity statement and cash flow statement (the “ 2018 Financial Package ”) and (B) prior to February 20, 2019, the final 2018 Financial Package, together with the related “inter-office memorandum” from the Company’s auditors in compliance with the instructions and scope reasonably determined by Seller.

(ii) If the Closing occurs after December 31, 2018 and on or before May 25, 2019, Buyer shall use commercially reasonable efforts to cause the Company and its Subsidiaries to provide Seller : (A) to the extent the Closing has occurred prior to February 6, 2019, the preliminary 2018 Financial Package prior to February 6, 2019, (B) to the extent the Closing has occurred prior to February 20, 2019, the final 2018 Financial Package, together with the related “inter-office memorandum” from the Company’s auditors in compliance with the instructions and scope reasonably determined by Seller, prior to February 20, 2019, (C) prior to July 3, 2019, the initial consolidated financial statements of the Company and its Subsidiaries for the period from January 1, 2019 until the Closing Date, prepared in accordance with IFRS Consistently Applied and with IFRS 9, IFRS 15, and, for the period after December 31, 2018, IFRS 16, including the balance sheet, income statement (including analysis of recurring and non-recurring and purchase price allocation items), equity statement and cash flow statement (the “ 2019 Financial Package ”) and (D) prior to July 10, 2019, the final 2019 Financial Package, together with the related “inter-office memorandum” from the Company’s auditors in compliance with the instructions and scope reasonably determined by Seller.

(iii) Following the Closing, Buyer shall use commercially reasonable efforts to cause the Company and its Subsidiaries to provide to Seller, no later than twenty (20) Business Days following the end of the applicable quarter, the quarterly sales for the periods from December 31, 2017 until the Closing Date.

(iv) From and after the Closing, Buyer shall use commercially reasonable efforts to cause the Company and its Subsidiaries to provide Seller, no later than twenty (20) Business Days following a written request by Seller, any administrative, social, accounting and financial document of the Company and its Subsidiaries and reasonable access during working hours to their respective employees as may be necessary for the Wendel Group to prepare its own financial statements and annual reports for the financial years ended on December 31, 2018 and December 31, 2019 (as applicable).

(v) Seller agrees to reimburse Buyer for any reasonable, documented out-of-pocket costs incurred by Buyer in connection with performing its obligations pursuant to this Section 5.6(c) . Seller acknowledges and agrees that Buyer shall have no liability for any information being provided pursuant to this Section 5.6(c) .

EXECUTION VERSION

5.7. Pub lic Announcements . The initial press release regarding this Agreement and the Contemplated Transactions shall be made at such time and in such form as Buyer and Seller agree; provided that in the event that the parties cannot agree, a party shall be permitted to make any disclosure required by Law (including the Laws of France and Luxembourg) or the rules of any securities exchange. Neither Buyer nor Seller (nor any of their respective Affiliates) will issue or make any subsequent press release or public statement with respect to this Agreement or the Contemplated Transactions without the prior consent of the other party, except as may be required by Law or the rules of any securities exchange; provided , that the party proposing to issue any press release or similar public statement in compliance with any such Law or the rules of any securities exchange shall use reasonable best efforts to consult in good faith with the other party concerning a mutually agreeable press release or similar public statement before doing so; provided , further , that each of Buyer, Seller and the controlling Affiliates of Buyer may disclose such terms and the existence of this Agreement and the Contemplated Transactions (a) as necessary to implement the provisions of this Agreement or to comply with the accounting and U.S. Securities and Exchange Commission or other applicable stock exchange disclosure obligations, (b) to public stockholders of Seller, Buyer or their respective Affiliates and / or analysts in the ordinary course of business for a transaction of the type contemplated by this Agreement, (c) to the prospective investors of Seller and its controlling Affiliates, in the case of this clause (c) to the extent consistent with prior public disclosure in accordance with this provision or (d) as necessary to settle, litigate or arbitrate any claims, actions, suits, demands, summons, proceedings, or litigation relating to or arising out of this Agreement, any Ancillary Document or the Contemplated Transactions.

5.8. Effo rts .

(a) Except as otherwise set forth in Section 5.3 , subject to the terms and conditions set forth herein and to applicable legal requirements, each of the parties shall cooperate and use their respective reasonable best efforts to take, or cause to be taken, all appropriate action, and do, or cause to be done, and assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Contemplated Transactions, including the satisfaction of the respective conditions set forth in Article VI .

(b) Seller shall use its commercially reasonable efforts in attempting to obtain, before the Closing Date, the consent, approval or waiver, in form and substance reasonably satisfactory to Buyer, from any party to any Material Contract as reasonably requested by Buyer, which are required to be obtained in connection with the Contemplated Transactions; provided , that neither Seller nor Buyer shall have any obligation to offer or pay any consideration in order to obtain such consents and approvals; provided , further , that Seller shall not make any agreement or understanding affecting the business or operations of the Company and its Subsidiaries as a condition for obtaining any such consents and waivers except with the prior written consent of Buyer. During the period prior to the Closing Date, Buyer shall use its reasonable best efforts to cooperate with Seller in attempting to obtain the consents, approvals and waivers contemplated by this Section 5.8(b) .

EXECUTION VERSION

5.9. Exc lusive Dealing . During the period from the date of this Agreement to the earlier of the Closing or the termination of this Agreement in accordance with Article VII (the “ Pre-Closing Period ”), Seller shall not, nor shall Seller permit any of its Affiliates (including, for the avoidance of doubt, the Company and its Subsidiaries) or Representatives to, directly or indirectly (i) initiate, continue, follow up on or otherwise participate in any discussions or negotiations regarding, or otherwise cooperate in any way with, or assist or participate in any effort or attempt by any Person with respect to, any Alternative Proposal, (ii) enter into or approve any Contract with respect to any Alternative Proposal or (iii) solicit, initiate or knowingly encourage, or take any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal that constitutes, or could reasonably be expected to lead to, any Alternative Proposal. During the Pre-Closing Period, Seller shall, and shall cause its Affiliates (including, for the avoidance of doubt, the Company and its Subsidiaries) and Representatives to, immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted prior to or on the date of this Agreement with respect to any Alternative Proposal. During the Pre-Closing Period, Seller shall, and shall cause the Company to, promptly (and in any event within five (5) Business Days) notify Buyer after it or any of its Affiliates has received, during the Pre-Closing Period, any proposal, inquiry, offer or request relating to or constituting, or that could reasonably be expected to lead to, an Alternative Proposal. Such notice to Buyer shall indicate the identity of the Person making such proposal and the material terms and conditions of such proposal, if any. During the Pre-Closing Period, Seller shall, also as promptly as practicable provide Buyer with (i) a copy of any written notice or other written communication from any Person informing Seller, the Company or any of their respective Affiliates during the Pre-Closing Period that it is considering making, or has made a proposal regarding an Alternative Proposal, (ii) a copy of any Alternative Proposal (or any amendment thereof) received by Seller, the Company or any of their respective Affiliates during the Pre-Closing Period and (iii) such other details of any such Alternative Proposal that Buyer may reasonably request.

5.10. Chan ge of Name . As promptly as practicable following the Closing, Seller shall cause its name and the name of any of its Affiliates containing the term “CSP Technologies” to be changed to such a name that does not contain the word “CSP” or is confusingly similar.

5.11. Data Room Information . No later than five (5) Business Days after the Closing, Seller shall deliver to Buyer an electronic copy of the documents and information contained in the Data Room on the date of this Agreement.

5.12. Cu ps Note . After the Closing, Buyer shall (i) pay to Seller any payments under the Cups Note actually received by the Company or any of its Affiliates within ten (10) Business Days of such actual receipt and (ii) cause the Company and its Affiliates to use commercially reasonable efforts to comply with the obligations under Section 2.8(d) of that certain Asset Purchase Agreement, dated as of May 18, 2018, by and between New Thermo-Serv Ltd. and Capitol Cups, Inc. and collect amounts owing under the Cups Note.

EXECUTION VERSION

ARTICLE VI
Conditio ns to Closing

6.1. Con ditions to All Parties’ Obligations.

The obligations of the parties to consummate the Contemplated Transactions are subject to the fulfillment prior to or at the Closing of each of the following conditions (any or all of which may be waived by all of the parties in writing):

(a) No Injunction . No Governmental Authority or court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law or Order, which is in effect and which prevents or prohibits consummation of the Contemplated Transactions; provided, that each of the parties shall have complied with its respective obligations under Section 5.3 .

(b) Regulatory Approvals . Any waiting periods (and any extension thereof) under the HSR Act with respect to the Contemplated Transactions shall have expired or been terminated.

6.2. Con ditions to Seller’s Obligations .

The obligations of Seller to consummate the Contemplated Transactions are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole or in part by Seller in writing):

(a) Representations and Warranties . The representations and warranties of Buyer made in Article IV of this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date (without giving effect to any “material,” “materiality” or similar qualification contained in such representations and warranties), as though made on such date (except for those representations and warranties which address matters as of a specific date, which shall be true and correct as of such date), except where the failure of any such representations or warranties to be so true and correct has not had, and would not reasonably be expected to have, a Buyer Material Adverse Effect.

(b) Performance . Buyer shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be so performed or complied with by Buyer at or prior to the Closing.

(c) Officer’s Certificate . Seller shall have received an officer’s certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, to the effect that the conditions set forth in Sections 6.2(a) and 6.2(b) have been satisfied.

(d) Closing Deliveries . Seller shall have received, in addition to the officer’s certificate addressed in Section 6.2(c) , all other deliveries set forth in Section 2.4(c) .

EXECUTION VERSION

6.3. Con ditions to Buyer’s Obligations .

The obligations of Buyer to consummate the Contemplated Transactions are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole or in part by Buyer in writing):

(a) Representations and Warranties . (i) The representations and warranties of Seller made in Article III (other than the representations and warranties of Seller set forth in Sections 3.1(a) , 3.2 , 3.3 , 3.6 and 3.23 (the “ Fundamental Representations ”)) shall be true and correct as of the date of this Agreement and as of the Closing Date (without giving effect to any “material,” “materiality,” “Seller Material Adverse Effect”, “Company Material Adverse Effect” or similar qualification contained in such representations and warranties), as though made on such date (except for those representations and warranties which address matters existing at a specific date, which shall be true and correct as of such date), except where the failure of any such representations and warranties to be so true and correct has not had, and would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect or Company Material Adverse Effect, and (ii) the Fundamental Representations shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date (without giving effect to any “material,” “materiality,” “Seller Material Adverse Effect”, “Company Material Adverse Effect” or similar qualification contained in such representations and warranties), as though made on such date (except for those representations and warranties which address matters existing at a specific date, which shall be true and correct in all material respects as of such date).

(b) Performance . Seller shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be so performed or complied with by Seller at or prior to the Closing.

(c) Material Adverse Effect . Between the date hereof and the Closing Date, no Seller Material Adverse Effect or Company Material Adverse Effect shall have occurred.

(d) Officer’s Certificates . Buyer shall have received an officer’s certificate, dated the Closing Date and signed by a duly authorized officer of Seller, to the effect that the conditions set forth in Sections 6.3(a), 6.3(b) and 6.3(c) have been satisfied.

(e) Closing Deliveries . Buyer shall have received, in addition to the officer’s certificate addressed in Section 6.3(d) , all other deliveries set forth in Section 2.4(d) .

ARTICLE VII
Termin ation

7.1. Ter mination Prior to Closing . This Agreement may be terminated prior to the Closing as follows:

(a) By the mutual written consent of Seller, on the one hand and Buyer, on the other hand;

EXECUTION VERSION

(b) By Buyer at any time prior to the Closing, if (i) Seller is in breach of or has failed to perform any of the representations, warranties or covenants made by Seller in this Agreement, (ii) such breach or failure is not cured or capable of being cured by the earlier of the day prior to the Termination Date and thirty (30) days following written notice of such breach or failure from Buyer (to the extent such breach or failure is curable) and (iii) such breach or failure, if not cured, would render the conditions set forth in Sections 6.1 or 6.3 incapable of being satisfied;

(c) By Seller at any time prior to the Closing, if (i) Buyer is in breach of or has failed to perform any of the representations, warranties or covenants made by it in this Agreement, (ii) such breach or failure is not cured or capable of being cured by the earlier of the day prior to the Termination Date and thirty (30) days following written notice of such breach or failure from Seller (to the extent such breach or failure is curable) and (iii) such breach or failure, if not cured, would render the conditions set forth in Sections 6.1 or 6.2 incapable of being satisfied;

(d) By Seller, on the one hand or Buyer, on the other hand, if the Closing shall not have occurred by December 31, 2018 (the “ Termination Date ”); provided , however , that (i) Seller shall not be entitled to terminate this Agreement pursuant to this Section 7.1(d) if Seller has breached this Agreement and such breach has resulted in the failure of a condition in Sections 6.1 or 6.3 to be satisfied and (ii) Buyer shall not be entitled to terminate this Agreement pursuant to this Section 7.1(d) if Buyer has breached this Agreement and such breach has resulted in the failure of a condition in Sections 6.1 or 6.2 to be satisfied; or

(e) By Seller, on the one hand or Buyer, on the other hand, if (i) the Contemplated Transactions shall violate any Order that shall have become final and nonappealable or (ii) there shall be a Law which makes the Contemplated Transactions illegal or otherwise prohibited; provided , however , that the party seeking termination pursuant to this Section 7.1(e) is not then in material breach of this Agreement.

7.2. Effe ct of Termination . In the event of the termination of this Agreement pursuant to Section 8.1 , written notice thereof shall be given by the terminating party to the other party and all rights, obligations, duties and remedies of the parties under this Agreement will terminate, and such termination shall be without liability to either party, except that the rights, obligations, duties and remedies of the parties in this Section 7.2 , Section 5.7 and Article VIII (other than Section 8.1 ) hereof and in the Confidentiality Agreement shall survive such termination and remain in full force and effect; provided , that, nothing herein shall relieve either party from any liability or damages arising out of its willful and material breach of any provision of this Agreement prior to such termination.

ARTICLE VIII
Miscel laneous

8.1. Surviv al; Certain Limitations .

(a) The representations and warranties of the parties contained in this Agreement (including the Schedules, the Seller Disclosure Schedule and Exhibits attached hereto and the certificates delivered pursuant hereto) (except for the Fundamental Representations, which will survive for the applicable statute of limitations) will not survive the Closing.

EXECUTION VERSION

(b) The covenants and agreements of Buyer and Seller contained in this Agreement (including the Schedules, the Seller Disclosure Schedule and Exhibits to this Agreement and the certificates delivered pursuant to this Agreement) that contemplate performance thereof prior to the Closing will terminate on the Closing Date. All covenants and agreements contained in this Agreement (including the Schedules and exhibits to this Agreement and the certificates delivered pursuant to this Agreement) that contemplate performance thereof following the Closing or otherwise expressly by their terms survive the Closing will survive the Closing in accordance with their terms.

8.2. Tax Matters .

(a) Transfer Taxes . Buyer shall pay all transfer, documentary, sales, use, stamp, recording, registration and similar Taxes (including penalties and interest), applicable to, or resulting from, the Contemplated Transactions, and Buyer shall (at its own expense) file all necessary Tax Returns and other documentation with respect to such Taxes . Buyer and Seller shall reasonably cooperate in the execution and delivery of all filings, Tax Returns, reports, certificates, and forms as may be required with respect to all such Taxes (including certificates or forms as may be necessary or appropriate to establish an exemption from (or otherwise reduce) such Taxes).

(b) Tax Returns . Seller shall timely file or cause to be timely filed when due (taking into account all extensions properly obtained) all Tax Returns that are required to be filed by or with respect to the Company or any of its Subsidiaries on or prior to the Closing Date. Buyer shall timely file or cause to be timely filed all other Tax Returns that are required to be filed by or with respect to the Company. All such Tax Returns that include the Closing Date shall be prepared and filed in a manner consistent with past practice and, on such Tax Returns, no position shall be taken, election made or method adopted that is inconsistent with positions taken, elections made or methods used in preparing and filing similar Tax Returns in prior periods.

(i) Buyer and Seller shall (and Seller shall cause the Company and its Subsidiaries to) cooperate fully, as and to the extent reasonably requested by the other party, in connection with (A) the filing of Tax Returns of the Company or any of its Subsidiaries, (B) preparing for and defending any audit, Litigation or dispute with taxing authorities, with respect to Taxes or Tax Returns of the Company or any of its Subsidiaries. Such cooperation shall include providing the other party with any necessary powers of attorney in connecting with preparing such Tax Returns, the retention and (upon the other party’s request or the request of any taxing authority) the provision of records and information that are reasonably relevant to any such audit or other Litigation making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and furnishing the other with copies of all correspondence received from any taxing authority in connection with any Tax audit or other Litigation or information request with respect to any Taxes or Tax Returns of the Company and any of its Subsidiaries; provided , that Buyer shall only be obligated to furnish copies of such correspondence to Seller to the extent such audit, Litigation or information request relates to Taxes for which Seller may be liable under the terms of this Agreement.

EXECUTION VERSION

(ii) Buyer and Seller agree, upon request, to use reasonable best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the Contemplated Transactions).

8.3. Ex penses . Except as otherwise expressly provided for herein, all fees and expenses incurred in connection with the Contemplated Transactions shall be paid by the party incurring such expenses, whether or not the Contemplated Transactions are consummated.

8.4. N otices .

All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made (a) as of the date delivered, if delivered personally, (b) on the date the delivering party receives an affirmative confirmation during normal business hours (and if not, the next Business Day) from the party or the attorney for the party to whom notice was intended, if delivered by facsimile or e-mail, (c) three (3) Business Days after being mailed by registered or certified mail (postage prepaid, return receipt requested) or (d) one (1) Business Day after being sent by overnight courier (providing proof of delivery), to the parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.4 ):

If to Seller:

CSP Technologies Parent S.A.

5, rue Pierre d’Aspelt

L-1142 Luxembourg

Attn: Winvest Conseil SA

Fax: +352 26 29 91 37
E-mail: winvestluxembourg@wendelgroup.com

With a copy (which shall not constitute notice) to:

Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza

New York, New York 10004

Attn: Christopher Ewan, Esq.

Fax: (212) 859-4000

E-mail: Christopher.Ewan@friedfrank.com

Wendel SE

89 rue Taitbout

75009 Paris - France

Attn: Direction Juridique

Fax: +33 1 42 85 63 60

E-mail: direction-juridique@wendelgroup.com

EXECUTION VERSION

If to Buyer:

AptarGroup, Inc.

265 Exchange Drive, Suite 100

Crystal Lake, Illinois 60014

Attn: General Counsel, North America

E-mail: andrew.gorman@aptar.com

With a copy (which shall not constitute notice) to:

Sidley Austin LLP

One South Dearborn

Chicago, Illinois 60603

Attn: Gary Gerstman

Fax: (312) 853-7036

E-mail: ggerstman@sidley.com

8.5. Go verning Law . This Agreement shall in all respects be governed by, and construed in accordance with, the Laws (excluding conflict of laws rules and principles) of the State of Delaware applicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance.

8.6. Entir e Agreement . This Agreement, together with the Exhibits and Schedules hereto, the Seller Disclosure Schedule, the Ancillary Documents and the Confidentiality Agreement, constitute the entire agreement of the parties relating to the subject matter hereof and supersede all prior contracts or agreements, whether oral or written.

8.7. Sev erability . Should any provision of this Agreement or the application thereof to any Person or circumstance be held invalid or unenforceable to any extent: (a) such provision shall be ineffective to the extent, and only to the extent, of such unenforceability or prohibition and shall be enforced to the greatest extent permitted by Law, (b) such unenforceability or prohibition in any jurisdiction shall not invalidate or render unenforceable such provision as applied (i) to other Persons or circumstances or (ii) in any other jurisdiction, and (c) such unenforceability or prohibition shall not affect or invalidate any other provision of this Agreement.

8.8. Ame ndment .

Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented or modified orally, but only by an instrument in writing signed by Seller and Buyer; provided that the observance of any provision of this Agreement may be waived in writing by the party that will lose the benefit of such provision as a result of such waiver.

EXECUTION VERSION

8.9. Eff ect of Waiver or Consent . No waiver or consent, express or implied, by any party to or of any breach or default by any party in the performance by such party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligations of such party hereunder. No single or partial exercise of any right or power, or any abandonment or discontinuance of steps to enforce any right or power, shall preclude any other or further exercise thereof or the exercise of any other right or power. Failure on the part of a party to complain of any act of any party or to declare any party in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitation period has run.

8.10. Par ties in Purchased Interests; Limitation on Rights of Others . The terms of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective legal representatives, successors and permitted assigns. Nothing in this Agreement, whether express or implied, shall be construed to give any Person (other than the parties hereto and their respective legal representatives, successors and permitted assigns and as expressly provided herein) any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisions contained herein, as a third party beneficiary or otherwise.

8.11. Assig nability . No assignment of this Agreement or of any rights or obligations hereunder may be made by any party, directly or indirectly (by operation of Law or otherwise), without the prior written consent of the other party hereto and any attempted assignment without the required consents shall be void; provided , however , Buyer may freely assign its rights and obligations hereunder without the prior written consent of Seller to any of its Affiliates, it being acknowledged and agreed that such assignment will not relieve Buyer of any of its obligations hereunder; provided , further , that nothing in this Section 8.11 shall restrict the post-Closing integration contemplated by Section 2.6 .

EXECUTION VERSION

8.12. Seller Disclosure Schedule . The Seller Disclosure Schedule is arranged in sections and paragraphs corresponding to the numbered and lettered sections and paragraphs of this Agreement. For the purposes of this Agreement, any matter that is disclosed in the Seller Disclosure Schedule in a manner that makes its relevance to one or more other sections of the Seller Disclosure Schedule readily apparent on its face shall be deemed to have been included in such other section of the Seller Disclosure Schedule notwithstanding the omission of a cross reference thereto . No reference to or disclosure of any item or other matter in the Seller Disclosure Schedule shall be construed as an admission or indication that such item or other matter is material (nor shall it establish a standard of materiality for any purpose whatsoever) or that such item or other matter is required to be referred to or disclosed in the Seller Disclosure Schedule. The disclosure of any matter or item in the Seller Disclosure Schedule hereto will not be deemed to constitute an acknowledgment that any such matter is required to be disclosed. The information set forth in the Seller Disclosure Schedule is disclosed solely for the purposes of this Agreement, and no information set forth therein shall be deemed to be an admission by any party hereto to any third party of any matter whatsoever, including any violation of Law or breach of any Contract. The Seller Disclosure Schedule and the information and disclosures contained therein are intended only to qualify and limit the representations, warranties and covenants of Seller contained in this Agreement. Nothing in the Seller Disclosure Schedule is intended to broaden the scope of any representation or warranty contained in this Agreement or create any covenant. Matters reflected in the Seller Disclosure Schedule are not necessarily limited to matters required by the Agreement to be reflected in the Seller Disclosure Schedule. Such additional matters are set forth for informational purposes and do not necessarily include other matters of a similar nature.

8.13. Juris diction; Court Proceedings; Waiver of Jury Trial . Except as otherwise provided in Section 2.5 , any Litigation against any party to this Agreement arising out of or in any way relating to this Agreement shall be brought to the Delaware Court of Chancery (or, if such court shall not have jurisdiction, any federal or state court located in the State of Delaware), and each of the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of any such Litigation; provided , that a final judgment in any such Litigation shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each party irrevocably and unconditionally agrees not to assert (a) any objection which it may ever have to the laying of venue of any such Litigation in any federal or state court located in the State of Delaware, (b) any claim that any such Litigation brought in any such court has been brought in an inconvenient forum and (c) any claim that such court does not have jurisdiction with respect to such Litigation. To the extent that service of process by mail is permitted by applicable Law, each party irrevocably consents to the service of process in any such Litigation in such courts by the mailing of such process by registered or certified mail, postage prepaid, at its address for notices provided for herein. Each party irrevocably and unconditionally waives any right to a trial by jury and agrees that any of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained-for agreement among the parties irrevocably to waive its right to trial by jury in any Litigation.

8.14. Reli ance on Counsel and Other Advisors . Each party has consulted such legal, financial, technical or other expert as it deems necessary or desirable before entering into this Agreement. Each party represents and warrants that it has read, knows, understands and agrees with the terms and conditions of this Agreement.

EXECUTION VERSION

8.15. Re medies . All remedies, either under this Agreement or by Law or otherwise afforded to the parties hereunder, shall be cumulative and not alternative, and any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of this Agreement and to exercise all other rights granted by Law, equity or otherwise.

8.16. Spec ific Performance . The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties agree that, in addition to any other remedies, each party shall be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy. Each party hereby waives any requirement for the securing or posting of any bond or other security in connection with such remedy. Each party further agrees that the only permitted objection that it may raise in response to any action for equitable relief is that it contests the existence of a breach or threatened breach of this Agreement.

8.17. Cou nterparts . This Agreement may be executed in any number of counterparts (including counterparts transmitted via facsimile or in .pdf or similar format) with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

8.18. Furth er Assurance . If at any time, after the Closing, any further action is necessary or desirable to fully effect the Contemplated Transactions, each of the parties shall take such further action (including the execution and delivery of such further instruments and documents) as any other party reasonably may request. From and after the date hereof until the earlier of (i) the Closing and (ii) the date Buyer obtains the R&W Policy, Seller shall use commercially reasonable efforts to provide and cause its Affiliates to provide such cooperation in connection with the arrangement of the R&W Policy as may be reasonably requested by Buyer and which is customary in connection with Buyer’s efforts to obtain the R&W Policy.

EXECUTION VERSION

8.19. Legal Representation . Each of the parties to this Agreement acknowledges that Fried, Frank, Harris, Shriver & Jacobson LLP (“ Fried Frank ”) currently serves as counsel to both (a) the Company and its Subsidiaries and (b) the Wendel Group, including in connection with the negotiation, preparation, execution and delivery of this Agreement, the Ancillary Documents and the consummation of the Contemplated Transactions. There may come a time, including after consummation of the Contemplated Transactions, when the interests of the Wendel Group and the Company or its Subsidiaries may no longer be aligned or when, for any reason, the Wendel Group, Fried Frank or the Company or its Subsidiaries believes that Fried Frank can’t or should no longer represent both the Wendel Group and the Company or its Subsidiaries. The parties understand and specifically agree that Fried Frank may withdraw from representing the Company and its Subsidiaries and continue to represent the Wendel Group, even if the interests of the Wendel Group, and the interests of the Company or its Subsidiaries are or may be adverse, including in connection with any dispute arising out of or relating to this Agreement, any of the Ancillary Documents or the Contemplated Transactions, and even though Fried Frank may have represented the Company and its Subsidiaries in a matter substantially related to such dispute , and Buyer and the Company hereby consent thereto and waive any conflict of interest arising therefrom. Each of the parties further agrees that, as to all communications among Fried Frank, the Company, its Subsidiaries and the Wendel Group arising out of or relating to this Agreement, any of the Ancillary Documents or the Contemplated Transactions or otherwise, the attorney-client privilege, the expectation of client confidence and all other rights to any evidentiary privilege belong to the Wendel Group and shall not pass to or be claimed by the Company or any of its Subsidiaries. In addition, if the Contemplated Transactions are consummated, the Company and its Subsidiaries shall have no right of access to or control over any of Fried Frank’s records related to the Contemplated Transaction, which shall become the property of (and be controlled by) the Wendel Group. Furthermore, in the event of a dispute between the Wendel Group and the Company or its Subsidiaries arising out of or relating to this Agreement, the Ancillary Documents or the Contemplated Transactions or any matter in which Fried Frank acted for them both, none of the attorney-client privilege, the expectation of client confidence or any other rights to any evidentiary privilege will protect from disclosure to the Wendel Group any information or documents developed or shared during the course of Fried Frank’s joint representation of the Wendel Group and the Company and its Subsidiaries. Notwithstanding the foregoing, in the event that a dispute arises between Buyer and / or the Company or any of its Subsidiaries, on the one hand, and a third Person (other than Seller or any of its Affiliates or any of their respective Representatives), on the other hand, Buyer and / or the Company or any of its Subsidiaries may access and use the information described herein to the extent it or they believe reasonably necessary to defend the dispute and may, in its or their sole discretion, assert any applicable privilege or protection on behalf of Seller to prevent the disclosure of such information to such third Person; provided , further , that nothing herein shall be deemed or construed as a waiver of any applicable privileges or protections that may be asserted with respect to the information as against any third Person.

EXECUTION VERSION

8.20. R elease . EFFECTIVE AS OF THE CLOSING DATE, BUYER HEREBY WAIVES, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES (INCLUDING, AFTER THE CLOSING, THE COMPANY AND EACH OF ITS SUBSIDIARIES), TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY AND ALL RIGHTS, CLAIMS AND CAUSES OF ACTION IT MAY HAVE, ARISING OUT OF FACTS OR CIRCUMSTANCES EXISTING ON OR PRIOR TO THE CLOSING DATE, AGAINST SELLER (SOLELY IN ITS CAPACITY AS SHAREHOLDER), WENDEL (SOLELY IN ITS CAPACITY AS (I) AN INDIRECT SHAREHOLDER AND (II) A MANAGER UNDER THE WENDEL MANAGEMENT AGREEMENT) OR ANY EMPLOYEE OF WENDEL OR ITS AFFILIATES (OTHER THAN THE COMPANY AND ITS SUBSIDIARIES) (SOLELY IN THEIR CAPACITY AS DIRECTORS), AND AGREES NOT TO SEEK RECOURSE AGAINST ANY OF THEM, RELATING TO THE OPERATION OF THE COMPANY, ITS SUBSIDIARIES OR THEIR RESPECTIVE BUSINESSES; PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS AGREEMENT SHALL RELEASE, WAIVE, DISCHARGE, RELINQUISH OR OTHERWISE AFFECT THE RIGHTS OR OBLIGATIONS OF ANY SUCH PARTY TO THE EXTENT ARISING OUT OF OR RELATING TO (A) CLAIMS INVOLVING INTENTIONAL FRAUD OR CRIMINAL MATTERS, OR (B) CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY ANCILLARY DOCUMENT OR THE CONTEMPLATED TRANSACTIONS.

(Signature Pages Follow)

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written.

BUYER:

APTARGROUP, INC.

By:     /s/ Robert W. Kuhn
Name: Robert W. Kuhn
Title:   Executive Vice President and Chief
           Financial Officer

[Signature Page to Stock Purchase Agreement]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered on this 13th day of August, 2018, and this Agreement shall be dated as of July 26, 2018 and shall be treated for all purposes as if executed and delivered by both parties on July 26, 2018, notwithstanding the execution and delivery thereof by the undersigned on August 13, 2018.

SELLER:

CSP TECHNOLOGIES PARENT S.A.

By: /s/David Darmon

Name: David Darmon
Title: Director

By: /s/Bernard Gautier
Name: Bernard Gautier
Title: Director

[Signature Page to Stock Purchase Agreement]

Exhibit 31.1

CERTIFICATION

I, Stephan B. Tanda, certify that:

I have reviewed this quarterly report on Form 10-Q of AptarGroup, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a--15(e) and 15d--15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a--15(f) and 15d--15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Date:	November 5, 2018


	By:	/s/ STEPHAN B. TANDA
		Stephan B. Tanda
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Robert W. Kuhn, certify that:

I have reviewed this quarterly report on Form 10-Q of AptarGroup, Inc.;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


	Date:	November 5, 2018


	By:	/s/ ROBERT W. KUHN
		Robert W. Kuhn
		Executive Vice President,
		Chief Financial Officer and Secretary

Exhibit 32.1

Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Stephan B. Tanda, president and chief executive officer of AptarGroup, Inc., certify that (i) the Quarterly Report on Form 10-Q of AptarGroup, Inc. for the quarter ended September 30, 2018 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of AptarGroup, Inc.

	By:	/s/ STEPHAN B. TANDA
		Stephan B. Tanda
		President and Chief Executive Officer

		November 5, 2018

Exhibit 32.2

Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Robert W. Kuhn, executive vice president and chief financial officer and secretary of AptarGroup, Inc., certify that (i) the Quarterly Report on Form 10-Q of AptarGroup, Inc. for the quarter ended September 30, 2018 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of AptarGroup, Inc.

	By:	/s/ ROBERT W. KUHN
		Robert W. Kuhn
		Executive Vice President,
		Chief Financial Officer and Secretary

		November 5, 2018